Banker Derangement Syndrome II: William Cohan Can Give No Reason for Not Appointing Warren, Except Some People Don’t Like Her

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As we indicated, this is the second post in a series on Banker Derangement Syndrome, in which people who might once have been sensible are acting as mindless mouthpieces of particularly rancid banking industry propaganda. We suspect it has to do with being too long in close proximity of zombie banks; they probably need to suck grey matter out of the living to keep functioning.

William Cohan wrote a particularly wretched piece for Bloomberg on why Elizabeth Warren should do everyone a favor and put herself on the next train out of DC. There is a decent case to be made against having Warren head the CFPB, but that’s not what Cohan provided. He instead made a weak argument (if you can even call it that) and got screechy to cover for it. Felix Salmon already kneecapped it on substantive grounds. Cohan perversely says that Warren would not be approved and then ‘fesses up that those nasty Republicans won’t permit anyone to head the CFPB. 44 Republican Senators wrote a letter saying they won’t approve of any nominee from either party unless the CFPB is gutted reformed.

So as much as Cohan huffed and puffed about Warren, this isn’t about Warren at all, it’s about the CFPB and the elephant in the room, how this country is to be run. The Republicans have turned the page back to the Richard Nixon playbook, in which he has Kissinger promoted the view that the president was unstable and therefore needed to be treated with kid gloves. Now of course, the kabuki goes several layers deeper here. Obama has been quite willing to fight for what he wants (he whipped aggressively for the TARP and lobbied personally to assure a rocky-looking Bernanke reappointment went through) but it suits him to uses those wacky Republicans as protective cover for doing what he wants to do anyhow, which is move further to the right so as to ease his 2012 fundraising. And among still-in-denial Democratics, the weird belief is that Obama lacks the will to be tough tactically and do roll calls to break a Republican pro-forma Senate session which is intended to block a recess appointment of Warren, when he never had any intention of giving her the job.

Folks, the only way Warren could have gotten the nod from Team Obama is if she acceded to the banking industry view of what the CFPB should do, which is a smidge of cosmetic change to placate unhappy consumers and nothing more. In fact, some readers have argued that even taking the interim role dignified the effort more than she should have.

Back to the Cohen piece. Reader Barbara W pointed out that the comments at Bloomberg on the piece are in unanimity against it (well, one of 34 could be classified as neutral) and what is striking is the degree to which they play back her own language: cop on the beat, sheriff, standing up for consumers. And no wonder, she’s loved by the media (well, ex Cohan) and by ordinary Americans (a petition to have her named as CFPB head was initially targeted to get 175,000 signatures and looks like it will receive 250,000 by its deadline).

But Cohan’s piece elicited such strong pushback not simply due to Warren’s popularity but also in response to his smug tone. And he can’t even fathom the state of play:

Surely Professor Warren is clever enough to see the proverbial writing on the wall. The inconvenient truth facing Elizabeth Warren, the controversial Harvard Law School professor President Obama would like to run the newly created Consumer Financial Protection Bureau, is that she has made herself so bloody disagreeable on Capitol Hill that she has obliterated her chance of winning the Senate votes she needs to be confirmed.

How many wrong things can you say in one paragraph? First Cohan snarks that Warren must be stupid and is hanging on hoping for an appointment. He’s missing the fact that she managed to score at least two wins out of what Team Obama assumed would be a losing hand. They figured they’d mothball her by making her an advisor and keeping her out of the limelight.

But Warren has taken as much ground as she possibly could in the pre-start phase of the CFPB by creating processes for how to handle initiatives, hiring key staff (which does a lot to imprint a bureaucracy) and launching some research projects. True, an successor could undo that, but it would take time and might not fully undo her effort to shape its culture and style.

