Tuesday, July 20, 2010

Elizabeth Warren for Consumer Protection...if she wants it.

I'm generally of the mindset that Elizabeth Warren would make an excellent head for the forthcoming Consumer Protection Agency that's going to be inside the Fed. I first saw her in the Frontline episode, "the Secret History of the Credit Card". She stood out because she said this:

I teach contract law at Harvard Law School, and [also] commercial law and bankruptcy ... but if you put me under oath right now, I tell you, I don't know what the effective interest rate will be on my credit card next month, because I can't read it in my contract.

That told me a lot, and impressed the hell out of me. It laid the problem bare, and in its own small way, led us to where we are today.

Now, I'm glad that the Labor Unions are going to lobby on her behalf. I'm not sure what Geithner's problem is with her, and I don't really care, either. Though I remain a Geithner fan, he's not going to be making this appointment, is he?

Some of the dumber pundits on my side of the (Liberal) Aisle are drawing yet another line in the sand, demanding that she be appointed, whining that a failure to appoint Elizabeth Warren is yet another reason for them to be disappointed with the insufficient Liberalism of the Obama Administration.

Whatever. (Yawn).

Let me maintain the ever-constant position of this blog that Simon Johnson, Robert Kuttner, David Sirota and Amy Siskind can all stick it.

What fascinates me about these douchebag demands, is that I'm 99% certain that none of these guys have actually spoken with Warren. I know I haven't. (Have you?) Thus, none of these guys...let me repeat, none of them...is even sure if she wants the job.

I'm not saying she doesn't. She may be chomping at the bit for the gig, but it'd be nice to hear the words from her lips before these morons start hemming and hawing. If she says she wants it, then at least their plaintive cries stand on firmer ground.

Even so, Erza Klein speculates that while Elizabeth Warren is well qualified, there may be even better (though less-known) people out there who could do the job:

My colleague Neil Irwin has a post this morning throwing some cold water on the heated advocacy for Elizabeth Warren to lead the Consumer Financial Protection Bureau. I'd group the objections into two buckets -- innovation and administration -- and both are fair.

Irwin's first concern is that an overzealous consumer regulator could, in his or her enthusiasm for ridding the market of trickery, also rid it of products that make credit available to the working class. Does keeping a small number of people from getting into serious debt justify keeping a large number of people from accessing credit instruments they could use effectively?

It's a legitimate concern, and only Warren can answer it. Of course, it's possible she's already explained the test she would apply to decide whether consumer financial instruments were legitimate, and I just haven't seen the speech.

Irwin's second concern actually worries me less. It's hard to predict who will and won't be good at building an agency. It's a task that's not quite like any other, and fairly few people have much of a track record at it. It's also not a task that's solely dependent on the director. Deputy directors and other high-level managers have a lot of influence over hiring and administering and creating a workplace culture. But only the person at the top can set the agency's vision and sensibility and appeal.

The question, to me, is whether Warren is the only person who can do that. I've made the argument that she will have a unique appeal to the sort of talented young lawyers and consumer advocates that we want working in the agency. She's also brilliant at working the media and acting as a public advocate, and she's clearly got an ambitious and restless vision for what this institution can become. But the other finalists aren't slouches.

Michael Barr is a Treasury official who deserves as much credit -- or, depending on your perspective -- bears as much blame -- as anyone in the country for shepherding the financial regulation bill to passage. He's good at working with legislators and the media, has excellent internal relationships that will be important for guaranteeing the agency's autonomy, and has the intellectual heft that his previous life as a law professor at Michigan and a Brookings scholar would suggest.

The third candidate, Gene Kimmelman, is the Justice Department's chief counsel for competition policy and intergovernmental relations, and was formerly a vice president at the Consumer's Union. The National Journal called him "one of the best known consumer advocates in Washington." He knows the field well, and probably already knows everyone he'd like to see working at the agency.

Moreover, the Consumer Financial Protection Bureau is a much-hyped agency being built amidst a grim job market. It won't have trouble recruiting, even without Warren's star power at the top.

So in the end analysis, the question is whether you think Warren's unique prominence and pedigree as the person who created the idea for this agency and put the issues beneath it on the map is worth more than the managerial experience and administrative relationships Barr and Kimmelman have. I come down on Warren's side, but her nomination has achieved a level of symbolism on the left that's out of proportion to the merits of the different candidates.

For me, it's Elizabeth Warren's skill at communicating that makes her my favorite. There may be better administrators, but no one is going to be able to explain the myraid bull@#$% of the Banks and Credit Rating Agencies better. So the job should be hers...

...if she wants it.