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Sheila Bair as Head of CFPB?

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Economics of Contempt and I are typically at loggerheads on financial services industry policy matters (he’s far too positive about the bank reform measures for my taste, even though his technical explanations are always instructive). But he had an inspired idea today:

I think Obama should seriously consider Sheila Bair for the CFPB job. As a preliminary matter, she can definitely get 60 votes in the Senate. I know that Chris Dodd approached her last year about the job, and she said she wasn’t interested, but that was then. She still had a year left at the FDIC when Dodd approached her. Now, with only a couple months left at the FDIC, she might be more receptive. Plus, a personal appeal from the president is pretty hard to turn down. (Or so I hear — no president has ever made a personal appeal for my help, because they’re all jerks, and I never wanted to be their friend anyway.)

He does start with a bit of a misperception: that getting a candidate approved by the Senate is a key hurdle. Given the late date and the requirement that the head of the CFPB be installed by July 21, the Administration is looking at a recess appointment under any scenario. As much as this might seem to allow for Elizabeth Warren to get the job, I regard that as a non-starter. Obama himself does not want to alienate big financial services donors, and enraged Republicans might exact their revenge by gutting key sections of Dodd Frank….in particular those relating to the CFPB. Most observers think the key window of vulnerability is through the end of the summer, but enough ire could conceivably make early fall action possible.

Bair, as a Republican serious about enforcement and current financial regulator, is just about impossible for anyone to object to seriously. Another observation by EoC:

Bair is also fiercely territorial, which sometimes bleeds into parochial. During the financial crisis, this was supremely unhelpful. But I think this would be one of her greatest strengths as the CFPB director. Given the CFPB’s bizarre legislative structure, in which the Financial Stability Oversight Council (FSOC) can veto the CFPB’s rulemakings, you want a CFPB director who is territorial, and maybe even a bit parochial. The whole purpose of setting up the CFPB was to establish an agency that has a singular focus: protecting consumers. I think this is necessary as a counterweight to banks and non-bank lenders, who have a massive informational advantage over retail consumers. In order to be that counterweight, the CFPB would really benefit from a director who only cares about her own agency.

Saying that women aren’t team players (in various coded forms) is such a cliche that I discount it more than a tad. Given that most Americans are pretty unhappy with the one-sided deals cut in the “rescue the banks” operation in late 2008 and early 2009, Bair’s not playing ball is more easily read as a rearguard action to try to impose some penalties on miscreant banks (she tried but failed to get Vikram Pandit ousted from Citi and succeed to some degree in getting that bank to downsize) rather than a personality defect in operation. So she has has some success as a bureaucratic infighter with the other, more bank-enabling financial regulators opposed to her. That alone is good reason to want her in this job.

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10 comments

  1. Philip Pilkington

    Am I the only one who’s never heard the “Women aren’t team players” cliche before?

    I always thought that the cliche — in regards to the workplace — was the exact opposite. I.e. “Women work for less because they’re more pliable”.

    Hmmm… Empirical research is needed — I’ll have to watch out for the former in the future.

    1. Frederick Street

      Am I the only one who’s never heard the “Women aren’t team players” cliche before?

      ‘Fraid so.

    2. scraping_by

      It’s a viewpoint that relates to salary level and position in the hierarchy.

      For worker bees, front line supervision, maybe a low level manager, women are useful fodder.

      “The Team” is A-level positions, directors, general directors, and executive. The top dog and about two levels down, to AVP, maybe to general director. Notably, the stock bonus crew. The ones who are exempt from downsizing and otherwise make up “the core”, leaving the rest of an enterprise “the periphery.”

      Add those two together, you get the Glass Ceiling.

      1. Philip Pilkington

        Yeah, that’s what I was thinking — makes sense. This is one of those situations — typical of prejudiced or strongly ideological viewpoints — where logic melts away and opposites overlap.

