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.