The question whether President Obama will nominate Elizabeth Warren to head up the new consumer bureau has gotten so interesting I can’t resist another post. Here are some things I suspect the President is thinking about:
Reasons to pick Warren: 1) the liberal base: liberals will be outraged if the President picks someone else, which could further deflate the enthusiasm of his base, boding ill for the November elections; 2) She’s a true consumer advocate: if he cares at all about the new agency, it will be hard to pick anyone else; 3) when push comes to shove, it won’t be easy for Democratic senators to vote “no” on someone who has defined herself as a protector of middle class Americans. (Republicans won’t be the issue. My guess is that the three who voted for the financial reforms are possible yes’s, and the others will all be no’s.)
Reasons to pick someone else: 1) picking Warren could destroy the President’s relationship with the financial services industry (a relationship that is a lot better than people tend to think); this might not matter in November, but it could be a big problem as he raises money for 2012; 2) a vote for Warren would be a very difficult vote for moderate Democrats like Ben Nelson, who’ve already taken some tough votes this year; as a result, confirmability is a genuine issue; 3) Effect on markets and lending: Warren’s signature concerns, such as clamping down on further on credit card and mortgage loans, could scare the markets and prompt banks to further tighten their lending to consumers and small businesses.
I still think it will be Warren. To be sure, the President has been willing to eschew the preferences of his liberal base (See: Geithner, Timothy, nomination of). But I think there’s too much pressure for Warren. My guess is that he’ll announce the choice tomorrow (Friday) night after the stock market closes, in the hope of dampening any negative market reaction.