President Obama has appointed Harvard Law Professor Elizabeth Warren to help organize the new Consumer Financial Protection Bureau.
The question now is whether Warren, a consumer champion, will wield the full power afforded by Congress to the agency that is supposed to crack down on Wall Street swindlers and speculators.
The answer to that question will tell us a lot about Obama’s commitment with regard to critical economic fights, and about the ability of progressives to influence the administration.
Right now, the jury is still out.
Obama has been looking a little more focused and functional of late, talking about the need to invest in infrastructure projects to create jobs and rejecting Republican calls for the extension of George W. Bush’s tax cuts for the rich.
Yet, for those who thought Obama was starting to "get" that America wants a president who will stand up to the economic royalists and do the right thing, his failure to appoint Warren to head the bureau is unsettling.
Obama has named the hero of reformers—and the one person anywhere near the upper echelons of this administration that Wall Street fears—to an advisory post where she will report to Treasury Secretary Timothy Geithner. Congress placed the bureau’s powers within the Treasury Department until such time as a permanent director is appointed and confirmed by the Senate to a five-year term. But Geithner has never been seen as an advocate for the agency. And, despite some complimentary public statements regarding Warren by the treasury secretary, it has been broadly suggested that he has been a behind-the-scenes opponent of her appointment to head the bureau.
Warren will also report to Obama—as a presidential assistant—and White House aides say that she will play a significant role in helping to create the consumer agency that is supposed to make real the promises made in the vague financial regulatory overhaul legislation passed earlier this year. Perhaps that will be the case.
Certainly, groups such as MoveOn.org are trying to put the best spin on the decision.
Hailing Obama’s decision as "Great News!" Move On says: "This is the boldest step Obama’s taken so far to rein in the big Wall Street banks. And it’s a major victory for grassroots progressives who rallied for Warren. The banks fought to keep her out of this job—and now that she has it, they’ll do whatever they can to keep her from exercising her full authority. That’s why we need to get the word out—to make sure she has the grassroots support she needs to aggressively police Wall Street."
Implicit in the last line of of the statement is a concern that Warren may ack the authority to aggressively police Wall Street.
I prefer the edgy response of Adam Greene, the co-founder of the Progressive Change Campaign Committee, who noted that: "The White House is being coy about Warren’s role.… The fact is that Warren will functionally have the keys to the new bureau for it’s opening months, giving her immense opportunity to craft it the right way—and giving President Obama a brief honeymoon on this issue with progressives through the election. It’s still completely on the table that she’d be given a permanent appointment, and if the Wall Street types in the White House tried to stab her in the back and give someone else that role, there’d be hell to pay with progressives. That would be a really stupid move right as the president gears up his own re-election."