I’ve been keeping an eye on the Elizabeth Warren beat, although my expectation is that the skirmishes now will pale in significance compared to whatever does or does not happen on what the Republican hope will be her ritual execution at the full committee hearing of the House Oversight committee on July 14.
This situation has become an intriguing bit of political theater. The Republican have increasing become one-trick ponies. Their strategy has been to take an extreme position, scream like bloody murder, act like they have no intention of negotiating, and watch the Dems capitulate. But particularly with Obama, capitulation is tantamount to throwing Br’er Rabbit in the briar patch: it’s exactly where the Democrats like to go, but they need political cover for selling out their badly abused “base”.
The hyperventilating and bullying strategy backfired spectacularly last month in subcommittee hearings with Warren chaired by Patrick McHenry. But the Republicans have convinced themselves that if they double down, they’ll come out winners. I don’t know how much of this is reptile brain reflex on overdrive, in that they are capable only of fight or flight and even flight is no longer an option.
These Republicans have styled themselves as prosecutors; McHenry ludicrously kept demanding yes or no answers, when his hearing was not an investigation and Warren was not and has never been a sworn witness which makes the not proven claim that she was less than candid not terribly damning. Yet real litigators, unlike these Perry Mason (or worse, Tom Cruise) wannabes, are very careful when likeable women are on the stand. They know beating up on the fairer sex is not acceptable in polite company.
So as a warm-up for July, the Republicans have also been trying Warren in the press, but so far that isn’t getting much traction. The right wing organization Judicial Watch released the results of a Freedom of Information Act request last Thursday which requested, among other things, for “any and all” communications that Warren had with state attorneys general.
The results were so underwhelming that the media (even the eager to pound on Warren Wall Street Journal) ignored them; the only uptake was late, on Monday, by the ever reliable mortgage industry mouthpiece Housing Wire. And no wonder. Judicial Watch’s eagerness to make something out of virtually nothing came off a tad desperate. They seem annoyed that the CFPB and the state AGs aren’t willing to spill all about ongoing investigations. Yet Wikipedia provides a list of exemptions from the FOIA and several appear germane:
inter-agency or intra-agency memoranda or letters which would not be available by law to a party other than an agency in litigation with the agency;
personnel and medical files and similar files the disclosure of which would constitute a clearly unwarranted invasion of personal privacy;
records or information compiled for law enforcement purposes, but only to the extent that the production of such law enforcement records or information (A) could reasonably be expected to interfere with enforcement proceedings, (B) would deprive a person of a right to a fair trial or an impartial adjudication, (C) could reasonably be expected to constitute an unwarranted invasion of personal privacy, (D) could reasonably be expected to disclose the identity of a confidential source, including a State, local, or foreign agency or authority or any private institution which furnished information on a confidential basis, and, in the case of a record or information compiled by a criminal law enforcement authority in the course of a criminal investigation or by an agency conducting a lawful national security intelligence investigation, information furnished by a confidential source, (E) would disclose techniques and procedures for law enforcement investigations or prosecutions, or would disclose guidelines for law enforcement investigations or prosecutions if such disclosure could reasonably be expected to risk circumvention of the law, or (F) could reasonably be expected to endanger the life or physical safety of any individual;
contained in or related to examination, operating, or condition reports prepared by, on behalf of, or for the use of an agency responsible for the regulation or supervision of financial institutions
So what did they try to make sound like smoking guns? If you actually look through what they dumped, has a lot of news stories and “you are meeting with so and so, here is who they are and when you last spoke to them”.
First is the framing: the Housing Wire industry dictation headline charges: “Judicial Watch claims emails show Elizabeth Warren already in power.” Yet what are the smoking guns? She e-mailed Tom Miller, the Iowa attorney general who later came to lead the 50 state AG mortgage settlement effort about discussing the mortgage mess back in the fall of 2009 when she was head of the Congressional Oversight Panel. Irrelevant, unless the Republicans are about to accuse Warren of being a witch in addition to being a bitch, and allege that she had a crystal ball that enabled her to see that the CFPB would indeed wind up in Dodd Frank and she’s play a role in setting it up and so was plotting well in advance.
She spoke to and had dinner with a group of called CWAG, or the Committee of Western Attorneys General, on November 30, 2010. That group, BTW, consists of a lot more than just the 15 AGs who are members, and also has law professors, law firm partners, employees of Microsoft, Office Depot, Monsanto, Anheuser Busch, JP Morgan, to name a few. I sincerely doubt anything meaningful regarding the state AG discussions, came up in such a public forum.
