News strikes today that Harvard law Professor Elizabeth Warren will, indeed, will be tapped to help set up the newly authorized Consumer Financial Protection Bureau (CFPB). We heard rumors of this on Monday, which the White House quickly defused -- only to validate the rumor a few days later. She won't be formally nominated as head of the CFPB, because the White House wants to avoid a confirmation fight in the Senate. Instead, she will just be appointed as a special advisor to the Treasury, which means she'll effectively lead the creation of the new consumer watchdog. This is a strange strategy.
Mixed Signals at the White House?
First, why did the White House dispel the rumor we all now know was accurate? On Monday, Meredith Shiner at Politico reported on theory that Warren would be appointed to the interim role but said White House officials indicated the contrary:
But a White House spokesman strongly denied that Obama would use the provision to circumvent a confirmation vote on Warren. "It's nothing," the White House spokesman said. "The president will have more to say about that agency soon."
Obviously, that's exactly what's happening. Today we have Brady Dennis of the Washington Post reporting:
President Obama this week plans to name Harvard law Professor Elizabeth Warren as a special adviser so that she can oversee a new consumer financial protection bureau while avoiding a potentially vicious Senate confirmation fight, according to people with direct knowledge of the decision.
The naïve view might be that Politico's sources simply weren't very good ones. But any reporter who has dealt with the Treasury knows that its spokespeople don't like to be quoted by name pretty much ever. So this was likely someone who was authorized to speak on the issue and was even told to kill the rumor. But if this was the President's plan, why not just respond by saying something like: "The Treasury doesn't comment on rumors. The process to determine the new CFPB head is ongoing." Isn't omission better than misleading the public?
How Is This Okay?
Second, this strategy is really quite shady. This isn't just the President appointing another czar, like the car czar or pay czar to oversee some temporary program already in motion. Warren will be responsible for creating an entirely new major federal agency from scratch. And the CFPB is arguably the most significant new financial industry regulator since the U.S. Commodities Futures Trading Association was created in 1974. Now we learn that an unconfirmed Presidential appointee will be its central architect. How is that okay?
Whether you are for or against Elizabeth Warren's role in the CFPB here is irrelevant. This question is one of principle: should an appointee who Congress has not vetted have this kind of authority? While it's true that the Treasury Secretary will still have ultimate discretion over the process, it's seems pretty likely that the President promised Warren that she would be the chief influence here. Can you imagine him saying, "Listen Elizabeth. We will probably try to get you confirmed eventually as head, but for now work with Tim and help him create the Bureau, and be sure to run all your ideas by him first." It's hard to imagine she would have agreed to assist unless promised significant authority.
So why is the legally President able to do this? Because the big summer financial regulation bill that spawned the CFPB also provided the President the authority to hire an interim director without confirmation. So obviously he's within his right to hire Warren as a special adviser. That's why it's pretty odd to see Senate Banking Committee Chairman Christopher Dodd (D-CT) having said that he believes any candidate for leading the Bureau should go through the Senate confirmation process. He did, after all, help to write the awful provision in the bill that allows the President to bestow this substantial power on an appointee without Congress' explicit consent.
But perhaps the strangest aspect to this White House strategy is the view that it's best to avoid confirmation for now. When, exactly, will a better time be for the Obama White House to bring a nominee before the Senate? Next year, when Democrat seats are almost certainly going to be diminished? If Warren can't be confirmed now, then it's hard to imagine that she ever could be. Unless something truly miraculous occurs for Democrats between now and November, they'll have an even harder fight during Congress' next session. Are they waiting for the lame duck session when Senators don't have to worry about angering their constituents by voting to confirm Warren? If Warren is really that highly controversial that even Democrats are scared to be associated with her, then she shouldn't be nominated.
Of course, we know that the Senate has little appetite to confirm pretty much anyone these days -- no matter how important the job is or uncontroversial their qualifications are. So the new CFPB head is likely no exception. Perhaps Republicans will have more interest when they occupy more seats next year. Of course, then a Warren nomination will have even more trouble getting through.