(Please checkout my
UPDATE at the end of this post. It's quite self-evident that Treasury Secretary Tim Geithner will continue to run the CFPB show.)
At 7:34PM EST this evening, I posted this comment in Slinkerwink's highly-rec'd diary on the Warren appointment story:
This could be a very foreboding development...
...since it creates quite a few legitimate questions that should not sit well with us, going forward.
Just one example here would be:
Okay, so the legislative branch would threaten to defund the CFPB if she was named interim chair or nominated for the permanent position. But, what does that say about the entire purpose of the CFPB, if they were going to really make an attempt to change any significant policy, in general?
Get tough with the banks? You're defunded.
Try to put some real muscle and regulatory backbone into anti-mortgage redlining enforcement? You're defunded.
Create a level playing field for state regulators to truly fight Wall Street greed? You're defunded.
Geithner could have named her a special advisor. Same with Bernanke. Etc., etc. But, that's not what happened.
The general consensus was that naming her to head the CFPB was a bone being thrown to the left. Now, even that's really not happening...and, frankly, it just highlights how f*cked up things really are as far as all of this is concerned.
Does it beat a sharp stick in the eye?
Of course.
But, with Nate Silver telling us the House has a 2:3 chance of going Republican on November 2nd, and with our margin in the Senate dropping by a consensus of four or five, what does that say about the President's last two years of his first term?
Frankly, again, IMHO, this just highlights the gross dysfunctionality of our government.
And, it makes the entire FinReg bill even more of a farce than it was already considered to be in the first place.
No...there's really not too much to celebrate here, at all.
In fact, IMHO, it's just a twisted preview of things to come.
Like I said...the entire situation is downright foreboding.
But, I'll rec the diary anyhow! (Because of my sincere support for the person that posted it!)
--SNIP--
by bobswern on Wed Sep 15, 2010 at 07:34:52 PM EDT
A little over two hours later, Yves posted this over at Naked Capitalism; and I wholeheartedly concur with her sentiments on this matter, too: "Elizabeth Warren on Way to Being Sidelined as Head of Consumer Protection Agency, Relegated to "Advisor" Role."
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(Diarist's Note: Naked Capitalism Publisher Yves Smith has provided written authorization to diarist to post her blog's diaries in their entirety at Daily Kos.)
Elizabeth Warren on Way to Being Sidelined as Head of Consumer Protection Agency, Relegated to "Advisor" Role
Yves Smith
Naked Capitalism
September 15, 2010 9:40PM
The body language of the Administration has been clear from the outset on the question of whether Elizabeth Warren would get its nomination to head of the new financial services consumer protection agency. Despite the occasional public remark regarding her undeniable competence, which really amounted to damning her with faint praise, Team Obama has never been on board with the idea. Michael Barr, assistant treasury secretary, was noised up early on as a possible candidate, but the PR push halted abruptly when her many supporters pointed out the obvious, that she was clearly the better choice. Then we had the no doubt authorized Chris Dodd kiss of death, that he thought she was qualified but doubted she could be confirmed by the Senate.
The reality is that the Administration is never going to appoint her; the only question is whether she can be kept in their orbit and not be a net negative as far as their dubious priorities are concerned. Timothy Geithner has become a central actor on all Adminstration economic policy matters, giving him more reach, and thus more face time with the White House than is normal for a Treasury secretary. Given how Warren has successfully, and correctly, roughed Geithner up before Congress in her role as head of the Congressional Oversight Panel for various TARP administrative shortcomings, he was guaranteed to be at best a non-supporter.
But on a much more basic level, the Warren marginalization isn't about personalities, although the powers that be love to pigeonhole thorns in their side that way. The clashes reflect fundamental differences in philosophy. Geithner, the Administration that stands behind him, and Dodd all are staunch defenders of our rapacious financial services industry, even though they make occasional moves to disguise that fact. Warren, by contrast, is clearly a skeptic, and a dangerous one to boot, because she understands the abuses well and is able to communicate effectively with the public.
Expect Warren to be pushed further to the sidelines, just as Paul Volcker has been (oh, and pulled out of mothballs when the Administration desperately needed to create the appearance it really might be tough on banks. Perhaps they hope her tenuous standing as acting head can be used to keep her in line. But she may also believe she has more influence even in a likely to be weakened position than on the outside as a critic. And sadly, that may prove true. Individuals, no matter how stellar their resumes, command far less media attention than those who hold powerful posts.
