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Johnson, Krugman, Nocera: Elizabeth Warren Is Getting Thrown Under The Bus

Evans Liberal Politics
March 21, 2011

 

Johnson, Krugman, Nocera: Elizabeth Warren
Is Getting Thrown Under The Bus

Johnson, Krugman, Nocera: Elizabeth Warren Is Getting Thrown Under The Bus, Daily Kos, March 20, 2011, by Bob Swern, used with permission, quoted verbatim:

MIT Professor, author and former International Monetary Fund (IMF) Chief Economist Simon Johnson noted, on Thursday, (See: “Who’s Afraid of Elizabeth Warren?“) that it’s certainly beginning to appear that–at least as far as the ongoing, Wall Street mortgage fraud settlement negotiations with our states’ 50 attorneys general are concerned–Treasury Secretary Tim Geithner’s quite perturbed with presidential advisor Elizabeth Warren and her Consumer Financial Protection Bureau for taking the lead in advocating Main Street’s position on the matter.

nice photograph of Consumer Financial Protection Bureau advocate Elizabeth Warren

But, over the weekend, in “Heroes As Villains: The Case of Elizabeth Warren,” and “An Advocate Who Scares Republicans,” even Paul Krugman and the NYT’s Joe Nocera, respectively, note that when political push comes to shove, Democrats from the administration on down, are more than ready to justify their inaction and tacitly feed Ms. Warren to the GOP wolves, as strong headwinds from the Wall Street go all out to vilify Warren.

As Johnson stated it–which should come as no surprise to anyone who’s been following Mr. Geithner’s ongoing, two-plus-year reign over all things financial in this country–after pointing out multiple comments which underscored general GOP disdain for Warren on Capitol Hill, many of Ms. Warren’s and Main Street’s economic hurdles lie on the other side of the aisle: “…Mr. Geithner at this stage is more pro-banking lobby than even Mr. Bachus.” Johnson was referring to House Financial Services Committee Chair Spencer Bachus (R-AL).

As a Democrat–even as a pragmatic Democrat–please take a few seconds to think about that.

Coming from the author of “13 Bankers,” “The Quiet Coup” and “The Two-Track Economy,” that’s really quite a statement.

To jog our memories, Johnson reminds us that Bachus is the person who recently said…

“In Washington, the view is that the banks are to be regulated, and my view is that Washington and the regulators are there to serve the banks.”

Johnson’s Geithner reference was with regard to a piece that appeared in the New York Post, around eight days ago, prior to Warren’s appearance before the House Financial Services Committee, earlier this past week. In that article, we learn that Secretary Geithner “isn’t happy” with Warren’s CFPB taking the lead advocacy position in the ongoing mortgage/foreclosure fraud settlement talks.

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Warren ripped again
By MARK DeCAMBRE
New York Post
Last Updated: 4:57 AM, March 11, 2011 …Geithner has privately told others that he isn’t happy with Warren’s involvement in the talks either, according to sources familiar with the matter…
…

…To be sure, one CFPB insider insisted that the agency only got involved in the mortgage negotiations after being “sought out as advisers” by state attorneys general.
“Politicizing the funding of bank supervision would be a dangerous precedent, and it would deprive the CFPB of the predictable funding it will need to examine large and powerful banks consistently and to provide a level playing field with their non-bank competitors,” Warren said in a recent speech.

To say that Geithner’s been “annoyed” by Warren, despite spin and related public statements to the contrary, from virtually the very first day he was in office, is to put the matter quite kindly. The facts are that she’s been a thorn in his side since day one, IMHO.

As I noted above, we’ve reached a point where even folks like Krugman and Nocera are making significant note of how our party’s leaders are conspicuously silent at this critical juncture:

Krugman, in his blog, yesterday (see link, above)…

…Warren has clearly faced a lot of hostility from within the administration, too. And as I see it, this also comes precisely because she was right: that gives her the kind of credibility that, in turn, makes her something of an independent force — which some people don’t like at all.Of course, that very credibility could make her an important asset to the Obama administration, for whom she could serve both as an able administrator and as a symbol of commitment to reform. But so far, the administration seems eager to avoid drawing any contrasts with the GOP, even when it has both justice and public opinion on its side.

Nocera, in Saturday’s NYT (see link, above)….

…It’s not just the House Republicans either. Already the Office of the Comptroller of the Currency has reverted to form, becoming once again a captive of the banks it is supposed to regulate. (It has strenuously opposed the efforts of the A.G.’s to penalize the banks and reform the mortgage modification process, for instance.) The banks themselves act as if they have a God-given right to the profit they made precrisis, and owe the country nothing for the trouble they’ve put us all through. The Justice Department has essentially given up trying to make anyone accountable for the crisis.Thank goodness, then, for the attorneys general — and for Ms. Warren. On Main Street, where the attorneys general operate, it is pretty obvious that problems persist…
…

…Let’s face it: there isn’t anybody in Washington more fearless about standing up to the big banks. No wonder they don’t like her…
…
…Senate Republicans have vowed to block her appointment if President Obama nominates her. Yet even if her nomination goes down in flames, Senate confirmation hearings would be clarifying. Americans would get to hear Ms. Warren explain why the Consumer Financial Protection Bureau has the potential to help Americans. And they would get to hear Republicans explain why the status quo — including the everyday horror of the foreclosure mess — is just fine.

It has been much noted in recent months that President Obama seems unwilling to start a fight with Republicans. Maybe that’s why he has shied away from nominating Ms. Warren to a job for which she is so clearly suited. But if protecting financial consumers — and helping the millions of Americans struggling to hold onto their homes — isn’t worth fighting for, then what is?

As some reading this might note, and as I’ve pointed it out in numerous posts — and as recently as in a diary in the past 24 hours — I think that even this woefully inadequate demand for $20 or $30 billion in mortgage modifications that the President and advisor Warren are now trying to squeeze out of Wall Street is quite pathetic, and really not much more than a charade once one realizes that the Treasury Department already has access to at least this amount in unspent, preapproved funds to accomplish this task.

It’s been widely reported, and as I’ve noted it in my own diaries of late via a recent ProPublica investigation, the government’s efforts to keep people in their homes via the HAMP program has been nothing short of a dismal failure.

From a practical standpoint, it’s now being projected by many of our country’s leading experts on residential real estate valuations, that as many as half of our nation’s mortgageholders will be underwater (owing more on their homes than they’re worth) by year’s end. Then again, much to the chagrin of those promoting our corporatocratic recovery (while Main Street languishes in pain), this situation was projected to come to fruition two years ago by experts at Barclays and Deutschebank. So, it’s not exactly new information.

The truth is that very little’s been accomplished to ameliorate Main Street homeowner suffering over the past couple of years.

