Republican Lynch Mob Looking Awfully Hard to Find Rope With Which to Hang Elizabeth Warren

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.

Print Friendly, PDF & Email


  1. hello

    “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 professional liberal base is just awful as in they (mostly) just sit down, shut up and give Obama a pass when Obama throws the liberal left under the bus.. Geez it was the liberal professional base that drafted and created the Obama juggernaut.

    However with their intense desire to win, liberals are like a battered wife who keeps standing by her man (sorry not-PC but a perfect metaphor). Liberals have cognitive dissonance as bad as the right-wing wingnuts.

    The liberals need to wake up and realize that they elected the first black GOP president. What would a Mitt Romney presidency look like? We know right now as Obama is a Romney clone policy-wise.

    In a perfect world the professional left would wake up and coalesce around Warren regardless of where she winds up. America needs more people like Warren and less like Obama or the GOP.

    1. Dennis

      Elizabeth Warren is one of the few political role models this country has left. We appreciate all your hard work and the crap you have to deal with.

      1. jake chase

        I am mystified by this hand wringing over Elizabeth Warren, as if appointing her or anyone else to a toothless agency will make a bit of difference.

        Am I the only one who sees in Liz an uncanny resemblance to John Lennon?

        1. nonclassical

          Not to those who take the time to view “The U.S. vs. John Lennon”…stubborn righteousness confronts fascism…

        2. and big I says

          jake chase: “Am I the only one who sees in Liz an uncanny resemblance to John Lennon?”

          No, you’re not the only one. That’s the first thing my daughter said when she saw Liz on TV.

    2. Francois T

      Liberals cannot wrap their mind around the fact they’re orphans; there is no political house for them anymore; therefore, they need to build a new one while the two branches of the Corporatist Party will do whatever it takes to prevent the libs to build their own house.

      The obvious alternative would be to launch a primary guerrilla warfare against every Democrass incumbent and replace them with real liberal/progressives.

      But this would mean to first and foremost throw out of office the whole apparatchik mafia from the DCCC and DLC.

      The second alternative is to go through another real Great Depression where no amount of special interest money could tame the tsunami of rage and resentment of The People against the elites bandits and their political puppets (let’s not forget their media enablers shall we?) running this country.

      1. nick

        You do realize that your post makes you sound exactly like the Tea Partiers that decry any moderate Republican as RINO. Is their strategy working?

        1. commenting

          The GOP/Tea Party has convinced/brainwashed? a big swath of America to vote against their personal economic interests for the past 30 years. So I’d say yes.

      2. ambrit

        Franscois T;
        Be very careful what you wish for. America was unusually lucky to have FDR and his ‘Brains Trust’ in place to fight the anarchic forces unleashed by the First Great Depression. Germany ended up with Hitler, Italy with a stronger Moussolini, various smaller states with their own Tinpot Dictators.
        Thinking abiut my reply to your comment, I Googled “It Can’t Happen Here,” a book by Sinclair Lewis and a later quite good Hollywod movie about the rise of Fascism in America after the Crash. I recommend both versions for a perfect “what if?” alternative to ‘Normal’ America. While there on Google I found a post by Ron Paul under the same name, “It Can’t Happen Here.” Posted in December 2004, it decried the rise of the American Police State!
        Add the Police State Movement to a new Great Depression and I’m afraid we may soon be staring down the barrel of a real American Facist State. Keep your powder dry brother.

  2. Francois T

    This 14th of July hearing could end really badly…for Darrell Issa.

    The asshat had better be very careful. If he’s trying to play prosecutor again, even his “base” could turn against him.

    Couldn’t happen to a nicer guy…

    1. leapfrog

      I hope it all blows up in his face. You are absolutely right, couldn’t happen to a “nicer” car thief and arsonist.

  3. Francois T

    Yves wrote:
    “The hyperventilating and bullying strategy backfired spectacularly last month in subcommittee hearings with Warren chaired by Patrick McHenry.”

    As much as I despise McHenry, I have yet to note what have been the consequences for him. Will he be primaried? Has he been stripped of his chairmanship? Did anyone called him names?

    1. thebewilderness

      Yes we did call him names. Misogynist was one. Liar was another. I called him an enormous mendacious disembodied anus. He didn’t like it one little bit.

