Obama Should Give Warren a Recess Appointment

Capitalism and markets depend on the
morality, honesty, and good faith of those who participate in them.
Markets function best and deliver prosperity when they are honest and
the law enforces that honesty; dishonesty, fraud, and official
corruption are the poisons that keep markets in many parts of the world
from delivering the goods.

That's where Elizabeth Warren comes in. Those
who are lobbying hard against her nomination to head the Consumer
Financial Protection Agency are the same people who lobbied against
financial reform legislation and lost. They paint her as the enemy of
capitalism and free markets. Nothing could be further from the truth:
She is the enemy of dishonesty, abuse, and just plain theft.

Many
of those who originated the toxic loans now poisoning the financial
world were outright fraudsters, and many of those who bundled and
purveyed those toxic assets in what amounted to a giant Ponzi scheme
were no better than fences of stolen goods. Credit card companies for
years have buried surprising fees, penalties, and interest rate
increases in print so fine and terms so obscure that the borrowers most
likely to be caught by them could not possibly understand them. That's
not capitalism; that's fraud. To be the scourge of theft and fraud is to
be the best friend of well-functioning markets.

The
new legislation promises steps toward restoring faith in the honesty of
the system of markets and credit. Warren's critics call her an
ideologue and a zealot, as if she were being considered for a position
on a federal court. But this is an agency with a mission, and the
legislation will be successful only if those writing the rules and
enforcing them believe in its mission and are zealous in its pursuit.

We
can expect a filibuster if the president nominates Warren. Having lost
one battle, the lobbyists pouring vast sums into the campaigns of
compliant senators hope they might still win the war. True, there are
other potential nominees with fair qualifications, but no one should
listen to what the bank lobbyists are saying. Anyone they support should
be immediately suspect.

Warren
is smart, determined, and committed to the cause of honest financial
services. The president should give her a recess appointment, as
Representative Barney Frank has suggested. That will give her a year or
so to hire the staff and write the regulations and in that way set the
new agency's course for many years to come. The opposition to her knows
this perfectly well; its arguments are in utter bad faith and should
fail. The president has the tool to defeat them.