As Johnson notes…

…[Geithner's] team agreed to Basel III, which requires banks to have less equity funding than Lehman had the day before it failed. There is no sign that systemically important financial institutions will be required to have a significant extra capital buffer – although this is supposedly not yet decided. And despite the undecided capital standards and large evident problems still facing banks (the foreclosure fiasco, commercial real estate woes, continuing high unemployment), the Financial Stability Oversight Council – which Mr. Geithner chairs – is about to sign off on letting banks increase their dividends.This makes no sense at all in terms of economic policy, but this is exactly what Mr. Geithner is presiding over. (If anyone you know at Treasury thinks this assessment is unfair, send them to Anat Admati’s webpage at Stanford.)

And having Elizabeth Warren on the scene – providing an alternative pro-consumer perspective – is apparently increasingly inconvenient to Mr. Geithner. For example, he has expressed displeasure at her engagement in the mortgage settlement process.

President Obama missed his best opportunity to reform the financial system when advisers – including Mr. Geithner – recommended that he defer to the top 13 bankers in March 2009. His team further punted when they failed to push for real change in spring and summer 2010, when the financial legislation was before the Senate. Mr. Geithner and his people were instrumental in defeating the Brown-Kaufman Amendment, which would have limited the size and the leverage (debt relative to equity) of the largest banks in the United States.

Will Mr. Geithner go for the trifecta? He was instrumental in bailing out the big banks without any strings. He held back serious attempts at legislative reform. Will he now prevent Elizabeth Warren, our potentially most effective modern regulator, from even coming up for a vote in the Senate?

When Geithner leaves the Treasury Department, he will return to the vampire squid’s lair from whence he came, upgrading his former, $500,000+ per-year gig as President of the NY Federal Reserve for a $10- or $20-million-a-year chairmanship with one of the too-big-to-fail firms that he’s done more to enrich over the past few years than any other U.S. citizen, save for–perhaps–Ben Bernanke. But, that’s certainly an arguable point, if ever there was one.

What’s inarguable here, however–White House apologists aside–is that, once again, when it comes down to a critical choice between Wall Street and Main Street, we’re dealing with a political party — OUR party — whose leadership is almost as much in thrall to Wall Street as the G.O.P.

Perhaps nowhere is that more self-evident than with regard to what’s happened to Elizabeth Warren over the past few days.

This country’s leading advocate for Main Street is being fed to the wolves, as our party’s leaders standby and, at the very least, witness this mugging in broad daylight.

IMHO, it’s the political version of the Kitty Genovese story, writ large.

In the words of Joe Nocera this weekend: “…if protecting financial consumers — and helping the millions of Americans struggling to hold onto their homes — isn’t worth fighting for, then what is?”

IMHO, Elizabeth Warren is being thrown under the bus…by both parties…and, it is unacceptable.

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Posted on March 21, 2011 by , Reply

Democrats In Denial: On Forsaking Our Feud w/ Neofeudalism

Evans Liberal Politics
November 24, 2010

 

Democrats In Denial: On Forsaking
Our Feud w/ Neofeudalism

Democrats In Denial: On Forsaking Our Feud w/ Neofeudalism, Daily Kos, November 19 (Updated), by Bob Swern, used with permission, quoted verbatim:

Perhaps moreso than anything I’ve read to date, Louis Uchitelle’s article (SEE: “Unions Yield on Pay Scales to Keep Jobs“) in Saturday’s New York Times provides us with an alarming, firsthand, crystal-clear snapshot of what Elizabeth Warren was referencing when she warned us, last December, of “AMERICA WITHOUT A MIDDLE CLASS–IT’S NOT AS FAR AWAY AS YOU MIGHT THINK.” First, from Liz Warren (December 5, 2009):

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Today, one in five Americans is unemployed, underemployed or just plain out of work. One in nine families can’t make the minimum payment on their credit cards. One in eight mortgages is in default or foreclosure. One in eight Americans is on food stamps. More than 120,000 families are filing for bankruptcy every month. The economic crisis has wiped more than $5 trillion from pensions and savings, has left family balance sheets upside down, and threatens to put ten million homeowners out on the street.

As Uchitelle reminds us today, we are (indeed, as we blog) witnessing the daily play-by-play of the overwhelming dominance of the corporatist-haves over the soon-to-be and already-lower class have-nots. (Simon Johnson, in August of 2009, called it: “The Two-Track Economy.”) It’s the ongoing story of the status quo’s creation of the greatest economic disparity ever measured between our country’s social classes; and here it is in today’s NY Times, ironically writ large. Truly, even today’s Times’ alternate headline for Uchitelle’s story supports the narrative of our developing, two-track economy, calling it:  a “Two-Tier Wage Scale.”

“Unions Yield on Two-Tier Wage Scales to Preserve Jobs“…

Unions Yield on Pay Scales to Keep Jobs
By LOUIS UCHITELLE
New York Times
November 20, 2010MILWAUKEE — Organized labor appears to be losing an important battle in the Great Recession.

Even at manufacturing companies that are profitable, union workers are reluctantly agreeing to tiered contracts that create two levels of pay.

In years past, two-tiered systems were used to drive down costs in hard times, but mainly at companies already in trouble. And those arrangements, at the insistence of the unions, were designed, in most cases, to expire in a few years.

Now, the managers of some marquee companies are aiming to make this concession permanent. If they are successful, their contracts could become blueprints for other companies in other cities, extending a wage system that would be a startling retreat for labor.

Though union officials said they could not readily supply data on the practice, managers have been trying to achieve this for 30 years, with limited results. The recent auto crisis brought a two-tier system to General Motors and Chrysler. Delphi, the big parts maker, also has one now. Caterpillar, back in 2006, signed such a contract with the United Automobile Workers…

The story references the reality that this was a “…fairly common means of shrinking labor costs in the recession of the early 1980s. At the end of the contracts, however, wages generally snapped back up to a single tier. At G.M., Chrysler, Delphi and Caterpillar, the wages will not be snapping back.”

Uchitelle takes us to three large, successful manufacturers in southeastern Wisconsin: Harley-Davidson, Mercury Marine and Kohler, where management has successfully  implemented semi-permanent, “two-tier systems that could last well into a recovery.”

“This is absolutely a surrender for labor,” said Mike Masik Sr., the union leader at Harley-Davidson, the motorcycle maker, not even trying to paper over the defeat.

I’m leaving some of the most alarming quotes and facts for you to read (by clicking on the links, above).

It’s a stunning piece; a stark, extremely tangible example of the ongoing destruction of our country’s middle class, as it’s occurring in real time, throughout America.

#            #            #

And, in a moment, this will bring us to Bob Herbert’s column, also in today’s Times: “Hiding From Reality.” But, first, a little more about unions; this time as it concerns G.M.

Yesterday, along with many hundreds of others here at DKos, I applauded the story of a resurging General Motors, as articles regarding the “new G.M.’s” initial public offering flooded the MSM and the blogosphere, throughout the day. I even posted a positive diary about it!  In it, I talked about the United Auto Workers, and their rapidly-diminishing membership…

To provide some context for organized labor’s share of the statistics that are mentioned, above, here’s a snapshot from the Wiki UAW page…

The UAW has seen a dramatic decline in membership since the 1970s. Membership topped 1.5 million in 1979, falling to 540,000 in 2006. Then the Great Recession hit, with GM and Chrysler going bankrupt. Membership fell to 390,000 active members in 2010, with more than 600,000 retired members covered by pension and medical care plans.

