Will Obama let down liberals – and women – again? Inside the fight over Washington’s new consumer-protection agency.

By Eleanor Clift,
Newsweek, 24 July 2010

Here’s a 2.0 version of health care’s public-option debate, and her name is Elizabeth Warren. She’s the Harvard law professor who’s been overseeing the Troubled Assets Relief Program and giving Treasury Department insiders heartburn over their excessive generosity to Wall Street bigwigs. Liberals are lobbying hard for Warren to head the newly created Consumer Financial Protection Bureau, warning the White House that failure to do so would rival the left’s disappointment over President Obama’s refusal to fight for a public option. Warren’s backers consider her the Joan of Arc of the financial consumer movement.

Warren is the only woman under consideration, and the job should be hers if it weren’t for some intramural friction that has taken on a gender cast. Her credentials are impeccable, underscored by her prescience in originating the idea for a consumer financial agency three years ago, well before the storm that would take down the markets and cost taxpayers trillions in wealth. Writing in a 2007 article in the journal Democracy, Warren challenged the rah-rah boom times, arguing that consumers are “effectively unprotected in a world in which a number of merchants of financial products have shown themselves very willing to take as much as they can by any means they can.”

In her clear-eyed and earnest way, Warren has broken through in testimony on Capitol Hill and on television as a voice for the people, ticking off powerful business interests and irritating the boys’ club that Obama has entrusted to steer the economy. If Obama chooses her to head the new consumer agency, she would have to be confirmed by the Senate and would likely provoke a partisan battle on the scale of a Supreme Court nomination. On Friday morning, three Republican senators warned the White House not to use a recess appointment to fill the new position. For Obama, it’s a classic political choice: how much of a fight does he want or need going into the fall elections?

His base is telling him that Warren is what the left needs to believe in him again. Obama loves the woman; there have been articles written about how he sought her out, and how admiring he is of her. As the financial-reform legislation made its way through Congress, she was consistently named as the likely head of the first consumer-protection bureau. If Obama backs down now, he looks like he’s afraid of a fight, which is not a good perception for a president who needs to burnish his leadership cred going into the November election. Warren is the voice of Main Street, and if the Republicans want to block her, Obama’s attitude should be “Bring it on.”

Warren has dared to challenge the captains of international finance, and she has rattled the protectors of Wall Street, many of them Republican and male, just the kind of opposition that Obama could use to drive women’s turnout in November. Warren embodies his efforts to revive the economy and create jobs in a way that everything else he’s done hasn’t conveyed. Her persona as a champion for the people is so ingrained that Obama wins simply by having the fight. “The only question is whether Elizabeth Warren is Moses whose candidacy expires overlooking the Promised Land, or Joshua who gets to lead the troops,” says Bill Galston, a senior fellow at the Brookings Institution and a former Clinton domestic policy adviser.

A decade ago, when Wall Street was riding high, Time dubbed the era’s chieftains of finance – Alan Greenspan, Bob Rubin, and Larry Summers – “The Committee to Save the World.” We learned later how their disdain for regulation and their faith in the markets was misplaced, and how one astute regulator, Brooksley Born, head of the obscure Commodities Futures Trading Commission, took on Greenspan et al. to argue for regulating those funny new financial instruments called derivatives that nobody understood, and how she was put down and marginalized and ultimately ignored. Former SEC chairman Arthur Levitt, in a Frontline documentary about Born’s lonely and futile quest to sound the danger, recalled the disparity of power and how condescending the men were in thinking this was a woman you could “flick off with the back of your hand.” Her warning unheeded, Born ultimately resigned, a case history of a missed opportunity that would have done more to save the economy, if not the world, than all the pooh-bahs who made Time’s cover.

Warren has advanced further into the club than Born, and if she makes it, she would bolster Mary Shapiro at the SEC and Sheila Bair at the FDIC, who like Warren have been at odds with the Obama team. Gender is at play in these debates, as well it should be. With women controlling more discretionary spending in America than men do, it’s far past time for better representation in the highest councils of power.