President Obama plans to announce this week that he will appoint Elizabeth Warren, the Harvard Law School professor who initially proposed the Consumer Financial Protection Bureau (CFPB), to lead the effort to get the new federal agency up and running.
According to reports, the president will appoint Warren to a special advisory role for the White House and Treasury Department. The maneuver will allow her to act as an interim head of the CFPB. It also will enable her to begin setting up the agency immediately without involving the U.S. Senate in a confirmation process and prevent a possible filibuster that would otherwise block her nomination.
Warren has risen to prominence among progressives as chair of the Congressional Oversight Panel of the Troubled Asset Relief Program (TARP) and many on the Left consider her a formidable force to challenge Wall Street and the banking industry. In contrast, many working in the financial sector have opposed her appointment, pegging her as anti-business.
The idea for an agency to protect consumers involved in financial transactions in a similar way the Consumer Protection Agency regulates dangerous or potential harmful consumer goods reportedly came from an essay Warren wrote before the financial meltdown in 2007 for Democracy: A Journal of Ideas:
Why are consumers safe when they purchase tangible consumer products with cash, but when they sign up for routine financial products like mortgages and credit cards they are left at the mercy of their creditors?
The difference between the two markets is regulation. ...
President Obama has heralded Warren's call for expanded government regulation, saying it will be “hugely helpful to middle-class families in the years and decades to come… an independent agency, whose sole job is to protect families in their financial transactions.”
The Democrats' financial reform bill that became law in July grants the Treasury Department authority to take the lead in helping create the new Consumer Financial Protection Agency. However, at least one Republican is challenging whether President Obama should be allowed to install Warren without Senate confirmation.
In a letter delivered to the White House today, Sen. Bon Corker, R-Tenn., a member of the Senate Banking Committee, wrote that he "strongly" believed the intent of the Dodd-Frank financial regulation legislation "was to have the head of this bureau go through the nomination, vetting and confirmation process."
Corker wrote that the position of director of the bureau "is unprecedented in the nature of its unfettered and unchecked authorities, which makes the confirmation process even more important to the interests of the American people. The individual who heads this bureau will be able to make rules, with ultimately no checks and balances, that could have broad reaching implications for the U.S. economy as it relates to accessing credit, social justice and the safety and soundness of the U.S. banking system. The job is disproportionately reliant on the decisions of one individual with access to large sums of taxpayer monies to carry out the agency agenda."
The opposition to bypassing the Senate is not just a Republican concern. Democratic Sen. Chris Dodd, D-Conn., one of the architects of the financial regulatory bill, also warns the administration about the political ramifications of unilaterally appointing Warren.
"This is a big job, an important job, and it needs to be -- you've got to build the support for that institutionally or the next Congress -- and none of us know what the outcome's going to be politically -- you could gut this before it even gets off the ground. If you don't have someone running it early on, it jeopardizes the existence of the consumer protection bureau," Dodd said. When asked how Congress might "gut" the agency, he replied: "Money. Take away the money. That's how you always do it."
Despite the senators' objections, naming Warren as an "assistant" or "counselor" to both the president and Treasury Secretary Tim Geithner would allow President Obama to bypass the traditional Senate confirmation process.
“I’m concerned about all Senate confirmations these days” including if he were to “nominate somebody for dog catcher,” the president joked last Friday when asked if he was concerned about Warren’s ability to be confirmed. “I’ve got people who have been waiting for six months to get confirmed who nobody has an official objection to and who were voted out of committee unanimously, and I can’t get a vote on them.”
For more information on Elizabeth Warren, check out this video of her recent appearance at Netroots Nation, speaking on her progressive economic vision. Dubbed a "true progressive champion," Warren participated in a panel discussion on "Building a Progressive Economic Vision" with AFL-CIO president Richard Trumka, Florida Congressman Alan Grayson (D), George Goehl of National People's Action, Phaedra Ellis-Lamkins of Green For All and Deepak Bhargava of the Center for Community Change.