How the Banks Take Down Politicians (Elizabeth Warren Edition)

Big banks are very powerful, and they destroy politicians they don’t like. Obviously, they don’t do it directly, but operate through front groups. Some of these organizations are known as “media outlets”, such as the New York Post, which outed one of Eric Schneiderman’s lawyers as a dominatrix to embarrass and intimidate his office.

On a Federal level, the most prominent front group through which bank-friendly and corporate-friendly smears happen is the Politico, a powerful establishment trade publication that caters primarily to media insiders and politicians, but gets nearly all of its substantial advertising revenue from lobbyists seeking legislative favors. As an example, almost every single print issue from 2009-2010 had a full-page back page ad from Goldman Sachs.

Today’s online advertisers in Politico include AT&T, Altria (ie. Phillip Morris), Boeing, Lockheed, Time Warner, and Verizon, all of whom are putting in money through yet another front group, RATE (Reduce America’s Taxes Equitably).

I’ve been hard on Elizabeth Warren for a lot of reasons, and I still don’t think she should be running for Senate. But if you want to understand how Wall Street exercises its political power, the Massachusetts race will be a great object lesson.

And lo and behold, the six most recent headlines in Politico about Elizabeth Warren are:

Elizabeth Warren’s campaign revises pay from TARP panel

Read more:

Warren faces surprising headwinds

Warren’s TARP panel under scrutiny

Will Warren have much Mass. appeal?

Passed over, Warren still ‘celebrating’

Warren unable to soothe Hill critics

Let’s look at a couple of the recent articles. You’d never know if you read the piece on the 23rd, “Warren faces surprising headwinds” that Warren had gone from being 20 points behind Scott Brown in Massachusetts polls to 2 points ahead. And what is the substance of article? Get this:

The great irony of this is that female candidates actually have fared much better in the South, the most conservative region in the country, than they have in the Bay State.

That’s an interesting factoid, but notice how the headline “surprising headwinds” suggests she is BEHIND, as in she needs to surmount the headwinds to get ahead. Now I’ll confess to having written sensationsationalistic headlines more than occasionally, but this looks an awful lot like a use of the headlines to undermine Warren (remember many readers will merely look at the headline and not read the story proper.

Or let’s look at the one on “TARP panel under scrutiny.” Notice the Congressional Oversight Panel, which Warren led, ended its work in early 2011. The media never paid much attention to the beefs by the Congresscritter from Bank of America, Patrick McHenry (the one who accused Warren of lying about scheduling in the Consumer Financial Protection Bureau hearings) about the level of disclosure by the COP over how it spent its funds (the COP did provide a high level recap, but McHenry wanted granular detail). Even a casual reader of the story can see McHenry’s fingerprints all over it.

This is of course a classic effort Rovian strategy, to undermine Warren on one of her strong points, her reputation for directness and honesty. Unstated is the idea that she insisted on disclosure from Treasury on the TARP while not cooperating with McHenry’s demands.

They glaring problem, of course, is these two cases are not remotely comparable. The Treasury promised transparency right, left and center, and not only failed to live up to its promises, but fell well short of the standards set forth in TARP. And since we’ve gotten inured to big numbers in the wake of the crisis, let us not forget that the TARP had a commitment of $750 billion, while the COP budget was $10.5 million, nearly five orders of magnitude smaller.

In fairness, if the COP has been less forthcoming than similar panels, the Warren critics have a legitimate point. But I have not seen that argument made. Given their eagerness to play up any bit of dirt they can find, I suspect the COP’s amount of disclosure was not out of line with similar efforts.

Despite the rise in Warren’s poll results as a result of favorable press when she launched her campaign, the tone of the press has taken a turn since then. The first story listed above, about Warren’s pay at the TARP, is a real gaffe. A spokesman had initially reported her compensation as $64,289, but that was her 2009 pay, not her total pay. They omitted the $128,433 she received in 2008. Her campaign revised the figure, but the mistake still looks really bad.

One of the big reasons we had cited for Warren NOT running for the Senate was that she already have good access to media, particularly TV, and reporters really liked her. The big advantage of being in the Senate is the ability to use the press for messaging; if you have that in large measure already, the incremental benefit by being in the Senate has to be weighed against the loss of independence (the need to be responsive to voters, donors, and the demands of the party).

But the tone of coverage appears to have taken a turn. These are the latest stories on Warren per Google News (click to enlarge):

And in case you think I am making overmuch of the change in tone, I got this e-mail from a journalist:

The blowback to her TARP pay issue and her video about the “social contract” is scorching. I’m astonished at the intensity of the rage at her….not just repubs but guys in the media. Or republicans in cahoots with guys in the media? McHenry pushed the story abt TARP….she is going to need some surrogates speaking for her on the stump; she can’t be sailing this ship alone.

