Network News

X My Profile
View More Activity

The case against Elizabeth Warren

warrengeithner.JPG

My colleague Neil Irwin has a post this morning throwing some cold water on the heated advocacy for Elizabeth Warren to lead the Consumer Financial Protection Bureau. I'd group the objections into two buckets -- innovation and administration -- and both are fair.

Irwin's first concern is that an overzealous consumer regulator could, in his or her enthusiasm for ridding the market of trickery, also rid it of products that make credit available to the working class. Does keeping a small number of people from getting into serious debt justify keeping a large number of people from accessing credit instruments they could use effectively?

It's a legitimate concern, and only Warren can answer it. Of course, it's possible she's already explained the test she would apply to decide whether consumer financial instruments were legitimate, and I just haven't seen the speech.

Irwin's second concern actually worries me less. It's hard to predict who will and won't be good at building an agency. It's a task that's not quite like any other, and fairly few people have much of a track record at it. It's also not a task that's solely dependent on the director. Deputy directors and other high-level managers have a lot of influence over hiring and administering and creating a workplace culture. But only the person at the top can set the agency's vision and sensibility and appeal.

The question, to me, is whether Warren is the only person who can do that. I've made the argument that she will have a unique appeal to the sort of talented young lawyers and consumer advocates that we want working in the agency. She's also brilliant at working the media and acting as a public advocate, and she's clearly got an ambitious and restless vision for what this institution can become. But the other finalists aren't slouches.

Michael Barr is a Treasury official who deserves as much credit -- or, depending on your perspective -- bears as much blame -- as anyone in the country for shepherding the financial regulation bill to passage. He's good at working with legislators and the media, has excellent internal relationships that will be important for guaranteeing the agency's autonomy, and has the intellectual heft that his previous life as a law professor at Michigan and a Brookings scholar would suggest.

The third candidate, Gene Kimmelman, is the Justice Department's chief counsel for competition policy and intergovernmental relations, and was formerly a vice president at the Consumer's Union. The National Journal called him "one of the best known consumer advocates in Washington." He knows the field well, and probably already knows everyone he'd like to see working at the agency.

Moreover, the Consumer Financial Protection Bureau is a much-hyped agency being built amidst a grim job market. It won't have trouble recruiting, even without Warren's star power at the top.

So in the end analysis, the question is whether you think Warren's unique prominence and pedigree as the person who created the idea for this agency and put the issues beneath it on the map is worth more than the managerial experience and administrative relationships Barr and Kimmelman have. I come down on Warren's side, but her nomination has achieved a level of symbolism on the left that's out of proportion to the merits of the different candidates.

Photo credit: Susan Walsh/AP.

By Ezra Klein  |  July 20, 2010; 11:40 AM ET
Categories:  Financial Regulation  
Save & Share:  Send E-mail   Facebook   Twitter   Digg   Yahoo Buzz   Del.icio.us   StumbleUpon   Technorati   Google Buzz   Previous: Research desk is open
Next: Lunch break

Comments

I'd still like Warren. Kimmelman sounds ok. Barr sounds like the least good candidate.

If she doesn't get it, how about running her for Senate against Scott Brown?

Posted by: Mimikatz | July 20, 2010 11:47 AM | Report abuse

I would have thought her unbelievably dishonest "medical bankrupcty" study would be reason enough to disqualify her.

Posted by: ab_13 | July 20, 2010 11:57 AM | Report abuse

Irwin's point is a good one. Payday lenders seem evil at first glance, but then when you are short on money and need to get your car fixed to keep going to work, it makes a lot of sense to have high interest / high risk debt available. Even junk bonds help both parties, despite higher interest rates, why not make these sort of things available to people?

Posted by: staticvars | July 20, 2010 12:03 PM | Report abuse

It's not so much what it says if Warren gets picked, as what it will say if Warren doesn't get picked. No candidate is perfect. Warren will have her problems, especially if she tries to change the status quo with consumer protection as I'd hope she would. But the fact remains, this is a situation where one candidate is about ideally suited for the position as she can be. It's like nominating Bernanke to the Fed before the collapse because he was the leading expert on how to prevent depressions. Warren is pretty much the leading expert in consumer protection. . . .except that she also doesn't hew to the Geithner/Summers/Bernanke establishment line--chastise Wall Street, but don't really do anything to really hurt it.

