President Warren’s Government - WSJ

President Biden defeated Elizabeth Warren in the 2020 Democratic primary by running as a centrist. But you wou...


President

Biden

defeated

Elizabeth Warren

in the 2020 Democratic primary by running as a centrist. But you wouldn’t know it by the way the Massachusetts Senator is seeding her proteges and allies throughout the administrative state. She has far more sway than Vice President

Kamala Harris.

Start with the Education Department. Last week President Biden appointed

Toby Merrill,

who founded the Project on Predatory Student Lending at Harvard Law School, as deputy general counsel. Ms. Merrill wrote a memo to Ms. Warren arguing that the President has the authority under the Higher Education Act to cancel student debt without approval from Congress.

Ms. Warren wants Mr. Biden to forgive $50,000 in debt per borrower, which would mainly benefit higher earners with professional degrees, especially lawyers. Mr. Biden has questioned whether he has the authority to do so, but now Ms. Merrill will have a new perch to persuade him. Assisting Ms. Merrill will be

Richard Cordray,

the new chief operating officer of the Federal Student Aid office. Ms. Warren backed Mr. Cordray a decade ago to be the Consumer Financial Protection Bureau’s (CFPB) first director. Now he’s getting another chance to target student loan servicers and debt collectors.

Their ally will likely be

James Kvaal,

whom Mr. Biden has nominated as under secretary of Education. As the Obama deputy under secretary, Mr. Kvaal helped craft the gainful employment rule that tried to put for-profit colleges out of business. Mr. Kvaal wants an even more aggressive for-profit crackdown in the Biden Administration.

But that’s not enough for Ms. Warren, who is blocking a Senate vote on Mr. Kvaal’s nomination to force the Administration to agree to unspecified student loan “reforms.” Mr. Kvaal has declined to endorse broad-scale loan forgiveness, and Ms. Warren is now holding him hostage.

Also awaiting Senate confirmation is Federal Trade Commissioner

Rohit Chopra,

a Warren disciple nominated to lead the CFPB. Mr. Chopra helped Ms. Warren launch the bureau and was its student-loan ombudsman assisting the Cordray-Kvaal crackdown on for-profits. At the CFPB Mr. Chopra will have sweeping powers to harass and dun businesses. Democrats established the CFPB in the Dodd-Frank Act in part because they thought the FTC too weak.

But that will change thanks to Mr. Biden’s new FTC chair

Lina Khan,

another Warren-Chopra pupil. Ms. Khan served as a summer associate at the CFPB in 2016, then as a legal fellow to Mr. Chopra at the FTC before she joined the staff at the House Judiciary antitrust subcommittee that wrote a 450-page report last fall urging the breakup of Big Tech.

Two weeks ago Ms. Khan and Mr. Chopra rescinded Obama-era guidance that regulated competition based on the consumer-welfare standard, as courts have long interpreted antitrust law. The Democrats said the guidance “needlessly constrains the Commission.”

Ms. Warren’s disciples believe regulators should operate with few constraints. Take Mr. Biden’s new Securities and Exchange Commission Chairman

Gary Gensler,

a former Goldman Sachs banker who found progressive religion running the Commodity Futures Trading Commission in the Obama Administration.

Ms. Warren boasted on

Twitter

that they “worked together after the 2008 crisis to hold Wall Street accountable.” As CFTC chairman, Mr. Gensler lobbied to expand his powers in the Dodd-Frank Act to regulate over-the-counter derivatives, especially credit-default swaps. The CFTC was a prolific financial rule-maker during the Obama years.

That included a push to broaden the Volcker Rule ban on proprietary trading, sweeping in many legitimate hedges designed to protect banks against market risk and placing the burden on banks to prove they weren’t trading for profit. The vague rule allowed Mr. Gensler to define proprietary trading however he wanted.

As SEC chair, Mr. Gensler is making more ESG (environmental, social and governance) disclosures a priority. Ms. Warren and progressives are pushing the SEC to redefine the concept of corporate “materiality” as information that investors consider to be socially important—e.g., the gender pay gap—rather than relevant to a company’s finances or governance.

***

Other Warren acolytes tapped by Mr. Biden include David Weil (author of the Obama joint-employer standard) to lead the Labor Department’s wage and hour division;

Dave Uejio

(current acting CFPB director) as Department of Housing and Urban Development assistant secretary for fair housing and equal opportunity; and

Wally Adeyemo

(the first CFPB chief of staff) as deputy Treasury secretary.

Mr. Biden still sometimes makes rhetorical bows to the center. But personnel usually ends up as policy, and the President has outsourced much of his government to Ms. Warren. Watch as her acolytes begin their regulatory onslaught.

Wonder Land: Behold the Democrats and GOP locked in a deadly tango over Biden’s $4 trillion. Images: De Agostini via Getty Images

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President Warren’s Government - WSJ
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