Now these are still early days for Warren, but the pounding has already started, and it is not going to get any better. She needs to up her game to prevent some of these charges from sticking.

Print Friendly, PDF & Email


      1. CB

        750 billion to 10.5 million, by your numbers. Order of magnitude in base 10 is 10. 750,000,000,000 divided by 10,500,000 is 714.285 divided by 10 is 71.4. My mistake, 71.4 orders of magnitude. From wiki:

        “In its most common usage, the amount being scaled is 10 and the scale is the (base 10) exponent being applied to this amount (therefore, to be an order of magnitude greater is to be 10 times as large).”

        Are you using another scale?

        1. Jessica

          Order of magnitude is exponential.
          So in Base 10,
          10 = 1 order of magnitude
          100 = 2 orders of magnitude
          1000 = 3 orders of magnitude
          Using Yves’s numbers
          750 billion divided by 7.5 million is 100,000
          and that is 5 orders of magnitude.
          Using the numbers you reference,
          750 billion divided by 10.5 million is about 71,428.57, which is about 4.5 orders of magnitude.

        2. LucyLulu

          There’s an easy trick. Just count the number of places you have to move the decimal point, that’s your answer. It’s the same as dividing by 10, five times.

  1. Fraud Guy

    I have seen this from the sidelines; my wife has the unfortunate habit of watching Fox News. Periodically, she picks up the negative messaging on some new topic, and, depending on how soon in the process I hear it, try to give her the countervailing data that refutes it.

    “Death Panels” and the “They’re going to raise our mortgage rates”(?) I stopped pretty quick, but I missed the development of the government going broke meme and we still argue over that one.

    But if the lies are told often and loud enough, unless Warren sandblasts away the tar and feathers, the residue will start to stick.

    1. CB

      You could point out that we’ve always had death panels. The death penalty; the hospital boards that rationed dialysis, my neighbor’s grandmother was refused; the TX law, that G Bush signed, that allows hospitals to disable life support in cases in “futile care.” One way or another, in this or that setting, America has always had death panels.

      1. Fraud Guy

        What really destroyed that meme for her was the argument that the death panels are currently insurance companies denying treatment because of cost; since she’s worked for doctors and hospitals, and had complained about denials of treatment (and many insurance companies who automatically deny the first submission of any claim), she then recognized the analogy from primary experience.

          1. Ray Phenicie

            The subject of health care and the role insurance companies play in that vast arena is a much more complex subject than your simplistic response would give credence to. I won’t try to defend the besmirched integrity of insurance companies but I would like to point out:

            Consumers- good, honest folk-regularly utilize health care and have the insurance company pay for services that are not medically needed. Example: Jr. decides to play soccer and now the family is suddenly concerned (because the school sports admin is concerned) about Jr’s well being. The family MD agrees and the insurance pays to have an otherwise very healthy person checked out.
            Thousands or even millions of so called preventive services are routinely administered and yet I would beg someone to show me numbers that can prove beyond a doubt that we benefit from those. Outside of supplying clean water and giving children routine immunizations I don’t know that we really get anything for the hundreds of billions paid out in mammograms, physical exams, immunizations for adults (with certain exceptions as in the case of health care workers) colonoscopies.

            I really think we all need to take time out and find out what insurance really is and how the concept grew up over the past 3-400 years.

          2. liberal

            [replying to Ray Phenicie:]


            Your observations are largely accurate: a huge chunk of “care” in the US is unnecessary.

            Problem is that no one’s ever devised a system that will correctly incentivize care provision, because it’s not possible, due to multiple market failures in the health care market.

            While insurers can perform some meaningful cost control, by and large they don’t really do anything except take a slice of the dollar, ie collect economic rent.

            Best solution is to socialize both health insurance and medical care, with guidelines issued from the top based on evidence-based medicine and reasonable cost/benefit analyses.

          3. Ray Phenicie

            Actually the number one concern that we should have when discussing health care is not the so called death panels. We all contribute to each other’s poor health by failing to look at the number one contributing factor to high health care.Every discussion on this topic is always devoid of any mention of the increasing poor health in the human population since the modern era of industrialization began dumping chemicals and nuclear waste in every direction. Compared to those two sources of death, the so called death panels are such a minute issue and can be shown to be nothing more than hype.

            Socializing the absorption of huge costs generated by the spread of poisons will solve nothing.

          4. Fraud Guy


            She was working (at the time) in the office of a General Surgeon, and this was on procedures that were pre-approved (medically necessary) and pre-qualified (covered by the plan) by the insurer before they were done by the doctor.

