Sources disclosed to the AP that Elizabeth Warren will be named the Acting Director of the Consumer Protection Bureauby the President. This is welcome news. The politics have been contentious. Simon Johnson made the case a few days ago that the President should go this route and explains the rationale in this piece.
Elizabeth Warren’s credentials are impeccable – she came up with the original idea for the CFPB, she pushed effectively for it to become legislation, and she has proved most effective in her oversight role as chair of the Congressional Oversight Panel (COP) for the Troubled Asset Relief Program. And her manifesto for the CFPB is sensible and actually pro-business – although she naturally opposes the specific ways in which big banks mistreat people.
No doubt Republicans in the Senate would try to derail her nomination to head the CFPB as they have done with numerous other nominations over the past year and a half. Their motivation would not be her views or expertise – she has earned serious Republican respect as a result of her COP role – just part of their electoral strategy to block the president’s agenda and to undermine an agency they have consistently opposed.
The Treasury Secretary is explicitly authorized by an Act of Congress to pick an interim head for the new agency – with a view to getting it up and running immediately (in fact, what has he been waiting for?) Presumably the Senate (and the House) passed this specific measure expressly to expedite the CFPB’s work.
Professor Warren has strong political support and would get the new agency off to a great start. She would represent the Obama administration’s serious attempt to rein in financial misbehavior – at the same time as keeping the economic recovery on track. Anyone who thinks she would be bad for American families has not been paying close attention. And best of all, she is very good at explaining what she is doing and why that makes sense.
There is a lot of hard work in front of Warren. Working on the rules is a big job. Changing the culture is a bigger one. There are almost always ways around rules and new products, schemes, and half-truths backed by a legion of lawyers can keep profiteers a step in front of regulators. So Warren needs to attack the heart of the problem, the attitudes and incentives that make this a game in which winning pays big and losing is just a small temporary setback. Banks will play that game all day long.