The one bit that the Warren accusers are trying to make mean something is a February 25 e-mail, which looks to be to all the AG offices from the Iowa state AG’s office (Tom Miller’s assistant AG, Patrick Madigan):
Elizabeth Warren would like to present the CFPB’s view on loan modifications to the entire EC. There has been a proposal to do it TODAY at 3:00 Central. Realizing that this is very short notice, and in order to maximize participation, I would like to push it to Monday. I need feedback ASAP.
Note that this is after the CFPB presented its ideas on the economic basis for a settlement to Tom Miller on February 14 (we criticized that document, which was leaked much later, for being too soft on the banks). It’s perfectly normal in professional services land for an advisor to ask to present his recommendations to the broader audience at his “client”, not just the person who brought him in. And MIller clearly approved of the idea; the call was coordinated through his office.
Yet Judicial Watch and Housing Wire are depicting this move as somehow proof that Warren was overstepping her authority. They are trying to make the fact that she stressed that her office asked for the briefing to remain confidential indicated nefarious intent. Huh? The banking industry went batshit when the idea of a $20 to $30 billion settlement was later leaked. It made sense to keep things under wraps until the AGs had agreed on their strategy, and Warren’s call was only one input into that process.
The entire Republican strategy appears to hinge on defining the word “advice” to mean something completely different from what it means in modern America. If you go to a financial advisor, or an attorney or an accountant with an issue, you don’t want an elaborate analysis that throws the problem back on you. You are asking them to tell you what to do and what their basis for their recommendation is. Now they might give you a couple of options, say the high cost versus the low cost one. But “advice” means a solution, and that means a recommendation. You as the client then accept or reject that suggestion; you might get another opinion if you don’t like what you heard. I get hired to give advice. No one would mistake me for a principal. I’ve regularly told clients to do or not do large deals, and recommend strategies. Remarkably, clients even sometimes listen to me and do what I tell them!
To use another example, McKinsey was very aggressive in pushing the Time Warner purchase of AOL, the single worst deal of all time. Yet despite how hard McKinsey worked over Time Warner (way in excess of anything Warren could have conceivably done, and recall further some ex McKinsey types were in senior roles at Time Warner), no one would call McKinsey anything other than an advisor.
The other strategy seems to be to tag Warren as overstepping her authority in acting as the de facto head of the CFPB in its startup phase. That dog does not hunt. She was clearly delegated whatever authority she has by the Treasury. And it is perfectly kosher for Warren either as a mere Treasury consultant with the approval of her minder (presumably Timothy Geithner) or in any authority delegated to her relative to the operation of the CFPB to contact state AGs. And what little correspondence there is is remarkably innocuous; Housing Wire tries to make something of her office contacting the New York attorney general Eric Schneiderman asking for input and offering to help!. She’s not a staffer, she’s a consultant, albeit one who has been authorized to take on some big tasks. To take any real bureaucratic action, like hiring people, she’d have to go through channels.
The Republicans seem to be trying to have a second go at the information extraction process; Bloomberg reports that Senator Bachus of the House Financial Services Committee has drafted a letter requesting “any and all” communication between Warren and the state AGs since September 2010. This is over my pay grade, but I don’t see how this has any more teeth than the Judicial Watch FOIA request.
The other amusing bit is the continued Administration silence. Perhaps they deem this noise to be beneath notice, but they did bother to put out some PR that got picked up at among other places, the New York Times, to the effect that the CFPB will be in business, permanent director or not, as of July 21. But the other weird bit is the continued impasse on Warren. Team Obama clearly like her to announce an exit plan; she clearly refuses to take the message. I’m surprised that she hasn’t been given a date certain for departure, but the Administration may have put itself in the position of being dependent on her and does not want her ousted until they have a permanent head. Or perhaps her agreement for her consulting gig was drafted so that she’d be engaged until a permanent head took office, and she is taking advantage of its terms.
If the Republicans don’t come up with more than what they have now, the July hearings could be a bizarre exercise of bluster and browbeating over very little. Warren said in early 2010 that:
My first choice is a strong consumer agency. My second choice is no agency at all and plenty of blood and teeth left on the floor.
The House oversight committee may find Warren to be a woman of her word.