Second, as we have pointed out the inability of certain Congressmen to contain how offended they are that Warren’s name is in any way associated with the nascent CFPB means they have undermined one of the Adminstration’s objectives in signing Warren up: to keep her as far away from the media as possible. You couldn’t get better PR than having angry and poorly briefed Congresscritters tear into her last week. Yes, as Cohan points out, they are mighty angry with her, but not because she is “bloody disagreeable” (well, unless you are a sexist, and Cohan’s ire suggests he might be a member of that club) but because she’s run circles around them at their own game. Using someone’s incompetence against them is never a pretty sight, but if they were out to gore you anyhow, pray tell what do you have to lose?

As we’ve said, we think Warren gets appointed only in an alternative reality in which Joe Stiglitz was on Obama’s economics team and all that fighting over health care last year produced real reform rather than an even bigger license to steal for big pharma and medical insurers. But if we are in alternative reality mode, we have to imagine Obama as willing to be aggressive tactically as opposed to using procedure as an excuse for promising much, delivering little, and relying on PR to mask the difference.

In one last effort at partisanship, before being forced to resort to a recess appointment, I’d like to see the President submit to the Senate the sort of CFPB head the Republican Senators might be willing to approve:

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  1. psychohistorian

    “….sucking grey matter out of the living to keep functioning.”

    Yves, I want to thank you for that.

    It makes me feel better about my continued references to Fukushima as an ongoing radioactive Roman Candle.

    Crazy world we are d/evolving into.

  2. Walter Wit Man

    I’ve given up hope of meaningful change in our government so I’m not as invested in Warren’s personal success as some may be. The focus on personalities is usually a distraction and a side show . . . but when someone is getting the two-party bum rush in Washington it means they pose a threat–however limited that threat may be.

    Obama probably thought he had a tight leash on Warren and that she was a safe temporary appointment (Obama needed to throw at least one bone to the little people–for appearances sake). But both parties must be worried that she will go off script and use her visibility to do some good (or at least expose the insincerity of Obama’s “reform” measures).

    Here’s hoping she delivers a blow before the inevitable happens and she gets put out to pasture. For the blow to really hit home it has to be leveled at Obama and the Democrats as well as the Republicans. This isn’t just a Republican bum rush.

    And reading that Cohan article is enraging. He wants to give Warren a “pat on the back” and send her home to run a campaign against Scott Brown that Cohan helpfully suggests she won’t win anyway. And I love the title of his article in that it suggests he supports Warren’s goals but she needs to disappear to achieve them (to better “serve” Obama, as he puts it). I am triggered by that argument because it’s the same line of “reasoning” the Democrats and Obama fans have been using as an excuse to enact neoliberal/conservative policy for years. As if Obama and Cohan want the same policy goals as Warren does. As if shutting her up and nominating a broken and tamed donkey in her place will achieve these same goals.

    1. attempter

      Here’s hoping she delivers a blow before the inevitable happens and she gets put out to pasture.

      Only she could put herself out to pasture, by continuing to conform to what the system demands of her. (Loyal oppositionists are still by definition conformists.)

      If she wanted to reject the kleptocracy completely and help build a movement against it, she could do so. Same with any of these other elites who are allegedly on the side of the people.

      The theory that any of them can do good work by staying within the system lacks evidence, to say the least. In fact, historically no one ever attempts reform within a criminal system until there’s real opposition outside it.

      1. tts

        No they can force her out if she gets too good at what she is doing anytime they like. She isn’t even the head of the organization she is advising remember.

        In the end she is wasting her time there. Once they get her gone they’ll start firing everyone and anyone who is competent and won’t play ball with the team players. Within a year or 2 that organization will be about as big of a threat as the SEC is to organized white collar crime. She needs to be out in public rubbing the politicians and the media’s face in their own bull. They have less control over what damage she can do that way.

        1. Alex Bowles

          Wasting time? Hardly. She’s busy creating the Gold Standard for public officials, while generating a bigger and more dedicated fan club that many actual rock stars. If the Democratic leadership fails to install her, they can write off any pretense of being in favor of, or opposed to anything meaningful. Conversely, deep-sixing her nomination will be a Pyrrhic victory of the first order.

