BLOG VIEW: Next week is the premiere of two highly anticipated endeavors: the Hollywood blockbuster ‘Captain America: The First Avenger’ and the Consumer Financial Protection Bureau (CFPB). One of these is a ridiculously expensive production that traffics in a juvenile fantasy about an over-the-top crime fighter going to wild extremes in the pursuit of justice. The other is a movie.
I can't say I am eagerly awaiting either, because I am not a big fan of comic book-inspired films or bloated bureaucracies. However, I have more respect for ‘Captain America: The First Avenger’ because it is turning up in theaters as a fully complete package. The CFPB is opening its doors with one conspicuous problem: no one is running the silly thing.
Unless I am mistaken, I cannot recall any similar situation in which a major new federal entity began operations with a vacancy in its leadership role. You cannot blame this omission on a beat-the-clock rush to get things done, because there was more than enough time since the CFPB's birth in last year's Dodd-Frank Act for the Obama administration to put forth a nomination for an agency director.
‘Frankly, I'm flabbergasted as to why the administration has not nominated somebody to head up this very important agency that they created,’ said Richard Hunt, president of the Consumer Bankers Association, in an interview last week with The New York Times.
The failure to fill this position is one of the more glaring mistakes of this accident-prone administration, except, in this case, it was no accident. The White House clearly realized that Elizabeth Warren – the driving force behind the CFPB – would never gain the confidence of congressional Republicans or the financial services industry. And, quite frankly, she did little to endear herself to her critics by obnoxiously boasting that the CFPB would be the new ‘cop on the beat’ – a tactless assertion that suggests all financial services companies are crooks and all borrowers are potential victims.
Warren's problems were obvious from the very beginning. According to a Wall Street Journal report from August 2010, Sen. Chris Dodd – then-chairman of the Senate Banking Committee – tried to get Sheila Bair, chairwoman of the Federal Deposit Insurance Corp. to take charge of the new bureau. Bair is a Republican, and Dodd hoped that having her at the helm would mollify GOP opposition to Warren. However, Bair wisely turned down the opportunity.
Since then, the White House has floated a number of trial balloons that offered other alternatives to Warren as the first CFPB director. The most recent of these happened last month, when word was leaked that the White House was considering giving the top CFPB job to Raj Date, a former banker and the bureau's associate director for research, markets and regulation. That idea failed to appease Warren's foes and it insulted Warren's supporters, who ratcheted up their lobbying efforts to get her into the job.
But for all of this time, Warren has not taken the hint that the White House is uneasy with her presence. President Obama is doing the best he can to ignore the growing chorus of Democratic congressional leaders, consumer advocates, labor unions and even a few financial services executives that demand Warren's ascension to the CFPB role via a recess appointment. And as the CFPB launch date approaches, the void of leadership smells of incompetence.
Unfortunately, too many people are assuming that Warren and the CFPB will become the federal equivalent of Captain America: an all-powerful hero that will fight off the bad guys and preserve the core U.S. values of truth and justice. Yet this scenario overlooks key concerns that include overlapping and overreaching authority by the CFPB, significant pushback by the financial services industry on major issues – including the risk-retention proposal – and the 2012 election campaign. The latter could be particularly lethal, as the president would gladly work to dilute the CFPB's outreach in order to attract campaign contributions from the wary Wall Street elite who have no appetite for Warren's antics.
Still, we need to be positive about one thing: Unlike next week's Captain America flick, there is no sequel in the works for the CFPB. But unlike today's movies that have a relatively brief life on the big screen, the CFPB will be stuck on the federal landscape for the foreseeable future – and, if we are really unlucky, perhaps forever. Or, as Ronald Reagan once remarked, ‘A government bureau is the nearest thing to eternal life we'll ever see on this earth.’
– Phil Hall, editor, Secondary Marketing Executive
(Please address all comments regarding this opinion column to hallp@sme-online.com.)
(Photo from ‘Captain America: The First Avenger’ courtesy of Paramount Pictures)
