Although President Obama made the creation of a Consumer Financial Protection Bureau a hallmark of the financial reform law enacted July 21, his delay in nominating the agency's first director could hamper its ability to get off the ground.
With so much riding on the appointment, several observers had expected Obama to make his choice clear within days of the law's enactment. Instead, the absence of a pick has given rise to a grassroots campaign to appoint Elizabeth Warren to the job, which could create a political issue for the administration whether it ultimately chooses her or not.
The Treasury Department, in the meantime, is tasked with getting the agency up and running, and observers said it is critical that a director be nominated and confirmed relatively soon.
"There's a lot of operational work that can be done without a director, but some of the most profoundly difficult things comes down to having a leader," said Raj Date, the chairman and executive director of the Cambridge Winter Center for Financial Institutions Policy. "Leadership matters. If you are trying to have an agency that attracts the best and brightest for the sector, then you have to have a leader."
Creating the consumer bureau was the first in a long list of tasks the agency must accomplish in its first year. Among other things, it must merge mortgage disclosure laws and outline a vision of its own authority.
Industry observers said that the Treasury can start much of the work, but that a new director will have to make hard choices.
The idea of letting the Treasury run the bureau has "a short life," said Jerry Buckley, a partner at BuckleySandler LLP. "As time goes by, there will be more and more pressure to appoint a leader who will take responsibility for getting the Bureau launched on the right foot. The president has said the CFPB is essential, he's campaigned for it, and he's rejoiced in its creation. A months-long delay in appointing a leader could start to raise questions about how important a priority this really is for the administration."
