Is Elizabeth Warren really the best pick to run the new consumer finance agency?
Liberals across the land are advocating vehemently for Elizabeth Warren to run the Consumer Financial Protection Bureau created by the soon-to-be-signed financial reform bill. Warren, of course, has been the chief watchdog of the financial bailout, frequent thorn in the side of Timothy F. Geithner and other architects of said bailout, a leading scholar on the rise of--and problems caused by--America's consumer debt overload, and a pioneer of the idea of creating such an agency to begin with.
(For a sense of the pressure from the left that President Obama is facing to appoint Warren, here is a petition in support of her candidacy from BoldProgressives.org, and posts advocating her candidacy from Paul Krugman, Matthew Yglesias, Annie Lowrey, and the Post's own Ezra Klein).
I've talked to more than a few people in the world of financial regulation over the last few months, some of them pretty liberal, who are wary of this idea. Here is some of their thinking--and some of the concerns and questions that Warren's supporters would do well to answer as Obama starts to consider his pick.
There are two questions in play in evaluating candidates for this, or, frankly, any high government job. First is whether their ideology would lead them toward decisions that are good public policy. And second is whether their management abilities and personal styles are a good match for the position.
On the first point, the new consumer financial protection regulator will need to balance the protection of consumers from unscrupulous, exploitative, or dangerous loans and other financial products with the benefits that come from financial innovation. We want a world in which fewer people end up in way over their heads in debt or face ridiculous financial fees. But we also don't want a world in which only rich people can buy a house, middle class families can't handle unexpected expenses by putting them on a credit card, and the 21st century equivalent of the ATM will not be invented because a regulator stands in the way.
Warren understands better than almost anyone else on the planet the first set of concerns. It's less clear how attuned she is to the second set. Of course, the same question needs to be asked about the other reported candidates for the job, the Treasury Department's Michael Barr and Justice Department's Gene Kimmelman, but Warren is the one who is attracting 100,000-plus endorsements through an online petition.
On the second question, about management style and personal qualities: Warren has an exceptional track record as an intellectual and as a public spokeswoman. But those are only a small slice of the responsibilities of an agency head. The leader of the new consumer financial protection bureau will need to hire hundreds, maybe even thousands of people, create an administrative structure from scratch, and oversee what is likely to be a long and arduous process of writing regulations that will govern millions of transactions. He or she will need to be sufficiently savvy in the inter-agency rulemaking process to avoid getting rolled by other regulators, particularly Sheila Bair at the FDIC and a newly named vice-chair for supervision at the Federal Reserve. Then there's the more basic task of maintaining good relationships in the White House and on Capitol Hill.
Looking at Warren's CV, it appears that her current job, as chair of the Congressional Oversight Panel, is her most extensive experience in or around government (she has also served on the FDIC's Committee on Economic Inclusion, among other advisory roles). She may well be an extraordinary manager who can finesse the policymaking process and who would have as deft a touch at managing an agency's internal politics as she is at managing her public profile. But given that she doesn't have that experience--or much policymaking experience at all--on her resume, the burden of proof will likely be on she and her allies to make that case.
By comparison, Barr, held a variety of jobs in the Clinton administration and has been the assistant Treasury Secretary who spent the last 18 months negotiating with Congress over the financial regulation bill. Kimmelman, was the top lobbyist for the Consumers Union for 14 years before joining the Justice Department, and also served two years on Capitol Hill and nine years working on policy matters at the Consumer Federation of America.
In other words, the question that President Obama and his aides are likely to be asking as the president moves toward a decision will be, "Will Elizabeth Warren be as effective as a bureaucrat as she is as a guest on the Daily Show?"
July 19, 2010; 9:17 PM ET
Categories: Consumer Financial Protection Bureau , Financial regulation
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