If Obama does not nominate her it will say a great deal about his mindset during these times--an abiding faith in the establishment even while it consistently fails to really address the crucial problems of our times.

Posted by: dhs08 | July 20, 2010 12:10 PM | Report abuse

Warren's merit, those are clearly debatable. The real worry I have is the way Left is inching for a 'fight' here. The way Huffington Post is following this candidacy is scary and it reminds Public Option fight of the last year. What that fight did and this fight is going to do is:
- make Obama WH more unpopular with Left and
- divide Democratic base more.

Sen. Dodd was trying to 'soft land' this issue, I believe. This is the reason why Obama and WH get frustrated with this base.

This is a nasty fight and for Left to talk about a candidate so forcefully is practically usurping prerogative of President & Fed to decide these appointments.

How different this fight of Left is than those 'gory' Banker & Oil Industry Lobbyists? Not from money side, but the ugly politics they are doing. Agreed that is what grass root politics is. But the ability of Left to 'spoil' the basic strategy and bring down the whole structure as a result of this 'fighting cock culture' is amazing....

Posted by: umesh409 | July 20, 2010 12:11 PM | Report abuse

For better or worse, the first person to head the agency is going to spend a considerable amount of time defending the agency -- not its regulations, but the agency itself and the legislation which created it.

The Obama/Pelosi Regime likes to test limits -- much like a childish brat. Those who employ the new agency (that is, voters) might best be served by a more gray-haired, forthright leader without the left-leaning baggage Elizabeth Warren brings to the table.

Posted by: rmgregory | July 20, 2010 12:24 PM | Report abuse

>>Irwin's first concern is that an overzealous consumer regulator could, in his or her enthusiasm for ridding the market of trickery, also rid it of products that make credit available to the working class. Does keeping a small number of people from getting into serious debt justify keeping a large number of people from accessing credit instruments they could use effectively?>>

That's always an argument against regulation. Safer cars are more expensive, so poor people won't be able to drive. Food tested for safety is more expensive, so many won't be able to eat.

Better disclosure or other means might solve the problem without having to ban specific products. There's no good reason to believe Elizabeth Warren will do anything crazy.

Posted by: fuse | July 20, 2010 12:28 PM | Report abuse

I doubt Warren would get it. The far left has gone absolutely crazy, and for as loudly as the far right cries about Obama being a communist or whatever, President Obama has been consistently moderate with regard to balancing populist outcry with establishment methods. He ain't gonna tap a radical.

Posted by: Meepo | July 20, 2010 1:02 PM | Report abuse

Elizabeth Warren represents a breath of fresh air for the Middle Class. She is the only person who has tapped in politically to the plight of the Middle Class.

Today on CSPAN, the public of all political stripes was virtually unanimous in her support. Any politician worth their salt will mine the same political vein she has exposed.

The last individual in my lifetime who reminds me of Warren is Senator Harry Truman when he put the military manufacturers through the wringer on behalf of our GI's during WWII.

As I recall his famous quote was

"I don't give them Hell, I just tell them the truth and they think its Hell!"

Posted by: microsrfr | July 20, 2010 1:09 PM | Report abuse

@RMG:The Obama/Pelosi Regime likes to test limits -- much like a childish brat.

nice gratituitous and untrue slam on top dems. In fact, the party of NO, are the ones acting like spoiled brats, attempting to stop all progress on legislation for the last 1.5 years. This is akin to them taking their ball and going home or holding their breath until they turn blue. The dems have played Charlie Brown to the repubs Lucy and the football on compromise legislation so many times, its painful to see them continue to try and compromise with the southern rump party.

the left-leaning baggage Elizabeth Warren brings to the table.

What exactly is this baggage? The desire to simplify credit card and loan applications so that people can understand them?

Insisting that outrageous interest rates, which are agressively marketed to the poorest people in our society, have some upper limit?

