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Can Elizabeth Warren Save the Economy?

Can Elizabeth Warren Save the Economy?

President Barack Obama’s decision to appoint Elizabeth Warren to set up the new Consumer Financial Protection Bureau (CFPB) couldn’t have come at a more critical time.

Over 44 million Americans were living in poverty last year. That’s the highest number on record. The Great Recession is taking a terrible toll on everyone outside the executive class, but policymakers have been reluctant to pursue an economic agenda that improves the lives of ordinary Americans.

The uniqueness of Warren’s new post raises plenty of questions, but it puts a fierce defender of the middle class in office at a time when the middle class most needs help.

So what exactly will Elizabeth Warren do?

As Annie Lowrey emphasizes for The Washington Independent, it’s not entirely clear what Warren’s new job will be or how long she will have it.

Consumer advocates have pushed hard to get Obama to name Warren the first director of the new CFPB. Obama, citing Senate confirmation hurdles, has instead charged Warren with setting up the agency as an adviser to both the Treasury Department and Obama himself. The post allows Warren to get to work setting up the agency, but not the power to start drafting regulations. It’s good to see her get a post on the Obama team, but we do not yet know how influential she will be.

Tim Fernholz sums up the pros and cons of Warren’s appointment in a piece for The American Prospect. There are very real drawbacks to the move. Confirming Warren for a permanent post as director of the CFPB will be harder next year — Democrats are likely to lose Senate seats in November.

It’s not impossible, but if confirmation was Obama’s chief worry, he’s only made it harder on himself by kicking the nomination down the road. This is true for whoever Obama picks — the bank lobby is going to scream about anybody other than a bank lobbyist, and Republicans are filibustering almost everybody Obama nominates to any post, including critical economic policy positions at the Federal Reserve.

Getting to work

But the new role also gets Warren on the economic policy team right away, and allows the agency to begin staffing up under her stewardship, even if it can’t draft regulations until a permanent director has been confirmed. There will finally be a strong voice on Obama’s economic team prioritizing household financial security above all else. That’s very good news.

Whatever the formal powers of Warren’s new post, we can be sure she’ll have a significant impact on policy making. Her current role as chair of the oversight panel for the Wall Street bailout was given almost no power at all by Congress, yet Warren has transformed it into the only real source of economic accountability in Washington, D.C. That’s no easy task, and we can expect similar courage and creativity from her as a member of Obama’s economic team.

What will the CFPB look like?

Warren herself seems to be pleased with the appointment. In a piece for AlterNet, Warren says that she “enthusiastically agreed” to take on the new position, and explains the vision for the CFPB:

“The new consumer bureau is based on a pretty simple idea: People ought to be able to read their credit card and mortgage contracts and know the deal. They shouldn’t learn about an unfair rule or practice only when it bites them — way too late for them to do anything about it. The new law creates a chance to put a tough cop on the beat and provide real accountability and oversight of the consumer credit market.”

Sea change

That sounds common-sense, but it’s exactly opposite to the past three decades of deregulation. Reversing the damage caused by that anti-regulatory fervor has been extremely difficult. The Obama administration needs Warren’s voice now more than ever. In the early days of his presidency, Obama pushed through a stimulus plan that has prevented the middle class from falling completely off the map. But those efforts are expiring, and they haven’t been enough to prevent millions of families from sinking into poverty.

Alarming poverty rate

In a harrowing piece for The Nation, Kai Wright notes that more people are now impoverished than at any time since the government began tracking poverty data. The poverty rate rose to 14.3 percent, with 44 million Americans — roughly one in seven — living in poverty. More than one-third of black and Latino children are growing up impoverished.

So it’s no surprise that income inequality is also at its most severe in decades. As Kevin Drum notes for Mother Jones – for the past thirty years, more and more American wealth has been concentrated among the richest citizens. The richest 1 percent of U.S. earners are raking in 10 percent more of the national income today than they were at the start of the Reagan administration, while the poorest 95 percent have seen their share of the national income decline.

Numbers like these aren’t a fluke — they’re a direct result of policies that put the interests of Wall Street and other powerful corporate players ahead of the well-being of households. Nor were these policies adopted in a vacuum — Wall Street lobbied hard for the right to pillage our pocketbooks, and when it couldn’t rewrite the rules, it simply broke them while bank-friendly regulators looked the other way. Elizabeth Warren can’t fix all of this on her own, and she’ll surely face opposition from some members of Obama’s inner circle. But families couldn’t ask for a better advocate, and her appointment couldn’t come at a better time.

