It is increasingly evident that the appointment of Elizabeth Warren to act as special advisor to the President and Treasury for the newly-established Consumer Financial Protection Agency has everything to do with Obama trying to shore up his questionable credentials as a reformer and perilous little with helping ordinary citizens. So the only question that remains is whether her appointment in a peculiar interim role will nevertheless result in a more forceful, effective consumer watchdog.
It’s important to put this move in context. As much as this agency has received a lot of coverage, since Warren has been an effective advocate of aggrieved consumers, this is only a teeny part of financial reform. Even if I am proven wrong, an aggressive consumer agency would have only a limited impact on bank behavior and risks. And it is destined not be be very effective due to how it was set up. Recall it was originally envisaged as an independent body. The banks howled, arguing that they could be subject to conflicting directives (the only likely conflict would in fact be between better treatment of retail customers and their bottom lines).
Rather than put some modest checks into the law (like requiring that the agency coordinate on certain issues), the consumer watchdog was shunted into the most bank-friendly regulatory body, the Fed (it’s operating on an interim basis at the Treasury, and will be moved into the Fed next July). Consumer advocates pointed out that the idea had no precedent:
“We have all sorts of individual agencies that protect Americans, and none of them is subservient to the regulator that is in charge of looking out for the industry,” said Lauren Saunders, managing attorney at the National Consumer Law Center in Washington. “This agency has to be independent so that it can fix the problems the banking regulators failed to fix.”
Even Barney Frank was skeptical:
“I was incredulous,” the Massachusetts Democrat said. “After all the Fed bashing we’ve heard? The Fed’s such a weak engine, so let’s give them consumer protection? It’s almost a bad joke. I was very disappointed.”
So the handwriting has long been on the wall.
With the Warren appointment itself, things have similarly gone from not great to clearly problematic. As we indicated when her appointment was first announced, her role as a de facto head but not in line for confirmation gave her an ambiguous status. She would be a lame duck as soon as any permanent director candidate was nominated. The fact that she was named an advisor to the President was not very encouraging. Even if she gets a decent amount of face time with him, there is no way she can trump Rahm and Geithner, both of whom have established, strong working relationships with him and by virtue of each having large roles (Geithner has made himself a central actor in all economic policy) will inevitably have much more access. And most important, she is not on board with the real agenda of Team Obama. As we noted:
But on a much more basic level, the Warren marginalization isn’t about personalities, although the powers that be love to pigeonhole thorns in their side that way. The clashes reflect fundamental differences in philosophy. Geithner, the Administration that stands behind him, and Dodd all are staunch defenders of our rapacious financial services industry, even though they make occasional moves to disguise that fact. Warren, by contrast, is clearly a skeptic, and a dangerous one to boot, because she understands the abuses well and is able to communicate effectively with the public.
Expect Warren to be pushed further to the sidelines, just as Paul Volcker has been (oh, and pulled out of mothballs when the Administration desperately needed to create the appearance it really might be tough on banks).
In other words, the die is already cast. The Obama Administration, again and again, has taken the side of the financial services industry, with the occasional sops to unhappy taxpayers and some infrequent scolding of the industry to improve the optics.
Friday brought the bizarre combination of a full bore PR push in conjunction with more evidence that Warren’s role was certain to be limited. It isn’t clear whether there was a change in plan or merely a later release of full details, but it emerged Friday that Warren had never planned to take a five year term as head of the agency (!). So the ambiguous nature of her role wasn’t simply, as reported earlier in the week, to avoid a confirmation battle the Administration might lose, but also because she did not want to serve a full term. Accordingly, the Administration announced, Warren would help select the person who would be nominated permanent head of the agency.
Now I have to tell you, this is mighty peculiar. It is now official that Warren is at best a placeholder; she cannot have much impact. She can’t make much in the way of policy or personnel choices; that would encroach on the authority of an incoming director. And even her ability to influence the choice of a nominee is questionable. Her taking the advisory role now assures that the nomination of the permanent director will come after the midterm Congressional elections. Given the virtual certainty of Democratic losses, the odds are high that Team Obama will settle on a “conservative” meaning “won’t ruffle the banking industry” choice, and argue its hands were tied.
So the Obama camp has played this extremely well. They get to avail themselves of the Warren brand, give her a Potemkin role, and use it to push the timetable for nomination of the permanent director out, which give them cover for installing a more compliant choice.
Now contrast this reality with the theater on Friday to broadcast the party line that the Warren appointment is a giant leap forward for consumers. It wasn’t just the full court press by the Administration to get the message out (including a blogger conference call with Warren that I learned of too late) but also aggressive moves with organizations that could carry the message. And “aggressive” is no overstatement; I was given a long form, first hand account of an high handed effort by people aligned with Warren to say a particular group saw her appointment as a big pro consumer step when that group had no intent of making that statement.
