In 2007, a Harvard Law School professor wrote an article for the journal Democracy proposing a federal watchdog agency regulating consumer financial products. “It is impossible to buy a toaster that has a one-in-five chance of bursting into flames and burning down your house,” the professor wrote. “But it is possible to refinance an existing home with a mortgage that has the same one-in-five chance of putting the family out on the street—and the mortgage won’t even carry a disclosure of that fact to the homeowner.”
Written in the very early days of what would become the Great Recession, the professor noted that the sub-prime mortgage market was a “stunning example” of the lack of such government oversight, pointing out that 52 percent of all sub-prime mortgages “originated with companies with no federal supervision at all.”
Three years later (PDF), after the economy had collapsed from the weight of crumbling sub-prime mortgage debt, Congress passed the Dodd-Frank Wall Street Reform and Consumer Protection Act and established the federal Consumer Financial Protection Bureau. Elizabeth Warren, the professor who had originated the idea, was appointed by President Obama to set up the new agency.
But a year later, in 2011, when the agency was ready for a formal head—who would require Senate confirmation—Republicans made their opposition to Warren known. One of Warren’s deputies was, instead, put forward to head the new agency. But by then it was too late—Republicans had turned Warren into a populist hero.
Had Republicans not stood in the way of Warren running the Consumer Financial Protection Bureau, she would have never instead run for Senate in Massachusetts—which, of course, helped her star rise. In fact, according to Google Trends, Warren was still relatively unknown and uninteresting to the American public until she ran for Senate against GOP golden boy Scott Brown.
Had Warren been appointed to run the CFPB, her preferred choice at the time, she would have likely been relegated to the dusty obscurity of the Washington bureaucracy—making a difference every day in the lives of the American people by retooling the consumer financial market but without the spotlight and bully pulpit of her Senate perch. She almost certainly would not have become what she is today, which is the de facto leader of the American left.
After all, most Americans don’t even know who Richard Cordray is—and his Google trend line spiked when he was appointed to the CFPB and then fell off a cliff thereafter. Elizabeth Warren is famous, yes, because her ideas and her passion connect with the vast majority of the American people who are pissed off at an economy that clearly is rigged to help the 1 percent at the expense of everyone else. But Elizabeth Warren is also famous because Republicans made her their enemy.
Moreover, as the saying goes, since the enemy of my enemy is my friend, Elizabeth Warren’s prestige was further bolstered by the fact that Republicans had primary responsibility for the financial crisis in the first place. Sure, Clinton-era market deregulation also played a significant role. But Republicans not only supported those measures but far more to ease restrictions on Wall Street and the very rich while constricting government oversight and support for borrowers. In fact, in the bipartisan Financial Crisis Inquiry Commission, Republicans pushed for phrases like “Wall Street” to be struck from the final report. It’s no wonder 69 percent (PDF) of Americans think the Republican Party generally “favors the rich.” From a policy perspective, they’re right.
Republican policies not only fostered the financial crisis but, adding insult to injury, Republicans then appeared massively callous about the fallout. They blamed poor people for the sub-prime mortgage debacle, instead of big banks. They made inequality worse by fighting against minimum wage hikes while slashing food stamps—and, until very recently, brushed aside any concerns about wealth inequality.
They insisted, a la John McCain (PDF) in the 2008 presidential race, that the “fundamentals of our economy are strong.” This obtuse, out-of-touch denial created an opening for political leaders who could connect with the pain of the American people and offer real solutions. Barack Obama emerged from this moment because of his ability to talk about inequality and connect with voters, who somehow overlooked the fact that his policy ideas and team were just Clinton 2.0. But Elizabeth Warren also emerged, the perfect policy hero to fight the villain that Republicans had plainly become.
Who knows whether Elizabeth Warren will run for president. She says she won’t, but then again she didn’t want to run for the Senate either until an overwhelming groundswell of grassroots energy essentially forced her in.
What is clear is that Warren, who was so nervous before a 2009 Daily Show appearance that she threw up backstage, does not naturally seek the limelight. Rather, the light has sought her out as a strong and bright alternative to the dim-witted policies and dark leadership of the Republican Party. Because Republicans can’t help hating Elizabeth Warren and her sensible economic vision, they’ve inadvertently turned her into the biggest public thorn in their side.