@ Meepo: What makes you think that Warren is a radical?

Posted by: srw3 | July 20, 2010 1:11 PM | Report abuse

Warren isn't a tool of the credit industry. She cares about my balance, not big banking. So I hope she get's in. The usurer's need cast out of the temple.

Posted by: spacekook | July 20, 2010 1:16 PM | Report abuse

Elizabeth Warren's nomination isn't about her, it's about Geithner, Summers, Bernancke, et al. Can Warren do the job ... of course. If she doesn't get the job the message is clear, the Wall Street establishment is clearly and totally in charge of Treasury, the Fed, and every aspect of federal financial regulation.

Posted by: billw6 | July 20, 2010 1:22 PM | Report abuse

Appoint her to the job with some good deputies to fill in the gaps in her portfolio.

Posted by: tuber | July 20, 2010 1:27 PM | Report abuse

I totally agree with microsrfr...Ms. Warren comes with the kind of integrity that many of those opposing her probably envy. Those who are so concerned about poor people not getting credit, won't be there to get them out of devastating debtload which many of them tend to incur!
In the meantime, those payday loaners and refund anticipation loaners make huge wealth for themselves without shame. Those people need to be protected more and Elizabeth Warren could do it !!

Posted by: truthhurts9 | July 20, 2010 1:35 PM | Report abuse

the fear the banks have in her is she will have cover from the people which they lack ... to include the President.
visualize a Verizon commercial with her at the head ...
Can you hear me now ?
Obama rode the wave of Populism .. and now he has a contender ...
Powerful people dont like outsiders with cover from teh people.

Posted by: AmericanSpirit | July 20, 2010 1:42 PM | Report abuse

She's doomed because DFHs and people like Simon Johnson endorse her.

Why worry about consumers when you don't even care if they have jobs?

Posted by: tggault | July 20, 2010 1:46 PM | Report abuse

The concern that an "overzealous consumer regulator could, in his or her enthusiasm for ridding the market of trickery, also rid it of products that make credit available to the working class" has no basis in reality.

Just stop for a sec and consider the real world:

1. The middle class will always demand credit. They have no choice in the matter. Credit scoring is used to "qualify" people for everything from employment to insurance to cell phones. The only way to establish a credit score is to borrow. As long as a credit score is required to obtain much that life requires, the demand for credit is here to stay, and so are lenders. No amount of consumer protection will stop the flow of credit.

2. Lenders and their lobbyists (see Ed Yingling) ALWAYS threaten that ANY regulation or even the suggestion of regulation would "force" lenders to reduce lending. They've been arguing this since the depression. it's still a fairy tale. Americans are as deeply indebted as ever.

3. Ezra's question "Does keeping a small number of people from getting into serious debt justify keeping a large number of people from accessing credit instruments they could use effectively?" just doesn't comport with reality. The reason this consumer protection agency is necessary in the first place is that there are HUGE numbers of people with serious debt problems. The lenders' business models depend on it. They don't profit from timely payments or loan payoffs. They profit by trapping their customers on an endless treadmill of payments. Restricting a lender's ability to rip people off isn't about protecting the few at the expense of the many . . . it's about protecting everyone from being swindled.

There are two things that could go a long way to solving these problems. One is better wages so borrowing becomes less necessary. The second, which these reforms failed to address, is to restrict the use of credit scoring to lending only. As long as credit scoring is allowed to be used as an all-purpose character reference, consumers have no choice but to borrow. As long as this is the case, they deserve the strongest protections.

Posted by: zaphod888 | July 20, 2010 1:55 PM | Report abuse

The first concern Irwin cites is exactly the same argument the payday lenders use. They wouldn't last a month if their only income was from helping folks get over a bad week. They count on repeat business by sucking their customers into an ever deepening cycle of debt with immoral interest rates. Nobody loses their car because they were a week late on their payment.

If you need an example of a newly created agency director who was a government insider and failed miserably, I suggest you read WaPo's current national security series - which everyone should be reading anyway.

