Bailout

Appointing Warren

By Felix Salmon

It’s weirdly depressing watching everybody scramble around trying to work out what on earth the kindasorta appointment of Elizabeth Warren to create the Consumer Financial Protection Bureau actually means. As Ryan Chittum notes, the WSJ certainly can’t make up its mind: David Weidner says that Warren is being sidelined and that “someone else will make the final decisions”; the paper’s news story, by contrast, says that she will have broad powers.

She will recruit staff for the agency, set the policy mission and serve as the recognizable public face for a new agency the administration wants to promote.

The big outstanding question is whether the White House intends to nominate Warren to lead the CFPB at some point in the future, before Obama’s first term is out. Jim Pethokoukis explains today that she’s probably here to stay:

There is an old management rule: Never hire someone you can?t fire. Obama violated this rule by picking Hillary Clinton for secretary of state. And he just did it again.

But weirdly, in exactly the same post, Jim says “it now seems unlikely that either Warren or Michael Barr will end up running this new agency”. It’s very hard indeed to reconcile the two positions: once the director is named, Warren’s job disappears. So either Warren is fired, or else she becomes the director. I can’t see any other outcome.

Ezra Klein, too, is trying desperately to hold two contradictory thoughts at the same time: this appointment “in no way prevents a permanent nomination from occurring at some later date”, he says, while at the same time “there’s no way Senate Republicans will ever let her have the permanent spot”.

My feeling is that once Warren has had this job for a while, and proven that she isn’t the devil incarnate, it might be possible to ratify her in the director’s position on a permanent basis. I certainly hope that’s what ends up happening. Probably both she and the White House want to keep their options open for the time being. But the communication around all this has been very messy, and there’s no sign that anything is going to get cleared up any time soon.

Full post as published by Macroprudential on September 16, 2010 (boomark / email).