Despite the loud calls for Obama to appoint Elizabeth Warren to head the Consumer Financial Protection Bureau, she is now unfortunately on her way out. This is a huge loss for middle class Americans and another victory for Wall Street. Warren was the ideal leader of the CFPB, an concept which she helped inspire. There has been considerable evidence over the past few years that (1) Financial markets are inherently unstable in a Minskian sense and that (2) the regulated (financiers) are in a never ending race with the regulators; the CFPB was a truly creative and dynamic strategy with a real potential to protect Americans from economic volatility and financial frenzy.
I do hope that the CFPB is still able to fulfill its role, and indeed it still has the potential to be effective. But I remain convinced that it would have been most likely to have a real impact on our society with Elizabeth Warren behind the wheel. Passing her up was a mistake on Obama’s part.
Update: from David Corn which both sounds reasonable and makes me feel better:
The Sunday afternoon news that the White House would not be nominating Elizabeth Warren to head the Consumer Finance Protection Bureau (CFPB) certainly has the potential to trigger outrage from progressives who believe President Barack Obama too often declines to confront Republican extremism. Warren, the populist Harvard professor who birthed the idea for a government agency that would protect consumers from tricks and traps perpetrated by banks, mortgage firms, and credit card companies, was the right person for the job. So much so that congressional Republicans have been howling about the prospect of her leading the agency even before the bureau was created last year by the Wall Street reform legislation. Which is why Obama’s decision not to fight for her—and it would have been a titanic fight—may disappoint. But there’s an upside to the move: the possibility that Warren will end up in the US Senate. And there’s this: The fellow Obama picked for the position, Richard Cordray, can be expected to do a fine job pursuing abusive financial firms.