Housing mess needs healing, not witch hunt, Warren says
Housing foreclosure settlement should focus on healing housing market, not punishing lenders, says consumer finance protection chief.
WASHINGTON — U.S. consumer financial protection chief Elizabeth Warren said Tuesday that a massive settlement of mortgage foreclosure abuses should focus on healing a deeply troubled U.S. housing market, not punishing lenders.
``I don't think this is about a pound of flesh. I think that's the wrong way to think about it,'' Warren told the Reuters Future Face of Finance Summit.
``I think the best way to think about this is how we put the problems in the rearview mirror, and we say we've done it. And now what we're about is repairing a market going forward. Nothing more and nothing less.''
U.S. regulators and a coalition of state attorneys general are negotiating a settlement with the biggest mortgage lenders, including Bank of America, JPMorgan Chase and Wells Fargo. These banks and other mortgage servicing firms have been accused of foreclosing on thousands of borrowers without having the necessary paperwork in place.
Warren, who is working to launch the new Consumer Financial Protection Bureau, declined to discuss the long-drawn settlement negotiations, which she said were led by other regulators. She also would not comment on specific components of her preferred structure for the settlement.
HOUSING PAIN FOR ALL
Warren, an adviser to President Barack Obama and U.S. Treasury Secretary Timothy Geithner on the proposed agency, expressed frustration with a U.S. housing market in which still-rising foreclosures are driving down home prices, leaving dwellings abandoned and threatening the economic recovery.
``There's still a lot of pain out there in the housing market and that pain is not confined to people who are upside-down on their mortgages,'' she said.
The wreckage left by mortgage abuses that fueled the U.S. housing bubble in the last decade prompted Warren to vigorously campaign for the creation of the consumer bureau, which officially assumes its powers in July.
One of her main first goals for the new bureau is to revamp mortgage disclosure rules with a simple, one-page form that makes for easy-to-understand comparisons between loans.
Although the stock market and financial services in general have healed since the financial crisis, there has been little healing in the housing market, she said.
``Right now, among those three, it's clearly the housing market that's in the worst shape, and really not yet back on firm footing and ready to build a market going forward,'' she said.
Republicans in the U.S. House of Representatives want to kill the Obama administration's main housing rescue programs, arguing that they have not effective in turning the market around.
Geithner on Tuesday urged lawmakers to move forward with legislation to scale back the government's support of the housing market by reforming state-controlled finance entities Fannie Mae and Freddie Mac.
Although Warren, a former Harvard Law School professor who chaired a U.S. bailout oversight panel, has been feared and criticized by financial services industry executives, she insisted that she is not out to punish them.
``No, what I'm out there to do is to make sure that the consumer's point of view is represented. For those who want to build a business model around the American family, I'm your new best friend,'' she said.
``If you built a model around tricks, traps and fooling people, pretending to give it away at 2.9 percent financing, zero percent financing with the notion (that) you were going to get them on the other end and raise your revenues that way, I'm not your new best friend.''
By taking the job as an adviser to set up the consumer agency last September, Warren avoided a formal nomination and a potentially lengthy an contentious nomination battle in the U.S. Senate. But the question over whether she would be the CFPB's permanent chief remains open.
She offered few clues to her future, saying that she has talked to some potential candidates about it, but Obama would decide who runs the agency.
Asked if she would take the job if he offered it, she said: ''Right now, I'm doing the work I'm supposed to be doing and this is a decision for the president of the United States.''