Why Liz Warren Won't Be Leading the Consumer Financial-Protection Charge
Elizabeth Warren's hopes of leading the Consumer Financial Protection Bureau have succumbed to the Washington disease, otherwise known as "political realities." One reality: Congressional Republicans, who drink from the same trough as Wall Street execs, fear her. Another, and perhaps less evident, truth -- so does President Obama.
The White House was predictably effusive this weekend in praising the Harvard prof, who dreamed up the idea of a government agency that protects folks from financial abuse, and naming former Ohio AG Richard Cordray to head the CFPB. Obama singled out her "force of will" and "bottomless well of energy."
While these are excellent qualities in, say, a chief executive or a tennis player, they are typically less valued in a financial regulator. In government circles, force of will is code for hard to control. It means not being a team player, as recently departed FDIC chief Sheila Bair was routinely accused of. And in the Obama administration, it means not knowing when to shut up. As a result, reports the NYT:
[Warren] never won the full support of the president or his senior advisers, particularly the Treasury secretary, Timothy F. Geithner, in part because of her independent streak and her outspokenness, which at times put her at odds with the administration.GOP vows to stone Cordray
Case in point: Warren is dumping all over federal and state officials over their proposed foreclosure settlement with Wall Street banks. She correctly points out that any talk of an agreement with mortgage loan servicers, let alone one that shields the companies from legal harm, is a joke given the government's inadequate investigation of banks' illegal foreclosure practices.
As director of the CFPB, Warren could be counted on to exert considerable will and energy in getting to the bottom of this scandal. That directly conflicts with Treasury's wishes, with Geithner on the record as favoring a speedy resolution to the "robo-signing" mess. Independence may be a virtue, but not on Pennsylvania Ave. As political pundit Matt Stoller, a former aide to ex-Florida congressman Alan Grayson, succinctly puts it:
Obama could have chosen Warren just as easily as he could have chosen anyone else, since the GOP has vowed to filibuster any nominee. He just doesn't think she's right for the job.Apparently so. Republican lawmakers have vowed to oppose any candidate to head the CFPB. Sen. Richard Shelby, R-Ala., reiterated that stance on Sunday after news surfaced of Cordray's nomination, saying that he and his colleagues won't confirm anyone unless Obama changes the bureau's leadership structure so that it is run by a commission, rather than by a single director (in contrast to every other banking regulator, it's worth noting). In other words, the price for letting the agency do its job is to make it vulnerable to political pressure (think SEC).
Life on the res
On paper, Cordray is qualified for the job, and he may well turn out to be an ardent champion for consumer rights. After all, Warren personally recruited him to head the CFPB's enforcement bureau. Cordray, a former law professor, stood strong for homeowners last year by suing Ally Financial after its subsidiary, GMAC, was found to have illegally rubber-stamped foreclosure documents. He also pressed Bank of America (BAC), JPMorgan Chase (JPM) and other big banks over their own robo-signing activities and sued three major credit agencies on behalf of Ohio pension recicipients who lost money on investments in mortgage securities.
In short, Cordray is no pushover. Taking Republicans at their word, he may in fact be as unconfirmable as Warren, with Democrats needing 60 votes in the Senate to approve the nomination.
If so, why did he get the nod over his boss at the CFPB? Just a guess, but I suspect it's because the White House is more comfortable with Cordray. Unlike Warren, a true Washington outsider, he spent many years in public service. He will have learned the fine art of compromise, a cherished trait in the Obama camp. Cordray also has a much lower public profile as a consumer advocate, which makes him easier to subdue if he does go off the reservation.
If Warren is too independent for life inside a federal agency, she'd be a breath of fresh on Capitol Hill. She is rumored to be considering a run for the Senate next year in Massachusetts. That would give voters a chance to shape their own political reality.
Related:
- GOP Lawmakers Finally Settle on Who They Want to Lead the CFPB: Nobody
- GOP "Screeching" Is Turning Elizabeth Warren Into a Saint -- and Maybe a Senator
- Why Republicans Just Did Elizabeth Warren a Big Favor
- If Liz Warren Gets the Nod, She'll Have Osama bin Laden to Thank
- Why Elizabeth Warren Terrifies Wall Street -- She Makes Sense