But, the reality is, while Thursday’s MSM (along with many folks’ posts in this community) was bursting at the seams with stories of jobs “saved,” the truth is all new UAW hires are earning only a small fraction ($14 per hour) of what all new union members earned up until just 17 months ago. (Very much like all those Wisconsin union members in Uchitelle’s story in today’s NY Times.)

From a very poignant op-ed by author Paul Clemens in Thursday’s NYT…

The Ghosts of `Old G.M.’
By PAUL CLEMENS
New York Times
November 18, 2010…ACROSS the nation, as in Detroit, there is an economic disconnect, a split between what the economic numbers say and how things feel on the ground. The economy is growing, but the unemployment rate hasn’t budged. The recession officially ended in June 2009, but more jobs have been lost than have been added since that “ending.”

Handling this disconnect requires political acuity. It brings to mind something Philip Roth once said about those who have little feel for literature and the texture of lived experience it provides and so “theorize” it. Mr. Roth imagined a scene of a father giving his son this advice while attending a baseball game: “Now, what I want you to do is watch the scoreboard. Stop watching the field. Just watch what happens when the numbers change on the scoreboard. Isn’t that great?” Then Mr. Roth asks: “Is that politicizing the baseball game? Is that theorizing the baseball game? No, it’s having not the foggiest idea in the world what baseball is.”

It’ll be fun, for a day or two, to look at the scoreboard, and to see what G.M.’s shares are going for: $26? $29? $33? $35? The numbers on the exchange will change; it’ll be great, and a welcome, temporary relief from the numbers, still difficult to comprehend, of jobs lost and plants closed. Soon enough, though, we’ll have to go back to watching what’s actually happening on the field, where there’s still a blowout in progress, with the home team way behind, and no one, seemingly, with the foggiest idea what to do about it.

The fact is, on Thursday, even this “gloom and doomer” (and former Carter/Mondale Michigan Press Secretary and local, 1980  Democratic presidential campaign UAW media liaison) was in DENIAL!

So, here’s Bob Herbert doing a deeper dive (another must-read, IMHO) on our collective denial, in Saturday’s NY Times: “Hiding From Reality.”

Hiding From Reality
By BOB HERBERT
NY Times
November 20, 2010However you want to define the American dream, there is not much of it that’s left anymore.

Wherever you choose to look — at the economy and jobs, the public schools, the budget deficits, the nonstop warfare overseas — you’ll see a country in sad shape. Standards of living are declining, and American parents increasingly believe that their children will inherit a very bad deal.

We’re in denial about the extent of the rot in the system, and the effort that would be required to turn things around. It will likely take many years, perhaps a decade or more, to get employment back to a level at which one could fairly say the economy is thriving…

–SNIP–

…All we are good at is bulldozing money to the very wealthy. No wonder the country is in such a deep slide.

We don’t even seem to realize how deep a hole we’re in…

–SNIP–

…That’s how people behave when they’re in denial.

America will never get its act together until we recognize how much trouble we’re really in…

#            #            #

POSTSCRIPT…

Truth be told, this is one of  my “more personal” diaries. You see, even a diehard, Democratic “gloom and doomer” like me can be subject to fits of cognitive dissonance. If nothing else, what posting this diary represents to me is the truth that, on a much more personal level, I understand–perhaps a lot more than I even realized until this evening–what many folks are saying when they criticize my reality-based coverage of what’s happening in our corporatocratic,  draconian, two-track economy. It is painful. Sometimes, very much so! And, deep down inside, I “get it.” And, I wanted to share those sentiments with you, tonight.

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Posted on November 24, 2010 by , Reply

Bankers Broke The Economy And Got Rich Doing It

Evans Liberal Politics
October 3, 2010

 

Bankers Broke The Economy And Got Rich Doing It


Bankers Broke The Economy And Got Rich Doing It, Campaign for America’s Future, October 1, 2010, by Zach Carter, quoted verbatim:

Today’s absurd William Cohan column actually argues that we don’t need consumer protections in banking—nevermind the subprime explosion, the $8 trillion dollar housing bubble or the 1.2 million foreclosures expected this year. Nevermind the $38 billion in overdraft fees the banking industry reaped in 2009, or the ridiculous fine-print on credit cards. Nope, in William Cohan’s crazy world, the mortgage crisis was basically a problem caused by idiot consumers who—according to Cohan– don’t even deserve basic legal protections.

(Note by Evans Liberal Politics owner Paul Evans: last year the banks had a profit of "only" $12 billion. But they charged obscene overdraft fees totaling the just-mentioned $38 billion. So without their immoral, calculated, software-driven overdraft fees, the banking industry would have lost $26 billion. In other words they had to screw everyman in order to be profitable.)

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Cohan makes only two real points in his column, both of them profoundly stupid. The silliest objection is his obviously disingenuous sticker-shock at the $500-million-a-year budget the new Consumer Financial Protection Bureau will have:

“In an era of huge budget deficits and a depleted treasury, that’s a lot of money for taxpayers to fork over every year to support a new government bureaucracy designed to protect us from our own worst impulses.”

Nobody who knows anything about budgets could be appalled by this number. Even by the standards of government bureaucracy, the CFPB’s funding is paltry. It’s only 10% of the Fed’s annual budget, and about half of the SEC’s. Eliminating or quintupling the CFPB’s funding would be totally insignificant to the overall federal budget. But even if this number did matter, Cohan’s analysis is preposterously short-sighted.

Employing a police force seems like a waste of taxpayer dollars until you get robbed, and so it is with financial regulation. Right now the U.S. economy struggling through a horrible recession, which has included significant government expenditures to bailout Wall Street and keep the job market afloat. All of this was caused by a predatory lending binge financed and implemented by Wall Street. Decent consumer protections would have prevented the housing bubble from getting totally out of control, and would have prevented Wall Street from destroying itself. If it costs us $500 million a year to save 8 million jobs, $8 trillion in household wealth, and $4 trillion in bailout money, that seems like a pretty good  deal to me.This budgetary argument holds no matter who is responsible for the mortgage crisis, be they banks or borrowers, predatory or pristine. But Cohan doubles down on his idiocy, saying that actually, borrowers don’t deserve to be protected from predatory banks.

Like virtually every senseless diatribe against the CFPB written over the past two years, this attack isn’t directed against the CFPB itself, but against the very idea of consumer protection—something that has been a common-sense element of bank regulation for centuries. Things got off track over the past thirty years (with accelerating aggressiveness during the Bush years) as bank regulators simply stopped enforcing consumer protection laws.

The CFPB does not create some wild new standard of regulation—it’s just an effort to ensure that somebody actually enforces the basic consumer protection mandate that existing regulators have ignored. The existing regulators failed, because they’re more worried about short-term bank profitability—the more money a bank makes, the less likely it is to fail, and the less likely that the regulator will be embarrassed by a disastrous bank failure. To existing agencies, it doesn’t matter where that profitability comes from—if it’s from predatory lending, they’ll just look the other way. The CFPB breaks this perverse incentive structure by establishing an agency that only works with consumer protection issues—not bank profitability.