          1. tts

            The Dems have already shown they can’t or won’t get her into office and her “fan club” is essentially meaningless since many of them still buy into the Team Democrat vs Team Republican trap, failing to realize that neither team stands for what they say and are both pro status quo. Which is to say pro rich and anti labor.

            Even if Obama deep sixes her personally many or most will still vote D no matter what to keep those evil evil R’s out of power while failing to notice that the government continues to slide to right anyways.

    1. Yves Smith Post author

      Trying to exhume him would be a bit much, so we are going for a modern approximation, which has to be suitably photogenic, given the need to promote his candidacy via the MSM.

  3. Christopher Harlos

    Warren must be gaining traction; why else the hit piece? If she starts to pose a genuine “threat” to the lords of finance and their political lickspittles (yes, I’m talking bout you Geithner, among taller others)look for the big guns to come out. Lesbianism? Left wing loon (ala Kucinich)? Wiccan? Muslim-lover? Stay tuned for the drudging. Lord knows she wins hands down on the merits.

  4. readerOfTeaLeaves

    Late last night, I thought that Google had a news update to the effect that Rep Daryl Issa (right end of GOP conservative spectrum, SoCal) was impetuously ordaining that Prof Warren must clear her calendar for an entire day in June, then come to Congress so they can villify her at their leisure.

    A few data points:
    According to Eliot Spitzer, the FIRE sector spent $62,905,312 last year alone lobbying in D.C.

    By 2008, the FIRE sector was accounting for 40% of US GDP; profit made through credit and lending.

    McHenry, the Congressman who went viral by huffing that Prof Warren had ‘lied’ to Congress, has a rather interesting employment history: like Karl Rove and Jack Abramoff, he was active in the College Republicans. After that, he worked for a DC lobbying group (DCI) that specializes in disinformation: push polling and other methods designed to deny reality by shaping public perceptions. His Open Secrets campaign funding synopsis is here.

    This whole Elizabeth Warren seems to have some of the dynamics of a financial Arab Spring. Obama may have originally asked her to be an advisor to get her in the tent; by the hour, his failure to appoint her is becoming much more costly to him politically.

    It’s fascinating to see the rising levels of fear among the predatory lenders: it sure looks as if they are in Full Panic Mode. If McHenry and Issa are the best they can manage… excuse me while I go load up on popcorn.

    (And thanks to Steve, or SteveA, who left a comment at NC a week ago; it was that comment that prompted me to turn on the C-Span hearing with Warren before McHenry’s committee. I have *never* seen anything like it, and would not have happened to watch if he’d not left that comment.)

    1. Old Steve (formerly Steve)

      I think I gave the original “heads-up” on McHenry calling Warren a liar on CNBC.

      I try not to fall (further) victim to cynicism, but I wonder if Obama is using Warren as a bullwhip with which to threaten the bankers to contribute to his re-election campaign. He can lord her over their heads, threatening retaliation if the banks don’t fall into line.

      Attempter and DownSouth would know better than I, but I think Lenin said that the Capitalist will sell you the rope you use to hang him. The big banks are too stupid to realize that Warren would be good for them, or at least better than the likely alternatives.

      Adding more regulation/compliance would make it even more difficult for small banks to compete. A little regulation that they can easily cope with is much better than the break-up of mega banks which is surely coming if housing prices do not stabilize.

      I take a lot of shit on this site because I’m in favor of free markets. Fair enough. But banking is not a free market. It is a credit cartel with publicly-funded deposit insurance as its backbone. Even a Libertarian would have to admit this fact.

      The banks have broken themselves and their customers, gotten bailed out by taxpayers, freely taken the deposit insurance and ZIRP subsidy and complained about Warren. And they see absolutely no inconsistency in their thinking.

      1. Peter T

        “Adding more regulation/compliance would make it even more difficult for small banks to compete.”

