Push for Bankster-Friendly Rep from the Upper East Side Carolyn Maloney Over Uppity Maxine Waters to Head House Financial Service Committee

Even though the odds are against the Democrats retaking the House of Representatives, the jockeying in case that event takes place is already underway. An effort is afoot to push aside the Democratic heir presumptive of the powerful House Financial Services leadership, Maxine Waters, and install the representative from the Upper East Side’s Silk Stocking district, Carolyn Maloney.

What’s striking about the effort to take down Waters is the thinly disguised racism. To put none too fine a point on it, Waters is not culturally white, like Obama or Colin Powell, nor is she well spoken like, say, one of my favorite former Representatives, Cynthia McKinney. She’s from the wrong side of the tracks class-wise as well as color-wise.

Of course, to make this sort of bigotry socially acceptable, it’s presented as a style problem. As I pointed out long form in a well-received article for the Conference Board Review, stylistic concerns are an effective way to keep to minorities out of leadership positions. It’s a requirement that candidates maintain a particular class veneer. Out groups typically find it difficult to wear the expected behavior gracefully if they didn’t learn it while they were growing up.

This article from Politicker presents an anti-Waters diatribe. It is remarkably transparent in taking a bank point of view, and makes no pretense to be neutral:

Why the worry about Ms. Waters as the nation’s chief banking regulator? It doesn’t stem from comments she made in her first term in office, when she suggested that the Rodney King riots that occurred in her neighborhood would better be thought of as a “rebellion”—since “riot,” she maintained, “sounds like it was just a bunch of crazy people who went out and did bad things for no reason. I maintain it was somewhat understandable, if not acceptable.” And it doesn’t stem from her more recent suggestion that “The Tea Party can go to hell” a suggestion appended by the promise that “I intend to help them get there.”

This is quite the little hatchet job. First, the chair of the House Financial Services committee is NOT a regulator. Overstating the chair’s power is a way to make her seem more of a dragon-lady-in-waiting than she would otherwise be. Second, get a load of the “Oh, we’re not making a gratuitous bigoted slam” of implying she’s a little too close to her people of color constituency while claiming that’s not an issue. If it’s not an issue, why mention it at all, let alone give it the pride of place in your “What’s wrong with Waters” case?

But the flip side is I applaud her remarks on the Tea Party. The fact that this sort of remark is held against her reflects the fact that mainstream Dems sell out to corporate interests under the guise of “compromise.” Someone who demonstrates that frontal opposition to the right can work would undermine the party’s preferred diversionary tactic.

The story continues:

Rather, most of the concern stems from what is perceived as a general hostility to the banking industry, if not to the economic system as a whole.

“She is wacko,” said one New York banking lobbyist. “She is very flamboyant, very old school. She is not one of these younger, sophisticated members of Congress. She has no grasp of the technical side of finance. She was elected during a different time in history and she hasn’t read a book since.”

The corridors of Wall Street’s financial firms are filled with stories of Ms. Waters privately and, in some cases, publicly browbeating executives over what many see as issues outside of their firms’ purview.

“Most of the international banks would start folding their tents” if Ms. Waters were to became chair of the committee, said John Allen James, the executive director of Pace University’s Center for Global Governance, Reporting and Regulation and a former consultant for McKinsey. “She is anti-bank. She doesn’t like anybody that wears a suit and a tie. She yells at them, and says why aren’t you doing more to address the housing problem, why aren’t you doing more to raise the boats of the less fortunate. It is a total misunderstanding of what capitalism is.”

If you are outside the 1% or are not somehow a big beneficiary of the banking industry, you ARE hostile to the banking industry. It’s remarkable how insular the view of financial services industry incumbents has become. If you’ve been looting the community at large, it should not come as a surprise that someone who represents a constituency of not less than affluent people would not be sympathetic to your views.

And notice the subtext of this and the earlier extract: that the banks somehow have the right to have Congressional committees promote their interests, as opposed to draft regulation that promotes a sound, responsible banking industry. Oh, and the whopper that banks are capitalist enterprises! Given how banks got considerable subsidies from the government before the crisis, and are so dependent on state support in the wake of the crisis (starting with ZIRP) as to no longer be properly considered to be private enterprises, Waters’ instincts are correct. The banks haven’t come close to acknowledging or acting on their responsibilities to taxpayers and communities.

We also have a straw man: “no grasp of the technical side of finance.” Earth to base, no Congressman does. Some may have a bit of knowledge in certain areas by dint of previous experience (for instance, Dick Shelby used to own a title company, and that is probably not unrelated to the dim view he has taken of MERS and securitization). Given the complexity of modern finance, and the fact that Congresscritters have broad ranging responsibilities, it’s ridiculous to expect them to be experts on tradecraft. They rely on their staffers to do technical investigations and provide briefings and recommendations.