This post features links to the best independent, progressive reporting about the economy by members of The Media Consortium. It is free to reprint. Visit the Audit for a complete list of articles on economic issues, or follow us on Twitter


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photo credit: thanks to david_shankbone via flickr
by Zach Carter, Media Consortium blogger

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36 comments

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2:55PM PDT on Nov 2, 2010

Why is one person expected to save the economy? It is going to take a lot of people doing the right thing, which isn't necessarily what is their own best interests, but in the interest of the whole nation.

11:07AM PDT on Oct 27, 2010

All that sounds great, but be careful to read any fine print coming out of this administration. Don't trust that what they say is what is actually in the bill. Sure some of it is great, but there are always hooks on these bills that can come back to bite us later on. They sell on one premise, then catch you on the details. You can look at any piece of legislation passed so far and say, "boy that looks and sounds great", but once you dig into the details, there is soooo much more regulatory control that you didn't expect. And that is where they get you. I think we need credit reform, no question, but be careful what the WHOLE legislation covers. 2000 pages can contain a whole lot of gotcha's hidden in the fine print. All I am saying is be cautious. Just like the credit card reforms we all know are needed. Treat these bills the same way, make them easy to understand so we know what is exactly being legislated. Pelosi's statement, "we will see what's in it after we pass it" should be your first clue that it isn't all Kosher, that is how they do it, rush, rush, rush, then they got you, stuck in a pen like livestock. The devil is always in the details. Cautious is the term of the times.

8:18AM PDT on Oct 26, 2010

We need our strong middle class back. I wish lobbyists would be outlawed. Can our decision-makers simply make decisions on their own for the benefit of US and our Planet with the intelligence and reasoning abilities they possess without money greasing their palms from Corps and Lobbyists? BAN LOBBYING!

11:02PM PDT on Sep 30, 2010

I sure hope she can! At least maybe she can get the country on the road back to prosperity.

4:59PM PDT on Sep 24, 2010

I will chant for this woman as she gets a PHD on Economics on the fly as she tackles her new job.

But by the sound of it, no matter how many people whine and scratch, she is up the the job and knows what she is getting into.

10:17AM PDT on Sep 24, 2010

Yes, she can.

10:37PM PDT on Sep 22, 2010

to continue..anyone with a name got a credit offer, even the family dog!. They went for it. They shoulnd't have but they did. And the 'businessmen' who crafted the easy credit rubbed their hands together and called it good.But then some of those same 'businessmen' who made a mint from the homes and easy credit began to see where they could ALSO make money-piles of it-by betting aginst those same people by mass bundling their mortgages with high risk derivative trading. Oh they were flyin high! They also saw where they could dump amercian jobs by the 1,000s and hire cheap, third world labor for pennies, so they went for that too! They had the BEST and BRIGHTEST minds to tell them how.
Of course they did not let a pesky little fact like that without their jobs those consumers couldnt keep up the payments on their homes or credit cards-heck, those fools shouldnt have taken them up on it, right? And so it began to fall apart. And governement stepped in to help not the little guy ,no they bailed out the 'successful businessmen'. who shouldnt have needed it!
During all this,Elizabeth Warren was getting her degree and learning all she could about the law so she could help the folks who only got the shaft.
Will she be a job creator? No. But she has the legal background and the moral will to help educate and protect the folks all those 'successful businessmen' screwed so it doesnt happen again. If she can do that, it makes her all kinds of successful in my book!

9:28PM PDT on Sep 22, 2010

Jake R asked the question: "Does she have any background whatsoever in job creation or business success?"
From what I have been able to discern from her background she has maybe the best background of all; she raised a family on a budget while also working fulltime. She stayed out of debt while doing so. During that process she was active in her community and devoted to helping others avoid what she felt were the 'traps' laid for the American consumer by unfair and deceitful credit markets, which took advantage of consumers who, despite having moved to a two income earner status, were actually less able to pay for basic needs than a one earner family had been able to do 30 years earlier. And by basics I refer to things like housing and utility payments, appliances and clothing and shoes for their kids, upkeep on a car, food and medical coverage. I would mention college, but minus a scholarship, college quit being part of the equation of basics for most families quite some time ago. There simply isn't enough left over. And families faced with the reality of doing all they could and seeing themselves never getting anywhere werre all too easy prey for the credit markets. The perfect target for 'you too can have a piece of the pie' market hawkers. And a president who went on tv nightly for months assuring middle income folks that buying a home was a really good idea-would give them a source of security they no longer felt. Marketing for credit cards flooded mailboxes, anyone wit

5:17PM PDT on Sep 22, 2010

She should have been given a job at the Treasury or directly over Wall Street. They (BANKERS,BIG BUSINESS) have great fear of her and the knowledge she has. That would be real reform.

3:33PM PDT on Sep 22, 2010

That's an awful lot to ask of one person. President Obama need a need economic team.

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