  4. Tony Franks

    If you want an explanation for the Republicans persistence just follow the money. The Republicans are performing like circus monkeys for the ABA, The Chamber of Commerce and the Financial Services Roundtable in the hopes of being rewarded during the 2012 election cycle.

    The room has been filled with bank execs (JPM, BOA etc) and lobbyists during the first two Warren hearings who watched the Republican performance disintegrate into a feces throwing tantrum (with the exception of one or two reps who actually had someone courtroom experience and knew when to quit).

    While the ongoing harassment of Warren may appear ludicrous and vile to those with a modicum of decency, it makes perfect sense in light of the fact that the only objective of many of the Republicans driving this is to generate money from the banks to feed the Republican machine at various levels.

    1. readerOfTeaLeaves

      Ah, I’d wondered who was actually in the room watching those hearings.

      There is one more strategy these folks are trying, which is right out of the ABA hopper, I’m sure: this is a *ginormous bureaucracy*, and it has **no Congressional Oversight** (quick! reach for your fainting couch!).

      The last hearing voiced these themes, which as Yves has pointed out is code for ‘if we can’t control your budget, our banker bankrollers can’t keep you under their thumb – ohMyGawdOhMyGawdOhMyGawd!” At the previous hearing, I don’t recall any of the Dems on the committee exposing that fiction, so it’ll be interesting to see whether any of them have the guts, wit, and preparation to make a hash of their GOP colleagues this time out.

      FWIW, some local publication in McHenry’s Congressional district (the Hickory Daily Record) had an editorial in late May arguing that McHenry owed Prof Warren an apology for his conduct at the previous hearing. Apparently, the ABA owns McHenry, but not yet the Hickory Daily Record ;-)

      Privately, I’m hoping that Warren is thinking, “Game on,” as she watches these corrupt weasels try to make a hash of her.

  5. nick

    I’m not sure I get the consternation over Obama here. Warren’s appointment has to be approved by the House, which is controlled by Republicans. I’m not really sure what “arm twisting” Obama can do to folks in the oppposition. Really, what incentive does the GOP have in voting for Warren? What can the Obama give them in return? I like Warren, a lot, but I still fail to see why the GOP would green light her, and what Obama has to offer the GOP to do so. If anyone here can enlighten me, I’m all ears.

    1. Francois T

      The GOP should calculate the number of seats they would lose in 2012 if they keep being such brutish idiots against Liz Warren. They seem totally oblivious to the fact that the lady has acquired a stature way beyond an ordinary head of agency.

      She represent one of the very few rays of hope of ordinary Americans of all political stripes in their losing struggle against the corporate stranglehold afflicting this country. The Reichpubliscums in Congress seem totally unaware that the proverbial backlash could be soon roar up close, mercilessly sweeping them out of office, exactly like it did for the Democrats in 2010 if not worse.

      1. Dave of Maryland

        That’s true, providing any of us want to go vote. I don’t. The 2012 elections are shaping up to be the scam of the century.

        1. Patricia

          Please take that 45 minutes of your time to vote third party. Any party. Vote “Time for a Party” if you like. It won’t do a thing for this futile round, but may encourage a possible future shift, if enough people do it. There is no possibility in citizen silence/absence.

      2. mezcal

        “They seem totally oblivious to the fact that the lady has acquired a stature way beyond an ordinary head of agency.”

        While I’d like to believe that, I would wager that less than 5% of the electorate could pick Ms. Warren out of a lineup.

        I would further wager that substantially less than 1% of the electorate could offer even a two-sentence description of who she is, what she does and why they should care.

        The econ blogsphere is a relatively tiny place.

        1. Valissa

          $ka-ching$ nailed it! I checked out Intrade and Gallup and tried searching on Elizabeth Warren… nada. At Google, typing in Elizabeth Warren gets only 871 hits.

          I think she’s great, but she has no real public following.

          1. BillF

            Not sure which Google you’re searching, but when I search Elizabeth Warren on my Google, it tells me:

            “About 8,490,000 results (0.14 seconds)”

          2. Valissa

            When I did my search, the first thing that came up on my screen in Google was 871 hits in .04. I did not wait for a longer search as I was looking for the quick public recognition hit. Sorry if I did not give enough info in my response. I’m sure you are correct given your longer earch time interval.