            If they thought the procedure shouldn’t be done for either reason, they could have denied it up front, but didn’t.

            From the few times they failed to resubmit the denials on time, it appeared that the insurers were attempting to catch them napping on notices and denying payments if they were submitted too long after the procedure.

        1. wunsacon

          You successfully used the health care example once. But, you can use it to teach a broader point about the danger of being a passive reader/listener/watcher and the merits of being an active reader/listener/watcher — always looking for “news” retailer bias (which differs from retailer to retailer) and constantly trying to exercise independent analysis and judgment.

          Some questions to ask:

          – Remember how Fox talked about “death panels”? Is it possible none of the people at Fox know that insurance companies act as death panels now? Or, if you think someone over there probably understood that, then why would they not bring that up?

          – If they didn’t bring it up because of political bias, then what should you do while listening to everything else they have to say? If they didn’t bring it up because they somehow missed it, how could they overlook something that everybody in the health care industry deals with on a daily basis (implicitly or explicitly)?

          1. wunsacon

            Edward Bernays used the idea of “personal liberty” to encourage women to smoke cigarettes and thereby buy the products of Bernays’ employers. Similarly, Murdoch News — why call different business units different names? — and right-wing “think” tanks use “liberty” and “freedom” as marketing words to *sell* the (often-though-not-always harmful) ideas of wealthy, established business interests to the rest of society.

      2. Anonymous Jones

        Um, yeah, we’ve always had death panels. They’re called doctors.

        Either through lack of access or deliberate intention, they have a role in life and death every day.

        I love that we argue about things that are completely and inextricably bound up with our existence. Death comes to us all, no matter how much we try to pretend it doesn’t exist.

    2. Jane Doe

      Nothing personal, but the part that I do not get: If she knows that they have lied to her in the past, why is she still watching?

      1. Fraud Guy

        That’s the $64 question; from what I can tell, the other major cable news channels either a) harp on things she doesn’t want to hear (oh, MSNBC/Keith Olberman/Rachel Maddow) because she’s tired of fighting government b) talk about things she knows not to be true (CNN), and then c) some of the positions Fox talks about she wants to hear (Immigration, National Debt, mainly) and then the rest of it initially sounds plausible.

        [sigh] she’s getting better, really.

        1. Bill

          Her clients would surely appreciate
          the meticulous precision, verbal and
          otherwise, practiced by those who read
          and contribute to this blog…..I know
          I do (seriously)

  2. Middle Seaman

    Politico will not be a major factor except, may be, in DC. Hopefully, Warren has a good cadre of workers who will make few mistakes. An error free campaign doesn’t exist and people always get elected despite these mistakes.

    Money is way more important and I haven’t seen anything about the donors to Warren. (I don’t read papers or listen to TV pundits, though.) Obama was elected despite endless number of errors, racial attacks on the Clintons, alleged elections fraud in caucus states, limited talent, etc. Obama had tons of money from the same banks that now attack Warren.

    1. kravitz

      And Politico has long been known as being a republican front. It has conservative founders, and is closer to Fox News than first view suggests. WhoIs does indeed tell all.

    2. ZachPruckowski

      Regrettably, “only a factor in DC” means it’s still a major factor, because the guys who would endorse Warren in the general or fundraise for her or donate her money (DSCC) are all DC-based. I haven’t really looked at the 2012 Senate situation outside my own battleground state (VA) since I’m involved in state elections right now, but there are 21 Democratic seats up in 2012 and if DC has a good excuse not to support Warren, they can shovel their money elsewhere.

      DSCC money and fundraisers from other politicians will be a huge factor for Warren since I can’t imagine the Obama campaign is going to throw the sort of organizing firepower at Massachusetts they’re throwing at battleground states (even ex-Gov Romney loses Massachusetts to Obama by double-digits).

      1. Nathanael

        Warren does not need DC money.

        She can easily raise grassroots money through ActBlue. If she can also organize, she simply doesn’t need DC money.

  3. Jesse

    Elizabeth Warren is a principled person making her stand.

    The new Storm Troopers use pens and money instead of fists.

    1. Eyal

      it’s so funny you say that because it reminds me of the end of my favorite movie, Goodfellas, when the feds arrest the mafiosos and the brother of one guy being arrested says “why don’t you go down to wall street to get the real freaking crooks, whoever gave you those suits had a wonderful sense of humour”

    1. Eyal

      it’s so funny you say that because it reminds me of the end of my favorite movie, Goodfellas, when the feds arrest the mafiosos and the brother of one guy being arrested says “why don’t you go down to wall street to get the real freaking crooks, whoever gave you those suits had a wonderful sense of humour”

    1. another

      “…all experience hath shown that mankind are more disposed to suffer, while evils are sufferable, than to right themselves by abolishing the forms to which they are accustomed.”

