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September 16, 2010

Warren Appointment: Encouraging, But a Big Incomplete

Posted in: Uncategorized

I know it’s deeply unsatisfying, but we’re going to have to wait and see rather than make a snap judgment about this Elizabeth Warren appointment. Mainly because it’s hard to decipher just what’s going on. I saw headlines yesterday that “Warren doesn’t get top job. But the New York Times says today “Elizabeth Warren to Unofficially Lead Consumer Agency.” So which is it?

Part of the problem is the imprecision of how the law is written. But let’s go all the way back to goals. What do we want out of this? We want Elizabeth Warren to run the Consumer Financial Protection Agency. What are the obstacles? There are a few. First of all, the Treasury Department has the responsibility of standing up the agency until it transfers to the Federal Reserve. If a director is confirmed before that time, he or she can start right away; but even the most optimistic scenario would put that pretty far in the future. We have nominees awaiting Senate confirmation that have sat for a year or more. There’s the option of a recess appointment in October, but that would have an expiration date of right around the time when the agency moves to the Fed.

This “interim director” position became an option because of how Dodd-Frank was written, but it’s somewhat incomplete. It allows for Treasury to have all the powers of the director (specifically the Treasury Secretary), which he can delegate. But the powers given to Treasury in the transition period are somewhat incomplete. They may or may not involve rulemaking and the like. It looks like Treasury can pick up where other agencies charged with consumer protection left off, but to go beyond that and make new rules based on Dodd-Frank, it’s unclear.

The point is that anyone who gets an “interim director” job would be working under Tim Geithner. That’s how the law is written. If Warren takes this position (and we haven’t specifically heard she will, though it’s likely), I don’t think we should assume this person will automatically get rolled. Precisely the qualities that make her so well-suited to run the agency make her more than able to ensure that she have authority over consumer protection in whatever position she takes. And I think the fact that she becomes a special assistant to the President, and not just the “interim director,” is important to that. She has another power center to which to appeal and a direct line to the Oval Office. I’m guessing she negotiated that.

The goal I had to ensure confirmation was to have her as interim director and to nominate her, so that she’s up for the job she’s already doing, and the usual obstruct and delay tactics don’t apply. That can still happen. No announcement has been made on a director. As the HuffPo story says:

The move allows her to act as an interim head of the CFPB and will enable her to begin setting up the agency immediately and prevent the GOP from filibustering her nomination. Warren could serve until President Barack Obama nominates a permanent director to serve the five-year term — a nomination he’s not required to make for some time. Obama also could nominate her as the permanent director in the near future, a prospect that has been discussed among top aides, according to a person familiar with White House deliberations. Warren formally will be named as a special adviser reporting directly to Obama, and serving in a similar capacity to Treasury Secretary Timothy Geithner, later this week.

This doesn’t mean this is the best-case scenario. It means it’s incomplete. She ought to have this interim position and the nomination. Sen. Jeff Merkley, in the first statement out of the box, argued for this:

“While this is good news for American families, it is my hope that President Obama will nominate Warren to a permanent position to head up the CFPB. She is more than deserving of the job and the Senate should have the opportunity to confirm one of the nation’s strongest consumer advocates.”

The concern stressed by officials in the White House is that Warren would not be allowed to be the public face of the agency or to testify before Congress if under the virtual cone of silence of a Presidential nominee. This allows the agency to begin without delay. But down the road, she could still serve in the interim capacity while nominated for the position, and that’s frankly where this can go.

I know in the go-go Internet age nobody likes hearing this, but we’re just going to have to wait and see. And at the outset, I’d rather have Warren in a job she accepts than not in a job at all.


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