Cohan waits until the final paragraph of his column to deliver the “evidence” for why we don’t need a CFPB, and he gets it completely, horribly wrong.

“Yes, some people who have lost their homes were victims of fraudulent mortgage brokers and shady lenders. But the vast majority of those who held the billions of dollars in mortgages now foreclosed on knew exactly what they were doing. And one of the dirty little secrets of the financial crisis is that one homeowner after another signed mortgage-loan documents that were filled with inaccurate information about his or her net worth, assets, salaries and ability to make monthly mortgage payments. Why would someone sign a loan document knowing full well the information on it was inaccurate and the mortgage could never be repaid?”

The only real statistic on mortgage fraud comes from the FBI, and it doesn’t back up Cohan’s claims at all. As early as 2004, the FBI was warning about an “epidemic” in mortgage fraud—not a few bad apples, not “some people,” but an epidemic . We know that mortgage fraud was standard operating procedure at Washington Mutual, now part of JPMorgan Chase, and they weren’t alone—for five years, rampant fraud was a basic component of the U.S. mortgage machine. And according to the FBI, 80 percent—repeat, 80 percent—of this fraud was perpetrated by the lender.

So, let’s answer Cohan’s question. Why would people knowingly set themselves up for foreclosure? They wouldn’t! The key incentives for fraud and deception do not apply to rational borrowers who want to live in their homes. They apply to lenders, who were being paid very well to push borrowers into unaffordable mortgages. Bankers and brokers were paid kickbacks to steer borrowers into subprime loans, when those same borrowers would have qualified for ordinary mortgages. With heavy demand for mortgage-backed securities on Wall Street, banks knew they could issue garbage loans and stick other investors with the tab—so they did. The list of lenders who pawned their crappy loans off onto other people includes many of the biggest names in finance: Wells Fargo, Wachovia, Citigroup Bank of America, Countrywide, Washington Mutual and more. Banks stood to make a lot of money from fraud. Borrowers, by contrast, could count on foreclosure. Who do you think is going to falsify the income on loan applications?

Sure, there were borrowers who tried to game the system. But the story of mortgage fraud in the housing bubble is overwhelmingly a story of malpractice by bonus-crazed bankers, not borrowers. We need Elizabeth Warren and the CFPB to protect our economy from such abuses. This is a question of basic law enforcement, something Cohan apparently believes should not apply to ordinary citizens looking to buy a home.

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Posted on October 3, 2010 by , 1 comment

Obama to Sidestep Senate Confirmation by Appointing Elizabeth Warren Special Adviser

Evans Liberal Politics
September 16, 2010

 

Obama to Sidestep Senate Confirmation
by Appointing Elizabeth Warren Special Adviser


A Survey of News from Around the Internet
on the Elizabeth Warren Appointment

 

Evans Liberal Politics, September 16, 2010, compiled by Paul Evans, photo of Elizabeth Warren from Wikipedia:

Sources: Obama to name adviser for new consumer agency, CNN Politics, September 15, 2010, by Dana Bash, Ed Henry and Jessica Yellin, excerpt quoted verbatim:

Washington (CNN) — President Obama plans to name Elizabeth Warren as a special adviser to help set up a new consumer protection agency created under the Wall Street reform bill, according to sources who spoke on condition of not being identified by name.

photo of Elizabeth Warren, new special adviser to the President and Treasury Department from Wikipedia

A Democratic official said Wednesday that Warren’s title would be assistant to the president and special adviser to the secretary of the Treasury on the Consumer Financial Protection Bureau.

In her role, Warren would report directly to Obama and to Treasury Secretary Tim Geithner while leading the administration’s work in starting up the new bureau, the official said.

Elizabeth Warren to be Named to Advisory Position This Week


In addition, a senior administration official said Obama will name Warren to the advisory position this week.

The move would allow Warren to help set up the new consumer protection agency but bypass a potentially difficult Senate confirmation battle if she were nominated to formally run the agency.

At his news conference last week, Obama said the Senate confirmation process has been bogged down by Republican partisanship. Obama said then he had several conversations with Warren, a Harvard University professor who has long been considered the leading candidate for the job, but he stopped short of officially nominating her.

Warren, 61, was favored by liberal Democrats to run the new agency charged with protecting consumers from abusive mortgage and credit card practices. However, her nomination was considered likely to draw opposition in the Senate over concerns about her liberal leanings and lack of government experience.

It was unclear how much authority Warren would have in the advisory role.

The Democratic official said that appointing Warren as an advisor would allow her to get involved immediately in setting up the agency. If nominated to be the new agency’s director, she would be unable to play a decision-making role until confirmed, the official noted.

Obama can still nominate a director of the new bureau, and Warren will participate in the selection process, the official added.

A spokesperson for Moveon.org, the liberal political advocacy group, said the title of Warren’s job wouldn’t matter if she had the necessary clout.

“As long as Professor Warren has real power, real authority and real support to hold the big banks accountable and stand up for American families, then our members — and Americans everywhere — will welcome this news,” said Ilyse Hogue, the group’s director of political advocacy and communications.

The Progressive Change Campaign Committee, which led a campaign to get Warren named the director of the new agency, said in a statement it hoped the appointment would provide Warren with the power she needed to do the job right.

“If Elizabeth Warren is given full power to run the new consumer protection bureau and hold Wall Street accountable, it will mean real change — and voters will know that going into November’s election,” the group’s statement said. “If this appointment is window dressing and Tim Geithner controls the show, it would be a big disappointment and a victory for Wall Street.”

Sen. Bernie Sanders, the Vermont independent who sits with the Democratic caucus, praised the move by Obama as a necessary step to get the new agency running. ….

Read the full article, here.

Elizabeth Warren Named Special Adviser


More News From Around the Web
on the Elizabeth Warren Appointment


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Elizabeth Warren Named Special Advisor, Daily Kos, September 15, 2010, by RhodaA.

She’s an outspoken advocate for families, described as having “a seemingly visceral loathing of financial services companies.” Her husband, Bruce Mann, describes her as “a grandmother who can make grown men cry.” Her brother, David Herring, said, “She was tougher than a snake, partner.”

“I’m writing to let you know that Professor Jerry Frug will be teaching your Contracts class this term instead of Professor Elizabeth Warren.” Martha Minow, Dean Harvard Law School

Ever since the Washington Post published the story on September 2nd that Warren had abruptly dropped her Contracts Law class at Harvard Law School, rumors abounded that she had been chosen to head the new Consumer Financial Protection Bureau. It was also known that she had met last month with Valerie Jarrett and David Axelrod to talk about the post, and again, on September 7th, with President Obama. Now, after conflicting reports of an interim appointment, Obama has made his choice.