    2. Chester Genghis

      It’s not a question of whether Warren can/will be approved. She won’t. But Obama should nominate her to fight the good fight.

      Fighting the good fight in this case also happens to be good politics in the sense that it allows Obama can position himself on the side of consumers vs. the banksters. That will play well with his base and independents and even that small portion of Tea Partiers with half a brain.

      But, of course, fighting the good fight is bad politics in the sense that it will antagonize the banksters. And Obama needs the banksters money more than he needs popular support. (After all, money can BUY popular support.)

      Therefore, he won’t nominate her. He’s just looking for a way to NOT nominate her as quietly as possible. That sounds easy, but so far its proven to be somewhat difficult. And that’s what making the whole process interesting….

        1. Frank

          Actually the GOP is aware of that, so they have kept the session going without calling recess. They will not allow Obama any recess appointments.

        2. Frank

          Ahh, the adjornment power… Nevermind!

          See what happens when you reply before readin’ the frikkin’ link, folks? ;)

    3. Dirk van Dijk

      It would be extremely useful if a few Democratic Senators made it clear that if the GOP does not stop the sensless stopping of all sorts of good competent appointees (not just Warren, but Daimond, and a host of judicial nominees) that the next GOP president wil have to opperate without a cabinet. Any pentagon head will have to be to the left of Kucinich, any Judge would have to be the reincarnation of William O Douglas to get approved.

      If the GOP realized that what comes around, goes around, they might not be inclined to play these stupid games. Of course the threat would have to be credible, which would be the hard part given the Democratic history of being a bunch of pussies.

      1. nonclassical

        Dems prefer appearing “weak” to being defined “bought and sold”…which is largely the truth of the matter.

      2. Francois T

        You are assuming that, by then, the Democrass would have located their spine and grow a set.

        An extraordinarily generous assumption IMO.

  6. Francois T

    “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 above is true, one can clearly see how politically problematic (in terms of collecting campaign cash from Wall Street) this would be for team Obummer. *evil grin*

    Repugs have clearly stated “no agency no nothing until we redraft some aspects of the law”, most especially the fact that the Bureau does not depend on the criminals in Congress for its budget. Yet, they’re aware they cannot stop the CFPB to start, even if there is no permanent director.

    But, should Warren’s arrangement with the White House stipulate she’s in until there is a permanent director, she could be in for a long time.

    *very evil grin*

    Unless, of course, team Obama really blunder and tell her to leave.

    *Evil AND sardonic grin*

    Nothing I love more than the smell of chicken shit on a raging battlefield.

      1. shoogie

        Lest we forget, the regulating agencies “examination strategy” in the Bernie Madoff case consisted mainly of asking him “pinky-swear” on his legitimacy even when all the ammunition they should have required had been repeatedly dropped in their laps.

        Why folks like Elizabeth Warren want to change such a system, using her own teeth if need be, is a cause well worth beating to death, donchya think?

  7. Norman

    I think I’ve said this before, [S.T.M.L.], but this country would do right by itself if the “Liberal Base” which seems to be getting screwed without even bending over, were to draft Ms. Warren to run for P.O.T.U.S. in 2012! She isn’t a Hillery with baggage, has shown she has the right stuff, indeed, exactly what this country needs when it comes to standing up for the rights of the people. I don’t know if she would even consider the option, but it sure seems as though she might, after watching her performance “under fire” with the Repuglicons and the silence of man[?] who appointed her to this start up agency, perhaps to his chagrin.

  8. NotTimothyGeithner

    The Democrats are looking for something to get Warren because they don’t want her at the Consumer Protection Agency. The GOP doesn’t want Warren because she has a “D” next to her name and will just make stuff up. Half the Democrats will follow the GOP’s lead.

  9. DownSouth

    Yves said:

    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.


    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.

    I’ve been reading Andrew M. Lobaczewski’s Political Ponerology: A Science on the Nature of Evil Adjusted for Political Purposes, and I find it quite helpful in gaining some understanding as to what is going down here.
    When “pathocrats,” that is psychopaths and other psychological deviants, gain political and economic power as they have in the United States, they impose an upside-down morality, like something out of The Twilight Zone. (The link’s for those too young to remember the TV series.) As Lobaczewski explains:

    Pathocracy is a disease of great social movements followed by entire societies, nations, and empires. In the course of human history, it has affected social, political, and religious movements, as well as the accompanying ideologies, characteristic for the time and the ethnological conditions, and turned them into caricatures of themselves.


