Soon after word got out that the White House appointed Elizabeth Warren to serve as special advisor and help set up the new consumer protection bureau, Twitter and Facebook erupted with shouts of excitement from personal finance and consumer experts: “Yahoo!” exclaimed Beth Kobliner, author of Get a Financial Life. “Elizabeth Warren’s appointment is a huge victory for consumers!”
Warren, a Harvard law professor who has headed the Congressional Oversight Panel, is celebrated as a force of good in the consumer world. Before taking on public roles, she was best known for her book, The Two-Income Trap: Why Middle-Class Parents are Going Broke, which explains why so many middle-class Americans feel so squeezed. She’s also not afraid to stand up for ‘the little people.’ Last year, her Congressional oversight panel criticized the Treasury Department for not doing more to help struggling families and called for greater transparency in the use of the bailout funds.
It’s not hard to understand, and embrace, the excitement over her appointment. Here are six reasons Warren’s appointment is good for consumers:
She’s a strong middle-class advocate. In an interview with U.S. News in February 2009, Warren emphasized the importance of supporting middle-class families: "The financial system can't be stabilized without stabilizing families. If families continue to choke on debt they cannot pay, the whole system will continue to falter. ... The outcome of this recession will either be a significantly strengthened middle class—which has less debt and a stronger safety net, both on its own and through new government regulation—or the middle class we once knew will disappear. [In that case,] America will move to a two-class economy—a substantial upper class that's financially secure and then a very large underclass that lives paycheck to paycheck."
She’s a celebrity. How many bureaucrats have rap videos written for them? The fact that the government’s top consumer advocate is so well-known brings much-needed attention to consumer causes and concerns. If a no-name expert filled her position, the new bureau wouldn’t get nearly so much attention.
She believes in the value of good government policies. Government policy, says Warren, is what will determine the future of America’s middle-class. Now, she’s in a position to help shape those policies. In the 2009 interview, she said helping people keep their homes and jobs should be the government’s priority: “Stopping the tide of foreclosures would help a great deal. Both because it would keep some families out of complete economic collapse, and it would let others stabilize the value of their biggest asset, their homes. It would also stop the continuing deterioration of some communities, and it would be good for jobs,” she said.
She has widespread support in the consumer world. Here’s how Carmen Wong Ulrich, television personality and author of the forthcoming The Real Cost of Living puts it: “[Warren] is our Wonder Woman. Her appointment means we--American consumers, Main Street--have a hero in Washington. She'll be our voice and champion and fill a gaping vacancy in terms of keeping our financial lives under a watchful eye, while many others have been either blind or sleeping."
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Warren’s smart and can put economic concepts in basic English. Here’s how she explained what caused the current recession to U.S. News: “This recession started years ago with declining wages and rising core expenses. Families tried to adjust by working more jobs and longer hours, depleting their savings, and taking on debt. Now, the American family is crushed by debt, and job problems will make the problem worse. ... The financial system can't be stabilized without stabilizing families. If families continue to choke on debt they cannot pay, the whole system will continue to falter.”
She’s real. A recent Washington Post profile reports that Warren grew up in a “cash-strapped” family in Oklahoma, got married as a teenager, and became a mother shortly afterwards. She slowly worked her way up in academia to her current spot as law professor at Harvard.
There are still a lot of unknowns: What will this new consumer financial bureau focus on? How will it interact with the consumers it serves? Will it successfully protect consumers from getting hurt by complex financial products? But one thing’s for sure: Warren can count on a lot of support from her fans.
Kimberly Palmer is the author of the new book Generation Earn: The Young Professional’s Guide to Spending, Investing, and Giving Back.