The peoples champion

[Political Waves]

We have a new and complex set of financial rules in this country -- the first stiffening of policy and prohibition since FDR -- and while they aren't as profound as we wanted, they are still nothing to sneeze at. The Achilles Heel is that the regulators MUST bare the weight of their responsibility if this is to work -- no establishment shenanigans.

You need to be aware of the growing controversy around naming Elizabeth Warren -- peoples hero and certainly mine -- to the position she personally championed in 2007 to protect the middle class, and has mobilized growing support around since, to provide regulation ... a.k.a ... consumer financial protection.

Little Timmy Geithner doesn't like her, having tangled with her in the last months, and since the new reforms give him ... in his treasury position ... a good deal more power, he will surely have an opinion about this nomination. While Obama has been very supportive of her, the White House machine is proposing a list of possible names without adding weight to hers. Chris Dodd says she might not be confirmable but that's a straw man. Warren could step in as Queen Watchdog and do a powerful job for the little guy.

 

Krugman and Johnson ... two of my favorite populist economists ... have endorsed her to head the Consumer Financial Protection Bureau, as has over 250 organizations under the umbrella of Americans for Financial Reform. Many in this group are allied with the Obama administration, including labor groups. Add that the bankers fear her and that's EXACTLY the person we need in the job. This, from Huffy:

But some have speculated Warren may face an uphill battle to become its inaugural chief. Lenders fear her -- particularly given her strong advocacy on behalf of the debt-strapped middle class -- and are furiously fighting her potential nomination as she's viewed as the most consumer-friendly of the candidates. Their friends in the Senate may take up their cause.

Proponents and critics agree that the first director will have a lasting impact on the agency, from the hiring of staff to the general attitude it takes towards consumer protection. Some are expected to prepare a Supreme Court-style campaign when Obama names his nominee.

During a radio interview Monday, Senate Banking Committee Chairman Christopher Dodd said there's a "serious question" over whether she, as Obama's nominee, could be confirmed by the Senate.

"We are confident she is confirmable," White House spokeswoman Jennifer Psaki said.

The administration, though, could bypass the Senate entirely -- without engendering the ill-will that would result from a recess appointment.

According to the bill's language, the Treasury Secretary has sole authority to build the new agency before it's ultimately transferred to the Federal Reserve. That includes anointing a person to head the effort on his behalf, and under his authority. The interim head would serve until the President's nominee is confirmed by the Senate.

That person could be Elizabeth Warren.

And the legislation doesn't appear to contain a deadline for a Presidential nomination, experts say, which means Warren could start the agency from scratch, put her people in, begin cracking down on predatory and abusive lenders, and initiate a culture that would put consumers' interests above those of the nation's most powerful financial institutions.

In short, she could set a tone the agency will follow for the next several years without the administration needing to fight a potentially drawn-out confirmation battle that could stall Obama's pro-consumer agenda.

This is a no-brainer. Warren got us here -- she deserves the job and WE deserve her! The Lefty's have circled the wagons around Elizabeth. Since Credo/Bold Progressives began their petition on her behalf on Friday, we now have over 140,000 citizens supporting her nomination -- please add your name, if you choose. If so, do it now ... a nomination could come this week. And if you think petitions are crap, know that this one is different ... this one is a DEMAND by the people and the more names are collected, the more it can be used as a "persuasive tool" ... read that club, if required.

There is NO reason why this woman shouldn't have this job and in fact, she's earned it ... if she wants it. If this is politicized away from her by Geithner, Summers, yadda et al, we need to come down on this administration HARD. This may not be the most important toss-up in town ... but it's the one that is the most obviously grassroots and the one that will allow us to sleep better at night.

Elizabeth Warren. Or else.