The real beef with Waters is that she and her staffers don’t take up bank lobbyist pet issues and talking points. And that’s the reason for preferring Maloney. Her district includes zip code 10021, which includes many of the most exclusive buildings in Manhattan, such as 720 and 740 Park Avenue, whose residents either are directly or indirectly beholden to Wall Street.

The Politicker story discusses Water’s input into Dodd Frank, that of a provision requiring more minorities and women be hired, which is criticized (by a Republican) as “radically changing employment law.” That might well be necessary, given that various court decisions have vitiated anti-discrimination statutes particularly ones making it harder to file class action litigation. Successful discrimination suits involving lower level employees produces only small awards, reflecting their modest salaries, and hence aren’t worth pursuing on a case-by-case basis.

What is more revealing is the article is silent on the real Waters controversy, that of a possible ethics violation involving her seeking assistance during the crisis for minority owned-bank OneUnited, in which her husband had a sizable equity stake. Waters loudly maintains her innocence and wants a trial. The investigation may be fatally compromised by virtue of two staffers on the Ethics Committee leaking confidential information to Republicans on the panel.

But why the failure to point out an obvious Achilles heel? Waters apparently realized early on her pumping for OneUnited might not pass the smell test and she backed off. It looks as if Barney Frank took up the effort on her behest. But Frank claims he was already on the case at the behest of scandal-ridden state senator Dianne Wilkerson, not Waters. And it isn’t as if the former House Financial Services Committee chairman was a paragon of propriety. He pushed to get his partner Herb Moses a job at Fannie Mae in the early 1990s, and was an aggressive defender of the GSE during (and after) his seven-year tenure there.

Let’s face it. The big problem with Maxine Waters isn’t that she’s not the most adept presenter or that she isn’t a technician. It’s that she’s seen through her constituency all the games banks play to exploit ordinary consumers, and she’s not buying slick banker patter as to why she should ignore it. And that’s why, warts and all, she’s the best candidate on offer for the Financial Services Committee chair for American citizens.

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  1. F. Beard

    Oh, and the whopper that banks are capitalist enterprises! Given how banks got considerable subsidies from the government before the crisis, and are so dependent on state support in the wake of the crisis (starting with ZIRP) as to no longer be properly considered to be private enterprises, Waters’ instincts are correct. Yves Smith

    It is doubtful that banks could even exist without government privileges including:

    1) A lender of last resort.
    2) Government deposit insurance.
    3) Borrowing by the Federal Government.
    4) Legal tender laws for private debts.
    5) The capital gains tax on usury-free money forms such as common stock.
    6) Government sanctioned rating agencies.
    7) The lack of a free, risk-free fiat storage and transaction service that makes no loans and pays no interest.
    8) Tax deductions for usury payments.

  2. BDBlue

    If I thought Maxine Waters would actually end up Finance Chair of the House, I might start rethinking my refusal to donate to Democrats. I don’t think she could actually accomplish anything – the overall Dem leadership is owned by the banks and would see to it that she was impotent – but the entertainment value would be awesome.

    1. nonclassical

      “the fact mainstream dems sell out to corporate interests under the guise of compromise”…


    2. jake chase

      Jesus, Maxine Walters! If she’s the best hope for Congressional oversight we better start voting with our feet. I suppose she is no worse than your average bought and paid for Congressman; all she really wants is a piece of the bank pie for hubby and a chance to make noise in sympathy with the downtrodden constituency that keeps reelecting her. But aren’t we entitled to anything in the literacy dept from our elected representatives? Maxine sounds like a character out of Amos ‘n Andy, and I thought you weren’t supposed to air those episodes any more.

  3. Mark P.

    “It’s remarkable how insular the view of financial services industry incumbents has become … that the banks somehow have the right to have Congressional committees promote their interests….”

    Well, for example –

    “The Joint Select Committee on Deficit Reduction is charged with finding $1.5 trillion in deficit reduction measures…

    • The 12 members of the supercommittee have received at least $41 million from the finance, insurance, real
    estate (FIRE) sector during their time in Congress.

    • They have received nearly $900,000 from three of thetop
    American banks: JPMorgan Chase, Bank of America, andWells Fargo.

    • Since 2000, the financial sector has spent over $4 billion
    lobbying elected officials.

    • At least 27 current or former aides to supercommittee members have worked as lobbyists for financial sector

    And so it goes.


  4. TK421

    She said “the Tea Party can go to hell” and that’s something Democrats should object to??? My god, what a pathetic party. If today’s Democrats had been in charge in the 1940s, then today we’d all be speaking German.

  5. Yossarian

    Wasn’t Maxine Waters under investigation for ethics violation? And doesn’t Maxine Waters’ husband own a bank…that was bailed out. Not that Maloney is likely any better…

    1. YankeeFrank

      You clearly didn’t read the piece. Yossarian would never comment without reading the piece first.