    The ideology in question may have been marked by deficits in truth and moral criteria from the very outset, or by the effects of activities by pathological factors. The original, very high-minded idea, may also have succumbed to early contamination characteristic of a particular time and social circumstance. If such an ideology is infiltrated by foreign, local cultural material which, being heterogeneous, destroys the original coherent structure of the idea, the actual value may become so enfeebled that it loses some of its attractiveness for reasonable people. Once weakened, however, the sociological structure can succumb to further degeneration, including the activation of pathological factors, until it has become transformed into its caricature: the name is the same, but the contents are different.


    The main ideology succumbs to symptomatic deformation, in keeping with the characteristic style of this very disease and with what has already been stated about the matter. The names and official contents are kept, but another, completely different content is insinuated underneath, thus giving rise to the well known doubletalk phenomenon within which the same names have two meanings: one for initiates, one for everyone else. The latter is derived from the original ideology, the former has a specifically pathocratic meaning, something which is known not only to the pathocrats themselves, but also is learned by those people living under long-term subjugation to their rule.

    Doubletalk is only one of many symptoms. Others are the specific facility for producing new names which have suggestive effects and are accepted virtually uncritically, in particular outside the immediate scope of such a system’s rule. We must thus point out that paramoralistic character and paranoidal qualities frequently contained within these names. The action of paralogisms and paramoralisms in this deformed ideology becomes comprehensible to us based on the information presented in Chapter IV. Anything which threatens pathocratic rule becomes deeply immoral.


    The actions of this phenomenon affect an entire society, starting with the leaders and infiltrating every village, small town, factory, business, or farm. The pathological social structure gradually covers the entire country, creating a “new class” within that nation. This privileged class of deviants feels permanently threatened by the “others”, i.e. by the majority of normal people. Neither do the pathocrats entertain any illusions about their personal fate should there be a return to the system of normal man.

    A normal person deprived of privilege or high position will go about finding and performing some work which will earn him a living; but pathocrats never possessed any solid practical talent, and the time frame of their rule eliminates any residual possibilities of adapting to the demands of normal work. If the laws of normal man were reinstated, they and theirs could be subjected to judgment, including a moralizing interpretation of their psychological deviations; they would be threatened by a loss of freedom and life, not merely a loss of position and privilege. Since they are incapable of this kind of sacrifice, the survival of a system which is the best for them becomes a moral imperative. Such a threat must be battled by means of any and all psychological and political cunning implemented with a lack of scruples with regard to those other “inferior-quality” people that can be shacking in its depravity.


    Any war waged by a pathocratic nation has two fronts, the internal and the external. The internal front is more important for the leaders and the governing elite, and the internal threat is the deciding factor where unleashing war is concerned…

    The non-pathological majority of the country’s population will never stop dreaming of the reinstatement of the normal man’s system in any possible form. This majority will never stop watching other countries, waiting for the opportune moment: its attention and power must therefore be distracted from this purpose, and the masses must be “educated” and channeled in the direction of imperialist strivings. This goal must be pursued doggedly so that everyone knows what is being fought for and in whose name harsh discipline and poverty must be endured. The latter factor—-creating conditions of poverty and hardship—-effectively limits the possibility of “subversive” activities on the part of the society of normal people.


    Whenever a society contains serious social problems, there will also be some group of sensible people stringing to improve the social situation by means of energetic reforms, so as to eliminate the cause of social tension. Others consider it their duty to bring about a moral rejuvenation of society. Elimination of social injustice and reconstruction of the country’s morals and civilization could deprive a pathocracy of any change to take over. Such reformers and moralists must therefore be consistently neutralized by means of liberal or conservative positions and appropriately suggestive catchwords and paramoralisms; if necessary the best among them has to be murdered.

    Does this not describe to a “T” what is happening to Elizabeth Warren?

