Elizabeth Warren is a master of simplifying the complex. In public appearances, the Harvard Law School professor who calls herself a "plain, flat-spoken, Okie" can explain the problems facing the nation's economy—and her well-researched solutions for them—in layman's terms. For example, when she proposed in 2007 the idea of creating a federal regulatory agency to protect consumers from abuses by banks and mortgage lenders, she framed a clear question: Why is it impossible in this country to buy a toaster with a 1-in-5 chance of it burning down your house, while it is so easy to refinance an existing home with a mortgage that has the same 1-in-5 chance of putting the family out on the street?
It is a good enough analogy that President Obama reiterated it on ABC's Good Morning America in a recent appearance. He went on to praise Warren for her hard work making her idea, the Consumer Financial Protection Bureau, a reality in the Dodd-Frank Wall Street Reform and Consumer Protection Act. Warren, who currently heads the Troubled Asset Relief Program Congressional Oversight Panel, had a front-row seat at the July 21 bill-signing ceremony, and by most accounts she is the front-runner to head the new bureau.
But banking lobbyists and Senate Republicans have mounted a pre-emptive campaign against her, forcing the administration to consider the political cost of a confirmation fight. The Senate opposition is led by Richard Shelby of Alabama, the senior GOP member of the Banking Committee, who argues that the new agency under Warren would be a "nanny state" bureaucracy that burdens the financial industry and raises costs for consumers. [See where Shelby's campaign cash comes from.]
Democratic Sen. Chris Dodd of Connecticut, an original sponsor of the financial reform bill, created a stir with remarks he made on July 19 to NPR. "I think Elizabeth would be a terrific nominee," Dodd said. "The question is, 'Is she confirmable?' And there's a serious question about it." White House spokesman Robert Gibbs responded that she is "very confirmable." A dozen Democratic senators signed a letter to Obama supporting her. And Warren reportedly has undertaken some quiet outreach to moderate Senate Republicans who would be crucial in a Senate vote.
Last Thursday, Treasury Secretary Timothy Geithner brought together top financial regulators to initiate planning for the new bureau. By some accounts, Geithner has a strained relationship with Warren stemming from her TARP oversight role, but he denies trying to block her nomination. Others in the running include Michael Barr, assistant Treasury secretary for financial institutions, and Gene Kimmelman, a former senior official at Consumers Union who is now chief counsel for competition policy at the Justice Department.
The prospective Warren nomination is a big issue among restive liberal Democrats and progressives. An online pro-Warren petition by the Progressive Change Campaign Committee has close to 210,000 supporters. There is some speculation that Obama might choose to dodge a confirmation fight by making Warren a recess appointment or by naming her as interim director for up to six months, giving her the opportunity to hire bureau staff and begin creating rules to protect consumers.
While the Obama administration continues to hold out on its official nomination, the Treasury Department confirmed yesterday that Warren will indeed be involved in the bureau in a major way. "The President has made clear that if she is or isn't the nominee, she will have a central role to play," said Barr after a speech at the Charlotte, North Carolina Chamber of Commerce.