Sometimes, it's hard to recognize a good thing, even when it's staring you in the face. For the last two weeks, the White House has been resisting calls by liberals for Elizabeth Warren, the Harvard bankruptcy expert, to run the new Consumer Financial Protection Agency established in the financial regulation bill that President Obama just signed into law.
Warren has a few obvious marks in her favor. She has spent her career studying consumer debt issues. She knows her way around Washington from leading the congressional panel that's keeping watch over the Troubled Asset Relief Program (the bailout money). And the very idea for the agency was her own, laid out in a 2007 article she wrote in the journal Democracy.
Representative Barney Frank, who designed the new measures, said last week that Warren's appointment is essential. Plenty of others agree. An online petition in support of her nomination has attracted more than 200,000 signatures. And yet, the White House and some top Democrats have been pushing back. Connecticut Senator Christopher Dodd publicly questioned whether Warren could get confirmed.
Dodd may not be the best source of advice, however, having been obliged to retire from the Senate because his coziness with banks and mortgage lenders foreclosed any hope of reelection. In fact, all the evidence suggests that Obama would benefit from nominating Warren, even if she were to arouse congressional opposition.
If her confirmation did indeed fail, the White House would have a compelling illustration of how Obama is striving to help consumers while being systematically undermined by Republicans (and Dodd). A fight over Warren might finally draw some attention to his efforts to help average people. Previous initiatives to help those struggling with debts have been undermined because conservatives successfully raised concerns about the cost. But unlike another stimulus plan or extended unemployment benefits, Warren doesn't add to the deficit.
In the likelier event that she was confirmed, Warren would bring a number of salutary benefits for consumers and the White House. This is universally understood. The big banks and credit card companies that oppose her, however, can't very well say that they're afraid she might do a good job, so their lobbyists are instead raising questions about her "management ability.''
Professing grave concern about management ability is an old Washington canard that's bogus for at least two reasons. First, it's almost always insincere. No one makes a big show of concern about managerial skills who doesn't already oppose the nominee for other reasons.
Second, it's misleading to imply, as a Washington Post account did, that Warren personally will "hire hundreds, maybe even thousands of people, create an administrative structure from scratch, and oversee what is likely to be a long and arduous process of writing regulations.'' Mostly, her staff will do that work. And besides, Warren has managed the Congressional Oversight Panel just fine.
What really does matter is an agency's public profile. As Warren's Harvard colleague Daniel Carpenter points out in "Reputation and Power,'' his sweeping history of the Food and Drug Administration, the FDA emerged as perhaps the most effective federal agency in the last century because the public held it in such high esteem. This conferred moral authority, independence, and an ability to command resources. It also helped the FDA attract the very best staff. In boosting the image of the Consumer Financial Protection Agency, Warren would be invaluable. It's hard to imagine who could better inspire a team of consumer regulators or command public attention.
Warren is regarded skeptically by some in the Obama administration for her tendency to be outspoken, which is precisely why consumers trust her. The tendency of Obama officials, especially the economic team, is to speak in the bland jargon of technocrats. But with an election looming, the White House needs someone who can explain its policies and convince voters that it is working in their interest. That may be why the administration seemed to soften its tone toward Warren this week. "I think she would be a very strong leader of this organization,'' Treasury Secretary Tim Geithner said. Warren's reputation would help not just the consumer agency, but the White House, too. And that could be key to holding power.
Joshua Green writes a weekly column for the Boston Globe.
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