Elizabeth Warren Named to, Well, Something…

There’s a fair measure of confusion about today’s news reports that Elizabeth Warren will be named to head the Consumer Financial Protection Bureau, well, not really head it, but be in charge of creating it, but she’ll answer to the President, and Secretary Geithner, but she’ll really be running it, just not going through the confirmation process.

Right.

It’s a little bit tough to nail this down fully. Matt Yglesias got confused about it, then talked to some people and came out optimistic.  Ezra Klein calls himself ambivalent. Jon Cohn’s headline (sort of) nails it. It’s hard to know what to think until there’s something solid to go on.

Here’s what we do know, someone has got to set up the CFPB. People at Treasury are working on it right now, apparently under the direction of Michael Barr (a very good man for the job.) There’s been a lot of focus on the politics of a Warren nomination/appointment/whatever it is. At the end of the day, that’s not really the important thing. The most important thing is the policy. Does this step help to set up the agency efficiently? Does this lend credibility to the office? Will it help consumers?

As Reid said the other day:

Whoever is nominated, they should be expected to explain clearly and for all to hear how the law establishes a new accountability framework based on a set of principles rather than the disclosure of product terms and conditions. There has to be no tolerance for the marketing of products that are deemed unfair or deceptive. When future regulations are governed by the principles of transparency, simplicity, and fairness, consumers will be given a greater chance of being match up with more appropriate financial products. These standards will level the playing field and apply to all providers, regardless of whether they are classified as banks or not.

If the leadership of an empowered consumer watchdog embraces the move from a disclosure regime to one based on principles, it has the potential to return banking to a lower-margin but respectable business.

Does this announcement move us toward that simplicity? Toward a level playing field? Well, not yet, but as with most things, time will tell.