The politically connected people I spoke to read this situation the same way I do (and further commented that their views are widely shared). Amusingly, Ron Paul is also providing cover by harrumphing about Warren being an “enormously powerful regulator” (really?). But the noise he and other bank industry boosters make illustrate a key point: her role as advisor is not a position of strength, her perch is not secure. And note further: the consumer protection agency cannot draft legislation or regulate until it is transferred to the Fed in July of next year.
Now admittedly, Warren made a success of a not very promising role as the head of the Congressional Oversight Panel, so perhaps she can somehow defeat the long odds. But I think it is more likely that she was so keen to act as midwife to the consumer protection agency that she allowed herself to be talked into taking a hollow mandate. And with the benefit of hindsight, her skills as an interrogator and communicator were put to good advantage in COP hearings. The periodic release of COP reports and the intense media focus on financial regulation while the Dodd-Frank bill was being hashed out also gave her a very high profile in the media, which further helped her push her agenda.
It isn’t clear her skills are as well suited to this role. How good a political infighter is Warren? How successful can she be in winning over some of her critics? Can she and her team come up with enough news hooks to keep her profile with the media high? Can she move the buildout of the agency forward without unduly boxing in her successor (too many stakes in the ground by Warren will make the job less appealing and will impede the permanent director search)?
Needless to say, it would be better if I were proven wrong, but it looks like Warren has made a Faustian bargain. I can only hope if that is the case that she moves quickly to cut her losses.
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This post hits all the points. Warren’s being shunted to an Arctic research facility, there to spend all her time arguing with bureaucrats. With any luck the public will soon forget she exists.
The fact that she’s willing to go along with this ought to put her alleged greatness in perspective. However relatively pro-public, in the end she’s still a system cadre, and sees defending the system as her first priority.
So the Obama camp has played this extremely well.
Unfortunately, for once this seems to be true, given how potent the Warren kool aid seems to be even among people who seem otherwise clear-thinking about the system. At the risk of going off-topic, I’ll attribute that to a seemingly congenital attitude that we need to wait for a celebrity Leader to serve as receptacle of our Faith and tell us what to do.
But this attitude itself is a core part of the problem.
I think that the “left,” and especially what remains of the D left, is so desperate for leadership that they’re like baby geese, who imprint the first moving thing they see as their mother.
So it was with Dean. So it was with Obama. And so it is and will be with Warren.
It could be worse. We could be looking for leadership from Sarah Palin, Glen Beck, Dinesh D’Souza, and Christine O’Donnell.
Volcker was briefly another one last year. Indeed we should look at the fate of his eponymous “rule”, and how long he lasted at Obama’s side, as a forerunner of this maneuver.
It may be appropriate to quote Lyndon B. Johnson on why he didn’t get rid of J. Edgar Hoover (and I applogise for the vocabulary):
It’s probably better to have him inside the tent pissing out, than outside the tent pissing in.
By keeping Elisabeth Warren on Team Obama, they have a much better grip on her and can ‘moderate’ her so that she doesn’t pose a problem for them.
It’s all about playing the power game.
I am siding with Yves; it is a PR coup to have Warren head an agency she doesn’t head. The liberal camp, hungry for crumbs Obama throws their way, hold the “advisor” position to be the real thing and see it as big victory for them.
On the street, people care much more about bread and butter issues. Namely, unemployment, Obama’s subordination to Big Money that takes money away from them and gives it to the filthy rich, mortgages, etc.
Only American liberals are gullible enough to attribute any importance to this pigeon in the hat trick.
Ron Paul is a “bank industry booster”? Really? I would think wanting to crush the FED and return to the gold standard is about as opposed to the current banking industry as you can get.
Shoving a little gold into a new currency is not going to solve anything as long as Americans continue to give up their sovereignty while US drugs-driven foreign policy under phony drug prohibition war against drugs rules.
For instance, there is now an American fleet of 46 vessels with planes, etc. and 7,000 troops in peaceful Costa Rica in a deal with the new president while the US claims it’s purpose to fight drugs. And there we are in Afghanistan running the poppy business, while incarcerating heroin users and low level dealers in profit making prisons.
This gangster system has got to go -with record numbers of young military men’s lives destroyed in myriad ways, dead, maimed, missing limbs, record suicides, drug addiction, no jobs to come to, ruined families -jeez!!!!!
Here is a link I hope you will enjoy reading on the Costa Rica situation.
I saw the story somewhere else a few weeks ago once; but its apparently off the radar since then (as far as I know). I’ve seen nothing, no news, no commentary on this.
