Corporate & Securities Law

Warren to the rescue

Steve Bainbridge recently ridiculed the claim made by some on the left that Harvard Law Professor Elizabeth Warren is the best hope for Democrats in November. (A good friend of mine from law school believes this too.) It was argued that appointing her to run the new Consumer Financial Protection Bureau would rally the base. Bainbridge ridiculed this argument on the grounds that few have ever heard of her and the “adding one more left-liberal policy wonk to Obama’s crew isn’t going to change the fundamentals [of the economy].” Sounds right to me. Bainbridge was wrong to argue, however, that she wouldn’t get confirmed in time to matter.

ABC is reporting that Warren has gotten the nod to run the Bureau. Well, sort of. She is being appointed on an interim basis, which apparently the law allows. (A constitutional law professor needs to help me understand the contours of how senatorial advice and consent can be bypassed.) But the interim appointment isn’t the only sneaky thing going on here.

A friend who works on Capitol Hill tells me about the president’s clever plan. The friend notes that she is going to report to the president, not just to the Treasury Department head. This makes it much less likely that she can be forced to testify before Congress — few White House staffers testify because of privilege issues and because it is consider inappropriate. So even if Republicans take the House, Darrel Issa, the Republican attack dog on investigations, will have a hard time getting much out of her. My friend writes:

So, basically, they’re bypassing the Senate, using a process that Chris Dodd didn’t even know was in the bill, and adding an extra element that will give them an excuse to prevent either the House or Senate from asking her any questions about the job she’s doing. Clever.  And bad for Geithner, who is now responsible for answering all those pesky questions insofar as she’s reporting to him for the interim function.

I’m opposed to the Bureau and don’t see the politics here as good for the Democrats or the president, but I admire the deviousness of this plan. It just goes to show how the president is just like any other politician.

A side note on Professor Warren. Another friend tells me that in the early ’90s, Elizabeth Warren was accused by the late bankruptcy empirical scholar Philip Shuchman of falsifying and manipulating data in a study she had published. Shuchman made this claim publicly in a book review. I don’t know the merits of the dispute, but find it interesting that so serious a claim (to us academics) was not raised during her role as TARP overseer or in the debate about her nomination to run the Bureau. Not that plagiarism disqualifies one for public office — just ask our vice president.

Full post as published by Truth on the Market on September 15, 2010 (boomark / email).