Simon Johnson is Wrong

Simon Johnson writes that the administration isn't supporting the proposed Consumer Financial Products Agency enough. Since I wrote a piece arguing the exact opposite last week, I thought I'd respond, though I do agree with Simon in so far as he administration could never do too much to support the creation of the agency.

Simon's main concern is that the administration isn't launching a "frenzied effort" to build support for the agency among economists, like it did for PPIP. There's a good reason why that is the case: Most of the economists who would listen to Treasury sympathetically already think the CFPA is a good idea. On the other hand, very few of them thought that PPIP was the best approach for the banks. Treasury doesn't need to waste time convincing economists of what they already believe, or keep them from criticizing a proposal they're likely to support. PPIP isn't a good comparison for the effort, anyways: The better legislative baseline is bankruptcy loan modification, a pro-consumer measure killed in the senate when the administration actually failed to support the legislation strongly enough.