President Barack Obama’s decision to appoint Elizabeth Warren to set up the new Consumer Financial Protection Bureau (CFPB) couldn’t have come at a more critical time.

Over 44 million Americans were living in poverty last year. That’s the highest number on record. The Great Recession is taking a terrible toll on everyone outside the executive class, but policymakers have been reluctant to pursue an economic agenda that improves the lives of ordinary Americans.

The uniqueness of Warren’s new post raises plenty of questions, but it puts a fierce defender of the middle class in office at a time when the middle class most needs help.

So what exactly will Elizabeth Warren do?

As Annie Lowrey emphasizes for The Washington Independent, it’s not entirely clear what Warren’s new job will be or how long she will have it.

Consumer advocates have pushed hard to get Obama to name Warren the first director of the new CFPB. Obama, citing Senate confirmation hurdles, has instead charged Warren with setting up the agency as an adviser to both the Treasury Department and Obama himself. The post allows Warren to get to work setting up the agency, but not the power to start drafting regulations. It’s good to see her get a post on the Obama team, but we do not yet know how influential she will be.

Tim Fernholz sums up the pros and cons of Warren’s appointment in a piece for The American Prospect. There are very real drawbacks to the move. Confirming Warren for a permanent post as director of the CFPB will be harder next year — Democrats are likely to lose Senate seats in November.

It’s not impossible, but if confirmation was Obama’s chief worry, he’s only made it harder on himself by kicking the nomination down the road. This is true for whomever Obama picks — the bank lobby is going to scream about anybody other than a bank lobbyist, and Republicans are filibustering almost everybody Obama nominates to any post, including critical economic policy positions at the Federal Reserve.

Getting to work

But the new role also gets Warren on the economic policy team right away, and allows the agency to begin staffing up under her stewardship, even if it can’t draft regulations until a permanent director has been confirmed. There will finally be a strong voice on Obama’s economic team prioritizing household financial security above all else. That’s very good news.

Whatever the formal powers of Warren’s new post, we can be sure she’ll have a significant impact on policy making. Her current role as chair of the oversight panel for the Wall Street bailout was given almost no power at all by Congress, yet Warren has transformed it into the only real source of economic accountability in Washington, D.C. That’s no easy task, and we can expect similar courage and creativity from her as a member of Obama’s economic team.

What will the CFPB look like?

Warren herself seems to be pleased with the appointment. In a piece for AlterNet, Warren says that she “enthusiastically agreed” to take on the new position, and explains the vision for the CFPB:

The new consumer bureau is based on a pretty simple idea: People ought to be able to read their credit card and mortgage contracts and know the deal. They shouldn’t learn about an unfair rule or practice only when it bites them — way too late for them to do anything about it. The new law creates a chance to put a tough cop on the beat and provide real accountability and oversight of the consumer credit market.

Sea change

That sounds common-sense, but it’s exactly opposite to the past three decades of deregulation. Reversing the damage caused by that anti-regulatory fervor has been extremely difficult. The Obama administration needs Warren’s voice now more than ever. In the early days of his presidency, Obama pushed through a stimulus plan that has prevented the middle class from falling completely off the map. But those efforts are expiring, and they haven’t been enough to prevent millions of families from sinking into poverty.

Alarming poverty rate

In a harrowing piece for The Nation, Kai Wright notes that more people are now impoverished than at any time since the government began tracking poverty data. The poverty rate rose to 14.3 per cent, with 44 million Americans — roughly one in seven — living in poverty. More than one-third of black and Latino children are growing up impoverished.

So it’s no surprise that income inequality is also at its most severe in decades. As Kevin Drum notes for Mother Jones — for the past 30 years, more and more American wealth has been concentrated among  the richest citizens. The richest 1 per cent of U.S. earners are raking in 10 per cent more of the national income today than they were at the start of the Reagan administration, while the poorest 95 percent have seen their share of the national income decline.

Numbers like these aren’t a fluke; they’re a direct result of policies that put the interests of Wall Street and other powerful corporate players ahead of the well-being of households. Nor were these policies adopted in a vacuum — Wall Street lobbied hard for the right to pillage our pocketbooks, and when it couldn’t rewrite the rules, it simply broke them while bank-friendly regulators looked the other way. Elizabeth Warren can’t fix all of this on her own, and she’ll surely face opposition from some members of Obama’s inner circle. But families couldn’t ask for a better advocate, and her appointment couldn’t come at a better time.

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