    There is little doubt that both political parties in the United States have entered the moral Twilight Zone, replete with Lobaczewski’s “paramoralisms.” Robert Hughes noticed it almost 20 years ago, writing in Culture of Complaint:

    The GOP’s “morality” was all about sex and honoring thy father, and it tactfully avoided other commandments, particularly the one against stealing. Thus one of the prototypical figures of the time was Charles Keating, a Cincinnati businessman with the lantern jaw, piercing eyes and strict ethical look of the risen cracker-salesman. Keating co-founded the National Coalition Against Pornography, with the intent of saving the innocent from Satan, and became a major agitator for “traditional moral values” in the Midwest. Only later did it appear why Keating was so interested in preserving American innocence: he cheated thousands of innocent people of hundreds of millions of dollars in his manipulations of Lincoln Savings and Loan, though—-unlike most of his fellow swindlers in the racket—-he went to jail for it.

    And it is no accident that Prohibition and The War on Drugs were ushered in to lay the groundwork for two of the most extreme periods in American history—-what Kevin Phillips called “booms, speculative heydays, and other periods of money worship”—-where banks and big business were given all but free reign to rape and plunder the American people: the Roaring Twenties and our current era.

    Frederick Lewis Allen offers some interesting insights into that earlier period when the normal people rose up and took their country back from the pathocrats, or at least beat them back for a while, and the paramoralisms (i.e. Prohibition) were exorcised and morality and sanity temporarily restored:

    [1929] But if the maintenance of prosperity is not considered a current problem, Prohibition emphatically is. The Eighteenth Amendment is in full force, and so are the bootleggers and rumrunners. Al Capone, as it happens, is serving a year’s sentence in Philadelphia for carrying a pistol, but he will be out soon; meanwhile his Chicago gang and similar gangster groups in other cities are taking an enormous toll from the illicit liquor business. Very few people believe that repeal of the Eighteenth Amendment is a reasonable possibility; any well-informed student of politics will tell you that a few dry states could block it indefinitely. Moralists are attributing the prevalence of crime to the dire influences of the speakeasy.


    But to the general public nothing…really matters except Prohibition. For the wet-or-dry issue is the hottest one in American politics.


    [1930] When the substantial and well-informed citizens who belonged to the National Economic League (an organization whose executive council included such notables as John Hays Hammond, James Rowland Angell, Frank O. Lowden, David Starr Jordan, Edward A. Filene, George W. Wickersham, and Nicholas Murray Butler) were polled in January, 1930, as to what they considered the “paramount problems of the United States for 1930,” their vote put the following problems at the head of the list: 1. Administration of Justice; 2. Prohibition; 3. Lawlessness, Disrespect for Law; 4. Crime; 5. Law Enforcement; 6. World Peace–and they put Unemployment down in EIGHTEENTH place! Even a year later, in January, 1931, “Unemployment, Economic Stabilization” had moved up only to fourth place, following Prohibition, Administration of Justice, and Lawlessness.

    These polls suggest not only how well insulated were the “best citizens” of the United States against the economic troubles of 1930, and how prone–as Thurman Arnold later remarked–to respond to public affairs with “a set of moral reactions,” but also how deep and widespread had become the public concern over the egregious failure of Prohibition to prohibit, and over the manifest connection between the illicit liquor traffic and the gangsters and racketeers.


    [1933] The next day–the 16th–the Senate voted to repeal the Prohibition Amendment. Four days later–on the 20th–the House followed, and the issue of repeal went to the States for their action, which by the following December was to make the country legally wet again. (This change in the Constitution required not only a two-thirds vote in both Senate and House–which had been secured–but the approval of conventions in three-quarters of the states.) The supposedly impossible was happening, with consequences to be felt in every American community; another landmark was being quickly swept away by the tide of change.


    The contrasts between this 1933 New Deal program and the Hoover program were sharp. It was not a program of defense but of multiple and headlong attack. In most of the laws and certainly in the intent behind them there was a new emphasis on the welfare of the common man; a new attempt, as was often said, to build prosperity from the bottom up rather than from the top down. There was a new willingness to expand the scope of government operations; for a long time past these had been expanding out of sheer political and economic necessity, as the inevitable long-term tendency toward centralization took effect upon government as well as upon business, but now the brakes were removed and the expansion was abrupt. Also in contrast was the visible distrust by Roosevelt of the bankers and corporate insiders of Wall Street; Hoover had leaned upon them for advice and assistance (which was not always forthcoming), Roosevelt disregarded them. He preferred the assistance of supposedly impartial (if impractical) professors to that of supposedly practical (if partial) business men. There was a new encouragement of labor unions, a new hospitality to liberal and radical ideas which would reduce the power of the owning class. The governmental center of gravity had moved to the left.


