EVEN THOUGH congressional Republicans and Wall Street lobbyists are eager to keep Elizabeth Warren from leading the new Consumer Finance Protection Bureau, President Obama won’t save himself any trouble by naming someone else to the position. Already, 44 Republican senators have vowed to vote against anyone Obama nominates unless the bureau is restructured and weakened first. Rather than give in to that threat, Obama should appoint Warren, the original proponent of such an agency, as its leader during the upcoming congressional recess.
The agency’s mandate is to ensure that, when financial institutions offer mortgages, credit cards, and other products to consumers, the costs and risks are transparent. Warren, previously a Harvard Law School professor, received a special White House appointment to get the new bureau going.
Opponents of greater regulation of financial services have sought to block her formal appointment as director of the bureau. They’ve portrayed her as high-handed and — in the case of a GOP congressman who got into a bizarre verbal tiff with Warren at a subcommittee hearing last week — even deceitful.
Yet it’s clear that the deepening opposition to Warren is just a proxy for a broader objection to the existence of the bureau itself. Having failed to keep the new consumer-protection bureau from being created in last year’s Dodd-Frank bill, the financial-services industry and its allies in Congress want to replace the bureau’s director with a five-member board and give other, more industry-friendly regulatory agencies more power to veto the consumer bureau’s rules.
It’s hardly surprising that the industry would bristle at tighter regulations, but there’s no squaring its position with the broader public interest. Because most consumers aren’t doctors or engineers, the need for federal oversight of medicines and consumer products is well established. There’s no less a need for greater scrutiny of complex transactions between consumers and financial companies. Indeed, greater transparency in consumer lending might have averted the fateful subprime-mortgage binge of the early ’00s.
Opponents of the bureau insist that it represents a vast expansion of federal power over the financial industry. But the stiff resistance the agency has faced — not just on Wall Street and in Congress, but also from other regulatory agencies — shows that its authority will be anything but unchecked.
That’s all the more reason for Obama to make sure the consumer bureau’s first director has a clear sense of its mission and a commitment to the spirit of consumer protection. In other words, it’s why he should stand by Warren.