|For Elizabeth Warren, journey from academia.|
Political shift poses test for Warren
Consumer watchdog faces newly business-friendly climate
WASHINGTON — Harvard law professor Elizabeth Warren’s biting criticism of Wall Street won her fans across the country and a powerful appointment from President Obama to oversee a new consumer protection agency.
But now that Warren has settled into her office near the White House and as she readies the agency to enforce rules on banks, loans, and credit cards that could affect every American family, she finds herself operating in a dramatically changed political climate. The Obama administration has shifted from bashing Wall Street “fat cats’’ to courting some of the same groups that fiercely opposed Warren and her agency.
That has left Warren with a pair of challenges: being a tough industry watchdog in what is now characterized as a business-friendly administration and trying to quickly assemble and manage an agency when her skills are rooted in the proverbial ivory tower at Harvard Yard.
“I know there are plenty of people with a handful of rocks — people just like me in my former life as an academic — watching this consumer agency every step of the way,’’ Warren said.
Indeed, just months after being one of the most outspoken critics of the way Washington and Wall Street operate and appearing on “The Daily Show and in a Michael Moore movie that criticized capitalism, Warren is now on the inside, required to abide by restrictions on what she can say, who she can talk to, and what she can accomplish.
Business groups and lobbyists, having failed to kill her agency, are now hoping Warren’s ambitious plans will be toned down by what they perceive to be a new reality in Washington, in which Obama is veering toward the middle in the wake of the Republican victories in the midterm elections.
Obama appointed a new chief of staff, William Daley, a former executive at
“You’re going to see a much more center-leaning administration. I think the appointment of Daley is going to be the start of that,’’ said Jordan Bernstein, a lobbyist for Cassidy & Associates who has represented appliance manufacturers and health care companies. He said he expects the White House to tamp down Warren’s ambitions. “Hopefully, if Ms. Warren stays in the role, she realizes the new reality.’’
In response to questions about Daley and Warren, the White House issued a statement saying Obama believes the agency “remains critical’’ to protecting consumers.
The consumer agency is designed to crack down on questionable lending practices that are blamed for helping drive the economy into the worst recession since the Great Depression. It will have broad authority to issue regulations on products including payday loans, student loans, car loans, and mortgages. Many expect a lobbying frenzy when the agency begins writing rules July 21.
“It’s going to be an onslaught, I am sure of it,’’ said Susan Weinstock, financial reform campaign director for the Consumer Federation of America.
Warren, one of the nation’s leading researchers on bankruptcy, persuaded Obama to include the agency in the financial overhaul. In September, the president appointed Warren to oversee creation of the agency.
To avoid a potentially lengthy and contentious confirmation battle in the Senate, Obama did not nominate her as director of the agency but appointed her as an assistant to the president and special adviser to the treasury secretary. That means the president will still have to nominate a director. If the director’s job goes to someone other than Warren, it is unclear whether she would stay on as an adviser.
For Warren, creating the agency has meant transitioning from academia to politics, from hurling unvarnished criticisms from the outside to gauging every word and navigating bureaucracy from the inside.
In her former position as chairwoman of the Congressional Oversight Panel on the government program that was widely criticized as a Wall Street bailout, Warren regularly lambasted banks and credit card companies for tricking and trapping consumers, hammered mortgage lenders for “behaving abominably,’’ and grilled Treasury officials for taxpayer-funded bailouts that allowed Wall Street executives to “take the money and run.’’
Warren is more measured in her public comments these days. She is rarely, if ever, quoted saying anything highly critical about banks or mortgage lenders.
When asked what it’s been like working for Obama and Treasury Secretary Timothy Geithner, whom she once harangued about the lack of conditions tied to bank bailouts, she said, “It’s been great.’’ Asked if she is concerned about the new political climate in Washington, she said only that she is focused on her job. “Nothing more. Nothing less.’’ The Globe interviewed Warren and asked follow-up questions by e-mail.
Supporters say reining in strong criticisms is one of the changes inherent in transitioning from academia to government.
“Academics have never been afraid to say what they want,’’ said Adam J. Levitin, a Georgetown University law professor and former student of Warren’s at Harvard. “Elizabeth has never been afraid to say what she thinks, but she has to be a little more circumspect. She has to be more careful about choosing her battles.’’
Asked if she has had to be more measured in her public comments, Warren said: “What has changed is I’m now part of a very large organization, and that means that I coordinate with many different people on every aspect of building the consumer agency. When I give a speech, for example, there are many different sets of eyes that help me think through my arguments and tighten my language,’’ she said. “If anything, that process makes my public comments stronger and more meaningful.’’
Representative Barney Frank — the Newton Democrat who co-wrote the regulatory overhaul and is one of Warren’s biggest supporters — said she has a wide following. “The administration knows, one, that she has overwhelming support from Democrats in Congress, and two, they understand politically that she’s overwhelmingly popular.’’
But Representative Judy Biggert, an Illinois Republican and chairwoman of the Financial Services subcommittee on Insurance, Housing, and Community Opportunity, recently issued a scathing statement asserting that Warren’s work has been too secretive and deserves a public airing on Capitol Hill.
“I remain skeptical of the ‘informal channels’ and ‘informal discussions’ that appear central to Professor Warren’s efforts to seek public input on the bureau’s actions,’’ Biggert said, adding that she plans to hold a hearing on the matter in the coming weeks. “ ‘Informal’ too often means ‘without transparency.’ ’’
Warren responded that she posts her schedule online and meets regularly with lawmakers from both parties. The agency also launched a website, ConsumerFinance.gov, to get public input. She said federal law limits her ability to seek formal public input through working groups and other means.
University of Maryland law professor Michael Greenberger, who advised consumer groups in the lead-up to the financial regulation overhaul, said that Warren can succeed because she has the most important person on her side: Obama.
“The president has a special place in his heart for Elizabeth Warren, even after the movement toward a more business-friendly posture, which started some time ago,’’ Greenberger said. “The freedom she had to spell out the idea [of a consumer agency] and lobby for it against the heads of Wall Street could only have been done, I think, from an academic position. On the other hand, you can’t set this bureau up from the Harvard Law School.’’
Donovan Slack can be reached at firstname.lastname@example.org.