    Action there was, in abundance; and it came fast.

    On Sunday, March 5, the day after the inauguration, the new President not only called Congress to meet in special session on Thursday, but also issued a proclamation putting the bank holiday on a national basis and prohibiting the export of gold and all dealings in foreign exchange. (Thus the country went at least part way off the gold standard–on a temporary basis.)

    On Thursday Congress met and passed with a whoop a law validating everything that the executive had done to date and tightening still further its control over banking operations, gold, silver, currency, and foreign exchange…

    …On Saturday–after a week of furious activity at the Treasury, during which regulations were devised and altered, plans for the issue of clearing-house certificates were made and abandoned, plans for the issue of new currency were promulgated, and a rough classification of banks into more and less sound was made with the aid of advice from Federal Reserve Banks and chief national bank examiners–the President announced that most of the banks of the country would open the following Monday, Tuesday, and Wednesday.

    On Sunday night the President, in his first “fireside chat,” explained to the people of the country with admirable simplicity, clarity, and persuasiveness just how the re-opening of the banks would be managed and how his hearers could help to make the process orderly.

    On Monday, the 13th of March, the banks began to open. And on the same day the President asked Congress to legalize beer—thus closing his tremendous first ten days of office on a note of festivity.

    Such were the bare facts of those ten days. But the mere catalogue of them gives little idea of their overtones of significance, or of what those ten days were like to the American people.
    ▬Frederick Lewis Allen, Since Yesterday

    1. craazyman

      we @ the ICA call that “Pilot Wave Inversion”. It’s a common phenomenon when more than 113 people try to organize themselves.

      Just like tornados are mirrored in the little spiraling whirlwinds that you see blowing on the streets in the fall, the PWI can be observed in everyday life, in miniature.

      If you and 10 friends are trying to decide what restaurant to go to and you’re out on a street corner on a 35 degree farenheit November evening, you can end up at a diner eating a tuna club with fries (and no wine) even though everyone wanted a bistro of some sort.

      Usually, nobody knows quite how this happens and everyone is pissed, but it’s a Pilot Wave Inversion made possible by the recession of the individual Gnostic Waves.

      1. Anonymous Jones

        The way that I can tell how awesome your comments are, craazyman, is that I’m certain almost no one can tell the extent of how awesome they are.

        This is the thing, why would someone want to be “normal,” or even sane, when one can be craazy instead?

    2. Patricia

      The study of deliberate relational, societal, political destruction is hugely important and very little considered. I only wish that it hadn’t been given that clumsy incomprehensible term, “ponerology”. It puts one off before one even gets to the generally off-putting subject itself.

    3. jake chase

      DownSouth, I don’t see how you can read stuff like this day after day after day. Are you an insomniac? However, one of your quotes did strike a nerve:

      “Any war waged by a pathocratic nation has two fronts, the internal and the external. The internal front is more important for the leaders and the governing elite, and the internal threat is the deciding factor where unleashing war is concerned.”

      America got started down this road when JP Morgan directed Wilson to enter America in WWI. The history of Wilson’s public relations efforts to demonize “the hun” and make unpatriotic any private expression questioning of the war are well recounted in a book called PR, the Social History of Spin by Stuart Ewin. It is written in normal English, for those who care.

      1. General Tso

        Sun Tzu formulated the substance of that quotation long before the guy who wrote ponerology was in diapers.

    4. nonclassical


      I took your advice and am finishing “Only Yesterday”, as we
      write…but “Political Ponerology” seems to have all been succinctly described by Malcolm X, and perhaps the twisted version is Machiavelli…

  10. Deloss

    Tell us what to do, please, Yves. I reply to Obama’s fundraising appeals with letters that say “NOT A DIME UNTIL YOU TAKE MEDICARE OFF THE TABLE AND APPOINT ELIZABETH WARREN” (on the theory that nobody reads anything long). But you have a large and moderately well-educated following. Tell us what to do, please, Yves. These are bad times. Lots of us are perfectly prepared to be foot soldiers, if the general has a plan.

