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Will President Obama Appoint Elizabeth Warren to Head the Consumer Financial Protection Bureau?


July 20, 2010 12:18 PM








President Obama will soon appoint a director to run the Bureau of Consumer Financial Protection, White House officials said Tuesday morning, but it’s unclear if he’s interviewed any candidates for the job, which will be officially created tomorrow when the president signs the Wall Street reform bill.


“He’ll turn this in fairly short order,” deputy Treasury Secretary Neil Wolin told reporters this morning.


Behind the scenes of the Obama administration there some is something of a storm brewing as liberals, progressives, and labor unions push President Obama to appoint Elizabeth Warren to head the new agency – against the wishes of others in the administration.


Warren chairs the Congressional Oversight Panel of the Troubled Assets Relief Program and has been seen by many on the Left as a force for greater accountability and transparency, and a check against the forces in the Obama administration that are closely allied with the financial sector, most notably Treasury Secretary Tim Geithner.


Geithner, sources say, has concerns about her appointment given some of the pointed criticisms Warren has made about the Obama administration’s policies.



  • In Warren’s April 13 report on Treasury’s $75 billion foreclosure prevention program, she wrote that “Treasury’s programs are not keeping pace with the foreclosure crisis. Treasury is still struggling to get its foreclosure programs off the ground as the crisis continues unabated.”

  • In her May 13 report on Treasury’s attempts to help small businesses, she wrote that “Because small businesses play such a critical role in the American economy, there is little doubt that they must be a part of any sustainable recovery. It remains unclear, however, whether Treasury’s programs can or will play a major role in putting small businesses on the path to growth.”

  • In her June 10 report on Treasury’s AIG bailout, she wrote, “The government argues that AIG’s failure would have resulted in chaos, so that a wholesale rescue was the only viable choice. The Panel rejects this all-or-nothing reasoning. There is no doubt that orchestrating a private rescue in whole or in part would have been a difficult – perhaps impossible – task, and the effort might have met great resistance from other financial institutions that would have been called on to participate. But if the effort had succeeded, the impact on market confidence would have been extraordinary and the savings to taxpayers would have been immense.”


Warren has been an aggressive watchdog over the Treasury Department and, more personally, a tough questioner of his in oversight hearings, for instance asking why shareholders and officials with US automakers had to make severe sacrifices to continue while recipients of TARP funds have made millions; or pushing Geithner to explain why AIG counterparties such as Goldman Sachs were paid 100 cents on the dollar.


On a conference call with reporters last week, Senior White House Adviser David Axelrod said that Warren was “obviously a candidate to lead this effort, but there are other candidates as well.”


One administration source said that it would be a "bloody battle" in the Senate to get her confirmed, since she would be opposed so strongly by Republicans and conservative Democrats, so the question is whether the president wants a big political battle over her. Warren has good relationships with many administration officials and has intellectual firepower, if not much managerial experience.


Two other candidates, sources say, include deputy Attorney General Eugene Kimmelman, who has worked at Consumer Federation of America, Consumers Union, and Public Citizen; and Assistant Treasury Secretary Michael Barr.


Today Sen. Bernie Sanders, I-Vermont, wrote the president urging him to appoint Warren to the post, noting that Warren “was the first to broach the idea of such a commission in an article published in Democracy: A Journal of Ideas in 2007… Professor Warren has a proven track-record as a smart and tough consumer advocate. As head of the TARP Congressional Oversight Panel she is seen, across the breadth of America, as a champion of open, honest and responsive government.”


You can read Warren’s 2007 story HERE.


Sanders notes that he has “no doubt that some in the Senate will oppose her confirmation. Good! It will allow for a serious debate as to the role that government should play in protecting the American people against the outrageous behavior we have seen on Wall Street.” 


As first reported by the Huffington Post’s Sam Stein, today AFL-CIO President Richard Trumka released a statement saying “In our view, there is only one candidate who is uniquely qualified and equipped to head this new agency. Harvard Law School Professor Elizabeth Warren originated the idea of the Consumer Financial Protection Bureau, and has proven as Chair of the Congressional Oversight Panel to be a strong and fearless advocate for the American public. We therefore strongly urge President Obama to appoint Professor Warren as Director of the new consumer protection bureau. Professor Warren's appointment would make clear that under President Obama's leadership, there truly will be accountability for Wall Street and fair treatment for the American public in the financial marketplace.”


The SEIU issued a statement offering similar support.


-Jake Tapper and Matthew Jaffe






July 20, 2010

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Click on graph for larger image in new window.

This graph shows the Notices of Default (NOD) by year through 2009, and for the first half of 2010, in California from DataQuick.

Although the pace of filings has slowed, it is still very high by historical standards.

From DataQuick: California Mortgage Defaults Hit Three-Year Low; Foreclosures Rise

The number of California homes pushed into the formal foreclosure process between April and June dropped for the fifth consecutive quarter to the lowest level in three years. The declines were greatest in the most affordable areas, where foreclosure activity continues to fall from extremely high levels over the past two years, a real estate information service reported.

A total of 70,051 Notices of Default ("NODs") were filed at county recorder offices during the April-to-June period. That was down 13.6 percent from 81,054 for the prior quarter, and down 43.8 percent from 124,562 in second-quarter 2009, according to San Diego-based MDA DataQuick.

Last quarter's total was the lowest since second-quarter 2007, when 53,943 NODs were recorded. The peak was in first-quarter 2009 when 135,431 homeowners received foreclosure notices.

"Obviously, motivated sellers and accommodating lenders have played a part in bringing the default filings down, especially when it comes to short sales. Public policy has also been a factor. We also need to remember that prices have come up off bottom over the past year. If they continue to rise, fewer homeowners will find themselves under water, which is a significant factor in letting a home go," said John Walsh, DataQuick president.
...
The number of Trustees Deeds (TDs) recorded, which reflect the number of houses or condo units lost at the end of the foreclosure process, totaled 47,669 during the second quarter. That was up 11.2 percent from 42,857 for the prior quarter, and up 4.4 percent from 45,667 for second-quarter 2009. The all-time peak was 79,511 in third- quarter 2008.
As I've noted before, in terms of new NOD filings the peak was probably in 2009. A few key points:

  • Because of the number of homes in the foreclosure pipeline, the number of distressed sales (foreclosures and short sales) will probably increase throughout 2010 - even as NODs decline.

  • As prices fall later this year, we might see another pick up in NODs.

  • Although NODs will decline in 2010 from 2009, the number will still be very high. The number of filings in the first half alone is at the peak of the previous housing bust.



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