Tell Me Again

Why I should give this administration the benefit of the doubt?

It does appear that Elizabeth Warren has the inside track to getting the position as director of the Consumer Financial Protection Bureau. We know that bureau, as part of the Dodd-Frank bill, lives inside the Federal Reserve, albeit with an independent budget and a (mostly) independent rulemaking authority.

However, at the outset, the bureau comes under the auspices of the Treasury Department. They will be responsible for its initial design and organization, before transferring it over to the Federal Reserve, probably in about a year (in the meantime, the Fed retains consumer protection powers). And reports are that Treasury has already begun that design and organizational process.

Officially, this process is informal. Treasury spokesman Erika Gudmundson maintained that the department is “talking about” staffing up at CFPB, and isn’t sure about the timeline for naming an interim director. There is some coordination going on between Treasury, the Federal Reserve, and other affected agencies.

However, a source tells FDL News that Geithner is working on this process with Elizabeth Duke, a member of the Federal Reserve Board of Governors. Duke is a former community banker and the past head of the American Bankers Association, a trade lobby group. She served on the ABA’s board of directors from 1999 to 2006. The ABA opposed the Dodd-Frank bill almost entirely because of the Consumer Financial Protection Bureau.

What’s more, Duke herself specifically opposed an independent agency in July 2009 testimony, and endorsed keeping the responsibility for consumer protection in the Federal Reserve. In fact, she went further, promoting the Fed’s consumer protection prowess despite the agency having missed the housing bubble and the predatory lending that enabled it.

I just don’t trust them to put the right people in place. I do trust Elizabeth Warren.