Posted by: adagio847 | July 20, 2010 1:58 PM | Report abuse

Well, and let's not forget that the business model of the banks for decades was predicated on a great many people making ignorant and self-defeating choices when it came to finances. Once (If) they understand, profits go down.

Posted by: Mimikatz | July 20, 2010 2:00 PM | Report abuse

@zaphod888 : well put, especially the point about credit scores being used as a proxy for character references for jobs, etc.

Personally I am all for the repubs defending payday lenders and their predatory practices. They are the new version of the company store, where you need to go to survive the week, but ultimately end up owing more and more as time goes on.

Payday loans are the symptom of poverty not its cure.

Posted by: srw3 | July 20, 2010 2:16 PM | Report abuse

"Does keeping a small number of people from getting into serious debt justify keeping a large number of people from accessing credit instruments they could use effectively?"

His concerns are never going to happens. If we're talking about payday loans, then the only way to get rid of them is to ban them and I don't see how Warren would do that. (Not that it would matter if she did.) Mortgages are another case: the expense of the mortgage is in how high the interest rate goes, so Irwin's example is arguing that Warren will cause interest rates to sky rocket. And no one has gotten rid of credit cards yet.

The entire point is just silly, unless you think "financial innovation" means ATM machines, which it doesn't. Hell, Volcker said the only financial innovation of the last thirty years that did anything was ATM machines.

The anti-Warren push is nothing more than the bank lobbyist trying to maximize their profits by keeping unfriendly regulators out of the loop.

max
['I can't believe you fell for it, Ezra.']

Posted by: theinfinitiveofgo | July 20, 2010 2:16 PM | Report abuse

So Ezra what were your Journolist posts regarding covering up the Wright issue and calling conservatives racist?

The WaPo deserves a nutty clown like yourself.

So what do you call the new listserv?

Posted by: Cryos | July 20, 2010 2:21 PM | Report abuse

Obama sent his favorite poodle (Ezra Klein, who supports every single bill Obama supports) to lower expectations about Warren.

Posted by: kingsbridge77 | July 20, 2010 2:27 PM | Report abuse

Email note sent to President Obama:

Our country needs someone with the integrity of Elizabeth Warren to head up the new consumer protection agency. This woman faces facts, and she doesn’t hesitate to share them with the public. Many people who don’t realize that now will become enlightened when her forecast of another dip in the recession is borne out.

She provides a refreshing contrast to the glib Wall Street jargon that we get from Timothy Geithner. He, Summers, and Bernanke are destroying your credibility with those who elected you. The longer you rely on that trio, the more you set yourself up to become the next Herbert Hoover. Things have progressed to the point that the only way to avoid that fate is to start acting like the next FDR. To do that, you will need to surround yourself with people like Warren rather than those you have now.

Thank you for considering this input.

Posted by: rdayers | July 20, 2010 2:37 PM | Report abuse

Considering the gray nature of FinReg.. this is a very important job.

Posted by: newbeeboy | July 20, 2010 2:50 PM | Report abuse

I no longer buy into the “what if innovation is stifled” argument.

Too much of what passes for financial innovation leads to financial instability, and the losers in most cases are the U.S. economy and ordinary folks, not “innovative” financiers.

Genuine innovation – the kind that provides long-lasting and widespread benefits to society, such as the new products and services delivered by technology companies - is rare in finance. Here, I agree with Paul Volker: the last valuable new product in finance was the A.T.M.


Posted by: shrewyou | July 20, 2010 3:09 PM | Report abuse

There has been corruption, malfeasance and a monumental klepocracy in the national government and Elizabeth Warren is in some small way unacceptable! She is one of the few who has been speaking effectively on behalf of all Americans.

News ought to be about reality, economic as well as injustice in our society. Instead we get in the news only tiny snippets of reality.

A classic example is the BP oil "spew", which might be a precursor to the destruction the oceans which is not mentioned in the news, as if this not possible. The earth ought to be considered precious, instead it is something to be worked over for profit. We need to embrace "enlightened capitalism" to preserve our planet and ourselves!