Now the Administration is pretending to hide its cards on this one. Technically, it could bypass confirmation altogether and have Warren as de facto leader of the agency, and never name a permanent director. However, the end game seems obvious: keep her in orbit through mid-terms to prevent a hissy fit from her many fans, then name a more bank friendly permanent director (the argument no doubt being that her effectiveness is compromised by her not being confirmed, and with the odds high that the elections will put more Republicans in Senate seats, the Administration will argue its hands are tied). However, this timetable could be optimistic; as a special advisor, she serves at the pleasure of the Administration and will be a lame duck as soon as a permanent director candidate is put forward.
Will Warren last? Both Brooksley Born and Sheila Bair have been accused of not being team players. With the team being industry cronies, that's a badge of honor. But each also had a clear bureaucratic role, and Born was still pushed out. I'm surprised Warren is accepting such a compromised position. Perhaps she believes she still has a bully pulpit and can embarrass the Administration into doing the right thing. But it will take a very thick skin for her to follow that course of action.
From MSNBC. Note its original headline was "Wall Street critic won't get top consumer job"; it has been revised to the anodyne, "Wall Street critic to help set up consumer agency":
The White House will name Wall Street critic Elizabeth Warren to a special advisory role in setting up the new Consumer Protection Agency called for by the financial regulatory overhaul, a source familiar with the White House's plans told NBC News on Wednesday....
The 61-year-old Harvard University professor had been considered the leading candidate to head the bureau itself, but her lack of support in the financial community could have set the stage for contentious Senate hearings that may have ultimately derailed her confirmation...
Others mentioned as contenders to lead the agency are Michael Barr, an assistant treasury secretary who was a key architect of the administration's financial regulatory plans, and Eugene Kimmelman, a deputy assistant attorney general in the Justice Department's antitrust division.
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UPDATE: Contrary to this article in Thursday's NY Times, "Warren to Unofficially Lead Consumer Agency," which incorrectly indicates otherwise (along with all of the other spin we're hearing today in the MSM), we've known (since at least July 17th, based upon this article in the WaPo by David Cho) for quite awhile that it is--and will continue to be--none other than Treasury Secretary Tim Geithner who'll be "officially" running the Consumer Financial Protection Bureau (CFPB).
HERE'S THE UPDATE (AND BACKGROUND): From my July 17th diary:
...The Washington Post's extremely complimentary lede on Tim Geithner in Saturday's edition, among other things, informs us that, as a result of the just-passed FinReg bill in Congress, the Treasury Secretary will maintain some of the most expansive power ever bestowed upon the Treasury Department. In fact, we're informed in the WaPo article that the FinReg legislation formally bestows upon the Treasury Secretary many of the very same, all-encompassing powers that were only temporarily given to his predecessor, former Goldman-Sachs CEO and Bush Treasury Secretary Henry Paulson, in late 2008.
We're told by Cho that it'll be Tim Geithner who'll be "...the head of the new consumer bureau until a director is confirmed by the Senate, allowing Geithner to mold the watchdog in coming months. And it will be up to him to settle a raft of issues left unresolved by the bill -- for instance, which financial derivatives will be subject to the tough new trading rules and which risky activities big banks will be required to spin off."
And, again, if you read Chan's [Diarist's note: reference is to NY Times' Sewell Chan in my 7/17/10 diary] piece, above, a note is already made therein that Geithner will be enabled to overrule that "powerful" (Heh!) new entity whenever he wishes.
Timothy Geithner's realm grows with passage of financial regulatory reform
By David Cho
Washington Post
Saturday, July 17, 2010
Half a year after some predicted he would be booted from the Obama administration, Treasury Secretary Timothy F. Geithner stands to inherit vast power to shape bank regulations, oversee financial markets and create a consumer protection agency.
Few Treasury secretaries have had such sweeping influence over such a wide realm as Geithner will wield once President Obama signs the new financial overhaul legislation passed this week by Congress.
The effort to dramatically expand financial regulation bears the stamp of no one more than Geithner. The bill not only hews closely to the initial draft he released last summer but also anoints him -- as long as he remains Treasury secretary -- as the chief of a new council of senior regulators...
--SNIP--
...In the wake of the bill's passage, there is recognition within the administration as well as on Capitol Hill that Geithner is not going anywhere anytime soon. White House officials said the speculation earlier this year about his tenure misunderstood his standing within the administration...
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Let the flames of Kossack cognitive dissonance come forth...