Divisions Emerge Among Republicans Over Elizabeth Warren
This story was updated at 11:45 p.m. ET to include mention of a Boston Globe op-ed.
A growing divide has emerged among Republicans over the possible nomination of Elizabeth Warren to head the new agency designed to protect borrowers from predatory lenders.
Leading Senate Republicans like Minority Whip Jon Kyl (Ariz.) and former Banking Committee Chairman Richard Shelby of Alabama oppose the noted consumer advocate and bailout watchdog, raising questions about her tenure atop the Congressional Oversight Panel and her past academic research into bankruptcy. But some of their colleagues have praised Warren for her work and her intelligence, fought efforts to water down the agency she may lead, and even introduced bills to give her more power to protect taxpayers.
And although Shelby and others raise the specter of Warren, a Harvard Law professor, running an agency they say is intent on choking off credit and hurting the economy in the process, two of Warren's Republican colleagues on the bailout panel said Wednesday that while they "do not share many of Professor Warren's views and opposed the creation of the [Consumer Financial Protection Bureau]" they have found her "collegial... professional [and]... quite willing to modify her views if presented with well-reasoned cogent arguments."
The two Republicans, Kenneth Troske and J. Mark McWatters -- one picked by Senate Minority Leader Mitch McConnell (Ky.), the other by House Minority Leader John Boehner (Ohio) -- added in their statement that the panel has been critical of Democrats and Republicans alike, and that "it takes courage to publicly question the decisions made by members of your own party."
In Thursday's Boston Globe, Charles Fried, a Republican and former solicitor general under Ronald Reagan who supported the Supreme Court nominations of John Roberts and Samuel Alito, writes in an op-ed that Obama should give Warren a recess appointment, according to a version of the piece available online. House Financial Services Committee Chairman Barney Frank (D-Mass.) last week told the Huffington Post the same thing, arguing that Obama should simply bypass the Senate.
"Capitalism and markets depend on the morality, honesty, and good faith of those who participate in them. Markets function best and deliver prosperity when they are honest and the law enforces that honesty; dishonesty, fraud, and official corruption are the poisons that keep markets in many parts of the world from delivering the goods," Fried, one of Warren's colleagues at Harvard Law School, writes in the Globe.
"That's where Elizabeth Warren comes in. Those who are lobbying hard against her nomination to head the Consumer Financial Protection [Bureau] are the same people who lobbied against financial reform legislation and lost. They paint her as the enemy of capitalism and free markets. Nothing could be further from the truth: She is the enemy of dishonesty, abuse, and just plain theft," writes Fried.
Republican statements of support for Warren's work aren't yea votes, of course, but they poke some gaping holes in the theory, advanced by Senate Banking Committee Chairman Christopher Dodd (D-Conn.) as recently as Tuesday, that lockstep GOP opposition would inevitably shut down a Senate attempt to appoint her.
"It's not all that clear how Chairman Dodd has been doing his math," said one consumer advocate intimately involved in the effort to get the financial reform bill through Congress.
During a Senate hearing last week with Warren and other bailout watchdogs, Sen. Chuck Grassley (R-Iowa) complimented them on their work, and said they had "brought more transparency and accountability to the activities of [the] Treasury [Department]."
"In short, you have kept Treasury honest, a critical service with so much taxpayer money at stake," Grassley added.
Last Thursday, GOP Sens. John Thune (S.D.) and Bob Corker (Tenn.) cited Warren while arguing against the Obama administration's proposed $30 billion for small banks. The stated purpose of the proposal is to ease credit for small businesses; Warren's panel said the plan "looks uncomfortably similar to TARP."
"Elizabeth Warren is a smart person," Corker said on the Senate floor. "There are things I agree with her on, and there are things I disagree with her on. But on that point, I absolutely agree."
Republicans outside the Senate have also come to Warren's defense.
Bank regulator Sheila Bair, the Republican Chair of the Federal Deposit Insurance Corporation, told Bloomberg Television earlier this month that Warren "certainly has all the qualifications and credentials for that job."
The statements of support are just the latest in a series of Republican statements praising Warren.
In March of last year, Grassley singled out Warren for her work protecting taxpayers.
"I want to especially mention Professor Warren," the Iowa Republican said last March 31. "So many times over the last decade and a half, you and I have been on opposite sides of a very important issue and we are probably still on opposite sides of that issue, but you're really boring in on this and I want to tell you that I really appreciate your work," he said in reference to her oversight activities. "And I appreciate your opposition on that other issue more because of the hard work you're doing on this."
In April 2009, Sen. Olympia Snowe (R-Maine) praised Warren and her panel's "yeoman efforts" on watching over Treasury, and introduced a bill to give her subpoena power because of the panel's difficulties in securing answers from Treasury.
Both Snowe and Grassley also voted against a provision this past May that would have gutted the new consumer agency which President Obama signed into law last week.
But Warren continues to be dogged by questions of confirmability, despite White House Press Secretary Robert Gibbs's Monday statement that Warren is "very confirmable."
Some consumer advocates suggest that the source of those questions may be attributable not to Republicans, but to Senate Democrats wary of angering their allies in the financial services industry. Lenders fear a Warren-led agency with the power to regulate consumer credit products like mortgages and credit cards because they worry she could be too aggressive in protecting consumers from dubious lending practices, cutting off key profit sources.
A vote for Warren would be seen as a vote against lenders. A vote against her would be seen as a vote against families. It's a lose-lose, one consumer advocate noted.
READ Troske's and McWatters's full statement:
"Although we do not share many of Professor Warren's views and opposed the creation of the CFPB, we have found our dealings with her to be collegial and professional. We often debate a wide variety of issues with Professor Warren and have found her quite willing to modify her views if presented with well-reasoned cogent arguments.
For example, as the Panel undertook its investigations on the 'investment' of TARP funds in GMAC and AIG, we raised a number of specific concerns with Professor Warren and the other members of the Panel. She was presented with a clear choice -- accept Treasury's tepid analysis or conduct a rigorous de novo review. She -- without hesitation -- chose the latter and the Panel produced what we believe is the definitive analysis of the GMAC and AIG misadventures. Although Treasury has not welcomed the Panel's reports on GMAC and AIG -- not to mention its continuing criticism of the Home Affordable Modification Program -- any lesser undertaking by the Panel would have run contrary to its Congressional mandate and ill-served the taxpayers who stand to lose tens of billions of dollars of TARP funded public resources.
It is important to note that the Panel has been critical of policies and decisions implemented by Democrats and Republicans alike. There is great virtue in that, because, while it is easy to question the decisions made by members of the other political party, it takes courage to publicly question the decisions made by members of your own party."
Shahien Nasiripour is the business reporter for the Huffington Post. You can send him an e-mail; bookmark his page; subscribe to his RSS feed; follow him on Twitter; friend him on Facebook; become a fan; and/or get e-mail alerts when he reports the latest news. He can be reached at 646-274-2455.