President Obama wimped out by not nominating Elizabeth Warren to head the Consumer Financial Protection Bureau.
Instead of Warren, whose idea it was to create an independent and powerful federal agency to protect consumers, Obama selected Richard Cordray, the former Ohio attorney general who is the current enforcement chief at the bureau.
Obama caved to Republicans, whose fierce support of the interests of the financial industry usually works to the detriment of consumers.
Warren was a player those Republicans couldn’t intimidate. They unfairly characterized her as anti-business, arguing that she, if left to run the bureau, would encourage the creation of burdensome regulations that would hold our economy back. This made Warren too controversial for Obama.
“Tell me what I did that was controversial,” Warren asked me in a telephone interview.
Not a darn thing.
She was attacked because she dared to call for simplicity in credit card agreements. She has advocated creating a single mortgage disclosure form that clearly lets people know how much and under what terms they are borrowing for a home. Yes, that’s the outrageous and contemptible behavior the Republicans couldn’t stand. How dare she actually want people to sign credit agreements and get loans they can understand, written in plain English?
Warren, who has spent the last year setting up the bureau, said she’s leaving with no ill will.
“I’m not disappointed,” she said. “I’m not disappointed at all. We have an agency. We need to move forward.”
She knows this battle can’t just be about her.
“Rich Cordray is good,” Warren said. “I recruited him. He’s the guy I wanted in a senior position in this agency. He’s smart. He’s strong, and he’s tough.”
Warren and Obama praised Cordray for his efforts against unscrupulous lending practices.
“He was the first AG out of the box to go after mortgage servicing fraud,” Warren said. “However, he has not been as controversial as me. So now either they are going to let him through or the debate becomes clear. It becomes about crippling the agency.”
With Warren out of the way and with a nominee who is clearly qualified, we’ll now see where the Republican leadership really stands when it comes to protecting consumers.
In May, 44 Republican senators wrote to Obama, threatening to block anyone from taking the helm of the consumer bureau unless certain structural changes were made to how the agency was run.
“Rather than demanding changes that give large banks effective control over the CFPB’s operations, we urge these senators to allow the president a vote on this nomination,” said Travis Plunkett, legislative director for the Consumer Federation of America. “Blocking a CFPB nominee will harm consumers who have been hammered for years by the effects of poor oversight of the financial services industry.”
Despite Republican rhetoric, the bureau as it is currently structured could do a lot to promote financial education and better enforce federal consumer financial protection laws. It was given rulemaking powers that would head off unfair, deceptive and abusive financial practices and products. For the first time, we have consumer protection powers consolidated into one agency.
After Obama’s announcement about Cordray, Sen. Mitch McConnell (R-Ky.) said Republicans haven’t changed their minds about fighting for changes to the bureau.
“Republicans have voiced our serious concerns over the creation of the CFPB because it represents a government-driven solution to a problem government helped create,” McConnell said in a statement.
So he’s saying the government shouldn’t be responsible to help fix the problems it let happen because of a lack of oversight? What gobbledygook is that?
“We can’t let politics stand in the way of doing the right thing in Washington,” Obama said in announcing Cordray’s nomination.
Sorry, Mr. President, that is exactly what has happened. The right thing would have been to pick Warren. Her nomination might have been blocked, but her confirmation hearings would have put front and center those leaders who are shilling for business and Wall Street interests.
The administration might argue that it’s more important to have someone directing the agency as soon as possible rather than spending a great deal of time fighting for Warren’s confirmation. I get that. So, Warren was sacrificed for the greater good. I get that, too. But I hope to see the administration fight and fight hard against any changes that will diminish the power of this consumer protection agency.
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