May 25, 2018
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A Financial Watchdog

Paul Sakuma | AP
Paul Sakuma | AP
Consumers used their credit cards more in March, marking only the second increase in the more than two years since the height of the financial crisis.

With so many ordinary folks struggling to make ends meet, pay their mortgages or get new ones, we need a financial watchdog more than ever. One is just being born, and it’s no time to pull its teeth.

That’s what some congressional Republicans are trying to do to the emerging Consumer Financial Protection Bureau. House Republicans are pushing three bills to limit the powers of the agency and create a five-person commission to replace the director.

On the Senate side, 44 of the 47 Republicans signed a letter to President Barack Obama vowing to block confirmation  of any nominee to head the new agency unless there were “structural changes that will make the bureau accountable to the American people.” That threat of filibuster seemed more intent on making the bureau accountable to the banking industry. Maine’s two Republican senators, Olympia Snowe and Susan Collins, signed the letter. Sen. Collins earlier supported an amendment that would have created a similar division in the Federal Deposit Insurance Corp.

The bureau is to be launched July 21. It doesn’t yet have a director, and that’s the key to a bitter dispute that pits consumer advocates against the big bankers and other lenders who are generous political contributors and have the ear of many Republicans.

At the center of the struggle is Elizabeth Warren, a Harvard Law School professor who originated the idea for the bureau, promoted it with the White House and through Congress, and now runs it as a special adviser to the president. She signaled its need in a 2007 article in the journal Democracy, calling for a new model for financial regulation “focused primarily on consumer safety rather than corporate profitability.” She wrote: “Financial products should be subject to the same routine safety screening that now governs the sale of every toaster, washing machine, and child’s car seat sold on the American market.”

Without waiting for an appointment as director, she has been plunging ahead to get the bureau going. She can’t set binding regulations, but she has hired dozens of staffers and established a home for the agency inside the Federal Reserve Board near the White House, started work on a fraud-alert hot line and organized conferences on credit cards and mortgages. She has created draft designs for a single, simpler mortgage disclosure form to take the place of the current two multipage forms. Her Office of Research is devising support for “evidence-based policy making.” Her website slogan is “Know before you owe.”

The president can veto any restrictive bills that Congress may pass. And he can avoid a filibuster by making a recess appointment so that professor Warren could lead the bureau through 2012.

She deserves the job. More to the point, we need her expertise and energy in correcting the balance of the consumers against the forces that brought on the great recession and often are now profiting in its aftermath.

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