    And, um, not a plan like that of the leading citizens opposed to Roosevelt, who tried in 1933 to get General Smedley Butler to overthrow the Roosevelt government by a coup. Something more in the other direction.

  11. Count von Geiger

    Democrats like to go, but they need political cover for selling out their badly abused “base”.


    Write in vote for The Consumer Protection Ticket 2012 :

    Paul Volcker == President

    Elizabeth Warren == Vice President

    Yves == Attorney General

    If enough people write in the vote, it will drive them up the wall.

  12. NYShooter

    Damn if I can remember where I read it, but I believe there’s a somewhat organized plan to hold, for want of a better term, a “Day of Outrage,” worldwide. They were calling for millions of people to descend upon (storm?) their respective Capitals for the purpose of vividly exposing the unmistakable Blitzkrieg of the Plutocracy onto the lower 99% of the population.

    It may sound corny but something has to give. The fissures in the societal structures worldwide are popping out exponentially, and who knows what will be the catalyst for “all hell breaking loose?”

  13. Paul Tioxon

    It is unfortunate that much of the analysis of politics on Naked Capitalism is in the category of misdirection to sow the seeds of despair, or misguided belaboring of the obvious. The republican attacks against Obama and Warren consist of beating them with whatever is at hand to beat them with. So, if she is charged with setting up the CFPB, then, anything she does is beyond the scope and letter of the law of a bureau that has not yet become operational. The lie here is that the CFPB operates within the Treasury Department until which time it operates in the Fed. Furthermore, Warren was operating under two capacities:

    “President Obama Names Elizabeth Warren Assistant to the President and Special Advisor to the Secretary of the Treasury on the Consumer Financial Protection Bureau”

    WASHINGTON – Today, President Obama announced the appointment of Elizabeth Warren to serve as Assistant to the President and Special Advisor to the Secretary of the Treasury on the Consumer Financial Protection Bureau.

    In July, the President signed the Wall Street Reform and Consumer Protection Act, which enacts the strongest consumer financial protections ever and creates an independent Consumer Financial Protection Bureau. Warren will play the lead role in setting up the Bureau and ensuring it is as effective as possible. Under the Act, the Treasury Department has the authority to get the consumer agency up and running, and Warren will serve as Special Advisor to the Secretary of Treasury to guide this effort. She will also serve as an Assistant to the President.”

    Anything she could be doing can come under either or both of these positions, acting on behalf of the president or Treasury. She was given a blank check to insinuate herself into anything remotely related to finance. And hopefully, she did. And hopefully, it was more than an insinuation. Her energy and capacity for understanding law, consumer finance and even more complicated matters of finance along with White House and Treasury credentials makes her an operational nightmare for the republicans and democrats who run interference for the banking lobby.

    1. Yves Smith Post author

      Your statement about the legality of Warren’s actions is 100% wrong. She’s a consultant. She is not acting as the head of an agency which would include doing stuff like issuing regulations and examining banks. All she has done is arrange for Treasury to hire staff (she has no ability to hire people independently) and develop some a new mortgage disclosure from which her agency cannot implement until it goes live. And she did that mainly as a template to show how the CFPB woudl work with industry.

      All she has done otherwise is go to meetings and give speeches and ask the otherwise sitting around not doing much CFPB staff to assist the state AGs at their request. The latter falls within the realm of advice and her consulting role and is perfectly kosher.

      Criminey, I’ve negotiated major deals on behalf of clients as a mere consultant. My authority was delegated and all my actions were subject to client approval. i don’t see why you are finding the nature of this relationship so hard to understand.

      You’ve been drinking Republican Kook Aid on this one, big time.

      1. Paul Tioxon

        Yves, I said “the lie here is that CFPB operates within the Treasury…” The lie referred to is the republican lie, that ANYTHING SHE DOES is beyond the scope of Dodd-Frank. It is in THEIR minds, a power grab or imperial over reach or what ever government blob that will take over the world menace they gin up on a daily basis. She is being beaten with the very fact that she HAS been appointed to get this agency started and is also a presidential assistant. She would be attacked for walking and chewing gum or using a reserved parking space with equal venom as if she personally tried out freshly printed $100 bills from the US MInt to make sure they worked when shopping at Crate and Barrel. I don’t think she is a walking a Aga Khan, making life and death decrees to the capital markets. She is just doing a job given to her, at that is enough to be considered too much from her enemies.