White House Taps Warren To Set Up Consumer Financial Protection Bureau


White House Taps Warren To Set Up Consumer Financial Protection Bureau, The Huffington Post, September 15, 2010, by Shahien Nasiripour:

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“Anyone who knows her knows that she would only take a position that had real meat to it,” said one source who had worked closely with Warren in the past. “I mean, seriously, you’ve seen her in action. Do you really think she’s going to be anyone’s lapdog? She bites hard.”

The nascent consumer unit being formed inside Treasury already has more than 35 employees, said Steven Adamske, Treasury’s deputy assistant secretary for public affairs. The number will swell in the coming months as the agency is developed. It will soon move out of the Treasury building near the White House and into a building leased by Treasury for its Office of Financial Stability just a few short blocks away, Adamske said.

Yet while speculation centered on whether Obama would nominate the outspoken and respected academic and advocate, HuffPost reported July 19 that Warren could head the agency without Senate confirmation. Lenders — but notably their friends in the Senate — began to publicly question whether Warren possessed the aptitude or management skill to run a large bureaucracy. The new consumer regulator will eventually house hundreds of employees and have a budget approaching $500 million.

Yet those questions took a backseat to her confirmability. Dodd began telling reporters that he had serious reservations over whether Warren, viewed as a polarizing figure given her aggressive advocacy on behalf of the middle class, would survive a Senate confirmation battle.

Dodd, whose name forms one half of the financial re-regulation bill that Obama recently signed into law, may have been concerned about a deliberate attempt to delay the agency’s formation, which could have occurred had Obama named Warren and Senators began to delay her confirmation, or vote her down.

As part of a gentleman’s agreement between the White House and the Senate, presidential nominees typically do not work in their nominated roles until they are confirmed. Had Obama formally nominated Warren, she wouldn’t have begun forming the agency until that time.

However, a HuffPost review found that Dodd had never before questioned a presidential nominee’s management experience — even when those nominees lacked it. Over the past several years, Dodd, a longtime member of the banking committee, declined to critically question nominees to financial regulatory agencies. He even skipped a few confirmation hearings altogether.

Warren, though, slowly began to pick up endorsements. Democrats in the House and Senate sent letters to Obama urging her nomination. House Financial Services Committee Chairman Barney Frank, a Democrat from Warren’s adopted home state of Massachusetts and the other half of the financial bill, said that Obama should simply give her a recess appointment, bypassing the Senate completely.

Republicans, too, began to endorse her. A former top official in the Reagan administration said a vote for Warren was akin to a vote for capitalism and free markets.

Yet still the administration declined to name her to the post. Speculation centered on a divide within the White House — longtime Obama advisers David Axelrod and Valerie Jarrett were for her, while Chief of Staff Rahm Emanuel and top economic adviser Larry Summers were against her. Geithner favored one of his top aides, Michael Barr, an assistant secretary at Treasury who helped shepherd the financial reform bill through Congress.

Axelrod, though, hinted today’s Warren news back in July, noting that “one thing I know for certain is however we move forward she’s going to be a strong voice in helping shape this and make it the most effective voice for consumers that it possibly can be.”

Lenders, already wary of the reforms to be implemented by Dodd-Frank, may react to a Warren appointment by being overly cautious in the credit products they offer consumers — like mortgages, credit cards and personal loans — and thus freeze up lending. Despite the fact that the nation is in the midst of a collective process of cleaning up its balance sheet — paying off debt, building up nest eggs for future expansion and purchases — the additional drying up of credit would significantly hurt the economy.

Those concerns may still exist. But for the time being, Warren’s backers won the fight within the administration. And giving her a seat at the table when it comes to economic matters is particularly significant, given that the key economic policy positions within the administration are mostly occupied by alums of the Hamilton Project — an initiative partly founded by former Goldman Sachs head and Citigroup chairman Robert Rubin. The former Treasury Secretary under Clinton, Rubin has mentored Summers and Geithner, and his disciples populate the White House and Treasury. The Project — and its alums — aren’t noted for their progressive economic policy positions, or their advocacy on behalf of everyday families.

Warren, however, is associated with the Roosevelt Institute, a progressive organization dedicated to advancing New Deal-like reforms that’s part of the Franklin D. Roosevelt Presidential Library and Museum in New York. Her inclusion in internal White House debates could help shape eventual policy proposals.

White House economic policy proposals to jumpstart the stalling recovery — and bring down the 9.6 percent unemployment rate — have thus far received tepid support from leading economists and market commentators.

Warren’s path to the helm of the agency began on March 10, 2009, as she joined Sens. Dick Durbin (D-Ill.), Chuck Schumer (D-N.Y.) and Reps. Bill Delahunt (D-Mass.) and Brad Miller (D-N.C.) in the Capitol Visitors Center to announce a bill to create what was then being called the Financial Product Safety Commission. Warren, at the microphone, laid out how the financial crisis could have been prevented had an effective FPSC been in place.

Elizabeth Warren, likely to head new consumer agency, provokes strong feelings, The Washington Post, August 13, 2010, by Brady Dennis.

Somewhere along the line, Elizabeth Warren became a symbol.

She’s either the plain-spoken, supremely smart crusader for middle-class families that her supporters adore, or she’s the power-hungry headline seeker her critics loathe, a fiery zealot disguised in professorial glasses and pastel cardigans.

…SNIP….

She was the child of a cash-strapped family on the Oklahoma plains, a teenage wife and young mother who became the only member of her immediate family to graduate from college, then went on to teach at Harvard Law School. Drawn to the field of bankruptcy, she initially took a jaundiced view of the irresponsible spendthrifts she believed were gaming the system, only to discover during her research a humanity in their stories that altered her life’s work. She has long maintained the bearing of a straight-shooting, “aw shucks” Washington outsider, even though she began showing her Beltway savvy as a political infighter more than a decade ago.

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Will Obama Give Elizabeth Warren the Power She Needs?


See Warren to Unofficially Lead Consumer Agency, The New York Times, September 15, 2010, by Sewell Chan.

For a negative view of the appointment see Triumph of the Money Party!!! Warren’s role downgraded, reports to Geithner, OpEdNews, September 16, 2010, by Michael Collins.

Also fairly negative is Obama Prepares to Sort of Appoint Elizabeth Warren to Something, Common Dreams.org, September 16, 2010, by John Nichols of The Nation.

Recommended: See Will Warren Have Power?, Daily Kos, September 15, 2010, by Stephanie Taylor.

See Republican Nightmare: Putting Elizabeth Warren to Work Now, September 10, 2010, by Simon Johnson: this is the earliest news I’ve found strongly hinting that Obama would move in this direction:

President Obama is finally looking for bold, creative, and clever ways to change the way the US economy operates – preferably with measures that will take effect by the November midterms and change the tone of the broader political debate. His tax proposals this week have some symbolic value, but in the broader sense all of these fiscal suggestions are tinkering at the margins.

What could he possibly do that would grab people’s attention, mobilize his political base, and put his opponents on the defensive? There is an easy answer: Appoint Elizabeth Warren to start running the Consumer Financial Protection Bureau (CFPB) immediately.