I find this article particularly disturbing in that Costa Rica, along with other countries in that region, are popular destinations for US expatriates attempting to escape a country that is increasingly becoming one big oppressive debtor slave colony. The existence of smaller safe haven countries such as Costa Rica are the only real remaining counterbalance to the increasingly monolithic corporate/government thug entity that is the US, which has as its main goal crushing individual freedom everywhere. If these small countries are extinguished, either through actual colonization or through (more likely) simply through excessive influence and de facto control by the US, then I fear the world will start to look more like Eurasia/Eastasia of George Orwell’s 1984.
I expect in the years to come we will see the US make it far more difficult to expatriate. Making expatriation outright illegal will be the first step, and retinal Scanners at every point of entry/exit will be the next step in this process.
If my ultimate nightmare comes to fruition, namely Sarah Palin as president in 2012, this will be the clearest sign as any to get the hell out of here before it’s too late.
Very valid concerns…
Ummmm…I think it’s pretty clear that the US elites want to make Costa Ricans debtor slaves even before they complete the task with US debtors. Read up on the origin of the term ‘banana republic.’ I’m going to bet it’ll be enlightening for you. The only reason you think Costa Rica is a better alternative is that the earth has already been scorched there and your peasant wages far exceed the unending poverty we have helped foster there. I don’t mean this in a derogatory way (but it’s the best example I have), you sound like my sex tourist friends who convince themselves the girls are just friendlier in Costa Rica, not forced into relatively cheap prostitution because they have no other options. Emigrating to Costa Rica is just a big fish-little pond strategy, not an escape from hegemony of the US elites.
Agreed that the gangster system must go. However, I would submit that the absence of sound money is a key ingredient in enabling our gangster state, which better enables it to fund its endless wars with monopoly money and enslave its citizens with debt.
Agreed, You’re right. I stand corrected. Its the scam leveraged digital trillions. They can buy up the world’s assets; buy up you and me and generations to come. We’ll see about that about that.
But the drug prohibition racket permits our military/police/CIA complex to compromise governments all over the world for power over their people with that money used to control or oppress them and extract profits from assets robbed from their own people.
This government has been getting away all over the world with what we now see they are doing here to us as described by Naomi Klein’s Shock Doctrine,and Confessions of an Economic Hit Man by John Perkins.
It isn’t commonly understood that the UN is the policing arm for US Drug Prohibition policy all over the world; no shooting gun power; but the power to inflict trade sanctions against countries who don’t tow the line; trade sanctions that only affect the smaller countries.
And the 191 signers to the UN drug protocols are obligated to enforce US laws; confiscate assets of accused drug law violators, etc.. Officials all over the world, under US pressure have subscribed to US drug prohibition, its called Narcotics Control by the press -for cover; because it serves police authority over their people in every kind of government, right, left, center, democracy, dictatorship … you name it.
Governments of every persuasion like it for the control it gives them over their people. Thus, worldwide drug profits; worldwide graft and corruption; worldwide police power and military over people pushed by US Drug Prohibition policy.
US Drug Prohibition policy is a scourge on humanity all over the world. They war against the trade one place; it pops up in other, from the beginning. This is no secret to authorities. But in academe you’re not gonna get paid by any think tank to write a paper.
I did a paper and a lot of research on it. You can’t underestimate the power, the foot in the door this drug war policy has given US government into every policing power on earth.
I would think wanting to crush the FED and return to the gold standard is about as opposed to the current banking industry as you can get. poopyjim
So Ron Paul wants to return to a government backed gold standard? Link?
My bad – he wants gold/gold-backed currency to be able to compete with the dollar. IMHO the effect would be the same – and would not be much of a “bank industry booster”.
http://www.ronpaul.com/2009-02-01/going-back-to-the-gold-standard/
I am not a libertarian by the way, but I respect Ron Paul as being one of the few principled politicians out there.
I like Elizabeth Warren. When this acceptance of an advisory position broke I thought, “say ain’t so Liz”.
But then I thought, interesting gambit. Accept and be marginalized and in that make it apparent that this administration has no interest in an effective consumer protection agency or anything else that would bring real regulation to the financial services industry. So, go ahead and marginalize me and I will make it clear that you dear emperor president have no clothes. Then I thought no, that is too eastern european for a woman from Kansas.
But then, we’re not in Kansas anymore, are we?
“Hell hath no fury like a woman scorned”..:)
Well, we can hope???
Uh oh. Now we’re going to have the Warren version of “11 dimensional chess” explanations in order to deny the obvious?
Obama may just be delaying the bad PR. The entire extend and pretend concpet is based on pushing anything that can be bad news into the future in the hopes that jobs, tax receipts, and bank capital will catch up and overcome the bad news.
