Elizabeth Warren, chairwoman of the congressional oversight panel of the Troubled Asset Relief Program, is the best person to head the newly created Consumer Financial Protection Bureau, Congressional Democrats said Thursday, rejecting arguments that the Harvard professor’s strong criticism of the banking agency makes her unfit to be one of its chief regulators.
Hoping to give force to Warren’s strong calls for a consumer agency that will challenge banks that she says traps borrowers in an avalanche of debt, lawmakers on Capitol Hill said Warren is the perfect person to head the agency she first proposed in 2007.
“This new office begs for the woman who created the institution,” said Rep. Jackie Speier, D-Calif.
The CFPB, modeled after the Consumer Product Safety Commission, will regulate the types of financial products available to consumers. When Warren first posited such an agency in a 2007 article, she said it was needed because banks trick lenders.
“Lenders have deliberately built tricks and traps into some credit products so they can ensnare families in a cycle of high-cost debt,” she wrote.
But Warren’s nomination will likely stir up a nasty confirmation fight as opponents say that she would stifle growth and innovation in an industry that recently saw major regulations passed through a financial overhaul bill signed into law last week.
Others say Warren is not well-versed in the needs of smaller community banks, which are also covered in the massive law. Still others say they are concerned that Warren’s nomination will provide a chance to re-litigate TARP, the unpopular bank bailout program.
But at least one senator said that criticism would be unsuccessful.
“Are Republicans going to say don’t confirm her because she’s too tough on banks?” asked Sen. Tom Harkin, D-Iowa, “That’s going to get them a lot of votes in November.”
Senate Republicans publicly have reserved judgment on Warren so far, but have voiced concerns about the CFBP.
“If it had been up to me, we wouldn't have created that agency in the first place,” said Senate Minority Leader Mitch McConnell, R-Ky., “It will be a massive bureaucracy.”