Elizabeth Warren triumphs. Well, sort of. President Obama has reportedly tapped her to be a special adviser to Treasury Secretary Tim Geithner for the purposes of setting up the new Consumer Financial Protection Bureau. (She will also be awarded the title of assistant to the president.) This is not the same as nominating her to head the CFPB, which Warren, the Harvard professor who runs the Congressional Oversight Panel that monitors the TARP bailout, first (and presciently) proposed establishing in 2007—before the financial meltdown. But it's close.
While Warren's many fans on the left have been fervently pushing for her to be named the new federal watchdog agency's first chief, there were clear signs that she would be met with resistance on Capitol Hill, with the banking and financial industries and their Republican allies in the Senate looking to prevent the plain-spoken consumer advocate from taking the reins of an outfit that is supposed to take on credit card firms, mortgage lenders, and banks that engage in abusive or deceptive practices. Rather than wage a high-profile fight over Warren—a battle that the White House might have been able to turn to its political advantage in the run-up to the congressional elections—the president has opted to sidestep the normal process and hand Warren a position not subject to Senate confirmation. She won't become head of the new agency, but she will be its official godmother, overseeing its establishment.
For some Warren backers, this might seem a half measure. The progressive FireDogLake site called it "the castration of Elizabeth Warren." But sources close to Warren tell me that is satisfied—even happy—with this appointment. And if she's happy....
Still, it's not a clear-cut victory for progressives, given that the move is open to interpretation. Is this a sign that Obama is yielding to GOP obstructionism? (Sen. Chris Dodd, the Democratic chairman of the banking committee, also seemed cool on appointing Warren to head the agency.) Or is this an indication that Obama can craftily outmaneuver GOP blockaders? Did Obama blink, or did he pull a fast one? Perhaps after Warren serves time as the agency's midwife, she'll be in a better position (politically) to be nominated as its first head. In any event, this decision will place the nation's top consumer financial advocate in the news and in the offices of this new consumer protection agency.
Meanwhile, Warren's COP has released its latest oversight report on the TARP bailout. And its no-nonsense review is decidedly mixed and hardly a ringing endorsement of Geithner's management of the massive bailout program:
Although the Troubled Asset Relief Program (TARP) provided critical support to the financial markets at a time when market confidence was in freefall, the program has been far less effective in meeting its other statutory goals, such as supporting home values, retirement savings, and economic growth….
Although the TARP quelled the financial panic in the fall of 2008, severe economic weaknesses remain even today. Since the TARP was authorized in October of 2008, 7.1 million homeowners have received foreclosure notices. Since their pre-crisis peaks, home values have dropped 28 percent, and stock indices -- which indicate the health of many Americans' most significant investments for college and retirement -- have fallen 30 percent. Given that Treasury was mandated by law to use the TARP to address these measures of the economy, their lingering weakness is cause for concern.
In other words, Treasury did not do its job. It used TARP to save the banks and big financial firms; it was not as assiduous when it came to assisting homeowners, workers, and consumers. Mr. Geithner, please give your new special adviser a warm welcome.