The question of who will be Barack Obama’s nominee to head the Consumer Financial Protection Bureau has now been clearly framed: either it’s going to be Elizabeth Warren, or it isn’t. That’s how Damian Paletta sees it, that’s how Simon Johnson sees it, and that’s certainly how the Progressive Change Committee sees it: they’re up to 138,485 people and counting on their petition to put Warren in charge.
This is by far the most high-profile appointment that will come out of the Dodd-Frank bill: you can hardly imagine thousands of signatures for or against Daniel Tarullo as the Fed vice-chairman in charge of regulatory issues. (Given that he literally wrote the book on such things, he’s probably a shoo-in.) As such, my feeling is that Shahien Nasiripour’s bright idea that she could simply be appointed — hired “on a contract basis”, without being nominated — is a non-starter.
And in any case it’s not obvious that such deviousness is necessary: there’s a good chance that Warren would indeed get confirmed by the Senate. She grew up a Republican in Oklahoma, and she’s been one of the toughest critics of Obama’s Treasury department. It’s all but certain that she would end up butting heads with various parts of the Administration during her tenure at the CFPB, to the detriment of the incumbents and to the quiet pleasure of the opposition. And her anti-bank rhetoric dovetails reasonably well with a lot of Tea Party complaints that banks have captured Washington.
It’s also worth noting that while her main opponent for the nomination, Michael Barr, is a much more agreeable Treasury man, he’s actually to Warren’s left on many issues. The plain-vanilla option (RIP) was actually Barr’s baby rather than Warren’s: there’s no mention of it in her original conception of the agency. Barr is also the foremost defender of the Community Reinvestment Act, which Republicans hate; he wanted the CFPB to oversee the CRA, and sees actively helping the poor and underbanked as part of the CFPB’s remit. Warren’s more conservative than that, and conceives the CFPB as a narrower consumer-protection agency.
Republicans, then, could well see more to object to in Barr than in Warren: he’s much closer to Treasury and to the current administration, and he tends to be more activist in terms of forcing banks to help the poor and unbanked, and telling them what products to offer. And of course most Senate Republicans will simply oppose Obama’s nominee on principle, no matter who it is.
My feeling is that the job should go to Warren. It wouldn’t exist were it not for her, and the CFPB has been set up to be very independent; as such, it should have an independently-minded head, rather than someone who can be trusted to fall into line behind Treasury and/or other regulators if and when there are any clashes. It’s never easy for a politician to nominate someone who they know will cause trouble for them down the road, but if anybody can do it, Obama can. Here’s hoping.