Sunday, September 26, 2010

Elizabeth Warren Takes the Reigns of CFPB

There has been an enormous amount of talk regarding the appointment, by President Obama, of Prof. Elizabeth Warren towards the establishment of the Consumer Financial and Protection Bureau (CFPB).  The new agency will have a budget in excess of $400 million annually and its policies will not be subject to presidential oversight.  The appointment bypasses the contentious issue of having her stand at the sidelines waiting for Republican opponents to permit her audience and confirmation within their royal chambers.
 
The crony-capitalists, financial sector lobbyists, and the banks have for the past year been leveling aspersions about Prof. Warren and her scathing criticisms of their business practices. The US Chamber of Commerce engaged in a multi-million dollar campaign last year to scuttle the idea of a CFPB from being even discussed in Congress. Indentured corporate servant Sen. Gregg Judd (R-NH) recently stated that it was his, "concern... that she would use the agency for the purpose of promoting social justice." The crony-capitalists and belligerents who were midwives to the great recession, refuse to cede any ground, even on the scorched earth they created.

Progressives and liberals on the other hand, have been touting her sensible, people-first approach to finance and banking regulations and as an ideal candidate to run the newly minted CFPB. The NY Times ran a piece in their business section underlying the grassroots feelings about Ms. Warren:
“The best way to explain it is that she speaks truth to power,” Ms. Abaunza continued. “She speaks about how people have been ripped off in a way that everybody understands. Although she is a Harvard professor, she doesn’t speak in an elitist way. She is a grandmother. She is from Oklahoma. I like the fact that she says ‘golly.’ She engenders this trust immediately. Because she is very honest.”
Paul Krugman outlined the underlying political landscape regarding the Warren appointment in his NY Times opinion piece :
The debate over financial reform, in which the G.O.P. has taken the side of the bad guys, should be a political winner for Democrats. Much of the reform, however, is deeply technical...

But protecting consumers, ensuring that they aren’t the victims of predatory financial practices, is something voters can relate to. And choosing a high-profile consumer advocate to lead the agency providing that protection ... is the natural move, both substantively and politically.
Simon Johnson, former IMF Chief Economist, also believes that there is enormous long-term value to Prof. Warren's appointment for the Obama administration:
the president finally has an adviser who understands the financial sector and who has healthy skepticism about its intentions and actions.  As we documented at length in 13 Bankers, too many top policy people – both in this administration and all its recent predecessors – have been overly inclined to accommodate the interests of finance, particularly the big banks.  In this regard, putting Ms. Warren directly into the White House with the highest possible level of access is exactly the right thing to do – much better, for example, than making her purely a Treasury appointment.
This is truly one of the more intelligent decisions the Obama Administration has made in a long time.  Consumers, average citizens, and a vast number of people -on both sides of the political divide- who are fed-up with the crony-capitalists manipulating the legislative process to their explicit benefit, all consider this to be a sound decision.   Hopefully, this is more than a token attempt to placate the Democratic Party's liberal base.   Given the departure of the Larry Summers, the Obama administration will have the opportunity to jettison its Clintonesqe neo-liberal policies and engage in sensible and progressive practices that will be in the interest of all Americans and not just the folks on Wall St.

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Additional blog entries and links on Elizabeth Warren can be found below:
  • Warren discussing with Rachel Maddow, the benefits of a CFPB: here
  • Warren analyzing problems with the US economy and the banking sector: here, here, and here.
  • Warren sparring with CNBC hosts and Jack Welch on the virtues of the CFPB: here

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