Posted by: Joe535 | July 20, 2010 3:14 PM | Report abuse

Gee WaPo, we're still waiting for that story on the Justice Department's handling of the Black Panther voter intimidation case. What gives? Oh yeah, you might have to bang on someone in the Oboob administration and of course you aren't going to do that, are you?

Posted by: flintston | July 20, 2010 3:42 PM | Report abuse

There was a lot of predatory behavior throughout Wall Street and the Banks and the Mortgage lenders. And the only solution I see is to confirm Elizabeth Warren instead of increasing the size of SEC. Because the SEC is just as sleazy as Wall Street. I REALLY would like to see Americans avoid Wall Street all together.

Middle America can create their own 401K's in other forms instead of through Wall Street. We know the debt-bond market is the primary monster. But there is also a lot of flagrant fraud in the equity-stock market that makes it just as unpredicatable for Middle America on Main Street. Wall Street has lost all moral bearings and has become serial thieves.

The Middle Class should remove all their money from Wall Street.

Put your money in local FDIC insured credit unions, and boycot
Wall Street predators. Try other ways to invest in retirement. Middle Class America should break the back of Wall Street.
Like Wall Street has broken the back of the American Middle Class.
These are times when retribution is necessary.

The SEC did not penalize Goldman Sachs...The Pocket Lint Settlement
was equivalent to 15 days of profits that Goldman Sachs regularly brings in.

The Sec has been incompetent and worthless for decades now. No way No more enlarging the civil service with their low work ethic...no more White Collar Welfare...the Civil Service is gargantuam obese already...and is 85% worthless. The SEC settlement with Goldman Sachs was a travesty... a pocket lint settlement amounting to only 15 days of G-Sachs profits...while the Middle Class will suffer 15 years due to the predation of Wall Street. No More enlarging of the Civil Service. The Middle Class needs to pull all of their money out of Wall Street and put it into small local FDIC insured credit unions. The Middle Class needs to break the back of Wall Street. We need Elizabeth Warren only. Not 800 SEC pathetic sleazy civil welfare recipients on the federal dole.

Posted by: ganttbarb | July 20, 2010 3:57 PM | Report abuse

Step 1, develop a strawman: “Concern is that an overzealous consumer regulator could, in his or her enthusiasm for ridding the market of trickery, also rid it of products that make credit available to the working class.”
Step 2, argue against it: “Does keeping a small number of people from getting into serious debt justify keeping a large number of people from accessing credit instruments they could use effectively?”

Typical BS tactic made famous by the BS experts at Faux News. Sorry to see it used by Mr Klein. Providing oversight and clarity to ALL financial products can only help. There is absolutely no reason for the overly confusing products designed by Harvard Law School lawyers and MIT PHDs except to fool investors into buying those products without knowing the full cost (fees). Insuring the consumer knows all the terms of the deal does not inhibit product availability. It just insures they are fairly priced.

Posted by: GabsDaD | July 20, 2010 4:02 PM | Report abuse

This decision is easy. In a 2004 Frontline episode on PBS, the Harvard Law professor Elizabeth Warren claimed that she was unable to comprehend a credit card contract. I'm no lawyer, and I understand every word of mine. The fact is that she did not WANT to understand it because she had already concluded credit card companies were ripping customers off. In 25 years of having numerous credit cards I didn't have a single complaint which the banks did not resolve to my satisfaction. The fact is that the fees were to protect banks from

Michael Barr is the joker who, since the 1990s, has been pushing the "affordable housing"

Posted by: rmmiller44 | July 20, 2010 5:06 PM | Report abuse

Elizabeth Warren represents the protection of the consumer a user of financial services in this country.

The financial services in this country are controlled by the wealthy and the powerful who have clearly demonstrated their ability to plunder and pillage the American economy in their quest for absolute power and financial gain.

In this decade the Bankers has spent some 1.3 billion dollars by their own admission
with the Congress to protect themselves from any reprisal from the consumer in
their use of unethical methods to attain global financial domination.

The Congress who is financially endowed by the Bankers has sold their legislative gifts so to speak are therefore complicit in this financial meltdown that will be felt for decades.

