The financial meltdown and the recession that keeps dragging on have severely hurt investors in real estate, Wall Street and almost every other place they had put their money. Regulators who were overly friendly to what they regulated added to the trouble. We have needed stronger financial regulation for a long time.
Elizabeth Warren, a Harvard professor and consumer rights advocate, saw the need when the financial system collapsed. She thought up the idea of a federal agency to guard against further abuses, sold it to Lawrence Summers, the White House economics chief, and worked behind the scenes to get it established. Against almost unanimous opposition by the financial industry, the agency unexpectedly made its way into the new financial reform law as the Bureau of Consumer Financial Protection.
Warren is on the short list of candidates to lead the bureau. The financial industry is united against her, and Treasury Secretary Timothy Geithner is said to oppose her nomination. Since 2008, she has overseen the Congressional Oversight Panel, a bailout watchdog that has kept track of how two administrations spent billions in taxpayer money to prop up Wall Street banks and help homeowners and small businesses. Her monthly reports often have slammed the Treasury Department’s actions. She asked pointed questions, though often with a smile, of Mr. Geithner when he appeared before her panel. A YouTube video headlined “Elizabeth Warren Makes Timmy Geithner Squirm” helped strain her relations with the treasury secretary.
Her critics often say that she would be a “polarizing” influence as head of the agency. Of course she would polarize. That’s exactly what’s needed. The financiers and the consumers are economic partners in transactions. But they also are often adversaries: What helps one side hurts the other. That’s a perfect case of polarization.
Too many regulators have been appointed because they get on well with those whom they regulated. Elizabeth Warren’s blunt style is just what the muddled financial picture needs.
Some administration figures are said to fear that the Senate would reject nomination of Elizabeth Warren. Financial services are among the largest contributors in congressional campaigns. And half-hearted support by the administration could add to the confirmation problem.
Here is an opportunity for President Barack Obama to defy the pressure by the financial community, resist any cautious advice from his aides, and strike a blow for the public welfare. If that means the usual Republican filibuster, so be it. Make those who try to block a vote by prolonged debate bring out their mattresses and see how long they would last.
That’s the way Harry Truman would have done it, and look how well he did in the 1948 campaign when almost everybody thought he would lose.