Tag Archives: Elizabeth Warren

Elizabeth Warren And The Independent Community Bankers of America Are Right: Antonio Weiss Should Not Become Undersecretary for Domestic Finance

By Simon Johnson

Antonio Weiss has been nominated to become Undersecretary for Domestic Finance at the Treasury Department. A growing number of people and organizations have expressed reservations about this potential appointment, which requires Senate confirmation – including Senator Dick Durbin (D., IL), Senator Jeanne Shaheen (D.,NH), Senator Joe Manchin (D., WV), the American Federation of Teachers (in a press release on December 17th), and other groups. And, from another part of the political spectrum, the Independent Community Bankers of America has also come out strongly against Mr. Weiss.

In a speech last week, Senator Elizabeth Warren detailed her concerns about Mr. Weiss’s background:

“He [Mr. Weiss] has focused on international corporate mergers and companies buying and selling each other. It may be interesting, challenging work, but it does not sufficiently qualify him to oversee consumer protection and domestic regulatory functions at the Treasury that are a critical part of the job.”

And Senator Warren made it clear that the Weiss nomination needs to be seen in this broader context:

“Time after time in government, the Wall Street view prevails, and time after time, conflicting views are crowded out.”

A line must be drawn and, as Senator Warren said on Friday evening, with regard to the Wall Street view that what is good for executives at big banks is good for the country,

“Enough is enough.”

The latest round of pushback from Weiss supporters against Senator Warren makes three points. First, this administration is not captured by the Wall Street view. Second, Mr. Weiss is not captured by the Wall Street view. And, third, that Mr. Weiss is so perfectly qualified for the job that all these broader issues are irrelevant or even illegitimate. None of these points has a substantive basis or can withstand scrutiny. The ICBA, AFT, and Senators Durbin, Machin, Shaheen, and Warren are right to continue opposing Mr. Weiss’s appointment. Continue reading

The Importance Of Elizabeth Warren

By Simon Johnson

One of the most important results on Tuesday was the election of Elizabeth Warren as United States senator for Massachusetts. Her victory matters not only because it helps the Democrats keep control of the Senate but because Ms. Warren has a proven track record of speaking truth to authority on financial issues – both to officials in Washington and to powerful people on Wall Street.

During the campaign, Ms. Warren’s opponent and his allies made repeated attempts to portray her as antibusiness. In the most bizarre episode, Karl Rove’s Crossroads GPS ran an ad that contended that she favored bailing out large Wall Street banks. All of this was misdirection and disinformation.

Ms. Warren has long stood for transparency and accountability. She has insisted that consumers need protection relative to financial products – when the customer cannot understand what is really on offer, this encourages bad behavior by some companies. If this behavior spreads sufficiently, the entire market can become contaminated – damaging the entire macroeconomy, exactly as we have seen in the last decade. Continue reading

Responsible Populism

By Simon Johnson

“Populism” is a loaded term in modern American politics. On the one hand, it conveys the idea that someone represents (or claims to represent) the broad mass of society against a privileged elite. This is a theme that plays well on the right as well as the left – although they sometimes have different ideas about who is in that troublesome “elite.”

At the same time, populism is often used in a pejorative way – as a putdown, implying “the people” want irresponsible things that would undermine the fabric of society or the smooth functioning of the economy.

In Latin America, for example, there is a long tradition of populists falling into bed with a corrupt political elite, and the results invariably include irresponsible macroeconomic policies and various kinds of financial disaster (see “The Macroeconomics of Populism in Latin America,” edited by Rudiger Dornbush and Sebastian Edwards).

In North America, however, the populist tradition has proved much more constructive. More than 100 years ago, hot-button issues included direct election of senators and a federal income tax. None of these demands seem irresponsible today, and achieving those goals through constitutional amendments in the run-up to 1914 in no way jeopardized American prosperity. Continue reading

Karl Rove’s Latest Attack On Elizabeth Warren

By Simon Johnson

Karl Rove’s Crossroads GPS has another ad out attacking Elizabeth Warren (video here).   This is beyond ludicrous – the ad attempts to blame Ms. Warren for the Troubled Asset Relief Program (TARP) and for bank bailouts.  The principle here seems to be that when the truth cannot be slanted in a way you want, just ignore the facts and go all out for disinformation.

I count at least five misrepresentations in the ad, and I suggest the following corrections: Continue reading

Wall Street v. Elizabeth Warren

By Simon Johnson

Karl Rove’s Crossroads GPS group has launched the first attack ad against Elizabeth Warren, presumably because she is now running hard for the Senate in Massachusetts.  This ad is not a big surprise, but the line that Mr. Rove takes could well backfire.

The ad states, “we need jobs, not radical theories and protests,” so we can break the argument down into three separate parts.

First, who destroyed more than 8 million jobs in the United States – and plunged us into the deepest and longest lasting recession since the 1930s?  Surely this was not Ms. Warren, who was just a law school professor, in the run-up to 2008.

Mr. Rove is opening the blame game and this is going to go badly for his presumed supporters – the largest banks on Wall Street that took excessive risks, paid their top people well, and then blew themselves up at great cost to the American taxpayer.  By all means, let us have a conversation about jobs and the history of job losses in the United States; “too big to fail” banks do not look good in this context. Continue reading

Nominate Elizabeth Warren – Provide The Pecora Hearings We Need

By Simon Johnson

Ms. Warren is helping get the new Consumer Financial Protection Bureau (CFPB) off the ground and remains the leading contender to become its formal head (subject to Senate confirmation).  She summarizes her substantive agenda this way,

We’re trying to make these markets transparent, which makes it easier for community banks to compete both with large financial institutions and with their nonbank competitors.”

She should now be nominated to the CFPB position.  There will be strong Republican opposition and some Democrats who are close to the financial sector may be lukewarm.  But a public hearing on her case represents our best opportunity to experience a modern version of the Pecora Hearings – the Senate Banking Committee hearings in the 1930s that laid bare the inner (and rotten) workings of the biggest financial firms (see Michael Perino’s book on Pecora for details).

These hearings would represent a major step forward towards forging a new consensus regarding how to really establish markets (as opposed to the crazy government subsidy schemes that predominate).  In addition, the administration would win a big victory with Ms. Warren’s confirmation. Continue reading

What Is Spencer Bachus’s Game?

By Simon Johnson

Representative Spencer Bachus, Republican chair of the House Financial Services Committee, famously remarked in December,

“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.”

With regard to the Consumer Financial Protection Bureau (CFPB), this apparently now implies that Mr. Bachus will use any means possible to change the topic away from substance – how banks treat their customers – to imagined procedural issues.

Specifically, Mr. Bachus is wrongly accusing Elizabeth Warren of misleading Congress with regard to the role of the CFPB in the negotiations over how to settle allegations that mortgage foreclosure practices have been abusive (see also this news coverage). Continue reading