The case for appointing Elizabeth Warren to set up the new Consumer Financial Protection Bureau (CFPB) was, at the end of the day, overwhelming. She had the original idea, she helped build political support and her own credentials have been only strengthened by her work as head of the Congressional Oversight Panel for TARP. On Friday, the president will reportedly appoint Professor Warren as an assistant to the president and special adviser to the Treasury Secretary, with the task of setting up and initially running the CFPB.
Some of Ms. Warren's supporters think this move is something of a half-measure -- they would have preferred a conventional nomination, with all the fanfare of a classic confirmation battle in the Senate. There is something to be said for that, but the interim appointment route is by far the best way forward for three reasons.
First, this form of appointment puts Elizabeth Warren to work right away -- on the issues of consumer protection that are first order both for ordinary families and for the macroeconomy. You really cannot build a sustainable economic recovery on the back of exploitative or abusive behavior by the financial sector. These issues are urgent and need resolution as soon as possible.
Second, the president finally has an adviser who understands the financial sector and who has healthy skepticism about its intentions and actions. As we documented at length in 13 Bankers, too many top policy people -- both in this administration and all its recent predecessors -- have been overly inclined to accommodate the interests of finance, particularly the big banks. In this regard, putting Ms. Warren directly into the White House with the highest possible level of access is exactly the right thing to do -- much better, for example, than making her purely a Treasury appointment.
Third, this step does not avoid a debate in the Senate -- it merely postpones it to a more advantageous moment. Presuming that Ms. Warren is nominated for a five-year term as head of the CFPB, she would go before the Senate Banking Committee with a real track record of achievement as interim head. The debate would not be about what the agency could do, but rather what it has already done -- and what it is set up to do next. These are exactly the right terms on which to bring out into the open all those who think that the financial sector only ever behaves well -- or that enforcing sensible rules on lenders would somehow bring the economy to its knees.
Barney Frank has the right overall assessment, telling the New York Times:
"I congratulate the administration on its creativity. There's no possibility she would take something like this unless she was fully empowered to do the job."
Cross-posted at The Baseline Scenario.
“Real reform starts with transparency and an adherence to the rule of law. The administration would do well to adhere to the law, rather than shoving a new economic czar down our throats without congressional involvement. Real reform would mean taking steps toward restoring sound money and getting back to the Constitution. The Constitution does not allow for favors to special interests, or handing out public money to keep private businesses afloat. The Constitution necessitates a small, impartial government that first and foremost, protects liberty, and sees all citizens as equal. It does not recognize a special banking class. The fact that measures to achieve these ends are still quashed tells me that indeed, the banks do still win in Washington.â€
-- Congressman Ron Paul (anti-corporatist)
“The truth is that this new bureau is just more of the same ineffective and damaging regulation we typically get from a crisis. Just as the FDA serves big pharmaceutical companies, not patients, and just as the SEC serves Wall Street, not investors, this agency will end up serving the banks. All regulatory agencies eventually become co-opted by the industries they regulate, and they become chiefly concerned with restricting the entry of new competitors and protecting market share for the big players. This new bureau is not likely to straighten out Wall Street, so much as it will instill a false sense of security in the public about banking and investing again.
“The appointee named to run the bureau is an Ivy League professor. By her own admission she is an academic, not a businessperson. She has very little real world business experience with the highly complex financial instruments she will oversee. The administration has done nothing to refute her characterization by some in the financial press as an anti-business, ivory tower leftist with an aversion to free market principles.
“She also admits to being told, or warned, that the big banks always win in Washington - yet she trumpeted the creation of this new agency as a win against those banks. I would caution her against declaring victory too soon.
But we all know he, and his wife, could care less about the plight of anybody not padding their pockets with money...
What has been the root of the problem with this Administration, and so many before it.
We have just been raped by the banksters, the wealthiest neocon elite, and the corportists into the Greatest Redistribution Of Wealth in History! UPWARD! TO THE WEALTHIEST FEW!
They need to be prosecuted, have their stolen Trillions clawed back, and given cold seats next to their buddy bernie for the next 150 years.
Wake Up! This is the 2nd Great Depression.
I understand the apologists for the rapists and trolls on this thread because they are either paid minions, suckling on the wealthy teet, or dreaming they can join the ranks of the rapists.
America needs one honest, intelligent, well spoken person in D.C. Then we need many more of them in a new Progressive Party. We sadly learned that Obama is just another corportist and is manipulated by the neocon wealthy elite the moment he appointed little timmy, summers, put rubin in an advisory position, and supported bernanke's reappointment.
Elizabeth for President.
Fire geithner, summers!
Audit the Fed with no restrictions and continuously.
as greenspam said, "If I've made myself too clear, you must have misunderstood me."
"Alan Blinder... noticed was "how quiet my office was, how few people came to see me". The Fed was run, he realised, not by its appointed board, but by the chairman and the barons."