Mike Konczal on the New York Times's attempted hit on Elizabeth Warren and company:
A Failed Dirt-Finding Expedition on the CFPB « Rortybomb: Today’s New York Times came out with a bizarre hit piece on the Consumer Financial Protection Bureau and the first wave of hires. They attempted to argue that there are already huge conflicts between those staffing the creation of the Bureau and those that they will be tasked to regulate.... But what’s so surprising about the article is how little they were able to find... the only thing they were able to flag was that Warren advisor Raj Date was, up until recently, a director of Prosper Marketplace Inc.... Having written a paper with Date on Glass-Steagall and the future of financial reform, as well as working with Date when he contributed to Roosevelt’s Make Markets Be Markets financial reform conference on the subject of the GSEs, I was kind of curious to see if he was actually some sort of deranged financial hit man. But if this is all the ‘dirt’, I’m almost worried for the opposite reason: that the agency will be too academic and not take advantage of people involved in the shadier side of the financial world who want to repent.
The Times article relies entirely on the implied assumption that peer-to-peer lending is some sort of shady, fly-by-night operation. In reality, it is simply an over-hyped phenomena of trying to integrate the internet with new financial institutions.... Prosper has been a useful experiment. It’s challenged thinking about information, prices, the “wisdom of crowds” versus institutional information, fringe lending, and started to find creative ways to replace the practice of low-quality high-churn payday-style lending, regardless of whether or not it is going to take off. Either way, wasn’t the problem that the CFPB was going to kill small-scale financial entrepreneurialism? So isn’t it good to include someone in the agency who has experience with it?
Even more striking is that the article fails to mention that Date and his former policy shop, Cambridge Winter, which they summarize as being “active in the Dodd-Frank debate”, were really at the cutting edge of the consumer financial protection debate. I actually wasn’t sure if the auto dealer exemption for consumer protection was something worth fighting until I read Date’s Baseline Scenario post on the topic, Auto Race to the Bottom.
Particularly pertinent was the excellent phrase:
Even by the low analytical standards applied to hastily arranged, crisis-driven corporate welfare initiatives, the exemption of auto dealers from the CFPA appears profoundly ill conceived. Exempting auto dealers would simultaneously be bad for consumers, bad for industry stability, and bad for what remaining sense of free-market integrity we still have.
He was also active in the Volcker Rule debate, bringing sanity to the discussion of the strengths and weaknesses of resolution authority (also here), and a whole ton of other research that created markers for serious financial reform.
The case against him is so weak that even Mark Calabria, director of financial regulation studies at the Cato Institute, who loves hitting a regulatory conflict and capture slowball over the plate, seems kind of bored with it...