Obama could be staring at a PR disaster if the economy does not improve and Elizabeth Warren leaves her advisory post in mid-2012 and goes public with demands for real consumer protection reform.
Team-Obama won this battle. Team-Obama lost the war. Obama is a one term president. They have betrayed progressives, moderates and conservatives. In he end they gained nothing. For the very first time, I am voting straight ticket republican, no matter how fringe crazy.
By doing everything they can to avoid protecting consumers, there won’t be any meaningful number of consumers left in case of a significant double dip into recession.
What will be the plan then? The powers that be can’t convert an economy that is 70% driven by consumers to some other paradigm without significant dislocations.
Bob Herbert was spot on in his last column, “Two Different Worlds”. The elites (that includes Obama) just can’t see nor feel the plight of ordinary Americans, which has acquired the status of inconvenient truth.
We all know how strong is the denial for these kind of truths.
I have a serious proposal for Yves and her loyal readers, and for the readers of other important financial watchdog blogs like Mish and Zerohedge.
Let Warren know: “We’ve got your back.” Pledge to act as “Warren’s Rangers.” Call on your readers to protect her independence at moments when she is most vulnerable. It will give her the needed cover to take bold steps in the coming months. It will (or should) bring together critics of the status quo from across the political spectrum.
If there’s one thing Americans should take away from the runaway success of the Tea Party Movement, it is that we have more power than we think, if we only unite outside of the traditional power structure.
The meme on Warren coming from the establishment conservative press (the WSJ) is “she is a dangerous anti-bank socialist given huge authority by our socialist president.”
The MSM on the left is likely to provide some cover along the lines of “Thank God Obama is giving Warren power despite those jerks at the WSJ.”
If we let Timmy and Obama get away with their marginalization strategy we will have let slip the ONLY chance we have to effect real economic reform.
This is the moment. This is the cause.
As jaded as I am about things I some how think that Warren is in the right place at what will be the right time.
I agree with you that the blogsphere does not know its power.
I think we are approaching a tectonic shift in “attitudes”. Will it be positive or negative towards us lesser folk….not sure. I can only hope that us masses rise to the occasion that is presented. If the direction is positive it will be easier to move Warren into more power from the inside than from outside and it will look better for Obama to have her at this side….the water is starting to boil.
Interesting times……
This is a tricky situation because Warren cannot ask for help (reporting for duty boss, don’t mind my posse) but will almost certainly need it down the road.
Also, though we who inhabit this underground world of high-brow financial blogs can read the lay of the land, this is way over the heads of the masses, who are just catching on that the country is on fire.
But we are, nevertheless, the intellectual vanguard (Yves, I hope you do not mind if we who benefit from your expertise include ourselves in that group) and I think Washington is becoming quite aware of our growing sense of unity and potential influence.
Why do you think Warren even got this job? Why do you think the Consumer Protection Agency (bastardized and marginalized though it is) even exists?
In a world without the free blogosphere, the “reform” landscape would look even worse than it does today. If there is hope for the future, this is where it lays.
Well Lev; I agree with you, but everyone needs to keep one barrel loaded to protect the Net Neutrality which allows the Blogosphere to exist..
http://www.youtube.com/watch?v=hjYpz5TQSlE
Many are totally unaware of how fragile our “freedoms” rally are. The money which was supposed to provide broadband access to all Americans appears to have been spent on digital TV instead..I wonder why??
Attempter has done yoeman’s work on his blog tracing in detail for your information the stealth strategy currently marching toward destruction of the open Internet as we know it (net neutralilty, as it is otherwise known) here
Sorry, the link to Attempter, Net Neutrality (open Internet) is here
Yes, that’s an excellent and accurate statement by Al Franken sounding the alarm for democracy and the Open Internet now under seige by corporations led by Obama, Google and Verizon, plus…
I don’t know what’s going on with the link once more here
Thanks, LeeAnne.
we need to start a poll
how long after leaving office will Dodd start work as a high paid lobbyist for the financial industry?
i’d give it 6 months max
I’d give Warren the benefit of the doubt for now.
I think ultimately we will see consumers self-regulate, i.e shun credit cards and debt.
I think this is a a far more powerful force than any ‘protection agency’, which will clearly become captured over time.