I believe that the Office of Thrift Supervision a federal bank regulator said it best on December 16,2006 “ That there are No Federal Consumer Banking Regulations”

In retrospect, Ms Warren has answered that OTS statement with her proposal of the Consumer Financial Protection Agency.

Congress ingratiated themselves with the Bankers and sold their access to the Congress to the highest bidder.

Conversely Elizabeth Warren therefore must represent the majority of the American people which the Congress has abandoned.


What makes Elizabeth Warren so dangerous to the Bankers and the Congress is that she cannot be bought. She is not for sale.

Accordingly Elizabeth Warren is the right person with the right mind set and the right credentials to protect those who have been financially brutalized for decades by the powerful Bankers and Politicians that have ignored the principals and values that this country was founded.

Michael LittleBig
Foreclosure victim of the Goldberg’s AmTrust Bank that was seized and sold by the FDIC on 12-4-2009 in Cleveland Ohio

Posted by: MichaelLittleBig | July 20, 2010 5:15 PM | Report abuse

This decision is easy. In a 2004 Frontline episode on PBS, the Harvard Law professor Elizabeth Warren claimed that she was unable to comprehend a credit card contract. I'm no lawyer, and I understand every word of mine. The fact is that she did not WANT to understand it because she had already concluded credit card companies were ripping customers off. In 25 years of having numerous credit cards, I haven't had a single complaint which the banks did not resolve to my satisfaction. The fact is that the various fees were to protect banks from losers who could not manage their credit and did not understand the products they were putting their signatures on. We let these people vote?!

Michael Barr is the joker professor who, since the 1990s, has been pushing the "affordable" mortgage products that precipitated this crisis. Before, during, and after the crisis he lectured Congress on the need for more government subsidies of housing which created moral hazard, inefficiently misdirected resources, and caused runaway expectations of house price growth.

Kimmelman wins by being the least stupid person under consideration. He's also the only one with any real management skills.

Posted by: rmmiller44 | July 20, 2010 5:16 PM | Report abuse

It's interesting how quickly some people put on a concern for the 'working class' when their best-qualified defenders actually get a shot at a little power. The idea that Warren's leadership of the consumer agency would somehow stifle credit to working people is not only absurd, it's insulting to the impressive work she's done and the stand she's taken in the face of a political establishment that wants nothing more than to tweak a pretty horrible status quo. It's sad to see Ezra buy into this, with however many reservations he makes about doing it. And if defending people like Elizabeth Warren from people like Timothy Geitner is a project of this shadowy, unreasonable 'Left', then count me a proud unreasonable leftist.

Posted by: andrewbaron78 | July 20, 2010 5:21 PM | Report abuse

What's the evidence that consumer protection will reduce the availability of credit to those who can afford it? Economic theory won't cut it. Economic theory said the markets would take care of subprime mortgages and over-leveraging by banks. Yeah, right!

All this concern about reduced availability of credit is a smokescreen for lost profits from loan sharking.

Posted by: Garak | July 20, 2010 5:25 PM | Report abuse

"There was a lot of predatory behavior throughout Wall Street and the Banks and the Mortgage lenders. And the only solution I see is to confirm Elizabeth Warren instead of increasing the size of SEC."

The only solution. What about...

"The Middle Class should remove all their money from Wall Street.

Put your money in local FDIC insured credit unions, and boycot
Wall Street predators. Try other ways to invest in retirement. Middle Class America should break the back of Wall Street.
Like Wall Street has broken the back of the American Middle Class."

Other solution found! If you don't like Wall Street banks, don't give them your money. Tell your representatives not to vote for bailouts, and if they do, vote them out.

"What's the evidence that consumer protection will reduce the availability of credit to those who can afford it?"

It's pretty obvious - if revenues from providing credit are lower, particularly due to caps on fees and interest rates banks will reduce the availability of credit to those with the weakest credit. Some of those with the weakest credit will probably blow themselves up with it (although arguably banks aren't helped all that much by those in default). Some of those would have been responsible borrowers and would have used it to make themselves better off.

In any case, if you want to turn off the spigot of credit, limited purpose banking / narrow banking is your best bet. Otherwise expect the banks to continually create credit with its periodic blowups, regardless of whether or not you create a consumer protection agency and staff it with superstars.

