Elizabeth Warren And Consumer Protection

by Stuart Shapiro

One of the most progressive elements of the recently passed financial reform bill is the creation of a Consumer Financial Protection Agency.  The agency would be charged with policing the honesty and transparency of banks, credit card companies, and brokerage houses in their dealings with consumers.

One of the fiercest advocates for the creation of the agency and a candidate to lead it is Elizabeth Warren.  The first leader of a new agency is critical.  He/she will put the structure of the agency in place and be crucial in both defining the agency mission and inculcating this mission in the people initially hired by the agency.  The first administrator will be critical in ensuring the long term effectiveness of the new CFPA.

That’s why Jason Linkins at Huffington Post is right to argue for Warren’s appointment.

You say that Warren’s appointment is likely to be very contentious? And draw a lot of opposition? Well I am interested in hearing the other side of that argument! How is that going to do? Will it be, “We are worried that Elizabeth Warren has philosophical opposition to the Wall Street practices that led to the largest economic meltdown in the last half-century?” Or is it going to be more like: “If Elizabeth Warren gets her way, some consumers may end up getting protected?” If it were up to me, this wouldn’t be a fight I’d be looking to actively avoid. I’d be looking for a way to drag it out for the next three months. (Unless I missed the part where Americans have suddenly rekindled their love for big banking institutions!)

This is a fight that Obama should be looking for.  It would also frame the difference between the parties very nicely for the fall elections.

By: Stuart Shapiro

Stuart is a professor and the Director of the Public Policy
program at the Bloustein School of Planning and Public Policy at Rutgers
University. He teaches economics and cost-benefit analysis and studies
regulation in the United States at both the federal and state levels.
Prior to coming to Rutgers, Stuart worked for five years at the Office
of Management and Budget in Washington under Presidents Clinton and
George W. Bush.