The Dodd–Frank Financial Regulation Bill, which President Obama signed today, created yet another Czar to head yet another Executive Agency, the soon to be formed Bureau of Consumer Financial Protection. Both the AFL-CIO and the SEIU have lobbied the administration to appoint Elizabeth Warren, a Harvard law professor who was one of the main architects of the Bureau as its head. Warren was also the chair of the Congressional Oversight Panel in charge of evaluating how effectively the TARP money was spent.
A senior source within the SEIU told the Huffington Post, Union “President Mary Kay Henry will ‘raise the point that Elizabeth Warren would be an excellent head of the newly created Consumer Protection Agency’ in private talks with Treasury Secretary Timothy Geithner.”
Not to be outdone AFL-CIO President Richard Trumka released a statement saying Warren is the only candidate “who is uniquely qualified and equipped to head this new agency.”
The Washington Post reported “Liberals across the land are advocating vehemently for Elizabeth Warren to run the Consumer Financial Protection Bureau created by the soon-to-be-signed financial reform bill.” And in another article “(For a sense of the pressure from the left that President Obama is facing to appoint Warren, here is a petition in support of her candidacy from BoldProgressives.org, and posts advocating her candidacy from Paul Krugman, Matthew Yglesias, Annie Lowrey, and the Post’s own Ezra Klein).”
Why have Big Labor and the left so strongly supported Elizabeth Warren? First the new bill will make it easier for unions, environmental groups and other special interest to engage in shareholder activism. The “proxy access rule” will allow these groups to put their own representatives on corporate boards throughout the country. This access could allow activist groups to put their agendas ahead of what is best for the corporation.
It could also be because she has made a career advocating class warfare and demonizing banks.
In 2009 Thomas F. Cooley in Forbs noted:
“[T]he Congressional Oversight Panel Report seems to have come to a more controversial conclusion. The COP argued that historical lessons show that the most effective response to banking crises has involved a combination of ousting “failed management” and liquidating banks. The April report takes on the Treasury’s responses in these areas and questions how effectively it has implemented its goals in dealing with the crisis.
The report essentially argues for nationalization on the grounds that, under government reorganization, bad assets can be removed, failed managers can be ousted or replaced and business segments can be spun off from the institutions. “Depositors and some bondholders are protected, and institutions can emerge from government control with the same corporate identity but healthier balance sheets,” the report argues, parroting a position that has been staked out by many prominent economic pundits.
Clearly, this is Elizabeth Warren’s particular crusade against the banks, since a majority of panel members dissented from the direction the report took and two refused to sign off on it at all. Her letters to Secretary Geithner and Chairman Bernanke stop just short of attacking them for trying to restart the market for asset-backed securities. These markets have been an important part of the financial intermediation system for decades, funding student loans, consumer credit and small businesses. But Professor Warren has had a long-standing antipathy to consumer credit markets.”
Yesterday CBS News told of her already mounting opposition saying:
Critics say that she lacks the experience for the job, that she has antagonized members of Congress and Treasury officials alike with her inquiries into the federal bank bailout program and that her crusading on behalf of consumers could harm the banking industry and restrict credit to ordinary Americans. …..
That director will have broad authority to shape the new bureau and to set the tone for how aggressively it pursues its mission of protecting consumers, a task that regulators often neglected in the run-up to the financial crisis. The director would also have a seat on the board of the Federal Deposit Insurance Corp. and would serve as a member of the Financial Services Oversight Council, a council charged with monitoring potential threats to the financial system.
Lacking experience, advocating bank nationalization, and allowing special interest to control corporate boards, Warren is right when she said banks are not going to like her ideas. What she left out is that probably so will most of America.