Fear Factor: What's Keeping the President From Picking the Best Person to Protect Consumers?

By Arianna Huffington, Tribune Media Services,
Huffington, Arianna
Posted 07/28/2010 at 4:50 pm EST

On Monday, White House spokesman Robert Gibbs lauded Elizabeth Warren as "a terrific candidate" to lead the new Consumer Financial Protection Bureau: "I don't think any criticism in any way by anybody would disqualify her."

So why isn't the White House rushing to nominate her for the position? In a word: fear.

The same fear-based approach that caused the administration to throw Shirley Sherrod under the bus before her name had even been uttered on Fox News is once again rearing its head in the decision-making process over Warren.

This time, it's not the ire of Glenn Beck that has Team Obama's backbone turning to mush -- it's the fear of angering the bankers by appointing a consumer advocate who might actually advocate for consumers (the same consumers who, in their role as taxpayers, have spent hundreds of billions bailing the bankers out).

According to the National Journal, the banking industry "privately grumbles that Warren would be their least favorite candidate to head the agency." Or, as Floyd Norris put it in the New York Times, "Whether or not she is named to run the bureau may depend on how willing the president is to anger the banks."

But Warren is far and away the best person for the position. Not only is she one of the country's foremost experts on bankruptcy law and the multiple ways in which banks trick and trap consumers, she's been the leading advocate for the creation of the agency, which the banking industry worked night and day to kill. In fact, it was Warren who came up with the idea for the agency in the first place, in a paper she wrote in 2007. Her entire career has been devoted to the issues the agency is being created to address.

So obvious is the choice of Warren as the inaugural head of the Consumer Bureau that nearly a dozen senators and more than 60 members of the House have already publicly come out in her favor. And more than 200,000 people -- i.e. consumers -- have signed a petition urging her nomination.

And there was this argument in her favor:

"She is an enormously effective advocate for reform. Probably the most effective advocate for consumer protection in the country. She has huge credibility and she played a decisive role in helping make the public case for reform and she was early on this, way ahead of everybody else."

That, as it happens, was Treasury Secretary Tim Geithner, speaking Sunday on ABC's "This Week." So why has Geithner stopped short of endorsing Warren (and, indeed, privately argued against her)? And why, as The Huffington Post's Jason Linkins put it, is the White House still "hesitating, looking for all the world like it is going to veer away from tapping Warren for the sort of job she was born to do?"

Fear. You know what they say: give a man some fear, and you make him fearful for a day -- teach a man to scare himself, and you make him fearful for life. The administration has taken the lesson to heart.

A different approach would be to do the right thing, welcome the fight, and make your case to the American people. "Are the Republicans, when we bring her name up, going to argue that she shouldn't be confirmed because she's too tough on the big banks and too tough on the financial industry?" asked Sen. Tom Harkin. "Boy, that'll get them a lot of votes in November!"

And given that her opponents, shameless though they are, can't just come out and say, "We're against her just because we're doing the banks' biding," what argument can they make? One currently being test-marketed is that because Warren is such a zealous advocate for consumers she would somehow be bad for "innovation." You know, the kind of innovation that brought us credit default swaps, teaser rates, 600 percent payday loan rates, and that led to widespread foreclosures and bankruptcies. Warren herself addressed this ludicrous claim in a paper in 2008:

"Thanks to effective regulation, innovation in the market for physical products has led to greater safety and more consumer-friendly features. By comparison, innovation in financial products has produced incomprehensible terms and sharp practices that have left families at the mercy of those who write the contracts."

Which, of course, is exactly why the Consumer Financial Protection Bureau was created in the first place. If someone with Warren's skill set and perspective isn't named to head it, why even bother creating it? Just so another banking industry shill has a place to cool his heels before adding a few zeros to his salary when he quits and joins the companies he was ostensibly regulating? Given that this is the usual M.O. of regulatory agencies in Washington, it's all the more important to name Warren so she can start the Consumer Bureau off on the right foot -- as a true voice for the people.

So which way will Obama go? If he makes his decision on the merits, Elizabeth Warren will be the first head of the Consumer Bureau. If he makes his decision out of fear, she won't be.

Appointing Elizabeth Warren will demonstrate that the detour his administration took to Feartown with Shirley Sherrod was a lesson learned.

(Arianna Huffington's e-mail address is arianna@huffingtonpost.com.)

(c) 2010 Arianna Huffington. Distributed by Tribune Media Services, Inc.