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Nobody Wants to Take CFPB Job Over Elizabeth Warren

The Wall Street Journal dropped a bit of a bombshell yesterday when it intimated that the reason the Obama Administration hasn’t been able to choose a director of the Consumer Financial Protection Bureau is that their preferred candidates don’t want the job over Elizabeth Warren:

White House officials seeking someone to run the Consumer Financial Protection Bureau have so far failed to find a nominee, with several candidates rebuffing the administration’s overtures, according to people familiar with the process.

One concern of some: That accepting would undercut Elizabeth Warren, the Harvard law professor and consumer advocate who is currently a special adviser to the president charged with setting up the bureau. She remains a hugely popular figure among many Democrats and anathema to many Republicans […]

That deadline could result in the White House nominating Ms. Warren, now a special adviser to the president charged with setting up the bureau. She is believed to want the job but her candidacy likely would trigger a Senate confirmation battle. President Barack Obama could avoid that fight by appointing her during a congressional recess before July 21.

The White House has unsuccessfully reached out to possible nominees, including Democratic former Michigan Gov. Jennifer Granholm, Democratic former Delaware Sen. Ted Kaufman and attorneys general from Iowa, Illinois and Massachusetts, these people said. Among those under consideration for the post include Democratic former Ohio Gov. Ted Strickland and Federal Reserve Board member Sarah Bloom Raskin.

The White House is coming up against the rare instance of an individual with their own competing power base in the Democratic Party. Democrats like Granholm and Kaufman don’t want to cross her because they genuinely believe she’s the best person for the job. Granholm said so publicly. So has Ted Strickland: “My personal feeling is that Elizabeth Warren should have that position.” The other concern for politicians who may want another job in the future is that the Democratic base, who admires Warren, will be unrelenting on what amounts to a scab taking her job. Furthermore, Raskin, who just got to the Fed, almost certainly won’t get the job, and create another vacancy on the Board of Governors.

What’s more, the White House is stuck. They can’t find anyone to take the job ahead of Warren, and the deadline for a director is rapidly approaching. By July 21, someone needs to be in that position, or else the agency forfeits powers over non-bank financial institutions until a director is in place. You may say that’s the point, that the Administration doesn’t want a strong CFPB, but if that were the case, they could have relieved themselves of this hassle altogether by simply not putting the agency into Dodd-Frank. CFPB is part of the Obama brand, the one place where he can boast of helping consumers over Wall Street, and by all accounts, he wanted the agency built over some objections from his economic team.

It’s impossible at this point to get any director, Warren or otherwise, nominated and confirmed to CFPB in three months. A recess appointment will almost certainly be required. So the idea of avoiding a confirmation battle is a moot point: it’s going to be avoided. So the strikes against Warren have been negated, and what’s more, nobody wants to step in front of her.

Some believe that there’s no chance this scenario gets implemented. Yves Smith’s case is as follows:

1) Obama is moving to the right for re-election. Mostly true, but Obama is mainly moving to a position that he thinks will appeal to voters. The appointment of Warren doesn’t contradict that at all. She’s a telegenic presence and generally seen as an admirable figure. This would appeal to base voters without alienating independents, much like the stated policies (at least rhetorically) of taxing the rich and protecting Medicare that came out yesterday.

2) Tim Geithner would never allow it. In a fight between the economic policy types and the political types, the political types have won on several fronts. They artificially lowered the stimulus because they didn’t want to spook the country with a bigger number. They have so far kept Geithner et al away from Social Security. I could see the political team thinking that Warren is a good hire with “good optics,” and overruling Geithner. Furthermore, the consolation prize for Geithner is that this would get Warren out of Treasury as a special counsel and as a special assistant to the President. Geithner could more easily freeze Warren out of economic meetings. Warren would be involved in arguably less decisions at CFPB, though obviously she’d have concentrated power over consumer protection, which differs from Geithner’s apparent core mission to protect the banks at all costs.

It’s probable that the President tried to neutralize Warren by putting her in this special assistant position, but Warren is confounding everyone again with her internal bureaucratic skills. Once she got in the Administration, it appears to be much harder to get her out.

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David Dayen

David Dayen