The Warren Watch
Even before President Obama signed the regulatory reform bill into law on July 21, he was under pressure from lawmakers and liberal groups to tap Elizabeth Warren as the head of a new consumer protection agency created by the legislation.
The situation is unprecedented. Bank regulatory spots tend to attract little attention, and pushing for a certain nominee can often be counterproductive, since administrations rarely want to be perceived as forced to pick a certain person for the job.
Still, that did not stop top Democrats, including House Financial Services Committee Chairman Barney Frank, from campaigning for Warren. In a letter sent to the president on July 21, Frank and 56 other Democrats called Warren the "perfect choice" for the director of the Consumer Financial Protection Bureau, while Sens. Tom Harkin, D-Iowa, Bernie Sanders, I-Vt., and two other senators sent a similar letter.
In an interview Friday with ABC News, President Obama said he had the "highest regard for Elizabeth," and pledged she would have some role with the new agency. But his comments implied she may not necessarily get the top job. "We have not made a decision about who we're going to appoint yet," the president said. "But here's my guarantee, is that Elizabeth is going to be working with me, working with Tim Geithner, the Treasury secretary, to help in thinking about how do we make this consumer agency as effective as possible, looking out for consumers."
If she is nominated, it is unclear whether she would be confirmed. Senate Republicans tore into Warren last week, saying she would be too aggressive and her actions could cause a credit crunch.
Enemy of My Enemy
But the GOP invoked Warren when it suited their purposes, and Democrats dismissed the Harvard professor's views when they wanted to.
Sen. John Thune, R-S.D., cited Warren during a floor debate on an amendment to create a $30 billion small-business lending fund Warren chairs the Troubled Asset Relief Program's Congressional Oversight Board, which cast doubt on the effectiveness of the proposed fund.
Quoting from a report from the committee, Thune said, "She goes on to say that such a fund 'runs the risk of creating moral hazard by encouraging banks to make loans to borrowers who are not creditworthy.' "
But Sen. Mary Landrieu, a key supporter of the fund, pounced on his comments, mockingly asking whether Thune's party was now on the Warren bandwagon.
"I was really under the impression that he and some of the leaders on that side had some objections to her style of leadership," Landrieu said, adding, "Evidently my good friend from South Dakota really appreciates the leadership she's given on this subject."
For her part, Landrieu, a Louisiana Democrat, said Warren was "entitled to that opinion, but I don't listen to Elizabeth Warren."
"I don't listen to Washington bureaucrats," she said. "I'm listening to the small-business associations of America. I'm listening to the Taco Sisters of Lafayette."
Thune was quick to play down any "newfound affection for Elizabeth Warren. I don't think that's the case," he said.
After a year and a half of work, Tarp pay czar Kenneth Feinberg officially shut up shop on Friday, and he didn't have a lot to show for his effort.
His final report found that 17 institutions that received Tarp funds during 2008 paid bonuses to executives, but he determined their actions were "ill-advised," not illegal.
Although Feinberg asked them to adopt changes to their policies, he acknowledged in a press conference he had no power to compel them to do so. Even his bully pulpit is gone. Feinberg was recently tapped to oversee the claims process from the BP oil spill, a job that is likely to leave him little time to think about banks.
In the end, Feinberg conceded his contribution to the executive pay debate was only "modest," pointing to other efforts from the banking regulators and the financial reform law that will have a more long-lasting impact.
"I must say that there are other institutions that will probably have a great deal more impact on pay than what I've been doing," he said.
Tale of the Tape
When experts say the Dodd-Frank Act is the "Biggest Piece of Banking Law Since the Great Depression," they aren't kidding.
In fact, when comparing just the length of the law to other landmark bills, the reforms enacted Wednesday may simply be the biggest ever.
According to a recent blog by University of Michigan professor Mark J. Perry, the Dodd-Frank Act — weighing in at 2,319 pages — is longer than five previous banking laws combined: the Gramm-Leach-Bliley Act of 1999 (145 pages); the Sarbanes-Oxley Act of 2002 (61 pages); the Riegle-Neal Interstate Banking Act of 1994 (61 pages); the Glass-Steagall Act of 1933 (37 pages); and the Federal Reserve Act of 1913 (31 pages).
"It took only 31 pages of legislation in 1913 to create the nation's central bank and establish the entire Federal Reserve System, with a Board of Governors and 12 district banks, as well as creating a single new U.S. currency," Perry said in the blog. "In comparison, just the table of contents (15 pages) and the list of definitions (11 pages) in the Dodd-Frank bill is almost as long."
The Federal Reserve Bank of New York on Friday said Sarah Dahlgren would become head of bank supervision Jan. 1.
Dahlgren will succeed William Rutledge, who recently announced plans to retire at the end of the year. Since January, Dahlgren has been in charge of the New York Fed's special investments management group.