The Battle over Warren Continues

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There is little doubt that Elizabeth Warren would be a strong advocate for consumers. That is why she is being opposed by those in Congress who receive support from the banking industry. There is also speculation that the US Secretary of the Treasury opposes her selection. He was the head of the NY Fed prior to, and during the financial crisis, and many believe that his interests are aligned with Wall Street. This article takes the position that the banks would be insolvent if they had to write off all of their bad debt, and that the Fed and Treasury are doing what they can to enable the banks to earn their way out insolvency. Part of this strategy is to allow the banks to earn fees in ways that a Consumer Protection Agency under Warren might prohibit. Therefore, she is opposed by friends of Wall Street in the Treasury.

This puts Obama in a pickle. He must decide whether to invest political capital in a battle over Warren's appointment, or to appoint someone who would be easier to get approved, and perhaps be a less effective head of the agency.