James Pethokoukis

Politics and policy from inside Washington

Consumer czar Warren not worried about GOP ‘enemies’

Oct 27, 2010 13:33 UTC

White House consumer czar Elizabeth Warren gave an interesting interview to the LA Times. Among the highlights:

1.  She says the only banks that new consumer rules will hurt are those whose profits are based on “tricks and traps.”  (That’s a phrase she used repeatedly in the chat.)

2.  She thinks she has plenty of power in her current role even if the exact limits are murky.

3. It kind of sounds like she would still like to head the new agency.

4. The consumer agency would have prevented the massive housing bubble and resulting financial crisis.

5.  I will let this bit speak for itself:

Are you concerned about what Republicans might do should they take majority control of the House or the Senate?

This agency has enemies, political and economic. That won’t change what I do. I’ll keep working every single minute to build a strong, independent agency to represent American families.


Queen Elizabeth (Warren) finally arrives

Sep 17, 2010 11:23 UTC

Had enough of me writing about Elizabeth Warren yet? And I haven’t even gotten to her dodgy bankruptcy study! Anyway, here is my Reuters Breakingviews opinion-torial (half opinion, half editorial) on the pick:

President Barack Obama is tweaking the legislative fine print to get his consumer champion. Coming from a credit card issuer, Elizabeth Warren might not like that modus operandi. But Main Street will welcome having her establishing the U.S. consumer financial protection agency. The president may not care that Wall Street feels differently. Still, the manner of his pick carries risk.

As the saying goes in Washington, “people are policy.” The appointment of Warren to a special advisory role is a case in point. Thanks to the Harvard law professor’s plain-spoken criticisms of banks, she has become a folk hero to liberals who have been clamoring for her to lead the new Bureau of Consumer Financial Protection. And Obama will need them to turn out in force if Democrats are to minimize what are expected to be steep losses in the November midterm elections.

But as something approaching a hate figure for the financial lobby, Warren was too radioactive for Obama to risk the Senate confirmation process that would have been needed to make her the formal head of the new agency. Hence the clever interim Plan B, under which she will advise the president and the Treasury on setting it up.

Obama himself has warm words for Warren, but she isn’t especially popular within his economic team. As head of the Congressional Oversight Panel, for instance, she has publicly clashed with Treasury Secretary Timothy Geithner over the $700 billion bank bailout. While Geithner thinks the bailout was crucial to economic recovery, Warren thinks it an opaque and unaccountable bank giveaway that has failed to restart lending. It’s a significant disagreement with an accepted White House strategy, albeit one inherited from the previous administration of George W. Bush.

Nor does her appointment do anything to heal White House divisions with Wall Street. While the president may not be too bothered about that politically for now, longer-term it makes practical sense to have a constructive dialogue with the financial sector. Shorter-term, hiring Warren in a way that’s seen as an end-run around Senate Republicans could prompt GOP senators to retaliate by further delaying three stalled nominations to the Federal Reserve board, including Janet Yellen as vice chairman.

Consumers may be justified in liking the idea of having Warren in their corner. But as she of all people could tell Obama, the fine print can contain hidden costs.


Give me a break. Elizabeth Warren is one of the few people in this country who cares about middle class people like me. We have had 8 years of corporations doing whatever they want and the result has been the worst financial catastrophe since 1929. Add to that is the fact that the rich and poor divide is growing. I am not interested in people like you being critical of someone who has been working to help ordinary people. If more people in Wasthington were like Elizabeth Warren maybe the nation wouldn’t be in this mess. Finally, even as an Obama supportor I am no fan of his good old boy economic team. Frankly, he needs to fire them and start over. These guys have been singing the praises of Wall Street until relatively recently. It will be good for them to deal with someone who isn’t afraid to take them on. It’s about time.

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A few thoughts on Elizabeth Warren

Sep 16, 2010 15:20 UTC

It looks like an end-run around the Senate, but liberals activists have still managed to get Elizabeth Warren into the Obama administration. A few thoughts:

1. I keep hearing how the WH is going to adopt a new tone with business. But picking Warren means that adjustment is more of a 2011 thing, I guess.

2.  I also hear that this Plan B might provoke senate Republicans into holding up Obama’s stalled Fed nominees.

3. Doesn’t this undermine Tim Geithner just a bit? She has been highly critical of Geithner in relation to TARP, which he has touted as key to the economic recovery.  Warren would also have preferred, her work on the TARP panel suggests, bank nationalization and mass bank executive firings in 2009. Geithner was completely against that.

4. The financial industry will complain about the Warren pick, but it now seems unlikely that either Warren or Michael Barr will end up running this new agency.  The two differ more on style than substance. So maybe the eventual pick will be someone more moderate that can better deal with a more Republican congress.

5. There is an old management rule: Never hire someone you can’t fire. Obama violated this rule by picking Hillary Clinton for secretary of state.  And he just did it again.

Just how scary is Elizabeth Warren?

Sep 14, 2010 14:15 UTC

That is the sort of question I get all the time from my business and banking contacts. And the White House may try to end run the Senate by temporarily appointing Warren to head the new consumer finance regulator. But how bad would she be for business and Wall Street (assuming she would be negative)? Here is how her opponents put it: “Let’s put an ideologue at the head of a new regulatory agency with extremely broad and undefined powers in a nation where business is crippled by uncertainty? Hey, what could go wrong?”

Then again, all the negative publicity might force her to be more moderate.  It also makes her an easier target for Republicans if they are in control of one of both Houses of Congress in 2011.  Here is what I wrote earlier this summer:

1. The Consumer Financial Protection Bureau created by the sweeping U.S. financial reform legislation will put Main Street protection under one roof. Though it technically will be housed inside the Federal Reserve, the agency will have vast power thanks to the fear of more sins like the ones that led to the housing crisis. It’s rare for a regulator to be empowered to perform “any” action necessary to protect consumers from abusive practices.

2. What’s more, virtually any link between consumers and a financial institution will get oversight. Rules will be tough to overturn. The new systemic risk council – made up of the Treasury secretary, Fed chairman and financial regulators – can only reject a proposal if it threatens the safety and soundness of the banking system.

3. The agency’s first director will set the tone, as well as precedent, for how far it can go. And Warren, who has been chairing a congressional panel overseeing the Tarp bailout fund, looks a leading candidate. The consumer protection bureau is her pet idea. The Harvard professor has said she believes banks are destroying the middle-class by loading them up with debt using deceptive products. Unions and anti-bank activists openly support her nomination.

4. Banks would prefer Michael Barr. Treasury’s point-man on the consumer agency is also an academic, but seems to have less of an ideological ax to grind. He may also be more sensitive to the need for financial institutions to earn their way back to health.

5. Warren’s bark is fearsome but Wall Street’s fears may be a little overblown. Rather than shutting down exotic ideas, she may instead push for more disclosure on them. But even if a Warren commission were to clamp down on some complex and risky products, it’s hard to believe the financial engineers won’t find a way to design simpler, and profitable, ones for consumers.


Ginchin, you have certainly made your biases clear! You have also distorted every fact you could get your left hand on. But let me ask you: exactly how did a “lack” of regulation lead to the housing bubble, the collapse of which triggered the financial crisis of Fall, 2008? Precisely which existing federal regulators failed to do their jobs, and how will the new Democrat proposals fix that? And while you’re at it, please discuss the role of personal responsbility in financial affairs. Thanks in advance for your erudition.

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