It seems to me that the political analysis is one dimensional. The recurring Obama is not FDR meme is the first mistake. Too much text book poly-sci middle class neatness. The republicans are engaged in full scale rule or ruin strategy. If they can’t have America on their terms, no one can. Better dead than a democracy should be their slogan and they are doing everything possible to kill Obama’s execution of power from the WH. It is clear that Warren will never get Senate confirmation for anything other than hat girl and that goes for enough Dodd like Dems. The whole hissy fit you are having about what PR subterfuge Obama is engaging in with Liz is ridiculous in misreading the galactic levels of obstructionism thrown in the Obama WH way in every matter down to and including asst undersecretary for pomp and circumstance. By getting her into the job of setting up the agency, he is spitting in the face of the Senate’s advise and consent process. Since there is not much going to happen til next July anyway, presumably, your golden girl will not be part of the massive cynical ruse, and work her butt off to make as much as is politically possible in the form and function of the new agency. Getting in the ground floor with the President standing by your side in front of the national media is a vote of confidence. Unless you are more concerned about sitting on your hands for months and months, she will be doing a lot of work that folks at McKinsey seem to do all of the time for corporate America,while not being the actual C level execs. But then, Yves, you know that having been one of Jesuits of Capitalism. So why all of this high school intellectual comprehension in denying the reality the murderous level of politics in DC? She is actually working on the very agency that she wanted to create and has the power to set its direction. Did you think she would want to work there until she was 65 or 70? She is acting to move this along now and the administration can move to other matters. Her presence there if anyone on the republican side cares that much, will serve as a distraction to them with every new reg and organizational proposal a cause for screaming and yelling about big government.
Your “full scale rule or ruin strategy” for Republicans is perfect, but for that reason I think you’re off base on the “whole hissy fit…about what PR subterfuge Obama is engaging in…” It is precisely those “galactic levels of obstructionism” that show this as yet another faux-protest roll-over in long pattern of unwarranted appeasements in a mere show of unilateral bipartisanship. A recess appointment could have been seen as “spitting in the face of the Senate’s advise and consent process”, but not this.
A real confirmation contest, with jowly old white men beating up on Liz, with her clearly in command, would have been a welcome scene for Obama voters, clearly something the good ol’ boys didn’t want. Even a real live filibuster (have we ever seen one?) would have been a refreshing CHANGE for once. No, Obama tipped his hand long ago, as Yves has clearly documented here again and again.
You are assuming that Team Obama wants reform of some sort and this move is the best end run they can do. That is not their posture. See this post:
http://www.nakedcapitalism.com/2010/03/the-empire-continues-to-strike-back-team-obama-propaganda-campaign-reaches-fever-pitch.html
They don’t want an effective consumer agency. This is another photo opportunity, the equivalent of kissing babies, not a substantive measure. As I indicated, this agency was over once it was housing in the Fed. Even the FDIC, which was an alternative proposal, would have given it some odds of being effective. No way at the Fed.
Moreover, you buy the meme, which I reject, that Obama could not get Warren through. I was watching the Bernanke vote pretty closely (as in had contacts who were on top of where the votes stood when the vote was in progress). Bernanke was seriously at risk of not getting passed. Team Obama put on full bore arm twisting and got it through.
If they wanted to get Warren through, they’d have her meet with everyone in the Senate, in groups with her supporters, one on one with waverers and opponents (all opponents, no matter how low the odds of her converting them) with very careful scripting. You’d have a simultaneous media push to get her supporters writing/calling in en masse, favorable media coverage (her also on major TV and radio), plus other members of Team Obama working on waverers.
This could get done. And frankly, this would be great theater for Obama in the run up to the midterms. It would take a lot of political air time, put him in the spotlight as being opposed to the widely hated banks, and also mean less media attention on all those issues where he is not doing well (the economy, illegal immigrants, Afghanistan, etc.).
The problem is Obama has consistently set his targets low and been willing to settle for even less. He’s shot to get only 60% of what he wanted (assuming he really only wanted what he said he wanted, I think they simply pretend to serve the traditional Dem base and govern far more to the right) and settled for at most 30%. This has encouraged the intransigent Republicans. If he had shown some will early on and rammed legislation through when the Dems had sixty votes, the Republicans would have more respect for him and would negotiate rather than bulldoze.
Power is a function not just of your strategic position, but your tenacity and ruthlessness. Obama is sorely lacking in the latter two qualities. Rahm, despite his ferocious manner, is not terribly ruthless.
And Warren has not give them much to work with either. How can she want to influence the agency and say she does not want to be its initial leader? If this is really true, as opposed to cover (and it may be true, she’d have to give up her tenured slot at Harvard, I’m almost certain she can’t take a five year sabbatical, the Bschool tolerates only two years), she is guilty of wanting to have her cake and eat it too. Honestly, this is really selfish, not reasonable. The head of the agency will want to put his mark on it, including staff picks and initiatives. It’s very unappetizing to have Warren put stakes in the ground (if she can indeed do that, vs. the Attempter view that this interim role is the Arctic research station) and six-nine months later have to go through contortions to modify them without looking like that is what you are doing.
