The banking crash of 2008 has taken its toll on middle class Americans across the country, and nowhere is the devastation still as punishing as in California. The Golden State once again led the nation in new real estate foreclosures for June (69,114), with Contra Costa County continuing to be hit harder than most. Antioch accounted for 473 of the county’s 2,320 June foreclosures, but the damage is still widespread.
Federal legislation designed to address the regulatory issues that led to the calamity was signed into law last week. But the success of the new legislation is largely dependent upon the regulators charged with further defining and enforcing the rules. Chief amongst these regulatory positions is the appointment to head the new Consumer Finance Protection Bureau (CFPB).
This appointment will be a watershed event for the Obama administration. The division of the President’s loyalties between Wall Street and the American people has been questioned of late. Elizabeth Warren, a well respected champion of the middle class, has long been expected to receive the nod, but it’s now well understood that Treasury Secretary Tim Geithner is pushing against her selection.
From the beginning of the effort to “reform” Wall Street, President Obama supported the formation of the CBPB. But where President Obama has been stringent in his support, Elizabeth Warren is its intellectual mother.
Of course, it’s easy to see why Geithner doesn’t want Elizabeth Warren. First of all, they just didn’t get along very well during hearings where Warren routinely called him on the carpet regarding the TARP payout. But more importantly, the finance “reform” bill leaves its effectiveness almost entirely to the regulators who will enforce it. That means that the strength of the CFPB will rest squarely in the hands of its chair. Geithner has thus far been able to avoid an audit of the Federal Reserve; the last thing he wants is a real regulator watching over its inner workings.
It’s also possible that Geithner’s concerns don’t end with the mere presence of a regulator. With trillions of dollars of bad mortgages and mortgage backed securities still on their books, the banks need a means to squeeze more revenue from clients while they slowly write off their bad debt. Warren’s dedication to preventing abuse of consumers just might prove detrimental to this process.
In the end, the decision belongs to President Obama. He has the choice to either renew the belief that he is the president of The People, or conversely, to remove all doubt that his loyalty is actually to Wall Street and big business.