Warren vs. Geithner: The Teapot Tempest
[Update: The Treasury Department sends a response to the Huffington Post article, which is included below.]
Citing a single "source with knowledge of Geithner's views," the Huffington Post led its homepage this morning with a story that says Treasury Secretary Tim Geithner doesn't want Elizabeth Warren, a top bailout watchdog, Harvard law professor, and tough consumer advocate, to lead the new Consumer Financial Protection Bureau. The independent Bureau, to be housed in the Federal Reserve, is the centerpiece of the Dodd-Frank financial reform bill, passed Thursday afternoon, and its leader will be a presidential appointee confirmed by the Senate.
Up in arms with the non-revelation of Geithner's opposition, the Progressive Change Campaign Committee (PCCC) blasted out an email this morning asking supporters to sign a petition urging President Obama to appoint Warren. The PCCC also said it was "launching ads today targeting Geithner" for opposing Warren.
OK, everyone take a deep breath. The news that Tim Geithner, joining several other Obama economic advisers, isn't keen on Elizabeth Warren and might not want her as CFPB head (even though the Bureau was her idea) is hardly breaking news, no matter how big HuffPo's headline is. Indeed, anyone who's followed the work of Warren's Congressional Oversight Panel could tell you that. After all, Warren's public grillings of Geithner have taken on an almost ritual quality—not a month goes by, it seems, without the blunt, Oklahoma-raised Warren bashing Geithner for AIG's backdoor bailouts or the Treasury's botched homeowner relief programs or the failure of megabanks to resume lending again, despite trillions in government assistance. Little wonder Geithner might not like Warren.
Moreover, comparing Treasury's economic policies with Warren's ideas, you can easily see where the conflict arises. If there's one quality that characterizes Treasury's economic relief programs—especially its homeowner programs—it's that they don't rock the boat much, don't rattle the status quo. (Had they done that, they would've required, say, principal reductions in the HAMP program or actually cracked down on mortgage servicers whose HAMP performance has been miserable—something Treasury has yet to do.) Warren, however, has done just that and she'd no doubt shake things up as CFPB head, which surely could make people in power a bit uneasy. In past testimonies and commentary, Warren was an advocate of "plain vanilla" financial products—making credit card contracts two pages long and simple to read, selling mortgages without hidden interest rate clauses and explosive terms. In financial circles, those are radical ideas—so radical, in fact, that Congress killed the plain-vanilla provision in its financial reform bill.
The differences between the Geithner and Warren are clear. It doesn't take a single anonymous source who supposedly knows what Geithner's thinking to know that.
The Treasury Department sends Mother Jones this response to the Huffington Post article:
"Elizabeth Warren has been a driving force behind the creation of the consumer financial protection bureau, and we have worked very closely with her over the past year and a half to make that idea a reality.
"Given her strong leadership on consumer protection, Secretary Geithner believes that Elizabeth Warren is exceptionally well qualified to lead the new bureau, and, ultimately, that’s a decision the President will have to make."