Advertisement
 
YOU ARE HERE: LAT HomeCollectionsBusiness

Elizabeth Warren, touted to lead new consumer protection agency, has powerful enemies

The consumer advocate's blunt questions as head of the TARP watchdog panel have made Wall Street captains squirm. Critics say she favors too much government control.

August 01, 2010|By Jim Puzzanghera, Los Angeles Times

Reporting from Washington — For a soft-spoken, unfailingly polite university professor, Elizabeth Warren has a surprising knack for making people squirm — particularly on Wall Street.


FOR THE RECORD:
Elizabeth Warren: An article in Section A on Aug. 1 about Elizabeth Warren, a leading candidate to head the new Consumer Financial Protection Bureau, identified Sen. Bob Corker of Tennessee as a Democrat. He is a Republican. —

She's done it to Treasury Secretary Timothy F. Geithner and other administration officials. As head of the watchdog panel monitoring the $700-billion federal bank bailout fund and a former high school debating champion, Warren often has put them on the defensive with pointed questions, such as: "Do you know where the money went?"

She's done it to lobbyists and lawmakers who unsuccessfully fought the creation of a new federal agency to protect consumers in the financial marketplace. As a bestselling author who can make complex issues understandable, Warren frustrated opponents by keeping the focus on the industry's failures.

"I want to turn to these guys sometimes and I want to say, 'What part of "We bailed you out" do you not get?'" she said on "The Daily Show With Jon Stewart" in January.

Now Warren has Wall Street executives, bankers and business groups extremely nervous. As the person to propose such an agency and one of its most outspoken advocates, the Harvard law professor is a leading candidate to be nominated by President Obama as director of the new Consumer Financial Protection Bureau.

That would make Warren, 61, one of the most powerful regulators of the financial industry.

Her pro-consumer views on outlawing what she calls the "tricks and traps" in mortgages, credit cards and other financial products — beliefs developed during her three decades of bankruptcy research — have industry officials gearing up for a major confirmation fight if she's nominated.

They've called her an extremist who will put the government in charge of the financial decisions of average Americans, driving up the cost of credit. But Warren's supporters said Wall Street's true fear was that she would make the agency a success, eliminating the hidden fees and abusive practices that have been so profitable for the industry.

"There are people who try to portray her as an activist or some sort of ideologue. What they are really troubled by is she communicates very well with the American public," said Jay L. Westbrook, a University of Texas law professor who has worked with Warren since the early 1980s.

"Her crime here, in the minds of many, is she's a very effective proponent of consumer protection," he said.

Sen. Richard C. Shelby (R-Ala.) said he would not vote for Warren. He called her a "guru" of behavioral economics, which studies how people make financial decisions.

Few are criticizing Warren publicly, but others are raising similar concerns and are warning against handing over the agency to someone who believes the government should make financial decisions for consumers.

"If an activist is put in charge of this, I think the American people will rue that day," said Sen. Bob Corker (D-Tenn.).

Opponents are laying the groundwork to try to torpedo her possible nomination. The U.S. Chamber of Commerce has prepared a handout with comments by Warren suggesting she believes consumers are incapable of making their own financial decisions.

"The worry is she would be too pro-consumer and not be concerned enough about the impact on the health of financial firms," said Jaret Seiberg, a financial policy analyst at institutional investor advisor Washington Research Group.

"I think it would be a challenge to get enough Republican support to be able to overcome a filibuster because she is a lightning rod for criticism," he said.

Warren's backers — including congressional Democrats and liberal activists — also are squirming a bit. They're worried that threatened opposition from Wall Street and Senate Republicans will stop Obama from nominating her.

Obama, Geithner and other administration officials have praised Warren as a terrific candidate, but they have not said when a nomination will be made. Warren has declined interviews about a possible nomination.

"The president has to make it clear on this issue that he is on the side of consumers," said Sen. Bernie Sanders (I-Vt.). "I think Elizabeth is far and away the strongest candidate."

Much of Warren's passion and skill come from her modest upbringing in Oklahoma as the youngest of four children. Her parents experienced the devastation of the Dust Bowl during the Great Depression, she said during a 2007 appearance at UC Berkeley.

Advertisement
Los Angeles Times Articles
|
|
|