It’s not yet official, but Elizabeth Warren has the job, a White House aide has told Slate. Let the rejoicing begin on the left, which made the Harvard law professor’s selection a litmus test of the Obama administration’s integrity, and let the character assassination begin on the right, which has already identified her as a dangerous radical.
The job is director of the Consumer Financial Protection Agency, an independent agency newly created (by the financial reform bill) within the Federal Reserve Board. The agency will create new regulations aimed at protecting financial consumers from being deceived or otherwise abused by lenders in ways that may or may not resemble the subprime debacle that gave you the Great Recession. Warren chairs the congressional panel overseeing the $700 billion Troubled Asset Relief Program (i.e., the Wall Street bailout, enacted—resentful Tea Partiers tend to forget—under a Republican president). She is also the person who dreamed up the CFPA.
Warren’s conceit—that financial consumers require the same level of protection as consumers of durable goods like automobiles—is the animating idea behind the CFPA (and also, to some extent, this new Slate column). Appointing Warren to run the CFPA will certainly keep the new agency focused on its core mission. But whether she will know how to run it is anybody’s guess.
Writing in the conservative Daily Caller, Amanda Carey made the case that Warren would be a lousy CFPA director, but Carey’s evidence was weak. When Warren worked for the National Bankruptcy Review Commission in the mid-1990s, a former co-worker told Bennett, Warren once blocked an official from the (Democratic) Justice department from testifying. Oh, and she wrote some language into the final report that displeased three commissioners, who griped in their dissent that they didn’t get enough time to review it. The TARP oversight panel’s lone Republican, Rep. Jeb Hensarling of Texas, once voiced a similar complaint. In that instance, Warren told the Dallas Morning News, “I asked for his comments repeatedly and received none.” Hensarling threatened to quit the panel but ended up staying another year. Roughly one-third of the reports issued by the TARP oversight panel have been adopted by unanimous vote, so it would be hard to argue that Warren is uncollegial.
It’s more accurate to say that Warren’s management skills are impossible to assess, because she’s never really managed anything. (The five-member TARP panel scarcely counts.) “She is something of an unknown,” a Warren-watcher told me, “the way any public figure who’s never held public office—real public office—is an unknown.” Her greatest asset, this person said, “is her ability to see issues and assemble teams to deal with them.” And Warren brings “a great deal of self-knowledge” to the task. But she’ll need to navigate turf wars with other agencies, back-channel pushback from the lending industry, striking the right balance between rule-making and enforcement, and hostile scrutiny from Republicans in Congress. Does she know how to schmooze a grumpy Republican? “I wouldn’t call her schmoozy.”
“There is no one better and only one or two people even conceivably as good as she is to create the ethos for the new agency,” my Warrenologist told me. “But ethos has to be underpinned with a functional structure. She’ll have to have people around her with more experience than she has” at creating one.
One worry is that if (as is reportedly under consideration) Warren gets the job through an interim or recess appointment, she may not have time to get much done. The director serves for five years if confirmed by the Senate, but only about a year if installed through recess appointment. If Warren were to serve for only a year, her contribution would likely never be more than symbolic. The Senate banking committee’s chairman, Chris Dodd, D.-Conn., says he won’t support a recess appointment. (His support wouldn’t be necessary to make one.)
But could Warren get confirmed by the Senate? Dodd has his doubts, and these are widely shared—even, it seems, by President Obama. Asked about it last week, Obama answered, “I’m concerned about all Senate confirmations these days. I mean, if I nominate somebody for dog catcher …” This raises the possibility that Warren’s nomination is nothing more than a stunt to excite the base before the midterm congressional elections. Wall Street remains a sufficiently popular target (even among many conservative voters) that forcing Republicans to oppose her noisily could help the Obama White House frame the debate as a battle between the virtuous middle class and the heedless, pampered rich. If that proves the case, then we probably won’t find out how good or bad a government manager Warren can be.
Update, Sept. 15: Bloomberg reports another possible gambit under consideration at the White House: Rather than appoint Warren director of the CFPA, Obama would install her at the Treasury department in a position that didn’t require Senate confirmation. From that perch, Warren would set about assembling the CFPA.
Update, Sept. 16: President Obama is expected to announce that Warren will receive a joint appointment to Treasury and to the White House, neither of which requires Senate confirmation, and that from these twin perches she will start putting the CFPA together. The move does not preclude her becoming director at a later date, and conceivably Warren might continue to run the CFPA even after somebody else is named nominal director.