JONATHAN COHN SEPTEMBER 16, 2010
President Obama on Friday will announce he is putting Elizabeth Warren in charge of the new consumer financial protection agency.
Well, that’s sort of what he’s doing. Honestly, I’m still trying to figure out what's about to happen—and whether those of us who like Warren for the job should be happy.
As first reported yesterday by Jake Tapper of ABC News, Obama will make Warren an Assistant to the President and a Special Advisor to the Treasury Secretary. The two titles are important. The Treasury position means that she will have primary responsibility for setting up the new Consumer Financial Protection Bureau, the independent regulatory agency created in the financial reform law Obama signed a few months ago. (It's the Treasury Department that has initial responsibility for setting up the bureau.) But as an assistant to the president, Warren will also report directly to Obama, giving her higher stature and a certain measure of independence.
What Obama is not doing, at least right now, is formally appointing Warren as the Bureau's first director. The position requires Senate confirmation and, according to senior administration officials, Obama anticipated a long confirmation fight—during which time Warren could not, under a longstanding agreement between the parties, be involved in decision-making. Since Treasury has to start setting up the Bureau anyway, giving Warren this position ensures she’ll be the one shaping it from the very beginning. She'll be able to hire staff, help set up budgets, and so on.
Here’s the official explanation, via a senior administration aide who spoke to TNR on Thursday morning:
Warren and the president discussed this extensively. They decided that setting up the agency, having the architect of the agency at the helm of it at this pivotal time, was the most important thing. ... I think they agreed that a confirmation process could take months. We’re absolutely confident she could get confirmed, but it could take seven, eight, even twelve months—and during that period she would be sidelined.
One potential bonus of the appointment is that, as a special assistant, Warren could consult on issues besides consumer protection. As critics like FDL's David Dayen have pointed out, Obama’s economic team could use some more ideological perspectives. Virtually every key policy adviser represents the same, relatively narrow swath of center-left thinking. (That's even more true with the departure of economist Christy Romer.) The team could also stand to have a few more people from less privileged backgrounds. Warren, who is a more unabashed populist and comes from a working-class family, would provide that diversity.
But that’s just a hypothetical bonus. As far as I know, nobody in the administration has said she’ll play such a role. Also not clear—and, potentially, a lot more worrisome—is how much independence Warren will really have, even with the dual appointment. Here’s how one well-connected consumer advocate, somebody who knows both the issue and the people, explained it to me:
I assume she wouldn't take the position unless she thought it had some teeth, but a major goal of creating an independent agency was to move consumer protection away from Treasury and bank regulators and make it politically insulated. Having Warren serve at the pleasure of the President doesn't accomplish that. The point of the legislation wasn't to have a special presidential advisor on consumer protection, but a full fledged agency.
I also wonder about the political thinking behind this decision. Many Republicans would fight the Warren nomination. And it seems like precisely the sort of fight Obama, and the Democrats, should want. It'd become a litmus test over which party wants to get tough with the financial industry and which wants to protect it. That would energize the base, which very much needs energizing. It might also get the attention of those independent voters convinced Obama has been too nice to the banks.
Of course, it's hard to know for sure how these things will play out. Nomination fights rarely break out of the usual Washington noise, in which case it really would be the worst of both worlds: Warren would be on the sidelines and Obama would have no political benefit. (As Annie Lowrey notes in the Washington Independent, this is yet one more reminder of how dysfunctional the nomination process has become.)
For what it's worth, the administration official I interviewed said that Obama does not fear such a fight and made clear Obama might still nominate Warren formally, when the time comes.
I've solicited some more opinions, from people more in the know, on what this means. I'll update this item as I hear from them.
Update: David Corn of Mother Jones reports that sources close to Warren describer her as "satisfied—even happy—with this appointment." If so, that would suggest she'll get the authority and power she needs.
Update 2: Just spoke to Rep. Barney Frank, an architect of the financial reform law and vocal proponent of appointing Warren to run the consumer protection agency. "This is very good news," he told me. "I give the president credit for finding a creative way to do this, for putting the right person in charge of this agency without being held up by the Senate."
Frank is also convinced that Warren wouldn't take the job if she didn't have all of the authority she needed. When I expressed some more skepticism, he chastised me for being a whiny liberal who can't accept good news when it's in front of me.
I'd be offended, but (a) Frank talks to lots of reporters that way and (b) Frank is usually right.