Posted by: justin84 | July 20, 2010 7:26 PM | Report abuse

STEAL-O-CRATS (D) LOVE LYING


" .. I would have thought her unbelievably dishonest "medical bankrupcty" study would be reason enough to disqualify her .. "

And worse: she got caught, lying.

Payback will be a 'b,' STEAL-O-CRATS (D).

Posted by: russpoter | July 20, 2010 9:38 PM | Report abuse

HOPE 'KNOW-IT-ALL' WARREN GET CHOSEN


Those who are not STEALING (D) or LYING (D) will do to her, what should have been done to Mr. Berwick (Socialist).

Bring it, Barry. It will be brutal.

Posted by: russpoter | July 20, 2010 9:43 PM | Report abuse

How depressing that the banking lobbyist's standard objection to ANY regulation -- it will limit access to credit -- becomes the cornerstone of this earnest piece by Ezra Klein. (Elizabeth Warren had the temerity to point out that the American taxpayer handed hundreds of billions to the big banks for the express purpose of maintaining access to credit -- and the big banks stopped lending.)

I've not heard any speech or read any transcripts or books by Ms. Warren that advocates anything but full disclosure. What will be banned is not particular products -- but products sold without proper information on the terms of the loan.

So what the industry is saying when they say that Ms. Warren's brand of regulation will eliminate "access to credit" -- consumers would never buy the crap we've been selling if they knew what it was really about.

It's even more depressing that a commenter would ever refer to Elizabeth Warren as a "radical". Who is "mainstream" if she is a "radical"?

Posted by: lorelai | July 21, 2010 12:07 AM | Report abuse

I still believe that EW would be the one you want to symbolize the honesty and sincerity so necessary to this new agency. As to administration, DC is rife with capable administrators. As to robbing the lower and middle classes of valid credit choices, that is strictly a red herring to anyone who knows Liz. That's not what she wants. She wants clarity, fairness and transparency for those applying for and receiving credit. It's simple. She is not anxious to penalize banks or other financial institutions involved in consumer credit, knowing full well that they are vital parts of the American economic environment. What wouldn't happen is that she would not relent in her determination to protect consumers from deceitful financial preditors. Simple. Case closed. Time to pick her for endless valid reasons, including the future of BHO's Presidency.

Posted by: Bumpmeister | July 21, 2010 8:50 AM | Report abuse

The concerns about the appointment of the Administrator for the Consumer Financial Protection Bureau arise because of the bill that is likely to become law delegates too much authority to the Bureau. To maintain the rule of law, the requirements in the law should be clearly defined. Authority granted to the executive branch should also be clearly defined with clearly defined limitations. When broad discretion is given to the executive branch, the legislation undermines the rule of law and public policy is established by the rule of men (people). Experience shows that over time, the rule of men fails to produce the intended results.

One need only look at the Glass-Steagall Act (commercial banks and investment banks must be separate). For 60 years, this requirement prevented banks from becoming "too big to fail" without an army of bureaucrats. Responding to pressure from the larger banks, Congress repealed the requirement in the late 1990s. Result: some of the very banks that lobbied for repeal were among those that were bailed out. The rule of men (the bureaucrats) were helpless. Yet, restoration of Glass-Steagall wasn't even offered as an amendment to the 2300+ page bill.

We now appear to be making the same misstate with the Consumer Financial Protection Bureau. Consider Mr. Irwin's statement, "First is whether their ideology would lead them toward decisions that are good public policy." Good policy should be established in the law (rule of law), not by the burearcrats. This is a legitimate concern because public policy is not established in the law.

The ironic part is that Professor Warren clearly pointed out the problems in the lending industry which inferred the obvious requirements (should have been in the law) to the inherent "race to the bottom" in adhesion contracts. However, I have not found any recommendations from Professor Warren for requirements in the law that would maintain rule of law in addressing the consumer protection aspects.

The problem is with the legislation, and maybe the mindset of Congress to grant such broad discretion to the executive branch.