Jude



Timothy Geithner's realm grows with passage of financial regulatory reform
David Cho, WaPo
Saturday, July 17, 2010
http://www.washingtonpost.com/wp-dyn/content/article/2010/07/16/AR2010071603732_pf.html

Tim Geithner Opposes Nominating Elizabeth Warren To Lead New Consumer Agency
Shahien Nasiripour, HuffPo
07-15-10
http://www.huffingtonpost.com/2010/07/15/tim-geithner-opposes-nomi_n_647691.html

Treasury Makes A Mistake - Claiming They Are Not Blocking Elizabeth Warren
Simon Johnson, Baseline Scenario
http://baselinescenario.com/2010/07/16/treasury-makes-a-mistake-claiming-they-are-not-blocking-elizabeth-warren/#more-7852

It's one thing to block Elizabeth Warren from heading the new Consumer Financial Protection Bureau.

It's quite another thing to deny in public, for the record, that any such blocking is going on (e.g., see this report; Michael Barr apparently said something quite similar today).

There is a strong groundswell of opinion on this issue from the left - see the BoldProgressives petition.  But the center also feels strongly that, given everything Treasury has said and done over the past few months, it would be a complete travesty not to put the strongest possible regulator in change of protecting consumers.  (See Ted Kaufman on the NYT's DealBook, giving appropriate credit to the SEC, and apply the same points to broader customer issues going forward.)

This can now go only one of two ways.

1.Elizabeth Warren gets the job.  Bridges are mended and the White House regains some political capital.  Secretary Geithner is weakened slightly but he'll recover.

2.Someone else gets the job, despite Treasury's claims that Elizabeth Warren was not blocked.  The deception in this scenario would be nauseating - and completely blatant.  "Everyone was considered on their merits" and "the best candidate won" will convince who exactly?

Despite the growing public reaction, outcome #2 is the most likely and the White House needs to understand this, plain and clear - there will be complete and utter revulsion at its handling of financial regulatory reform both on this specific issue and much more broadly.  The administration's position in this area is already weak, its achievements remain minimal, its speaking points are lame, and the patience of even well-inclined people is wearing thin.

Failing to appoint Elizabeth Warren would be the straw that breaks the camel's back.  It will go down in the history books as a turning point - downwards - for this administration. ++


The Warren Drama: Another Missed Opportunity?
Robert Kuttner, The American Prospect
July 18, 2010
http://www.huffingtonpost.com/robert-kuttner/the-warren-drama-another_b_650615.html

For the past several days, people who care about whether financial reform is to be real or sham have been following the drama of whether President Obama will name Elizabeth Warren to head the new Consumer Financial Protection Bureau. The Bureau is the best thing about the financial reform bill that Obama will sign later this week, and its prime architect was Warren, a folksy Harvard law professor who has become a well known and admired public figure championing reform.

It's no secret that Treasury Secretary Tim Geithner doesn't want Warren. As Chair of the Congressional Oversight Panel monitoring the Treasury's conduct of the bank bailout under TARP, Warren turned what might have been an obscure and toothless agency into a feisty forum for challenging the Treasury's coddling of the big banks. She did not pull her punches in asking tough questions of the treasury secretary and demanding sometimes embarrassing documents.

Over the past several days, the Treasury has leaked other names being considered for the job, giving the deliberate impression that Warren is just one candidate among many. White House political adviser David Axelrod, given the chance to clearly deny that Geithner was trying to block Warren's appointment, described her as well qualified but his statement was widely taken as faint praise.

All of this infighting and leaking must be amusing to President Obama, the man who ultimately will make the appointment. It was Obama who personally decided that he wanted a strong consumer protection agency in the financial reform bill, partly to offset the perception that the administration was too cozy with Wall Street.

The provision survived lukewarm support by many in the administration because it was one of the few provisions in which Obama took a direct personal interest. Obama, not Tim Geithner, will choose the first head of the new agency. Strong presidents, like Franklin Roosevelt, tolerate advisers with differing viewpoints.

