Thursday, April 21, 2011

Sheila Bair for CFPB Director (Really)

The White House is evidently having trouble finding a nominee for director of the Consumer Financial Protection Bureau* (CFPB). The list of people who have passed on the job includes former Michigan Gov. Jennifer Granholm, former Sen. Ted Kaufman, Massachusetts AG Martha Coakley, Iowa AG Tom Miller, and Illinois AG Lisa Madigan.

Elizabeth Warren, who is currently setting up the CFPB as a “Special Advisor” to the Treasury Secretary, just can’t get the 60 votes required for Senate confirmation. She couldn’t get 60 votes last year, when there were 59 Dems in the Senate — and she even “made the rounds on the Hill herself to check the math, but she came away with the same conclusion: There was no path to 60.” So her chances of getting 60 votes now that there are only 53 Dems in the Senate are somewhere between exceedingly slim and none. Obama could technically recess appoint Warren, and while the chances of that happening have probably gone up, I’d still be very surprised if he did.

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.)

I haven’t been the biggest Sheila Bair fan in the past, but I’ve more or less made my peace with Bair. I still think she’s a self-promoter, and cares too much about her image in the media. But, to her credit, when it comes down to brass tacks on issues that really matter, she always ends up doing/saying the right thing rather than the popular thing.

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.


* According to the statutory text, it’s technically called the “Bureau of Consumer Financial Protection,” which would make it the BCFP. But that’s stupid, and everyone, including the agency itself, calls it the CFPB. Put this one on the “to do” list for the technical corrections bill.

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