Obama should nominate Elizabeth Warren to lead new consumer protection bureau
Barack Obama promised enormous change in how our government was run when he was elected president.
He should live up to his word and nominate Elizabeth Warren, one of this country's most passionate and committed consumer advocates, to head up the new Consumer Financial Protection Bureau, which is authorized in the Wall Street reform bill that he signed into law on Wednesday.
The bureau, which will be housed within the Federal Reserve, will have the authority to regulate and analyze consumer financial products such as mortgages, other types of loans and credit cards. A special unit will be created to sound the alarm early if companies or products pose a risk to consumers.
The person who directs this new bureau will have the power to build an agency that puts the interest of consumers first and protects them from many of the shady and predatory practices of a financial industry that, especially in the past decade, has run amok.
Warren is chairwoman of the congressional oversight panel monitoring the U.S. banking bailout. She is also a bankruptcy expert and has produced research that highlighted bad credit products.
It was Warren who championed the idea of a financial product safety commission. In a 2007 article for the journal Democracy, Warren wrote that just as the Consumer Product Safety Commission was created to protect buyers against unreasonable risks of injury, so too should there be an agency to safeguard consumers who use various forms of credit.
"Clearly, it is time for a new model of financial regulation, one focused primarily on consumer safety rather than corporate profitability," she wrote. "Financial products should be subject to the same routine safety screening that now governs the sale of every toaster, washing machine, and child's car seat sold on the American market."
Already there is concern that Warren wouldn't get through the confirmation process because she's viewed as too consumer-friendly. During an interview on WAMU-FM's "The Diane Rehm Show," Sen. Christopher Dodd (D-Conn.) said he wasn't sure Warren could win Senate confirmation.
"People can be great nominees and Elizabeth, I agree, could be a terrific nominee. The question is, 'Is she confirmable?' And there's a serious question about it," said Dodd, chairman of the Senate Banking Committee.
Even if Warren would have a tough time getting through the nomination process, Obama should back her anyway. There are other good candidates for this job, but Warren's got proven moxie. Let the American people see which senators are pro-consumer and which ones are afraid to tick off the financial services industry. Going forward with Warren's nomination would be a good thing, said Sen. Bernie Sanders, an independent from Vermont.
"It will allow for a serious debate as to the role that government should play in protecting the American people against the outrageous behavior we have seen on Wall Street," Sanders said.
Some people are questioning whether Warren will stand in the way of financial product innovation. They worry that her history of criticizing credit issuers and industry practices might crush the development of new credit products for the middle class.