Posted by: DonN2 | July 21, 2010 9:50 AM | Report abuse

"How depressing that the banking lobbyist's standard objection to ANY regulation -- it will limit access to credit -- becomes the cornerstone of this earnest piece by Ezra Klein."

I don't know how to avoid the conclusion that capping fees and rates is not going to reduce credit availability to those with weak/short credit histories. Credit to 75% of the population will probably be unaffected other than perhaps rewards programs might be less generous and/or perhaps annual fees on more credit cards.

"Elizabeth Warren had the temerity to point out that the American taxpayer handed hundreds of billions to the big banks for the express purpose of maintaining access to credit -- and the big banks stopped lending."

The purpose was to prop up banks until profits could start the recapitalization process. The "maintaining access to credit" was just part of the sales pitch. All one has to do is look at the total stock of credit/debt and consider its value marked to market to realize that a few hundred billion isn't going to make a difference in terms of credit availability.

"I've not heard any speech or read any transcripts or books by Ms. Warren that advocates anything but full disclosure. What will be banned is not particular products -- but products sold without proper information on the terms of the loan."

I suppose that's no big deal, but if it ends up being 15 pages of disclosure reading, I can count on one hand the number of people who are going to bother reading it. What lender provides loans without making terms available? Wouldn't failure to provide terms to the customer constitute fraud and invalidate the contract(loan) under current law?

Again, if you want real financial reform you should look to limited purpose banking / narrow banking. Anything else is window dressing.

Posted by: justin84 | July 21, 2010 9:54 AM | Report abuse

Good administrators are a dime a dozen. You hire them. They are technicians. They implement, organize and follow up. An administrator without vision is worthless, you create a bureaucracy without a visionary at the top. This department does not need to be fully staffed in a week. We need new ideas, new approaches, new perspectives, new understanding. Everything will be vetted anyway. Consumers, workers and families are all part of the cycle of money and their economic health needs monitoring as well as monitoring the management of community credit along with the FDIC. This all can be modeled, with metrics, which was an interest of Bernanke but he seems to be tied up with global money value management along with the big banks with their penchant for printing shadow banking money substitutes. Plenty of work for him right there. This isn't simply about payday lenders.

Posted by: Beacon2 | July 21, 2010 11:45 AM | Report abuse

Mr. Klein:

The case for Elizabeth Warren:

1) The agency was her idea. Least important, but nonetheless . . . .
2) Elizabeth Warren can handle the complexity and confusion of a large agency. She is an outstanding lawyer. What do you think lawyers do? Handle complexity and confusion, of course. Besides, she can pick aides to handle anything she can't. Isn't that what successful CEOs and presidents do?
3) Elizabeth Warren is the people's choice. She spoke for the people, defended the people's interests when D.C. was only concerned about the bankers and Wall Street. She is a hero out here on Main Street.
4) Elizabeth Warren has proved that she is honest. There is no liar's tremble in her voice. She looks us straight in the eye and tells us what she really thinks. We instinctively recognize her honesty. We trust her.
5) Elizabeth Warren knows how to talk to us ordinary people. That's probably because she is used to explaining things to her law students.
6) Our economy needs Elizabeth Warren. We are in for some rough days ahead. Elizabeth Warren, her presence, her life story, inspire can-do confidence. That's what America needs more than anything right now.

Elizabeth Warren is the woman of the moment. Obama needs her in his administration. The American people need her in his administration.

The arguments for Elizabeth Warren are far stronger than those against her.

Thank you.

Posted by: sdroth465 | July 21, 2010 3:20 PM | Report abuse

The fear of limiting credit to working people isn't credibly. I'm sure Hitler would have said he was concerned with protecting German citizens from his Jewish victims. Payday loan businesses should be very strictly regulated as they provide a service to the most vulnerable members of our society.

Elizabeth Warren is the only person of the three you mentioned, who has the support and confidence of the people she would be charged with protecting.

Posted by: denhau | July 26, 2010 11:28 AM | Report abuse

The comments to this entry are closed.

 
 
RSS Feed
Subscribe to The Post

© 2010 The Washington Post Company