Warren Goes European

In terms of drafting the rules for the Consumer Financial Protection Bureau, Elizabeth Warren has eschewed a rules based approach to regulating consumer credit, instead choosing to go with the principle based system of regulations favored by European regulators:

In her speech and in an interview earlier in the day, Warren said she hopes to take a more “principles-based approach” to regulation, rather than simply saddling companies with more of what she calls “thou shalt not” rules — which make for burdensome, costly compliance and which banks often start trying to skirt as soon as they are written

“Regulators can make more pronouncements from on high, identifying suspicious practices in the various markets and banning them. Or regulators can layer on more disclosure requirements,” Warren said in her remarks. “But neither restores customer trust.”

Rather, she said, “Let’s measure our success with simple questions” — Can customers understand a product? Do they know the risks? Can they easily figure out what it really costs?

To the degree that this will produce uncertainty for the banks, this is a good thing, because regulatory certainty has been used as a license to rape consumers.

I'm still waiting to see how Timothy "Eddie Haskell" Geithner manages to cut her legs out from under her on November 3, because it's clear that consumer protection is the last thing that he wants.