Last Wednesday, July 21, 2010, eighteen months after taking office, President Barack Obama used eleven pens to sign into law the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010. In the tradition of many Presidents before him, Obama made use of multiple pens. He did so to create historic artifacts – or souvenirs – to pass along to supporters and perhaps archivists. One can imagine that each collector will be able to claim ownership of an implement that created one of the first (of hopefully many) pieces of significant financial reform legislation since Franklin Roosevelt’s New Deal.
But why eleven pens? If you watch the video carefully, it appears the President uses a new pen to inscribe each letter of his name. But, there are other possible meanings. As many now realize, thanks to the efforts of big bank lobbyists, much of the sweeping reform (that did not get cut out entirely) will be slowed by over sixty studies and delayed by delegation to administrative agencies. The key provisions of Dodd-Frank will take years to implement as they require, according to law firm, Davis Polk & Wardwell LLP more than 243 new rules to be enacted by eleven federal regulators. And, the significant powers of enforcement of the new law (such as the Kanjorwski Amendment – the power to break up big banks that pose grave threats to the financial system) will be held by these same bodies. Yes, eleven.
Of these eleven, some do not actually exist yet. One of the most critical to be formed is the Bureau of Consumer Financial Protection (CFPB), the new watchdog agency to be housed in the Fed. Designed to protect consumers from unfair and deceptive lending practices, the CFPB will have the authority to make and enforce rules related to a whole range of consumer financial services. Everything from mortgage loans to credit cards (with an unfortunate loophole for auto dealers).
To launch this important agency requires a new Presidential appointment, and most likely, Senate approval. There is widespread support surfacing for Elizabeth Warren, the Harvard Law Professor and head of the Congressional Oversight Panel who conceptualized this agency.
Warren is respected by experts and revered by the public. This support stems from her expertise, the content of her views, her commitment to asking tough questions and her communication style. Appearances on a variety of media outlets, including the popular Daily Show with Jon Stewart and Bill Moyers Journal, have kept the public informed as to the status of the TARP/bailout among other related topics. Her scholary research and popular trade press books emphasizing the shrinking middle class resonate with, not surprisingly, the shrinking middle class.
She has received support mainly from progressives, but also conservatives. Most recently, Charles Fried, a former Solicitor General under Ronald Reagan endorsed her in a Boston Globe op-ed. Fried, a conservative constitutional scholar even went so far as to suggest the President make a recess appointment, without seeking Senate approval. Fried wrote:
“CAPITALISM AND markets depend on the morality, honesty, and good faith of those who participate in them. Markets function best and deliver prosperity when they are honest and the law enforces that honesty; dishonesty, fraud, and official corruption are the poisons that keep markets in many parts of the world from delivering the goods.
“That’s where Elizabeth Warren comes in. Those who are lobbying hard against her nomination to head the Consumer Financial Protection Agency are the same people who lobbied against financial reform legislation and lost. They paint her as the enemy of capitalism and free markets. Nothing could be further from the truth: She is the enemy of dishonesty, abuse, and just plain theft.”
Endorsements and support keep coming from a variety of organizations and individuals. Many of these have been prompted by the alarm supporters feel upon reading that Treasury Secretary Tim Geithner appears to oppose her and that Senator Chris Dodd, Chair of the Senate Banking Committee continues to suggest she is not “confirmable.”
Very quickly supporters have begun to speak out. They include too many to name, but here are some who come to mind: more than 200,000 people who signed the Progressive Change Campaign Committee’s “Let Elizabeth Warren Police Wall Street” petition; more than 160 former students who signed onto a letter to the President urging Warren’s nomination; the American Sustainable Business Counsel (a network of 50,000 companies); former chair of the Consumer Products Safety Commission, Ann Brown; tireless consumer advocate, Ralph Nader; MIT Professor Simon Johnson and James Kwak founders of the essential Baseline Scenario and authors of 13 Bankers; Nobel Laureate, Paul Krugman; Wall Street Journal columnist David Weidner; Washington post blogger, Ezra Klein; New York Times columnist, Floyd Norris; the New York Times; The Boston Globe; The Delaware News Journal; The Philadelphia Daily News; a group of Senators including Sherrod Brown, Tom Harkin, Bernie Sanders, Ron Wyden, Al Franken, Sheldon Whitehouse, Ted Kaufmann, Roland Burris, Byron Dorgan, Barbara Boxer, Jeff Merkley and Mark Begich; at least 39 of members of the House of Representatives including Barney Frank and other members of the House Financial Services Committee; Americans for Financial Reform (a coalition of 250 organizations including consumer, labor and senior citizen groups); 26 prominent economists and other expert members of SAFER.
While she has had detractors, supporters, like Mike Konczal at rortybomb and others who have read her scholarship and have reviewed the critiques have carefully exposed the misstatements. And, some of those who advise against her appointment, such as a bankers association from her home state, seem to admit it is related to her position to support consumers, not her knowledge or skills.
What lies ahead, over the next year and beyond, will require far larger armies of lawyers, economists, finance experts and just plain able bodies and minds to monitor and influence the rulemaking process. Rumor has it that one bank alone plans to set up 100 teams of employees, tasked with particular rule makings. And that is just one bank. Also, the biggest, most capable law firms with some of the sharpest legal minds in the country (and the ability to recruit the top law students in any economic climate), have already signaled their readiness. The top tier have posted on their websites detailed, clear explanations of the legislation and the next steps. These documents are offered free to the public, a very small loss leader, no doubt.
It seems only fair that with those many thousands of experts representing big banks, we have a least one person (and ideally all eleven heads of these agencies) on the inside, committed to preserving the property rights of ordinary people, the consumers, savers, investors, homeowners, taxpayers and voters who make up our ever shrinking middle class. Whether Elizabeth Warren is “confirmable” may be code for whether there are any Republican Senators who will supply the extra votes so debate can end. Remember, the same-old “desperately seeking sixty” type phenomenon will apply. However, that is a fight worth waging in full daylight.
So, in short, what I’m saying, is I hope that when he appoints Elizabeth Warren to lead the Bureau of Consumer Financial Protection, the President hands her one of those eleven pens. She will use it well.