Yves,
I don’t know specifically about Harvard Law School’s rules regarding leaves of absence so you may be correct that Warren would have to give up her tenured spot in order to be the head of CFPA but I would not assume that to be the case. Law schools view working for the government, especially high-profile jobs like this, as a plus. Professors at many top schools move in and out of the government. It’s fairly common.
The law school I attended had a very different policy about this than the B school there.
Thanks for the article and for keeping the spotlight on this issue.
Shorter Paul Tioxon: be grateful for the kind and caring people watching over you here in the vault of the Kreditbanken.
I’ve been signing posts in comment sections for over a year with “Third Party now: Elizabeth Warren for President!”
She’s very smart and very tough, and I would bet she completely understands the insider strategy that Yves outlines.(Politics at Harvard ain’t beanbag.)
My guess is that she will figure out a way, is already planning how, to leverage this position in a way that will concretely benefit the public (at least as much as anything can proceed from D.C. and benefit the public in these days of Repub obstructionism and Dem fecklessness and malfeasance).
My hope is that she will also be using this “job” as a platform for an eventual Presidential run, the way Harry Truman rode his Senate investigations of war profiteering all the way to the Vice-Presidency. Of course, it would have to be in a third party, but if ever the time were to be ripe for a new progressive party, it would be in the coming decade’s massive social dislocations.
Well, I can dream, can’t I?
Obama was intended all along to be a transitional and diversionary figure, harmlessly channeling dissatisfaction until the Hard Guys could come back into power.
Then there is the additional benefit of being able to ignore African American issues ( for which Obama will go down as one of the worst presidents in recent memory) for the rest of our lifetimes under the meme of, “You had you chance, and you blew it.”
Consumer protection is all well and good but how does one regulate an inherently dishonest system, fractional reserve lending? It is not some tiny font on a contract that has wrecked the economy.
So long Obama. You could have been great if you had taken on the bankers.
…and the insurance companies, and the austerians, and the torturers…
Come to think of it, the only group he’s gone after with any gusto are his supporters!
bravo!
I dunno…I think she can do a lot by being willing to go to the public as she has done in the past.
Yes, that could be viewed as “disloyal” by those with a certain mentality – but they hired her knowing who she is and how she works, so she is perfectly justified in continuing her public appearances and explaining her plans and ideas for this new agency on-air and in print.
I hope she can get started right away, though. She will probably be able to force more public promises from the Administration before the November elections than after.
It’s about the face time!
Who wouldn’t take the opportunity to have time with the President? She will have a chance to show the destructive path the FIRE economy has our country on. Either Obama will listen, or he won’t. Then she’ll know for sure where Obama stands and just may let the rest of know.
She will have much less face time with him than the other members of his team, Rahm, Geithner, Summers, Orsag, etc. He has established relationships with them and trusts them. And more important, it is very clear that Obama has no intention of doing anything more than the odd symbolic move here and there to inconvenience the banks.
Look at what he did to Volcker. One of the reasons I decided to vote for Obama (aside from being utterly horrified by Palin) was that Obama in the runup to the election, was treating Volcker as his most important financial/economic advisor. As soon as he was elected, Volcker was put aside and the bank friendly Geithner-Summers-Bernanke team was in charge. This was sheer bait and switch. And remember, this was despite Volcker having an established relationship with Obama! By contrast, Warren is the new kid on the block with all of Obama’s economic team against what she wants to accomplish (except for a few largely empty gestures here and there). Think she can win this one?
You need to read Daniel Ellsberg’s book Secrets. He was a top Rand employees, later worked for both the Departments of State and Defense. He had all the very top level clearances. He writes articulately about how he and other Vietnam experts, who could see clearly that the war was hopeless, labored under the delusion that if they could only see the President and tell him the truth, he would change course.
He was then involved in the development of what came to be called the Pentagon Papers, the compilation of the history of the US involvement in Vietnam. He came to see that every Administration was fully aware of what a futile exercise it was, but chose to go ahead regardless…..for reasons of American prestige.
You assume Obama does not know the score. I suspect he does and has still chosen to align himself with the bankers.
You’ve done been bamboozled.
http://www.youtube.com/watch?v=7ie0bXNzFkw
My point entirely.
President Obama favors the financial industry because he appears to believe that a collapse of the financial industry could lead to riots, could lead to very large wars.
Much of what has transpired since Mr. Obama took office was preordained by forces set in motion by the Bush administration. There is nothing new in this phenomenon, it has been this way with every change in administration since Truman.
I continue to see Warren’s acceptance of this straw man post as being real hard ball. If President Obama doesn’t support her in her efforts, he is exposed for what he is and that more than anything else may set the democratic party back for a very long time.
