Six Days In And All Is Not Well

Six days. One hundred forty four hours (including a weekend). That is precisely how long it took for Treasury Secretary Tim Geithner to complicate President Obama’s plan for development of the Consumer Finance Protection Bureau.

Unless you reside under a rather large rock, you already know that last Friday, September 17, 2010, the President formalized what had become an informal relationship with Elizabeth Warren, appointing her to the post of Special Counsel to the President. The idea being that in that post, Ms. Warren, a Harvard Law School Professor and former member of the Congressional panel that oversaw disbursement of the TARP funds, could avoid a bruising and perhaps unwinnable Senate confirmation battle and act as the defacto interim head of the new Consumer Finance Protection Bureau. Prior to the appointment, it was widely reported that Ms. Warren was not Secretary Geithner’s first choice to lead the agency, and probably not even a close second.

And so, it would seem, it is not only the banking lobby, mortgage brokerage companies, credit card companies and payday lenders that are unhappy about Ms. Warren’s appointment. Yesterday, Secretary Geithner more or less announced that we can add him to those ranks also. In a statement yesterday before the House of Representatives Financial Services Committee, Secretary Geithner said "I think it’s in the best interest of getting this agency up and running to have a confirmed director in place as soon as we can." With that clearly considered quote, Secretary Geithner more or less staked out his position respecting what Ms. Warren’s role should be, which is to say, nothing other than perhaps to assist in choosing a nominee. Once a director is appointed and confirmed, Ms. Warren’s power to influence the direction of the CFPB will be severely diminished if not destroyed entirely.

Whether and how the White House will respond to Secretary Geithner’s statement is unclear. The CFPB technically falls under the umbrella of Treasury, so suggesting that Secretary Geithner should be disinterested or refuse to answer the question is absurd. However, Secretary Geithner works for the President, and the President has made his wishes rather clear.

While all of the foregoing is interesting political intrigue, for our purposes it is important because it evinces a serious fracture in the administration regarding the face and form that the CFPB should take as it gets up and running.

-- Chris Jones is a member in Womble Carlyle's business litigation practice group and a leader of the firm's Consumer Finance Investigation and Enforcement Team. He regularly represents a wide variety of clients in both state and federal venues throughout the United States.