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Elizabeth Warren on hot seat

By Jennifer Liberto, senior writer


WASHINGTON (CNNMoney) -- House Republicans got their first chance Wednesday to grill White House adviser Elizabeth Warren about the new Consumer Financial Protection Bureau (CFPB), taking a first step in a campaign aimed at gutting, curbing or controlling the new agency.

Appearing at her first public hearing on behalf of the bureau, Warren explained how the bureau is being established and how its top goal is making financial products easier to understand.

"We firmly believe in the importance of making prices clearer, making risks more obvious, and cutting back on the fine print and legalese that can make it impossible for families to compare a mortgage or credit card with two or three others," Warren said in her prepared testimony.

The bureau was the most popular part of the Wall Street reforms passed into law last year. But it was also the most politically controversial, barely emerging after more than a year's worth of legislative wrangling.

The bureau is an independent agency, funded by fees that banks pay to the Federal Reserve. Beginning July 21, the bureau will be operational, having the ability to regulate credit cards, mortgages and other financial products such as payday loans.

But Republican lawmakers, who've already made good on promises to pass bills to roll back health care reform and undo environmental initiatives, want to take a bite out of the consumer bureau and bring it under their control. They've already filed bills to do so.

"Many of my colleagues have concerns about a new agency with little congressional oversight," said Rep. Shelley Moore Capito, a West Virginia Republican who chairs the panel conducting the hearing. Republicans on the panel called the agency too strong and too powerful.

But Warren countered those criticisms by pointing out that the CFPB is the only agency that has a legislative cap on what it can draw in funding from the Fed. It's also the only agency whose rulings can be overturned by a two-thirds majority of banking regulators who serve on the Financial Stability Oversight Council.

"The consumer agency is not the strongest agency, we're the most constrained agency in federal government," Warren said during the hearing.

In her prepared testimony, Warren downplayed the bureau's powers to craft new rules of the road for banks, saying she doesn't envision rules as the "main focus of how the CFPB can best protect consumers."

Warren, a consumer advocate and Harvard University professor working as an adviser to both the White House and Treasury, has had more than 60 one-on-one meetings with lawmakers about the consumer bureau, she said in testimony.

President Obama hired her to be the administration's point person for setting up the consumer bureau, which has also irked Republicans. They want Obama to appoint an official director who would be subject to a Senate confirmation vote.

The hearing was one of the more hostile Warren has yet faced on Capitol Hill. Several Republicans asked Warren if she was director or the acting director of the bureau, and she answered no.

Rep. Patrick McHenry of North Carolina tried to get her to agree that her appointment as a White House adviser was controversial. And Rep. Sean Duffy of Wisconsin tried to get her to agree that the consumer bureau should be run by a five-member panel as opposed to the single director set up in the law.

"I think that Congress' decision was wise," Warren said.

After the hearing ended, House Financial Service Committee chair Rep. Spencer Bachus of Alabama announced he had introduced a bill that would replace the director position at the bureau with a five-member commission. To top of page

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