“President Obama favors the financial industry because he appears to believe that a collapse of the financial industry could lead to riots, could lead to very large wars.”
I would question that assumption too. Doing controlled structure unwinds of the TBTFs would have been VERY PAINFUL, but it would have confined the damage to the firms, shareholders and bondholders, and derivatives.
It’s the bondholders and corporate officers who have been protected in this whole mess. As you may well guess, these are the MOTUs which are being bailed out while the rest of America gets augured into the ground.
Obama is no dummy, he knows exactly what he’s doing.
Siggy,
I think you are way too optimistic.
Obama’s true priorities have been obvious to anyone who has been paying attention. If Warren leaves, it will be well before the 2012 elections (remember, the agency needs a permanent director….even she’s accepted that idea). So she is already a lame duck.
And even if she resigns with legitimate beefs, she at most gets a flurry of media attention right after her resignation and it dies, fast. She won’t have ongoing media coverage once she’s back at Harvard. Look how little attention Bill Black gets outside the blogopshere and the occasional cable media appearance, even though the is 100% right on fraud. You don’t have a good media platform from an academic position. This will be more than a year before the presidential elections, no lasting damage (assuming any damage).
By contrast, Obama, Geithner, Summers, top people in banks, all have excellent platforms for keeping propaganda campaigns going. They will quickly drown out what little noise she can make.
If she’s smart, she already knows it’s NOT about the “face time” – it’s about the bully pulpit. She has already shown herself not to be shy about using it, and having an officially-sanctioned role (however vague) connected to this new agency will give her an extra fillip of legitimacy if/when she speaks out publicly about her vision for it.
We just have to hope that she has the self-assurance and intelligence to use the position rather than to allow the Administration to use her. If she can’t get them to budge, she can still get mileage out of resigning and explaining her reasons for resigning.
Karen,
Her bully pulpit, when she had high profile, didn’t keep the agency from being hobbled by being housed in the Fed. Why should it make any difference now? I’m told JP Morgan alone is spending boatloads hiring everyone it can to carry its PR message. Look at this insane editorial at the Washington Post, its assertions (that she will be “running” the agency, the agency can do absolutely nothing until next July) don’t line up with observable reality.
http://www.washingtonpost.com/wp-dyn/content/article/2010/09/18/AR2010091803142.html
And resignations are overrated. The only resignations I can recall making an iota of difference is the Saturday Night Massacre, and that was with a President who was already badly wounded:
http://en.wikipedia.org/wiki/Saturday_Night_Massacre
Once you’ve been inside the tent, you’ve been observed at close range, the other side can pick what were probably at most minor missteps and blow them out of proportion. Trust me, if she resigns and starts talking, the PR mill will start pumping out the message that she didn’t understand banking, wasn’t a team player, etc. And per the WaPo, the MSM will favor the bankster version of events.
Look how much Paul O’Neill accomplished with his “bully pulpit”–and he was the Treasury Secretary! If you don’t have the President’s ear, having access to a microphone isn’t going to accomplish much.
The CFPB was gutted in the House. So Barney Frank’s incredulity needs to be taken with a grain, or a few tons, of salt. Dodd hacked up more on it in the Senate. Obama then engaged in this long drawn out guessing game with Warren. The timing makes it clear that this is only about the November elections. In this sense, I think it is a miscalculation on the part of Obama, Rahm, and the Democrats. It is not even remotely close to what is needed to energize Democrats and independents to flock to the polls and vote Democratic.
I would agree in terms of bureaucratic maneuvering it was a coup. But that has been the mark of this Administration. Penny wise and pound foolish. They sometimes can nail the small stuff but are completely clueless on the big picture. They can put Warren in a box but they can’t keep the economy from going to hell.
Being generous to Warren, I would say that she thought some limited voice was better than no voice at all. Alternately and more likely, she was just snookered.
It isn’t commonly understood that the UN is the policing arm for US Drug Prohibition policy all over the world; no shooting gun power; but the power to inflict trade sanctions against countries who don’t tow the line; trade sanctions that only affect the smaller countries.
And the 191 signers to the UN drug protocols are obligated to enforce US laws to confiscate assets of accused drug law violators. Officials all over the world, under US pressure have subscribed to US drug prohibition, its called Narcotics Control by the press -for cover; because it serves police authority over their people in every kind of government, right, left, center, democracy, dictatorship … you name it.
Governments of every persuasion like it for the control it gives them over their people. Thus, worldwide drug profits; worldwide graft and corruption; worldwide police power and military over people pushed by US Drug Prohibition policy.
I meant to put this above. Sorry for repeating it.
over estimate
Usually a claim like “has everything to do with Obama trying to shore up his questionable credentials as a reformer and perilous little with helping ordinary citizens” is followed by” and here is my evidence.
