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The Battle over the CFPB

Yesterday I tried to give some historical context to the continuing controversy over whether President Obama should nominate Elizabeth Warren to head the CFPB. I want to return to that subject today.

This morning’s New York Times has an article addressing the issue. Part of the objection to Warren is her outspoken criticism of the banking industry.  Bankers apparently feel that “she has unfairly accused them of exploiting consumers.”   This has become a familiar refrain of late in the financial community (see for example Jamie Dimon’s comments at Davos earlier this year).         

But such expressions have a much older lineage than that. In 1939, Ferdinand Pecora wrote Wall Street under Oath, his memoirs of the Senate investigation he led in 1933 and 1934. This quote is from his introduction.

Frequently we are told that regulation has been throttling the country’s prosperity. … That its leaders are eminently fitted to guide our nation, and that they would make a much better job of it than any other body of men, Wall Street does not for a moment doubt. Indeed, if you now hearken to the oracles of The Street, you will hear now and then that the money-changers have been much maligned. You will be told that a group of high-minded men, innocent of social or economic wrongdoing, were expelled from the temple because of the excesses of a few. You will be assured that they … were simply scapegoats, sacrificed on the altar of unreasoning public opinion to satisfy the wrath of a howling mob blindly seeking victims.

A good deal of the New York Times article was devoted to chronicling attempts to weaken the agency. Warren described the efforts this way:

Every day, somebody’s got a plan to undercut this agency, to knock it down,” she said. “The conversation is effectively: ‘Oh, we’d really like to kill this thing but it might be too popular for that — that might cause too much blowback. So can we find a way to maim it?’ ”

In 1939, Pecora ended Wall Street under Oath this way:

When open mass resistance fails, there is still the opportunity for traps, stratagems, intrigues, undermining—all the resources of guerilla warfare. These laws are no panacea; nor are they self-executing. More than ever, we must maintain our vigilance. If we do not, Wall Street may yet prove to be not unlike that land, of which it has been said that no country is easier to overrun, or harder to subdue.

The more things change …



Rafael Mangual
Project Manager,
Legal Policy

Manhattan Institute


Published by the Manhattan Institute

The Manhattan Insitute's Center for Legal Policy.