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.