        Thus, by their ‘nature’ women can be at once pliable — this explains their lower pay — AND strong-willed — this explains why they should be sidelined when the boys are discussing business.

        http://www.youtube.com/watch?v=LS37SNYjg8w

    3. Mannwich

      The term “team player” is code for being totally “compliant” and to not question things too much (if at all), including looking the other way when obvious ethical breaches, corruption and outright criminality is occurring right in front of you. As long as the “right people” are getting wealthy/wealthier, the “team player” thing to do is to look the other way or take token half measurse to appease the Sheeple.

  2. Abe, NYC

    Warren, Bair, Miller – does it really make a difference who gets the job? It’s abundantly clear that the battle against the banks has been lost. At least, NC makes it abundantly clear :)

    The war hasn’t been lost IMHO, not yet. There will be another crisis within five years – that’s been ensured – and then it will be the moment of truth for America. I’m still hoping things will turn out well, because “America invariably does the right thing, having exhausted every other possibility.” This is hoping against hope though.

    Twenty years ago I couldn’t imagine that I’d ever see Karl Marx’s society dynamics at play…

    1. Paul Tioxon

      Marx’s analysis was based on a historical process that spanned over a hundred years of records of British economic development. The same intellectual process that derived the concept of geologic time spans is necessary for a social science. You simply can not pick and choose the unit of analysis and expect valid conclusions. Our particular historic moment is part of a larger historic process, whose length is longer than the lifetimes of the people who live during the playing out of events in question. The social phenomena under analysis does not appear until enough time has elapsed to view just what the beginning, the middle and the end is. The Owl of Minerva does fly at dusk, unfortunately for most.

  3. gordon

    Bair already said she needs time with her teenage kids, forget it. She threw in the towel “banks are in much better condition— bullshit…” as almost 900 are on the list and that big one last Friday they closed wasn’t even on the list.

  4. MichaelC

    We’d all be better served if Bair replaced John Dugan as the head of the OCC.

    For one thing she’d eat Timmy for lunch.She may even be able to steer O onto a more politically viable course, to betray his class, as FDR did, so he might survive,(if he cares).

    Bair could provide cover for Obama to ease Geitner out of the picture (and neuter the Reps, as she’s a R (coopting one of their serious own might be preferable to surrendering to the Palinistas) as he becomes a political liability once the elecion cycle heats up. He is a useful (and expedient) idiot (to both sides) after all.

    [I'm pretty sure the 'gives good(brilliant) meeting' meme is code from both sides that this guy is truly an idiot]

    The legal front on foreclosuregate is building steam (MI just kicked MERS to the curb) just as reelection season is starting. Underwater mortgages are something every voter gets, even if they don’t really get the seedier story about how so many were created to benefit so few.

    I wish it had been more loudly pointed out during the OCC vs AG ‘Settlement’ debates, that the OCC is an ‘independent’ regulatory arm of the Treasury. OCC doesn’t stand on equal footing with the FDIC or the nascent CFPB. The Treasurer decides the OCCs course. Normal citizens don’t have a clue about that power imbalance.

    The threat that the OCC settlement preempts the states is the President’s threat. Perhaps readers here understand that, but I don’t think its widely recognized.

    If the average bear understands that the Treasurer(Geithner, and by extension the banks) is in charge at the OCC, and if the Treasurer serves at the pleasure of the President,then the OCC serves the President.

    I’d bet most voters think Dugan is just an ass heading up a weak, poorly funded do gooder institution fighting on their behalf against predatory bankers.

    If they were disabused of that notion, perhaps more people would demand Geithner move back into that Larchmont place he had such a hard time selling.

    It bears repeating that the current Treasurer has never been a regulator, by his own repeated admission, despite the fact that he has two of the most critical regulatory supervisory roles in the country (NY Fed Pres, Treasurer(ultimate head of OCC).

    Any idiot can see, whether they’re useful (Geithner)or inconvenient, (underwater voters), that the next 6 years are going to be difficult.

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