Elizabeth Warren © Susan Walsh-AP

Related topics: banking, credit cards, politics, customer service, Liz Weston

When I asked Elizabeth Warren last week how she'd like to be remembered, I expected her to cite one or more of her professional accomplishments. Perhaps:

Her groundbreaking research as a Harvard law professor with the Consumer Bankruptcy Project, which exposed the fragility of many American families' finances, or her best-selling books that sprang from that research, "The Two-Income Trap: Why Middle-Class Mothers and Fathers are Going Broke" and "All Your Worth: The Ultimate Lifetime Money Plan."

Or her role as head of the Congressional Oversight Panel, which investigated the bank bailout, criticized how rescue funds were used and suggested ending the notion of "too big to fail" by liquidating insolvent banks.

Or her current job putting together the fledging Consumer Financial Protection Bureau, which she championed and which she believes, had it existed earlier, could have prevented the financial crisis by blunting the growth of subprime mortgage lending to unsophisticated borrowers.

Liz Weston

Liz Weston

But no. After first asking for a rain check to consider my question, the former Sunday school teacher blurted out that what she'd really like to be known for is being "a good granny" to her three young grandchildren, whom she was flying to see in California the next day.

Warren, 61, has a way of confounding expectations. Bankers so loathed her for her criticism of their industry that naming Warren as the director of the consumer protection bureau was considered politically untenable last year. President Barack Obama instead hired her as a special assistant to Treasury Secretary Tim Geithner, which didn't require congressional confirmation.

But recently, in what The Wall Street Journal and others have called a "charm offensive," Warren has been reassuring groups of bankers that what she wants is more transparency, not necessarily more regulation, which the Oklahoma native likens to fences on a prairie that lawyers can easily dodge around.

She has also been soliciting the opinions of credit card companies' CEOs. In our conversation, she cited Nigel Morris, a co-founder of Capital One, as someone who "thoughtfully talks about how the thing works, how decisions are made."

"It's been people like Nigel, who are on the inside," Warren said, "who've helped me understand the role the regulation should play to keep a market free, to make a market competitive."

Warren's corner office at the Treasury Building looks out on two of D.C.'s best-known icons: She can see the Capitol from one window and the Washington Monument from another. These are visual reminders of just how far she's come, from studying the lives of financially desperate families to wrestling with some of the most financially powerful special interests.

Competition is not an excuse for deception

It remains to be seen whether Warren can blunt the antipathy that bankers feel toward her in time to be named the head of the bureau by its July 21 launch date. Meanwhile, House Republicans still are looking for ways to gut the agency's funding. They're convinced that an agency devoted to protecting consumers from unsafe and deceptive financial products will squash innovation and kill jobs.

Warren, obviously, doesn't see it that way. Rather than tying lenders up in regulatory vines that prevent them from competing, she wants to see clearer disclosure and less fine print, which she famously likens to shrubbery in which the "muggers" of hidden fees and other anti-consumer "gotchas" can hide.

"A competitive market is one where the competition is not about how many things you can hide in the fine print," she said. "A competitive market is one where the consumer sees the differences, and so people are competing to attract the consumer. That's the whole difference."

The role of the bureau, Warren says, will be "to ask the questions, gather the data and to monitor the markets to make sure they work for consumers."

The credit card market, for example, has always been competitive, she said -- but not competitive in a way that necessarily benefited consumers. Instead, card companies competed for how much revenue they could produce.

"And the smartest way to do that had over time become to pretend to sell at a low price at the front end and then sock people hard on the back end with fees and interest rate repricing," Warren said. "The difficulty, of course, with doing that is that the consumer can't ask two basic questions: 'Can I really afford this?' and 'Could I get it somewhere else cheaper?'"

The Credit Card Accountability Responsibility and Disclosure Act, which went into effect a year ago, banned some of the worst practices:

  • Rate hikes for no reason.
  • Universal default, which allowed card issuers to raise your rates if you fell behind with another lender.
  • Repeated approval of over-limit transactions in order to charge multiple fees.
  • Ever-moving due dates and due times, which meant you could be slapped with a late fee if your payment didn't reach the card's processing company by a certain time of day.

Some have claimed that the Credit CARD Act caused card issuers to slash credit limits, raise interest rates and precipitously close accounts. The reality is more nuanced. Card companies began reducing credit limits, closing accounts and raising rates when the credit crunch began in late 2007, well before the act was passed. The recession accelerated those trends.

The Credit CARD Act definitely cut into issuers' revenue. According to a report by the Office of the Comptroller of the Currency, card companies' income from over-limit fees virtually disappeared in the year after the law went into effect and issuers were required to get consumers' consent before approving over-limit transactions. Late-fee revenue dropped in half after issuers were required to fix due dates and due times were eliminated.

The issuers knew their revenue was in peril, of course, and that interest rate hikes would be much tougher under the law, so they raised rates on many accounts before the law kicked in.

But Warren said the comptroller study, and the bureau's analysis of data supplied by the largest credit card issuers, show that the Credit CARD Act was still beneficial to consumers.

"The data indicates that the overall cost of credit cards did not go up," Warren said. "The pricing is just more visible upfront."

Hacking through the gobbledygook

But there is still work to be done, thanks to that fine-print shrubbery that Warren wants to chop down.

"Today it is not possible to look at four credit card agreements and tell which one is cheaper," Warren said. "Part of the reason is that agreements are still too long and complicated."

The same is even more true of mortgage agreements. Warren said that the agencies responsible for two forms provided to consumers have been in negotiations to combine the forms -- for the past 15 years. Instead "the forms have been revised to become longer and more complicated," she said.

Cutting through the bureaucracy is something the nascent bureau can do, since it will take over consumer protection responsibilities that are currently scattered among seven agencies.

That is, of course, exactly what scares the banks, which are used to ineffective, understaffed consumer protection departments hidden in the agencies' backwaters.

Equally scary is that the bureau may be headed by a plain-spoken, personable "granny" who understands exactly how tough it is for consumers today and who wants financial products that can help them rather than make things worse.

For her part, Warren seems to relish the challenge.

"I have so much fun doing this," she said. "I get up every morning looking forward to this."

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Liz Weston is the Web's most-read personal-finance writer. She is the author of several books, most recently "The 10 Commandments of Money: Survive and Thrive in the New Economy" (find it on Bing). Weston's award-winning columns appear every Monday and Thursday, exclusively on MSN Money. Join the conversation and send in your financial questions on Liz Weston's Facebook fan page.