In a Nation article last month, “Disarming the Consumer Cop ,” I reported how the bank lobby and its Republican allies in Congress were trying to gut the Consumer Financial Protection Bureau (CFPB) before it goes live on July 21 and prevent Elizabeth Warren from becoming the bureau’s full-time director.
The lobby won a partial victory yesterday, when the Obama administration shunned Warren and nominated Richard Cordray —a former Ohio attorney general who was head of enforcement at CFPB—to run the bureau. Cordray has a strong track record  of investigating foreclosure fraud and other corporate malfeasance, but he does not have the clout or expertise of Warren. She was the natural pick to run the agency she conceived of and by far the most qualified person for the job. Choosing somebody other than her was a colossal capitulation by the Obama White House.
I’m sure the Obama administration had its reasons for not picking Warren: her appointment might have further inflamed Republicans at a time when Obama needs their support to raise the debt ceiling; she’d complicate his outreach to Wall Street and fundraising strategy for 2012; she wasn’t going to win any popularity contests inside the Treasury Department.
But Warren’s attributes far outweighed her negatives. The administration pushed her out the door at the very moment it needed her the most. She’s the best spokesperson Obama has on economic policy, especially compared to a Wall Street–friendly stiff like Tim Geithner, and has spent her whole life fighting for the middle class, which is the stated priority of the Obama administration. The consumer bureau is the most popular and tangible aspect of the Dodd-Frank financial reform bill, which was the most popular piece of legislation enacted by the administration in its first two years in office.
In the last election, voters who blamed Wall Street  for causing the economic crisis supported Republicans over Democrats by fourteen points! The public viewed Obama as a big spending friend of the banks. No one would ever say that about Warren.
Even though she’s out of the picture, the GOP still wants to disarm the CFPB and reiterated their vow yesterday not to confirm Cordray unless the White House agrees to major changes to the bureau. The Wall Street Journal  reported that “the White House may be willing to make some minor concessions to win confirmation of Mr. Cordray.” But unless the administration is willing to completely restructure the CFPB and forgo its independence, Republicans will not confirm Cordray. That leaves Obama with no choice but to give him a recess appointment, which is what he should have done with Warren.
Thus far, the president has been extremely reluctant to use his recess authority , making only twenty-eight appointments, even though nearly 20 percent of his judicial and executive branch nominations have been blocked by Senate Republicans.
The CFPB goes live on Thursday. Without a full-time director in place, the CFPB will be able to supervise the nation’s largest banks and enforce consumer protection rules from other agencies but will not be able to assume any of its new powers , such as policing the shadow banking industry or cracking down on “unfair, deceptive or abusive,” financial services products.
If he wants the CFPB to do its job, Obama needs to act swiftly. He wasn’t willing to fight for Warren. Will he now fight for the CFPB? If he doesn’t, its very survival is at stake.
—Ari Berman is the author of Herding Donkeys: The Fight to Rebuild the Democratic Party and Reshape American Politics . You can follow him on Twitter at @AriBerman .