  14. Dovenmuehle Sewage Distribution

    Darn, we shoulda’ got Melissa Bean! There’s a Democrat who knew how to kill, gut and clean consumer protections.

  15. JPM Settles SEC Case

    “This is a slap in the face of investors, taxpayers and homeowners who accepted this garbage masquerading as ‘loans.’ $153 million is chump change, unless they intend to follow it up with the same action on all the pools. JPM knew it was funding loans based upon false appraisals.” – Editor (of another blog)

  16. NotRobertRubin

    “Does Bill Clinton still not grasp that the current economic crisis is in large measure his legacy?” – Robert Scheer

  17. Mob Rule

    The “Senator for K Street” apparently has healthy, cancer-free balls. Makes plenty of sense. This particular stooge has been thoroughly corrupted by corporate health industry profiteer donations. Additionally, the scumbag had Doctors arrested for interrupting his sacred proceedings. But since this is about the Banksters, which are in no way separate from the aforementioned profiteers, we can speak postively of the corrupt Senator.

    “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.”

    Since we have the Patriot Act, we could use the tenants therewithin to eavesdrop on all of his office’s Senate related business. Everything, transactions, web searches, sleeping patterns, total 100% evisceration of 4th amendment rights for our safety, just to check on the Senator, he has nothing to worry about if he isn’t doing anything “wrong” – after all, one can never tell where the terrorists are!

  18. Lamest of Blogs

    Liz Warren won’t save you. There’s this funky thing called conflict of interest: she was the chair of the Congressional Oversight Panel created to oversee the U.S. banking bailout (formally known as the Troubled Assets Relief Program).
    An epic crime, a tragedy that never should have happened, and Warren agreed to the task to “oversee” bailouts. (Everyone needs to ask themselves, what exactly is it that the powerful do when appointed to ‘lead’ something?)
    An individual can be measured (I think we agree) by where they take a stand, by particpating/endorsing the tragedy of TARP, Warren is decidely a Bank insider.

      1. Jack Be Quick

        Hmm, looks like she wrung her hands up in despair.

        (Then probably climbed into a limo, whisked away to enjoy brandy and meat in a private area of the Old Ebbit Grill)
        “Poor borrowers, tsk tsk.”

    1. Yves Smith Post author

      You’ve just revealed you’ve lost the plot. She was asked to head the COP long after the bailouts were passed and she had nothing to do with them.

      And I am highly confident you didn’t read a single COP report either. You have no idea what Warren did or the COP did and yet you try to indict her from a position of ignorance.

      1. Jack Be Quick

        You’re highly assumptive, and you have no right to take anyone’s contributions from your blog for your own use, but you do anyway since it’s all “legal”. It’s that fine print thing that a dolt like Liz Warren seems to think will clear up the “mortgage problems”. You can fuck people with fine print.
        You seem to report on how people’s lives are being destroyed, perhaps feigning concern over their misery, but you’re completely inconsistent because you’ve earned your money in similar ways. And you work for Banks, the same ones ejecting people from their homes. You have their advertisments plastered over your site.

        1. Skippy

          Were all in the cannibals pot, we are born into, of systems, bias begins at day one, not by an act of reverse choice, experience[s revelations.

          Skippy…come together or be blown off, you decide. For myself, I’m beyond repair (killed for money), but with effort here and else where, others may avoid such. Do it not for yourself but others…eh.

  19. Gus Smith

    She hasn’t done much of anything, that’s a fact. Both Dodd and Frank are corrupt beyond reproach, the bill that bears their name is a bad joke. But you’re living in an air conditoned condo in Manhattan, what do you know actually?

  20. Agent#77832

    We are Anonymous.

    We have read your financial boards.
    Your financial boards make ‘sense.’

    We have noticed you are missing things.
    You don’t notice, do you?

    You have become part of the problem.
    you write. People listen.

    Jp morgan manipulates markets.
    As do you, unwittingly. Who do you serve?

    As are we, cunningly.

    Silver Viral Project.
    financial revolution.

    It is here.
    Google it.

    Down with Fiat.
    Expect us.


  21. KFritz

    I remember Perry Mason, or at least Raymond Burr as Perry Mason, as polite to most, if not all, witnesses, female or male.

Comments are closed.