Why Obama will nominate Warren
The nomination of Elizabeth Warren to head the Consumer Financial Protection Bureau seems to be a foregone conclusion at this point. Warren and the large team of Warren enthusiasts have been pushing her nomination aggressively, to the point at which no one in the Obama administration is going to want to face the political firestorm associated with not nominating her.
This is no horserace: Warren’s running only against a vague conception of not-Warren, rather than against a flesh-and-blood Michael Barr or anybody else. Here’s Charlie Rose, for instance, questioning Tim Geithner on the subject in the very first direct question of his interview:
Charlie Rose: Will Professor Elizabeth Warren be the new director of the consumer agency?
Tim Geithner: Let me just say that she is an incredibly capable, effective advocate for reform. She was way ahead of her time, way ahead of the country in pointing out what was actually happening in the credit business. All the bad stuff that was happening, the looming housing crisis, she was pioneering and pointing out those risks. And she is a — I think probably the most effective advocate of reform we have in the country on these questions. So like I say, I think she’d do a great job in that position…
Charlie Rose: She has the qualities you’re looking for.
Tim Geithner: Oh, absolutely, without a doubt, without a doubt. But that’s the president’s decision to make.
I understand. The other question is whether her nomination will be approved by the Senate if she’s nominated. There’s some political controversy there.
And here’s Floyd Norris, today, saying that “the bureau, more than most new agencies, is likely to be molded by its first boss”:
The new office has a director, not a board, and it is hard to imagine what runner-up position could be offered to Ms. Warren.
The president could choose someone who will not ruffle too many feathers, and in the process avoid yet another Senate floor fight.
But if he names Ms. Warren, and she wins confirmation, she and Ms. Schapiro could become a dynamic duo in reforming Wall Street.
Neither Rose nor Norris so much as mentions Barr, or the other candidate for the job, Gene Kimmelman. And that’s where they fall short, I think. Because it’s far from obvious to me that Barr, Kimmelman, or anybody else would indeed “not ruffle too many feathers” and “avoid yet another Senate floor fight”. And unless you can convince yourself that the Senate would be tougher on Candidate B than on Warren, there’s no Senate-related reason not to nominate her.
The other reasons not to nominate Warren are weak indeed. There’s talk that she doesn’t have executive experience; I doubt that argument will carry much weight with Barack Obama. Megan McArdle doesn’t like the methodology in her research papers; again, this is not a big deal. And Adam Ozimek, in a blog post entitled “The case against Elizabeth Warren”, sums it up like this:
If you’re the type of person who thinks that interest rates of 200% are crazy and shouldn’t be permitted, then you probably will like Warren as head of CFPB. However, if you’re the type of person who thinks that payday lending makes people better off, then you probably don’t want Warren as head of CFPB.
Warren is known to have powerful friends in the White House, which means that there’s really only one possible obstacle to her getting nominated: Tim Geithner. Dan Froomkin, for instance, reckons that “the only way Warren will get the job is if Geithner is overruled”. But if you look at the tone of Geithner’s comments to Rose, he hardly seems dead-set against her. And no Treasury secretary, least of all Geithner, likes going against the wishes of the White House. Geithner is at heart a technocrat, rather than a fighter or an ideologue, and he’s certainly no master of the dark political arts. If he was ever trying to prevent Warren’s nomination — and I’m not convinced that he was — then he has at this point been convincingly outmaneuvered. The game’s over; her nomination is a done deal.