The debate over Elizabeth Warren’s candidacy for head of the brand-new Consumer Financial Protection Bureau is one that pits liberals against liberals. Progressives are mobilizing to ensure that President Obama nominates her to the post. Their adversaries, it seems, are mostly in the White House, and Treasury secretary Tim Geithner is the most prominent. There is no corresponding conservative opposition.
Despite the intramural character of the debate, progressives are talking about Warren’s possible nomination in stark terms. The American Prospect editor Robert Kuttner went so far as to write that the financial regulation bill signed yesterday would be meaningless without Warren at the CFPB: “[People] who care about whether financial reform is to be real or sham have been following the drama of whether President Obama will name Elizabeth Warren to head the new Consumer Financial Protection Bureau.”
The effort to cast Warren as the object of a crucial struggle between reform-minded outsiders and entrenched insiders is problematic for two reasons.
The first is that if, as Kuttner suggests, financial reform is a “sham” without Warren heading the CFPB, then financial reform is clearly worthless overall. The CFPB, after all, is not one of the provisions of the reform bill created to correct the regulatory problems that led to the financial crisis, and it is not intended to prevent further financial crises. And if the regulatory system requires the perfect regulator to function effectively, it is not worth having.
One of the arguments progressives frequently make about financial regulation, as, for instance, James Kwak and Simon Johnson did in the otherwise reasonable and enlightening 13 Bankers, is that conservative presidents pick regulators who intentionally undermine their own offices. We’re not likely to see another president as liberal as Obama for a while, so if it’s a struggle to persuade him to nominate a Warren-style regulator, progressives should be very worried about the CFPB’s long-term viability.
The second is that by portraying Warren as a protector of Main Street and friend of the little guy, the left is playing into some of conservative criticisms of the liberal Washington establishment, because she is herself a member of that establishment. It is true that she has managed an effective Congressional Oversight Panel. Overall, however, she seems to be a mild conservative caricature of a Beltway liberal, having placed herself in a position of real power without having done anything in particular to deserve it. Her route to Washington prominence was not through winning an election or finding success in the private sphere , but instead through gaining a position at Harvard Law School and then vaulting into government. As Megan McArdle documents, though, there are real concerns about the quality of her scholarship at Harvard, and its liberal-friendly conclusions. It is possible, maybe likely, that Warren could resolve the questions McArdle raises without any trouble. But no one has bothered even to stop to ask the questions. Certainly not the progressives like Kuttner, who apparently don’t consider such questions should be any impediment to installing her in an office in which she would be able to exercise real power over all kinds of businesses across the country.
In fact, progressives seem to think that Warren has a right to the CFPB office. “It’s not just that Warren has earned the job,” Kuttner writes, as though anyone could “earn” the right to wield such enormous powers, which haven’t even been fully determined under the provisions of the bill yet. Warren’s main claim to the job is that she first proposed a CFPB-like office, but it’s not clear why writing an academic article is supposed to prepare you for high office. McArdle has promised a follow-up post criticizing Warren’s record as a public official, which I’ll be sure to highlight.