A little more than a year ago, Elizabeth Warren was known only in the financial services space as the potential first director of the Consumer Financial Protection Bureau that the Harvard University professor created from scratch.
As of Tuesday night, she is an elected U.S. senator from Massachusetts, with many assuming she will aim for a seat on the powerful Senate Banking Committee.
If you recall her days as the CFPB’s de facto leader, Warren faced intense opposition when testifying in front of Congress on the CFPB. Her tenure at the agency, which she helped create, was short and ended with both Democrats and Republicans eventually turning on her as a potential head of the agency.
Opponents wanted more checks and balances on the CFPB and a chance to restructure the agency. By the end of her tumultuous ride at the new agency, Warren had set her sights on politics, a move that resulted in her election against Republican incumbent Scott Brown.
So what does it mean for financial firms? Will Warren have more power or less as a U.S. senator? Wherever you fall in terms of the Elizabeth Warren camp that question is a significant one.
“I think the big difference is in the Senate she will have a larger variety of things she can do,” said Jim Hawkins, a professor with the University of Houston Law Center, who has followed the CFPB. If Warren remained a part of the CFPB, she would be constricted by the powers that the Dodd-Frank Act laid out for the agency, Hawkins explained. “None of those will constrain her in the Senate. If there are issues that fall outside the CFPB (parameters), she can address those,” Hawkins said of Warren’s Senate position.
The other big difference is the attention she received in her hard-fought Senate race. Warren is now a household name.
“I think the race gave her a lot of visibility,” said Hawkins. In fact, it’s greater visibility than what she enjoyed at the CFPB.
But Mark Calabria, who focuses on housing policy for The Cato Institute, said it’s not guaranteed that Warren will land on the banking committee. “That doesn’t mean she can’t talk about housing,” Calabria said. But if she doesn’t serve on the committee, it would leave her somewhat outside of the game.
And if Warren does land on the committee, Calabria said Warren will have no direct impact on housing starts or sales per say. “I think she will spend more time on nonbank issues,” he said. He added that Warren will probably try to ensure the qualified mortgage rule, or QM, assigned to the CFPB is not revamped substantially and that the CFPB is protected in general. While she is likely to continue shining the light on the banking industry, Calabria sees Warren, like most new Senators, learning the ropes and picking her battles carefully.
Either way, Warren still has attention and some power, so her life after the CFPB may be a case of be careful what you wish for.
kpanchuk@housingwire.com