See Thank you Mr. President for appointing Elizabeth Warren, City Data Forum, ongoing.

See America Still Needs Elizabeth Warren, And The Bank Lobby Is Still Lying About Her, Campaign for America’s Future on Evans Liberal Politics, August 9, 2010, by Zach Carter.

See Exclusive: President Obama to This Week Name Elizabeth Warren to Special Advisory Role to White House/Treasury Dept to Form New Consumer Agency, ABC News Political Punch, September 15, 2010, by Jake Tapper.

At his press conference Friday, President Obama noted that “the idea for this agency was Elizabeth Warren’s,” a reference to an essay she wrote in 2007 in Democracy: A Journal of Ideas in which she proposed a “Financial Product Safety Commission.”

The president went on to call Warren “a dear friend of mine. She’s somebody I’ve known since I was in law school. And I have been in conversations with her. She is a tremendous advocate for this idea. It’s only been a couple of months, and this is a big task standing up this entire agency, so I’ll have an announcement soon about how we’re going to move forward.”

Naming Warren as an assistant or counselor to both the president and Treasury Secretary Tim Geithner would allow the president to bypass a Senate confirmation process that could prove lengthy and contentious.

“I’m concerned about all Senate confirmations these days” including if he were to “nominate somebody for dog catcher,” the president said Friday when asked if he was concerned about Warren’s ability to be confirmed. “I’ve got people who have been waiting for six months to get confirmed who nobody has an official objection to and who were voted out of committee unanimously, and I can’t get a vote on them.”

Since nominees facing the confirmation process also enter a period of public silence, avoiding the confirmation process would also allow Warren to publicly discuss the agency and its benefits, which the president is eager for her to do.

Recommended: Exclusive: Elizabeth Warren in her own words, Salon, September 15, 2010, by Lynn Paramore, excerpt quoted verbatim:

What are some of the values that were instilled in your childhood that you would like to see emphasized now?

I guess it is a fundamental belief that people are doing the best they can. It is easy when you are successful to think that you did it all by yourself and to forget that you didn’t. You got here because a lot of things broke your way. You were lucky enough to be born into a family that could afford to take care of you well. You were lucky enough to be able to have a family that could pay for you to go to school or buy your way out of scrapes. And to people who have had a lot of luck and don’t acknowledge that — the world looks like a total meritocracy, right? I’m on top because I really won, because I am better than everyone else.

I think I grew up with a profound sense of watching people who were good people, who were smart people, who were hardworking people — God, nobody on this Earth worked harder than my mom and dad — and they had very little. But they made do with what they had. They had their family, they raised four kids who loved them and four kids who all had our own families that we loved. And so, I guess the only way I can say it is that the value is in knowing that the game doesn’t always come out fairly. There is a lot more going on. The material success at the end of the day is only a small part of it. Truly successful lives are about family.

Read the Wikipedia article on Elizabeth Warren.

Highly Recommended: Watch Conversations with History: Elizabeth Warren — “Law, Politics and the Coming Collapse of the Middle Class,” Presented by the Institute of International Studies, Univ. of California at Berkeley, January 10, 2008, 59:11

Note by Paul Evans: It was Elizabeth Warren who first proposed the Consumer Protection Agency in the first place, in an article titled Unsafe at Any Rate, in the summer of 2007.

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Posted on September 16, 2010 by , 8 comments

Herbert: “The Economy Has Failed Working Americans”

Evans Liberal Politics
September 14, 2010

 

Herbert: “The Economy Has Failed Working Americans”

 

Herbert: “The Economy Has Failed Working Americans”, Daily Kos, September 13, 2010, by Bob Swern, used with permission, quoted verbatim:

Tonight, as we learn that the leading advocate for the survival of the U.S. middle class is being turned into a political football by the White House and she’s now being thrown onto that deeply captured playing field which we occasionally reference as the U.S. Senate, the NY Times’ Bob Herbert tells us of our economic “Recovery’s Long Odds” and “…the structural changes in the economy that have bestowed fabulous wealth on a tiny sliver at the top, while undermining the living standards of the middle class and [that are] absolutely crushing the poor.”
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A Recovery’s Long Odds
By BOB HERBERT
NY Times Op-Ed
September 14, 2010…Neither the Democrats nor the Republicans have a viable strategy for reversing this dreadful state of affairs. (There is no evidence the G.O.P. even wants to.)

(Diarist’s note: the operative word in Herbert’s first sentence is: “viable.”)

Robert Reich, in his new book, “Aftershock,” gives us one of the clearest explanations to date of what has happened — how the United States went from what he calls “the Great Prosperity” of 1947 to 1975 to the Great Recession that has hobbled the U.S. economy and darkened the future of younger Americans.

He gives the Obama administration and the Federal Reserve credit for moving quickly in terms of fiscal and monetary policies to prevent the economic crash of 2008 from driving the U.S. into a second great depression. “But,” he writes, “we did not learn the larger lesson of the 1930s: that when the distribution of income gets too far out of whack, the economy needs to be reorganized so the broad middle class has enough buying power to rejuvenate the economy over the longer term.”

The middle class is finally on its knees. Jobs are scarce and good jobs even scarcer. Government and corporate policies have been whacking working Americans every which way for the past three or four decades. While globalization and technological wizardry were wreaking employment havoc, the movers and shakers in government and in the board rooms of the great corporations were embracing privatization and deregulation with the fervor of fanatics. The safety net was shredded, unions were brutally attacked and demonized, employment training and jobs programs were eliminated, higher education costs skyrocketed, and the nation’s infrastructure, a key to long-term industrial and economic health, deteriorated…

Timothy Noah is in the middle of a nothing-less-than-brilliant, 10-part, two-week series over at Slate, entitled: “The United States of Inequality.” (I’m sure I’ll be referencing Noah’s seminal work in future posts for years to come.) The sixth chapter of his series, posted late Sunday, is: “The United States of Inequality: The Great Divergence and the Death of Organized Labor.”

In his Sunday chapter summary, Noah tells us…

The United States of Inequality
The Great Divergence: The Great Divergence and the Death of Organized Labor
By Timothy Noah
Slate.com

Posted Sunday, Sept. 12, 2010, at 9:56 PM ET…Taft-Hartley slowed and then halted labor’s growth and then, over many decades, enabled management to roll back its previous gains. Big manufacturing’s desire to do so grew more urgent in the 1970s as inflation spun out of control, productivity fell, and the steel and auto industries faced stiffer competition from abroad. Even before Ronald Reagan’s election, Levin and Temin write, the Senate signaled the federal government was rapidly losing interest in enforcing Truman’s 1945 pact (diarist’s note: see Noah’s discussion of Truman’s “Treaty of Detroit”) when it killed off, by filibuster, a pro-labor reform bill aimed at easing union organizing in the South.