Of course this is right along the same line as when the claim was they didn’t want her to head the agency but at the same time, ignoring Franks statement that she didn’t want to head the agency.
I am still not seeing what you are complaining about. The CFPB is an independent bureau in the Fed. Budget will be a fixed percentage of Fed’s budget plus supplemental funding from congress. Director appointed by Pres confirmed by Senate. Has various rule making authority, supervision and enforcement powers. I don’t see where the director reports to the Chairman of the Fed. I don’t see where regs have to be approved by the Fed, I don’t see enforcement via the FBI or SEC. That would make it independent by statute. Separate dedicated funding, staffing, rule making and enforcement in one bureau. Where does being in the Fed mean anything other than they did not want to create a cabinet level position with the same statutory authority? I realize it is not a global authority, that there are exemptions with depositories of under $10BB and no auto loans are under their authority, for now. The republicans can always come in and staff it with polo pony trade association attorneys and the democrats can always expand its authority, but previously, there was the Fed directly responsible for many of these issues along with a dozen other agencies that obviously didn’t care what was done to the citizens of this country. Treasury currently now is authorized with the full power of the CFPB. The transition has allowances for up to 18 months of construction time. Liz can be there for almost 2 years in a direct capacity. And her appointment whether recess or not is moot, she is in charge by order of the president, it is a distinction without any material difference in power.
Finally, in reviewing your propaganda allegations inre “Does the Obama Administration really want any financial reform at all”? I revisited your post. It was not about consumer protection. It was about another world in a galaxy far away, where prop trading, and bucket operations and Magnetar churn huge sums of cash in hopes of hijacking a few basis points of the Trillions that flow through these capital markets. The consumer fixes of CFPB protect me and my family from paying thousands of dollars in late fees, over limit fees, annual fees, back end yield spread premiums on mortgages, assorted other junk fees on refis, and oh yea, he reformed college lending by nationalizing it. I admit, the worst problems that caused this depression were not due to high interest rates on credit cards or cheaper college loan payments, but that is the world I live in. Wall St has decoupled from the real economy and Obama clearly has not fixed that other world that can create financial ruin in mine when it collapses. But the protections coming from Liz are real, do not adversely affect me in a material way. They will save me money. The economic stratification of this country is such that Obama is giving meaning relief and benefits to many lower middle class and blue collar workers. That is real reform, the expanded Pell grants are real reform. The community colleges around here are booming like the King Of Prussia Mall on Black Friday after Thanksgiving. It may not mean anything at all to you but it means the world to me and the people I know. Geithner, Summers, Emmanuel etc, do not seem to be doing anything more than perpetuating the oligarchic groupings around fiance. That is a major problem, but that doesn’t mean that the retail banking side isn’t getting structural change that is real or is not politically viable. I already enjoy hearing about the people who can’t get a $40 cup of coffee with their debit cards. The banks no longer advancing them $5 at starbucks and billing them an over limit fee. I don’t have to assume they want to have financial reform, they already have done it for me and for all of the college loans they now run through the government. I hope that the high powered and highly placed that seem to know what is going on do more than vote. Raise money through a pac and run for some office. If that nitwit in Delaware can do it why can’t you?
The nitwit in Delaware won because the entire right wing hate radio was non stop trying to get her elected.
Hate to say it but none of us are going to have that edge.
Paul,
With all due respect, you are just plain wrong on your assumptions.
The CSFB will have no rulemaking authority until it is at the Fed, see:
http://www.creditslips.org/creditslips/2010/09/agenda-for-new-consumer-czar.html
Geither is acting director, with Warren as his advisor. That’s per statue. All the agency can do now is studies and staff up in advance of being operational.
And it DOES report into the Fed. Did you not read the debate on why the agency was to be housed in the Fed? It wasn’t about not having a cabinet level position (the SEC is independent and not Cabinet level). The SOLE reason was to force the CSFB to coordinate with other regulators, and this was the time when the hope was, per the plan set forth by Paulson, to consolidate all financial regulation under the Fed.
I suggest you read this post. You have bought the Obama PR hook, line and sinker. The bureau’s authority and independence are far more limited than you believe.
http://www.huffingtonpost.com/john-taylor/the-consumer-financial-pr_b_508510.html
You are just dead wrong about this Administration’s aims. Look at how they have done nothing effective on mortgage mods, a very high priority with consumers. All they want out of this is a few PR items to appease their base before November.
Yves, please see attached and particularly the section on “abusive” practices.
http://www.huffingtonpost.com/the-fourteenth-banker/the-challenge-elizabeth-f_b_721689.html
I would like your opinion as to whether there is an opening for rule making.