President Obama shouldn’t have backed down.
In announcing Monday that he’s nominating former Ohio Atty. Gen. Richard Cordray to run the new Consumer Financial Protection Bureau, Obama clearly hoped to leapfrog over opposition to his original pick: Harvard professor Elizabeth Warren.
Warren had drawn fire from the financial-services industry and its friends in the Republican Party for her passionate and unyielding commitment to consumer protection. They rightly perceived her as someone who would no longer accept banks’ business as usual as business as usual.
It’s been increasingly clear in recent weeks that Warren, while unquestionably the best person for the job, wouldn’t be nominated for the agency’s top spot. Republican lawmakers declared that they wouldn’t accept her under any circumstances.
But in my chats with agency insiders, it was similarly clear that the real fight wasn’t about Warren. It was about a demand from the banking industry and its GOP cronies that the Consumer Financial Protection Bureau be run by a five-person board rather than a single director.
Banks and conservative lawmakers argue that if there’s a director running the show, that person would have too much power. They say it would be more equitable for a committee to be in charge, as is the case with the Federal Communications Commission and the Consumer Product Safety Commission.
What they’re really saying is that it’s easier to water down regulatory oversight when there are multiple cooks stirring the soup. As with the FCC and the product safety commission, political ideology often becomes a factor in policy decisions.
And, as has been seen time and again, panels of regulators frequently develop cozy ties with the industries they’re charged with keeping tabs on. In May, FCC member Meredith Attwell Baker announced she’d be stepping down to take a high-level lobbying job with cable giant Comcast.
Insiders at the Consumer Financial Protection Bureau told me that this was the line Obama wouldn’t cross. He was — and reportedly is — determined to see that the new agency, which officially opens for business Thursday, is run by a lone director.
Cordray, 52, has been working with Warren as the agency’s director of enforcement. He’s viewed by consumer advocates as a well-qualified nominee for the top job, although not much more palatable to Republican lawmakers.
“A lot of the same people who disliked Warren also dislike Cordray,” said Linda Sherry, a spokeswoman for Consumer Action. “It’s hard to see how he’s more likely to be approved than she was.”
She added that “Obama doesn’t look good not standing up for Warren. The agency was her idea. She’s done all the hard work. This seems like a slap in the face to Warren.”
It does. But Warren always put the watchdog bureau’s interests ahead of her own, so it’s unsurprising that she’s accepted the president’s decision so graciously. She stood by Obama’s side Monday as Cordray’s nomination was announced.
Travis Plunkett, legislative director for the Consumer Federation of America, said it’s likely Obama is gambling that by abandoning Warren, he’ll be in a better position to defend the makeup of the Consumer Financial Protection Bureau.
But it’s unclear whether that gambit will pay off. Forty-four Republican senators have already vowed to block Cordray’s nomination unless Obama agrees to change the law and allow the agency to be run by a committee.
“Until President Obama addresses our concerns by supporting a few reasonable structural changes, we will not confirm anyone to lead it,” said Alabama Sen. Richard Shelby, the ranking Republican on the Senate Banking Committee.
That’s why I say Obama shouldn’t have backed down. He’s now in the same position as before but has sacrificed his first-choice pick to run the Consumer Financial Protection Bureau.
It’s undeniably clear that Republicans don’t like consumer protection. They’ve already moved to slash funding for the Consumer Product Safety Commission and a new database of product-safety complaints.
And now, despite the harsh lessons of the mortgage meltdown and repeated bailouts of reckless and rapacious Wall Street firms, the GOP is stubbornly attempting to cripple a new agency charged with overseeing credit cards, mortgages, payday loans and other financial products that are easily abused by businesses.
Obama keeps trying to deal with Republican lawmakers — on the debt limit, on budget cuts, on taxes. And he gets nowhere. These people have dug in their heels on virtually every issue and are determined not to budge.
Now the president has thrown Warren under a bus in hopes of breaking the logjam over leadership of the new agency. All he’s accomplished is handing a win to his opponents and getting nothing in return.
“The president is taking a calculated risk that anyone but Warren is viable,” said Ed Mierzwinski, consumer program director for the U.S. Public Interest Research Group. “We’ll have to see if this works.”
This new agency is one of Obama’s signature achievements. If he was to stand up to his opponents on any issue, this is it.
Maybe the president will prevail in the end. But at this point, he’s lost more than he’s gained.
David Lazarus’ column runs Tuesdays and Fridays. He also can be seen daily on KTLA-TV Channel 5. Send your tips or feedback to firstname.lastname@example.org.