President Reagan’s 1981 decision to break the air-traffic controllers’ union and to slash top income-tax rates killed off Truman’s 1945 pact entirely. Although Reagan was a onetime union president, he showed little concern when the 1982 recession rapidly eliminated so many Rust Belt manufacturing jobs that the proportion of private-sector workers who belonged to unions dropped to 16 percent in 1985, down from 23 percent as recently as 1979. Reagan’s hostility to unions was further reflected in his choice of Donald Dotson to chair the National Labor Relations Board. Dotson had previously worked as a management-side labor adversary for Wheeling-Pittsburgh Steel, and (presumably with both lips and heart) believed collective bargaining led to “the destruction of individual freedom.” Under Reagan’s two terms, the federal minimum wage, which previously had been adjusted upward every year or two, would remain stuck at $3.35 an hour for close to a full decade. Similarly, President George W. Bush, another two-term Republican, later let the minimum wage remain at $5.15 (to which it had risen during the presidencies of his father and Bill Clinton) for two months shy of 10 years, by which time its buying power had reached a 51-year low…

Noah’s over-arching theme of income inequality is what he references in his opening chapter, as…

…a topic of huge importance to American society and therefore a subject of large and growing interest to a host of economists, political scientists, and other wonky types. Except for a few Libertarian outliers (whose views we’ll examine later), these experts agree that the country’s growing income inequality is deeply worrying…

Here’s a link to Noah’s Visual Guide to Inequality. It’s a must-read/must-view, IMHO.

And, getting back to Herbert’s column, today, this is where he’s taking us, too, while concurrently parsing Clinton Labor Secretary Robert Reich.

Herbert observes:  “…it’s painfully obvious that the economy has failed working Americans.”

(Again, I strongly encourage the readers of this diary to reference the first and most recent [sixth] chapters of Noah’s work, linked above. His assessments of our country’s inequality problems, and the solutions to them, are both spot-on and compelling, to say the least.)

Herbert points out Reich’s citation of analysts’ tracking of the “…increasing share of national income that has gone to the top 1 percent of earners since the 1970s, when their share was 8 percent to 9 percent. In the 1980s, it rose to 10 percent to 14 percent. In the late-’90s, it was 15 percent to 19 percent. In 2005, it passed 21 percent. By 2007, the last year for which complete data are available, the richest 1 percent were taking more than 23 percent of all income.”

And, we’re reminded, yet again, that the richest 1/10th of 1 percent of our society–just 13,000 households–accounted for more than 11 percent of total income in 2007. As Herbert notes: a male worker’s median wage in 2007 was actually less, when adjusted for inflation, than that of a male worker 30 years ago! Put even more simply, “A typical son, in other words, is earning less than his dad did at the same age.”

Next-to-last, I find my posting of this diary to be quite incomplete (and/or “dishonest due to omission”) without making note of these two events (repeating one of which I mentioned in the opening paragraph) that have come to light inside the Beltway over the past few hours, namely:

–the potential feeding to the proverbial wolves of Elizabeth Warren’s nomination as Consumer Finance Protection Bureau Chair;

–and the increasing cacaphony of the Blue Dogs, and even some moderate Democrats, bending to corporate fundraising pressures this election cycle, to assuage the status quo by extending Bush’s tax cuts to the wealthy, despite all of the–for lack of better words–pandering and bullshit to the contrary that we read coming from D.C., as well.

Because even the President knows that, at the end of the day (at least as it’s being dictated by the centrist-right zeitgeist of Capitol Hill), it’s the Senate that maintains final say over these matters.

And, as Matt Taibbi told us in that memorable commentary from the August 6th edition of Rolling Stone, Wall Street’s Big Win…

What happened next was a prime example of the basic con of congressional politics. Throughout the debate over finance reform, Democrats had sold the public on the idea that it was the Republicans who were killing progressive initiatives. In reality, Republican and Democratic leaders were working together with industry insiders and deep-pocketed lobbyists to prevent rogue members like Merkley and Levin from effecting real change. In public, the parties stage a show of bitter bipartisan stalemate. But when the cameras are off, they f*ck like crazed weasels in heat.

Finally, in addition to Noah’s great series, currently on Slate (to which I provide links, above), I’m told you may wish to checkout a regular Thursday evening event (at 9PM EST), right here in th(e) (Daily Kos) community, concerning our country’s growing class disparities: Our Wedge Issue: Income Inequality Kos. Kossack Azazello has been politely urging me to drop by, and I think it’s time I did just that.

Hopefully, sometime before November 2nd, the leaders of our Party on Capitol Hill will start giving this issue more than just lip service, as well.

Evans Liberal Politics would like to thank Bob Swern for permission to republish his work on an ongoing basis. Bob is our favorite progressive economics writer. More than even Paul Krugman, Mr. Swern fleshes out his articles with lots of details and links, and so provides real grist for liberals and progressives to learn from. You are invited to email Bob Swern here.

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Posted on September 14, 2010 by , 4 comments

Vacancies Strain White House’s Goals for Economy

Evans Liberal Politics
September 11, 2010

 

Vacancies Strain White House’s Goals for Economy

 

Obama Hints May Make Elizabeth Warren Appointment

 

Vacancies Strain White House’s Goals for Economy, © The New York Times, September 10, 2010, by Sewell Chan, excerpt quoted verbatim:

WASHINGTON — President Obama signaled on Friday that he was close to choosing a director for a new consumer bureau, but an array of top jobs that will be crucial to shaping economic policy and financial regulation for the rest of his term remain unfilled.

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At a White House news conference, Mr. Obama praised Elizabeth Warren, the Harvard law professor who was the chief proponent of the Consumer Financial Protection Bureau and is a front-runner to lead it. Calling her “a dear friend” and a “tremendous advocate” for the new agency, the president said he had talked with her but added, “I’m not going to make an official announcement until it’s ready.”Ms. Warren is considered a foe of Wall Street but a favorite of liberals. If she were nominated to the post it could set off a partisan brawl similar to the battles that nearly swamped the Dodd-Frank financial overhaul law Mr. Obama signed in July, which created the bureau.

That position, however, is only one of a half-dozen unfilled presidentially appointed posts that have vast powers over the mortgage market, financial stability and the banking and insurance industries. The seats have been vacant even though the new law directed regulatory agencies to make scores of major decisions that will shape Wall Street and the financial sector for years to come.

Delays in the appointment process — lengthened by Congressional brinksmanship and cumbersome vetting — are not new, and some choices have come quickly. On Friday, the president named Austan D. Goolsbee chairman of the White House Council of Economic Advisers, filling a position that had just opened. But the confluence of vacancies in the economic realm comes at a time of regulatory transformation, a slowing economy and a Republican resurgence. (Mr. Goolsbee, who was previously confirmed as a member of the council, did not need a second Senate confirmation to become chairman.)

The prospect of Republicans making strong gains in Congress in November has complicated the appointment calculation, as nearly all of the unfilled jobs require Senate confirmation.

“There’s a normal attrition around midterm,” said Stuart E. Eizenstat, who was President Jimmy Carter’s chief domestic policy adviser and later President Bill Clinton’s deputy Treasury secretary. “What’s different now is the likelihood of a dramatic change in the composition of Congress, and the fact that the Republicans may use each and every one of these to make an economic point.”

