A key provision of the financial regulatory reform bill that passed Thursday created a new consumer agency to enforce rules regarding financial products such as credit cards and home-equity loans. The agency, called the Consumer Financial Protection Bureau, was largely conceived by Elizabeth Warren, who many thought would lead it. However, in a move that's infuriating many progressives, Treasury Secretary Tim Geithner reportedly opposes Warren's nomination. That's leading some to allege that Geithner wants to water down the financial reform bill by staffing regulatory agencies with Wall Street-friendly bureaucrats. Here's a glimpse of their outrage:
- This Will Ruin Financial Reform, writes Simon Johnson at Baseline Scenario: "Financial 'reform' is already very weak. If Secretary Geithner gets his way on consumers protection, pretty much all of the Democrats efforts vis-à-vis the financial sector’s treatment of customers have been for naught."
- This Is Outrageous cries Forrest Brown at Open Left: "As chair of the bailout oversight panel, she held Wall Street executives' feet to the fire and was not afraid to speak out. As a Harvard professor, her credentials are impeccable. And she was the one who came up with the idea for the Consumer Financial Protection Bureau -- perhaps the best piece of this bill -- in the first place. Warren is perfect for the position and most financial insiders have just assumed she would get it. That's why it's so outrageous that Geithner -- a longtime Wall Street insider -- would attempt to sabotage her appointment."
- I'm Disappointed in Obama, writes The Reaction blog: "Having Elizabeth Warren head the soon-to-be consumer protection agency was/is something tangible, some real change a liberal could hang on to. And now it's being slapped away by a White House too enamored with Wall Street to see clearly... Once again, this will be a test for Obama himself. He got the bill he and Wall Street wanted. Now will he fight for what his base wants? I'm not holding my breath."
- Why Progressives Love Warren Annie Lowrey at the Washington Independent explains: "She devoted her career to studying how the modern financial system ends up giving families and workers bum deals. The idea for the CFPB is hers. She is, bar none, considered the foremost mind on the topic. As the head of the CFPB, many in Washington hoped, she would act not just as a strong leader, but as a draw for smart minds — a kind of J. Edgar Hoover, sexing up the bureau rather than letting it become just another wan regulatory agency. This might sound a bit strong. But I am serious in saying that most everyone I speak with about this issue — on the Hill, in consumer groups, in think tanks — considers Elizabeth Warren just that good."
- C'mon Tim! laments Felix Salmon at Reuters: "I hope he doesn’t get his way. The bureau would never have come into being without Warren pushing it hard; it’s only fair she gets a chance to run it at inception, and shape the way it does business. Even if she has been harsh in her public questioning of Geithner."
Update: In an e-mail, the Treasury Department attempts to downplay reports that Geithner opposed Warren's nomination. Andrew Williams, Deputy Assistant Secretary for Public Affairs, says:
Elizabeth Warren has been a driving force behind the creation of the consumer financial protection bureau, and we have worked very closely with her over the past year and a half to make that idea a reality.
Given her strong leadership on consumer protection, Secretary Geithner believes that Elizabeth Warren is exceptionally well qualified to lead the new bureau, and, ultimately, that’s a decision the President will have to make.