The initial apoplectic furor of opponents of the new consumer financial regulator - the Bureau of Consumer Financial Protection - at President Obama's appointment of Elizabeth Warren to serve as an advisor to the president whose job will be to get the bureau running has shifted gears. Naysayers (those opposed to a consumer regulator from the start) are now spinning Warren's appointment as a win, arguing that the advisor position somehow bars her from being nominated for the 5-year director's post down the road.
That was the push that Mark Calabria of the Cato Institute made when we discussed the Bureau yesterday on DC's Fox 5 News. If he were right, opponents of reform would be justified in claiming a victory. But I think the quick shift in talking points is mostly an effort by Warren opponents to create their own reality. It didn't work when the Bureau was being debated in Congress and Wall Street allies tried to declare it dead on arrival in the Senate. The agency emerged stronger than most proponents dared hope. So don't expect the reality-shifting rhetoric to succeed here either.
There has been no indication, from Warren, President Obama, or even Treasury Secretary Geithner, that Warren cannot eventually be nominated for the director post. By all accounts, the special assistant position was created not to avoid an eventual confirmation battle (a battle we believe the president and Warren could win, and come out stronger for having taken a strong stand on behalf of consumers) but to put Warren on the job now and get this critical consumer protection office off the ground.
Americans are struggling, they're swimming in debt, consumer bankruptcies are up from 2009 to 1 million through August. Consumers would have paid the price if the critical work of this agency was stalled in a drawn-out and politicized confirmation battle. Republicans have made clear that they would hold up this nomination as they've held up countless others. The public needs this agency now, and Elizabeth Warren is the right person to get it off the ground.
Critically, she'll answer to the President, not just Treasury Secretary
Geithner, ensuring that her assessment of the priorities of a
strong, reactive consumer protection agency won't be rejected out of
hand if banker-friendly Geithner disagrees.
That said, she should be nominated as the Bureau's director once it's up and running next summer. Elizabeth Warren has a deep understanding of consumer financial products
and has made a career-long commitment to consumer protection. Who better than the woman who first came up with the idea of a consumer financial protection agency, and will have spent a year doing the dirty work of starting a new bureau from scratch, to be the consumer champion at its helm?
It would be a nasty bait-and-switch if this appointment were nothing more than a political maneuver to appease the president's progressive base before the election, but assure bankers that the new consumer watchdog won't have a real bulldog at the helm. Here's hoping that Obama doesn't want to be tainted with that image in the lead-up to the 2012 elections.