Battle looms over new job heading financial watchdog
Tuesday, July 20, 2010
President Obama has yet to sign the bill that will overhaul financial regulations, and already a tug of war is unfolding over whom he will tap for the highest-profile position created by the landmark legislation.
At the center of this wrangling is Elizabeth Warren, an outspoken Harvard law professor who served as a key architect of the Consumer Financial Protection Bureau, the new regulator that she is a top candidate to lead.
Warren, who chairs the congressional panel overseeing the federal bailout of the nation's banks, isn't the only candidate for the powerful post. Others include Michael S. Barr, an assistant Treasury secretary, and Eugene Kimmelman, a deputy assistant attorney general in the Justice Department's Antitrust Division. But she is easily the best-known and the most polarizing.
In recent days, consumer advocates and activist groups have pressed Obama to appoint Warren, arguing that she has a long track record as a champion for middle-class families.
Critics say that she lacks the experience for the job, that she has antagonized members of Congress and Treasury officials alike with her inquiries into the federal bank bailout program and that her crusading on behalf of consumers could harm the banking industry and restrict credit to ordinary Americans.
Warren, a ubiquitous presence on television and on Capitol Hill the past year, has remained mostly silent about the post.
Watchdog with autonomy
The bill approved by Congress last week will establish an independent consumer bureau within the Federal Reserve aimed at protecting borrowers from abuses in mortgages, credit cards and other such loans. The new watchdog, an essential feature of proposals to expand financial regulation since the Obama administration released its blueprint last year, will have autonomy to write and enforce its own rules, a dedicated source of funding and a presidentially appointed, independent director.
That director will have broad authority to shape the new bureau and to set the tone for how aggressively it pursues its mission of protecting consumers, a task that regulators often neglected in the run-up to the financial crisis. The director would also have a seat on the board of the Federal Deposit Insurance Corp. and would serve as a member of the Financial Services Oversight Council, a council charged with monitoring potential threats to the financial system.
After media reports last week that Treasury Secretary Timothy F. Geithner opposed giving the job to Warren -- which his advisers have disputed, saying Geither thinks she is "well qualified" -- liberal groups, commentators and lawmakers sprang into action.
An online petition to appoint Warren drew tens of thousands of signatures, according to the Progressive Change Campaign Committee. Americans for Financial Reform, a coalition of nearly 200 consumer, labor and civil rights organizations, weighed in on her behalf. She "has shown a steadfast and tireless commitment to protecting consumers throughout her distinguished career and is without question the best candidate to run the new CFPB," the group's leader, Heather Booth, said in a statement.
Sen. Tom Harkin (D-Iowa) circulated a letter praising Warren as a potential head of the consumer agency.
Republicans and the financial industry largely opposed the new consumer bureau from the start and are unlikely to warm to any candidate.