        I read that the small banks of America are supporting Warren now, after having met and heard her a few times. Maybe, they don’t fear that Warren would add more red tape for them.

        “I’m in favor of free markets. Fair enough. But banking is not a free market. It is a credit cartel with publicly-funded deposit insurance as its backbone. Even a Libertarian would have to admit this fact.”

        I agree.

        1. readerOfTeaLeaves

          I also agree with

          I take a lot of shit on this site because I’m in favor of free markets. Fair enough. But banking is not a free market. It is a credit cartel with publicly-funded deposit insurance as its backbone.

          I also agree; although I’m skeptical that a free market exists any longer, apart from the App Store, iTunes, and local street fairs.

          I’ve been watching this kerfuffle over Warren play out is mighty interesting.

          If you go to Google News, you can see that McHenry’s local area has some local level media (The Hickory) and they seem offended by his behavior. Meanwhile, in Oklahoma, a banker who’d thought Warren was the Antichrist until he met her has come around to supporting her – again, that’s a local, close-to-home, close-to-grassroots level of media. (I have second thoughts about leaving this part of the comment, as the DCI and other bankster lobbyists will be phoning up outlets like The Hickory just about any minute now.)

          Interestingly, the Credit Union blog (for federal credit unions), and also the Consumer Affairs blog, appear to be *strongly* supporting Warren.

          So if the local lenders, the credit unions, and the consumer affairs interests are coalescing around Warren, which appears to be what’s happening, then the banksters are shooting themselves in both feet. Which, at this point, seems to be in character; given their history of incompetence, brazen dishonesty, and cheating, I really don’t expect anything else out of them at this point.

          But it does suggest that events are turning in Warren’s favor, and (like the forces of Mubarak) whatever the banksters and the McHenry’s and Issa’s attempt is only going to make this uglier and draw it out. In the end, it’s a question of whether the banks have enough sense to recognize emerging new realities.

          I don’t think the banks can do that; like Mubarak and the Tunisian President, the banksters are in far too much denial to deal with the rapidly shifting political and demographic realities that they are largely responsible for funding.

          The irony ;-)

  5. vholder

    “….me thinks the fellers protest too much” and it’s fear,old white fellers get nervous around smart uppity gals,Riff-raff and the Tanman.

  6. Dirk van Dijk

    The left side of that pic needs to be cropped out to get an accurate pic of either the GOP senators or a person they would approve of.

  7. craazyman

    When they develop the drug to treat BDS they’ll need some sort of theme song or jingle for the branding.

    I remember when “Billy Jack” hit the movie Thee-ate-ers, so long ago. Billy actually looked old to me. And I had a vague sense that his movie girlfriend, Jean, was really hot. But only in that 5th grade kind of way. My classmate buddy told me in a hesitant but proud way that his mom looked like Delores Taylor. I didn’t know what to say and I think I just nodded, feeling faintly embarrased at the thought that his mom could be considered a hot woman. And that roundhouse kick Billy Jack had scared the shti out of me. I couldn’t have imagined any sort of romantic feeling for Billy Jack’s woman or anyone associated with him in any way, or even anyone who looked like her!

    If Billy Jack rode down the street on his Bike, I think I would have run into somebody’s back yard and watched through the bushes. But I was 10 and Billy Jack was a tough dude.

    Anyway, who can ever forget the lyrics to the Billy Jack theme song?

    One Tin Soldier

    Listen, children, to a story
    That was written long ago
    ‘Bout a kingdom on a mountain
    And the valley folk below
    On the mountain was a treasure
    Buried deep beneath a stone
    And the valley people swore
    They’d have it for their very own

    Go ahead and hate your neighbor
    Go ahead and cheat a friend
    Do it in the name of Heaven
    You can justify it in the end
    There won’t be any trumpets blowing
    Come the judgment day
    On the bloody morning after..
    One tin soldier rides away

    -Dennis Lambert and Brian Potter

    This IS the face of BDS . . . ha ha ha ha

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