The tight Congressional calendar also means that some of the jobs might go unfilled for months longer.

“It is close to impossible to think that the Senate can take a nomination, hold hearings and confirm the person before the election,” Mr. Eizenstat said. “And getting this done in the postelection session is possible, but very difficult.”

In some cases, the president has put forward names that have not been acted on.

For example, the Federal Reserve’s board of governors, which is considering additional steps to prop up the flagging recovery, has just four of its full complement of seven members. The Senate has yet to confirm three candidates Mr. Obama nominated in April to fill the vacancies.

One factor that has delayed the decision over the consumer post is the fierce opposition of banking and business groups to Ms. Warren, who is chairwoman of the Congressional panel that oversees the 2008 Wall Street bailout. Senator Christopher J. Dodd of Connecticut, the chairman of the Banking Committee, has said she might have trouble being confirmed.

On Friday, Mr. Obama voiced frustration at Senate Republicans for routinely blocking his appointments, “even if I nominate somebody for dogcatcher.”

Pointing to vacant judgeships and unfilled positions at the Department of Homeland Security, he added: “It’s very hard when you’ve got a determined minority in the Senate that insists on a 60-vote filibuster on every single person that we’re trying to confirm.” The Republicans, he said, are “just playing games.”

Read the full article, here.

What keeps the Democrats from making their case?, OpEdNews, September 10, 2010, by Ralph Nader.

See The midterms: Who’s the ‘Party of No’?, MSNBC First Read, September 9, 2010, by MSNBC, excerpt quoted verbatim:

“The Republican National Committee turned the “party of no” label against Democrats in a new Web video, which clips together several Democrats’ campaign ads showing different members opposing healthcare reform, cap-and-trade legislation, the stimulus bill and other items,” The Hill writes.

Former New York Gov. George Pataki, who now runs the conservative nonprofit group Revere America, yesterday unveiled a seven-figure ad buy (YouTube video), part of the “Pledge to Win” campaign, which will target members of Congress who voted in favor of the health care reform law.

See Did Obama hint he’s going to appoint Elizabeth Warren?, The Washington Post, The Plum Line, September 10, 2010, by Greg Sargent.

See America Still Needs Elizabeth Warren, And The Bank Lobby Is Still Lying About Her, Campaign for America’s Future on Evans Liberal Politics, August 7, 2010, by Zach Carter.

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Posted on September 11, 2010 by , 1 comment

America Still Needs Elizabeth Warren, And The Bank Lobby Is Still Lying About Her

Evans Liberal Politics
August 9, 2010

 

America Still Needs Elizabeth Warren
And The Bank Lobby Is Still Lying About Her

 

America Still Needs Elizabeth Warren, And The Bank Lobby Is Still Lying About Her, Campaign for America’s Future, August 7, 2010, by Zach Carter, used with permission, quoted verbatim:

Of all the accomplishments Elizabeth Warren has amassed during her lifetime, one of the most impressive is also one of the least well-known to the general public. Warren was a co-founder of Credit Slips, a very technical, influential blog on banking and bankruptcy. She hasn’t blogged there since taking up her post as Chair of the Congressional Oversight Panel for the Troubled Asset Relief Program, but a review of her posts reveals a set of truths that Warren’s opponents in the bank lobby do not want to acknowledge. While Wall Street bankers like to smear Warren as an ideologically driven crusader, Warren’s blogging reveals her to be the exact opposite: a serious student of economic evidence, eager to embrace good ideas from any source.

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Take a look at this post from September 2008, in which she praised economists Greg Mankiw and Ken Rogoff. Both of these economists are, let’s say, unpopular among liberals. Mankiw was chair of President George W. Bush’s council of economic advisors, and Rogoff is an alum of the International Monetary Fund, where he pushed draconian cuts in social programs in developing nations in the name of balanced budgets.

But it turns out that both Mankiw and Rogoff had something interesting to say at a forum back in September 2008. And what did Elizabeth Warren have to say about it? She calls them “interesting,” “terrific,” “calm,” and “funny.” She doesn’t blast them for their backgrounds with institutions that are generally reviled by progressives, she just emphasizes that they’re serious thinkers who are making good points about the role the bank bailout played in the economy:

Greg’s work with the current administration and Ken’s background with the IMF and on the Board of the Federal Reserve add a certain credibility to their assessments of conditions on Wall Street. If they are right, the $700 bailout is saving some investment bankers’ jobs in the short term, but overall it is just making the financial system worse.

Aside from seeking out common ground with aggressive conservatives, Warren also displays a deep-rooted intellectual curiosity throughout her blog postings. One of the most obnoxious bank-lobby smears against Warren is that she doesn’t fully appreciate the benefits of financial innovation, and that she’ll cut off useful credit to poor people by pushing overzealous consumer protection. Even some otherwise respectable bloggers have taken up the chant, without really bothering to investigate whether there’s any shred of truth to it. Even a casual browsing of Warren’s blog work reveals this to be a silly charge.

In a post from May 2008, she details a Wells Fargo customer who was quite clearly ripped off by her bank. Warren provides a very cautious analysis of the situation. While Wells Fargo’s actions were an obvious disgrace to the bank itself and the regulatory regime, the appropriate response is not obvious. Maybe the kind of product Wells Fargo was selling should be banned outright. Maybe it should only be provided with more rigorous disclosures. Maybe consumers should have to ask for the product before bankers are allowed to discuss it. The point is, Warren isn’t eager to claim that an obviously abusive product should simply be banned—she wants to make sure that policymakers don’t unnecessarily cut off credit to well-informed adults who want it.

Again and again, Warren reveals herself to be a devout student of data in her blog work. It isn’t sexy, it sure as hell doesn’t traffic in the broader blogosphere, but it’s the mark of someone who truly cares about getting it right, rather than merely developing a set of popular talking points. Warren clearly loves reading economic papers on the effects of various credit policies, and determining their effects on both individuals and society at large. That’s exactly what we need from a bank regulator, especially at the Consumer Financial Protection Bureau.

You can find all of Warren’s Credit Slips blogs here. I’ll be highlighting more of her blogging in future pieces, but it’s clear from these posts alone that she is not an ideological crusader. This fact, in truth, is why the bank lobby so fervently opposes putting her in a position of regulatory authority. For decades, all of our bank regulators have been driven by ideological agendas. They’ve aggressively pursued any policy that creates short-term profits for Wall Street, under the view that anything that generates money for Wall Street is expanding credit in society and furthering productive economic growth. President George W. Bush even appointed a bank lobbyist to the top regulatory post in the nation. The results of this plan were disastrous, as everyone living through the current recession can attest.

Of course, there is an alternative to appointing regulators who will always put bankers and brokers first. We need a rigorous scholar who cares about finding the right policies to elevate the middle class and further healthy economic growth. We need Elizabeth Warren.

Zach Carter lives in Washington, D.C. He is a Fellow a Campaign for America’s Future and Economics Editor for AlterNet. His work has appeared in The Nation, Mother Jones, The American Prospect and Salon.

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