      The Declaration refers to forms of government, but wouldn’t the same apply to other institutions like banks? And anyway, where is the line between our government and the banks these days? When we’ve had enough of this arrangement, we’ll find good advice in the very next sentence of our founding document.

      “But when a long train of abuses and usurpations, pursuing invariably the same object evinces a design to reduce them under absolute despotism, it is their right, it is their duty, to throw off such government, and to provide new guards for their future security.”

  4. Greg Marquez

    I’m not sure you’re helping her much. I’d wanted to share this article but your defense of Warren is so lukewarm e.g., “I’ve been hard on Elizabeth Warren for a lot of reasons, and I still don’t think she should be running for Senate. ” I think sharing it might actually hurt her.

    I do wish, in the video clip, she hadn’t focused on the deficit in the first part, but I guess it’s hard to argue against that headwind.

    1. ReaderOfTeaLeaves

      I thought her deficit summary was brilliant: quick, clear, simplified.

      Back in the day, I voted for moderate Republicans. which basically no longer exist. (see also: Lincoln Chaffee.). Another person who seemed familiar in that same way was Susan Eisenhower, when she intro’d Barak Obama before the 2008 Dem convention.

      As I recall, Warren started her adult life as a Republican. For someone like myself, the way Bush put two wars AND Medicare drugs on the national credit card was criminal, and the weaseled Congress that went along was just as bad.

      But those are the very people who are Politico’s readership, so it is all the more intriguing to watch them go into Smear Overdrive after a single poll showing Warren ahead ;^)

      I would almost liken this to a very mild, US middle class dynamic that has some Arab Spring dynamics. Politico represents the Mubarak faction.

    2. Yves Smith Post author


      I am not in support of her race. I’ve made that clear a zillion times. She fell in line with what the Dem hacks wanted of her. That at a minimum raises questions about her judgment. If she were true to her agenda of sticking up for the middle class, she would not be getting more deeply involved with the orthodox members of the party, which is what this campaign demands of her, at least through the primaries.

      You can easily except sections of the post and send your own commentary to others. The very fact the banks are so desperate to take her down at such an early stage of her campaign should be a strong element of proof to your contacts that she is worth backing

      1. Tim

        What I find interesting as a MA resident is how little attention she is getting in Massachusetts. I get the sense this week this has now become a battle between her and “Wall Street” and Scott Brown along with her six primary opponents basically being bystanders. Winning the nomination of either party in MA is fairly complex process first you have to get a high enough vote at the party convention(both parties usually hold them in Worcester) in the spring then win the primary in September before the election. I get this feeling that both Warren’s opponents and proponents seem to have jump the gun a little bit not that I saying she went get past the convention or win the nomination its just that neither is an overnight process.

  5. TK421

    Haven’t Warren’s good friends in the Obama administration been fighting back on her behalf? They support her and want her to win, I’m sure.

    1. Susan the other

      Well Nesara News sounds a little ideolooney. But I could believe Timmy did say that Obama was not in charge. Clearly, Obama isn’t in charge of anything.

  6. Clodene

    While I respect your opinion and agree quite often, I would like to add something to the analysis of Elizabeth Warren’s Senate run.

    Most of the people who read this blog and populate the financial and political world know well of Ms. Warren and her views. However, there are so, so many who do not. Scott Brown snowed the population of Massachusetts who thought he was one of them. He turned out to be just another Republican lackey. He used his swing vote to torture the unemployed last Fall.

    Having Elizabeth Warren in a position to speak to the real issues and be heard by so many will be extremely helpful. I’m not saying that things won’t get dirty. She will have to have an organization that is strong and intelligent. And still with that she may loose. It is what she is saying that is seeping out into the consciousness.

    So many times friends and family have views that are just parroted FOX and Tea Party rhetoric. To have to hear the other side articulated so clearly and prominently is the real value in her run. Many of those Scott Brown voters are going to have to take a little time and effort to bring their thoughts back in line. Many may be successful in rounding them up and cajoling them back into those corrals which they have trapped themselves. However, a few stragglers may not make it back. In these discouraging times that may be the most we can hope for.

  7. Seth

    Small point: Newspaper headlines are written by editors. You get to be an editor by kissing up to the publisher. And all publishers are wingnuts.

  8. Jack Parsons

    As to the domme: Winston Churchill had a great line about prosecuting people for buggery. “You cannot get a British jury to convict someone for buggery. Either they cannot believe it is possible, or they are doing it themselves.”

    The concept of a domme is mostly “huh?” or “sure, whatever”. Now, furries, on the other hand…

Comments are closed.