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New Commission Aims for Consumer-Friendly Financial Disclosures

(10/13/10)

The new Consumer Financial Protection Bureau, which Elizabeth Warren has been tapped to head up, will make simplifying the financial disclosure forms presented to consumers one of its top priorities. The new disclosures would reverse the format of forms currently in use which are long, overly legalistic and confusing and convert them to a short, simple, easy to understand format. Industry attorneys assigned the task of drafting the current disclosures in use, structured them to be extremely complex in language in an effort to overwhelm consumers with information and fine print to deflect potential lawsuits, providing no real benefit to the consumer. Designing clear and concise disclosures will create an ease of understanding for consumers and would be predicated on establishing a simple set of regulations and rules for lenders, reducing their cost of compliance. Eliminating outdated regulations which have proven to be too cumbersome and cost-ineffective to comply with, will be a critical part of this process. The ultimate goal of the bureau should be arming consumers with useful information to assist them with their decisions and not forcing so much regulation on the financial services industry that it is left with no choice but to roll out massive, encyclopedic disclosures.

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