A reform package that should have been a clear winner politically has turned out to be a political draw because too many voters believe that the Administration has favored Wall Street over Main Street. The best possible antidote to that perception would be the appointment of Warren. She is the rare public official involved with financial regulation seen as a passionate fighter for regular people. The Administration desperately needs a dose of that.

There is a whispering campaign that Warren would be given a rough time in a confirmation hearing. But a contentious confirmation process would be a pure gift to the White House and the Democrats.

Much of the financial reform package is fairly obscure and technical. Mention the words credit default swap, and it just reinforces the impression that the government is in bed with Wall Street. But consumer protection is the easiest part to grasp. Do we want banks to gouge consumers on overdraft charges, mislead them on the cost of credit cards, and devise deceptive mortgage products? Most Americans would say no.

This is the fight Warren has been waging. If Republican senators want to hold hearings defending the poor misunderstood bankers, and giving the compelling Warren a hard time for protecting consumers, bring it on. It would make terrific television and nothing would be more clarifying about which party is the bigger stooge for Wall Street. This administration needs a few star players who stand up for regular people.

Obama needs to make his decision soon, because the longer this question hangs fire the more annoyed the Democratic Party base becomes with the White House and the more the Treasury invites pressure from the bankers to give the job to anybody but Warren.

This is actually a story not just about Warren, but about three public officials. This is going to sound very down-in-the-weeds, but stay with me because here's where the politics get really interesting. The other two are named Michael Barr and Richard Neiman.

Barr, the assistant treasury secretary for financial institutions, is said to be the Treasury's preferred alternative to Warren. The banks are lobbying hard to get Barr the job.

In fact, Barr worked hard inside the administration to get a strong consumer protection agency, and he and Warren enjoy a good relationship. A University of Michigan Law Professor on leave to work at Treasury, Barr is friendly to some forms of regulation. However, on other key regulatory issues, such as too-big-to-fail, and a strong version of the Volcker rule separating commercial banking from financial gambling, Barr has been very much Geithner's man.

During the final weeks of the legislative fight for financial reform, Barr infuriated progressives in Congress by pressing for weaker rather than stronger forms of regulation. But as someone with credibility on consumer protection and loyalty to Geithner, Barr is seen by the banking industry as the perfect anti-Warren.

There is a third person in this tale, Richard Neiman, who is up for another key regulatory job, the chief regulator of national banks. (That post is known, misleadingly, as the Controller of the Currency.) Neiman's current day job is New York State Banking Superintendent, and he also serves with Warren as one of three Democrats on the Congressional Oversight Panel that Warren Chairs.

Throughout his career, Neiman has been known as a Wall Street Democrat. He spent ten years at Citigroup, and another twelve with the TD Waterhouse group, another large bank holding company. As New York Banking Superintendent, Neiman was seen as so banker-friendly that Goldman Sachs opted to become a New York state-regulated bank under Neiman's supervision.

On the Congressional Oversight Panel, Neiman has often sided with Republicans and bankers against the Panel's two progressive Democrats, Warren and Damon Silvers of the AFL-CIO. He frequently issued separate statements taking issue with the Democratic majority, and even wrote a dissenting report co-authored with Republican panel member John Sununu.

If President Obama names Barr to head the new consumer agency and Neiman to regulate national banks, it will be a signal that Wall Street is still in the saddle, an affront to Warren, as well as a huge missed opportunity.

However, there is an elegant trifecta solution. Give Barr the more technical job of regulating national banks -- he is well qualified and a lot less beholden to Wall Street than Neiman. And then make Warren the head of the new consumer bureau.

It's not just that Warren has earned the job and that the appointment would cheer a progressive base that needs to be energized for November. Daring the Republicans and the financial industry to go after this dedicated and charismatic fighter for regular people would also be terrific politics. ++

 

 

"I'm asking you to believe. Not just in my ability to bring about real change in Washington ... I'm asking you to believe in yours."
~ Barack Obama

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