No reformers question whether Elizabeth Warren is the best candidate to head the new Consumer Financial Protection Bureau. She’s a lauded scholar, an inspiring advocate who will draw talented and dedicated reformers to the new agency and she came up with the whole idea for creating the CFPB in the first place. Nominating a dedicated reformer like Warren will send a clear signal to the entire world that the U.S. government is serious about regulating the banks that drove the global economy off a cliff. Nominating anybody else will send a clear signal that bankers still have veto power over key political appointments.
By contrast, there are no compelling arguments against appointing Warren. Four have basically been offered, and they are all so weak that it’s hard to view them as anything but bad-faith excuses to block somebody the bank lobby simply doesn’t like. There’s a perfectly rational reason for the bank lobby not to like Elizabeth Warren: she’s spent much of her career explaining how elite bankers rip off American families, and there is every reason to believe she will crack down on this behavior if she’s given the CFPB post. That’s not a knock against Warren—that’s what the CFPB director is supposed to do.
Here are the lousy objections that bankers and their apologists are voicing:
Bogus Objection #1: Elizabeth Warren is insufficiently attuned to the benefits of financial innovation.
There is simply no evidence for this claim whatsoever. Her career has been devoted to empowering the American middle class. She wants to see financial innovations, she just wants them to be good for the middle class, rather than tricks and traps designed to extract its wealth and convert it into bonuses. This is part of Warren’s political appeal. Not only is she right about policy, but her policies resonate with American families left, right and center. Find me a politician who is willing to publicly advocate for tricks, traps and big bonuses, and I’ll show you a politician who can’t get re-elected.
Bogus Objection #2: Elizabeth Warren lacks the management experience needed to run a federal agency.
This is not important, nor is it a typical standard for agency heads. As Tim Duncan of the Cambridge Winter Center for Financial Institutions Policy emphasized with me in conversation, there were plenty of Bush-appointed regulators who would have been rejected if “management experience” were a prerequisite for regulatory chiefs. When John Dugan was named Comptroller of the Currency in 2005, he had no management experience—he was a bank lobbyist and had been for more than a decade.
“Management experience” is banking industry code for “one of us.” Bankers and their congressional backers weren’t worried about Dugan’s lack of management experience, because they knew he was an industry activist who could be relied on to promote whatever banks believed to be in their own short-term self-interest, regardless of the consequences for society at large.
Just as important, agency heads are not HR reps or administrative officers, and there are plenty of qualified people who can help Warren flesh out the new agency. Those people are going to be hired by whoever ultimately ends up heading the CFPB, and pretending that Warren will be getting things up and running all by herself is more than a little bizarre. What she can do is set the tone for the new agency, and develop a culture of regulatory rigor. She’s already proven that she is capable of this—her work as Chair of the Congressional Oversight Panel for the Troubled Asset Relief Program has already changed the way Washington talks about banking and bailouts. Nobody else under consideration for the job can put that on their resume.
Bogus Objection #3: Elizabeth Warren is not ‘confirmable’
Senate Banking Committee Chairman Chris Dodd, D-Conn., made himself look very silly by suggesting this last week on the Diane Rehm show. It’s not Dodd’s job to handicap nominations, it’s his job to get them through Congress. Sabotaging an appointment before it gets started by calling it politically impossible was a rather transparent favor for the banking industry.
And today’s story by Noam Schieber in The New Republic underscores that Dodd was either recklessly shooting from the hip with that comment, or simply making things up. No Democrat is eager to buck President Barack Obama’s appointment to this agency, whoever it may be, and lawmakers from both parties are hesitant to speak out against Warren. She’s not a voice of progressives or Democrats, she’s a voice for working families. Behind the scenes, bank-friendly politicians are certainly trying to keep Warren from coming up for a vote. But when it comes time to actually vote, they aren’t going to vote against her.
Bogus Objection #4: Elizabeth Warren is a shoddy scholar
Only one person has launched this assault, because it’s so transparently false. Warren is one of the world’s foremost authorities on consumer bankruptcy law, and the authority on medical bankruptcies. Her work, in fact, created an entire realm of academic research on how and why medical bills push families over the edge. But that didn’t stop Megan McArdle from launching a sleazy, disingenuous smear campaign against Warren. Both Mike Konczal and Richard Eskow have taken down McArdle, and I don’t have much to add. McArdle gets her facts wrong, deploys specious reasoning, and published a public embarrassment for The Atlantic.
The political case for appointing Warren is even stronger than the policy case. No voter will give Obama props for bending to the bankers on this appointment. Choosing anybody other than Warren will not make Obama appear reasonable or moderate—it will make him look weak and corruptible. Warren is the natural choice to head the CFPB, which is why every Wall Street reform group has lined up behind her, and every bank lobbyist has lined up against her. Voters are eager to see a president who stands with them on the economic issues that shape their lives. Appointing Elizabeth Warren head of the CFBP is the strongest signal Obama can send demonstrating that he’s working for the middle class.