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Elizabeth Warren to Head Consumer Protection Bureau?
Once President Obama signs Wall Street reform into law, the battle will move off the front pages, but it'll be far from over. Who the president picks to lead key agencies and commissions will determine the course and strength of those regulatory bodies, much as Joe Kennedy shaped a half century of tough financial industry regulations by setting the tone as the first head of the Securities and Exchange Commission.
Two positions are being watched closely by both sides: A new head of the Office of the Comptroller of the Currency (OCC) and the first head of the Consumer Financial Protection Bureau (CFPB).
Regardless of the regulator Obama picks to run OCC, banks will be losing one of their best friends. John Dugan consistently fought to protect banks from regulation, compiling a record of fealty to Wall Street impressive even by Bush-era standards. His term expires in August.
At the CFPB, Wall Street and the GOP have been working to prevent Elizabeth Warren from assuming the helm long before the body had been created. An amendment pushed by House Republicans in the Financial Services Committee was intended specifically to eliminate the possibility of her leading the agency.
It failed and Warren, a Harvard professor and the intellectual mother of the bureau, has the strong backing of committee chairman Barney Frank (D-Mass.), as well as Rep. Brad Miller (D-N.C.), who led the push in the House for tighter consumer protections in the mortgage lending industry. Many consumer advocates would view any appointment other than Warren as a disappointment.
"We wouldn't have had a financial crisis if the supposed watchdogs hadn't been ventriloquists' dummies for the banks. The CFPB is a huge win for consumers, but it will have been a waste of time if the CFPB is just one more agency controlled by the banks," Miller told HuffPost. "We need someone to head the CFPB who is smart, tough and independent-minded. Professor Warren fits the bill."
In its write-up of possible CFPB heads, the trade paper American Banker mentioned Warren first, followed by Michael Barr and Eric Stein, both senior Treasury officials, as well as Fed official Allen Fishbein, who focuses on consumer issues, and Ellen Seidman, a former regulator at the Office of Thrift Supervision and now a banker.
Barr was a lead Treasury negotiator during the crafting of Wall Street reform deliberations. His policy portfolio, where he focuses on financial institutions, makes him an apparently more suitable pick for the OCC than the CFPB.
Wall Street wouldn't be happy if he wound up at either body. Though he is viewed with some suspicion in progressive circles for having served as a special assistant to former Treasury Secretary Robert Rubin, Barr has reportedly earned the enmity of the Wall Street lobbyists, who say he refuses to take their phone calls. His economic research has focused on the relationship between Wall Street and low- and middle-income Americans. In 2009, he co-edited the book "Insufficient Funds: Savings, Assets, Credit, and Banking Among Low-Income Families."
If Obama chooses someone other than Barr to lead OCC, that makes Barr a leading candidate for CFPB, damaging Warren's chances. A Treasury spokesman declined to comment on the speculation, as did Warren.
In the Wall Street Journal's speculation about CFPB leadership, Warren is again mentioned first, followed -- again -- by Barr.
The WSJ also suggests as potential candidates Martha Coakley, the Massachusetts attorney general who theatrically lost her bid for the U.S. Senate in January. Lisa Madigan, the Illinois attorney general, and Lori Swanson, Minnesota's top cop, are mentioned, as are Susan Wachter and Nicolas Retsinas, academics with government backgrounds.
Coakley, however, thinks Warren would be the right pick. "I think, frankly, that Elizabeth Warren would be a terrific head of that agency," she said on Fox Business when asked if she herself would be interested in the gig. "She's thought a lot about the consumer protection piece."
Madigan, too, declined to be considered and threw her weight behind Warren. "Not only was it [Warren's] idea to create the Consumer Financial Protection Bureau, but she has long understood the need for such an agency to ensure that another financial crisis doesn't devastate the futures of millions of hardworking Americans," Madigan said in a statement.
Warren has distinguished herself over the past year and a half as the head of the Congressional Oversight Panel, the bailout watchdog, which earned her bipartisan praise.