Obama, bowing to pressure from Republicans, has overlooked Elizabeth Warren, who conceived the idea of the new consumer agency, the Consumer Financial Protection Bureau (CFPB), in favor of ex-Ohio Attorney General Richard Cordray. Cordray isn’t necessarily a bad pick. He had gained some prominence investigating mortgage foreclosure practices in Ohio and was already a member of the CFPB as head of its enforcement agency.
Nonetheless, his selection is a clear slight to Elizabeth Warren, who conceived the agency and was a leading advocate of its being formed. Its mandate, pursuant to the Dodd-Frank act, is to “promote fairness and transparency for mortgages, credit cards, and other consumer financial products and services” and was formed in response to the various abuses found in mortgages and credit cards in the wake of the financial crisis of 2008.
Obama may have bowed not only to Republican opposition but to opposition from within his own administration. Warren’s independence and outspokenness didn’t sit well with Treasury Secretary Tim Geithner. Geithner has long been criticized by progressives as being too bank-friendly and he also came under fire for permitting bankrupt insurance firm AIG, which received federal bailout money, to pay$165 million in bonuses to its employees when he was head of the New York Federal Reserve bank. He had also come under criticism from progressive sources for his actions as Treasury Secretary for an approach that consisted of propping up the big banks, keeping them “too big to fail”, rather than breaking them up into more manageable organizations that wouldn’t threaten to take the economy down with them.
Obama’s slighting of Warren to head the new consumer agency is another example of his Clintonesque triangulation and practice of shunning the progressives who came out for him in 2008 in an attempt to appease the Republicans.
It isn’t likely to help him. Republican senators look likely to try to filibuster Cordray’s confirmation and Richard Shelby (R-Ala) has threatened to oppose any nomination unless the post of agency head is replaced by a Board of Directors. Such a board would enable the Republicans to hold out for Republican members on it who could slow down the consumer agency.