      1. Yossarian

        The issue was mentioned and then shot down as a non-issue for no other reason than it was not convenient to the argument being presented. The article played the race card far too cavalierly. Having watched her in many hearings I do not think Maxine Waters is particularly eloquent or bright; that is my opinion and it is not a racist one. I also think that she is an enemy of the TBTF banks, which is a more likely reason for her ouster. This is the worst article I have read on NC in a long time.

        1. Yves Smith Post author

          Really? Go read again. I said Barney Frank had his fingers all over this and he’s separately not a paragon of propriety. You have yet to make the case that even if the charges against Waters are true, that her actions are out of line with business as usual in DC, which is what I suggested.

          !The post linked to the Slate piece, which went through the BankUnited story in some detail. It made it abundantly clear that Waters withdrew early and Frank too it up. If this is corrupt, Frank is culpable, as are Hank Paulson and Sheila Bair, who were aware of this activity.

          With banks front running the stress test announcements (which they clearly did if you were watching futures overnight), the revolving door in DC (which we’ve discussed in passing, but we have cases like the guy at the Fed who was responsible for AIG going DIRECTLY to AIG), Fed director and former Goldman partner Steve Friedman trading in Goldman stock in January 2009 (which was clearly based on the knowledge that the Fed was not going to nationalize BofA or Citi, as was discussed the media), the corruption of academic economists (go see Inside Job: Summers is still up for head of the Word Bank, Laura Tyson is on an Obama jobs committee despite their, erm, improprieties), you have a lot of nerve singling out Waters. Not just the Democratic party apparatus but two department heads in a Republican administration supported this action.

          It’s funny how you get exercised about corruption only when it involves a black woman who is tough on banks. Look at Melissa Bean or the pay to play system in Congress, both of which I’ve written about. You ignore the case of Barney Frank’s boyfriend, the guy at the NY Fed who supervised AIG going directly to AIG, former Goldman partner Steve Friedman buying Goldman stock while he was a Fed director in January 2009, without getting consent (and begin ex Goldman, I can tell you Friedman knew that was wrong).

          And corruption doesn’t seem to have hurt the eligibility of Larry Summers or Hillary Clinton (remember her commodities trading?) or Laura Tyson from getting senior roles in this Administration (Tyson is on an Obama jobs committee).

          There are so many cases of corruption in DC that even if the allegations against Waters are true, it’s rampant. And unlike the types of corruption I describe above, her BankUnited case was trivial in its consequences compared to the cases above.

          Looks like you’ve got a huge blind spot. The problem isn’t the article, it’s that they conflict with your biases.

  6. DABull

    The biggest problem is that Maxine Waters might be THE stupidest person in the house if not the planet.

    1. YankeeFrank

      Ahh yes. She’s dumber than Newt Gingrich? Really? You are merely pointing out the truth of what Yves just wrote — that Ms Waters’ demeanor doesn’t meet with the approval of those classy white types.

        1. YankeeFrank

          Having a PhD does not make one smart. Sorry to burst that bubble. And Newt says idiotic things all the time, and betrays a very sorry grasp of history (his subject, no?) as well. The man is a malignant narcissist who thinks reality should bend to his brilliance. Egotism and narcissistic blindness do not make for intelligent insight. Newt Gingrich is a much dumber specimen than Ms Waters, yet he is given more respect because he is white and has a PhD. Lame.

        2. YankeeFrank

          And one more thing — Ms Waters clearly has a much better grasp of what has happened in finance over the past decade than does Newt. She understands crimes were committed. Newt denies these basic facts. So tell me — who is smarter? Yes, Ms Waters is smarter.

        3. Kakko

          Nice :)
          Waters is dumb and Gingrich is evil, those are 2 truths to live by. Newt is the most hypocritical, dishonest, self-serving womanizer to become politician this side of WJC. Funny, because when you put Newt and WJC together, they actually almost balanced the budget.

    2. b.

      DABull’s appears to be a self-falsifying statement, given that the general pattern of “stupidest at location X, if not the planet” is the stupidest statement possible in this context, if not ever.

      It’s not a pipe either.

  7. Ed

    The big argument against Waters is probably the ethics charge, but Yves brought it up and argued that it was overstated. However an ethics investigation of a congressperson is serious enough that it should be addressed at more length.

    I am suspicious of the ethics charge appearing about now. Charles Rangel became chairman of the Ways and Means committee, but was forced out after a short time over ethics violations. However, the specific charges, fiddling with property-related expenses, are something that just about every congressperson does. They really sounded like something all politicians do, its generally expected, but if you want to remove someone awkward from public life or diminish their influence, you can wheel them out at any time. Sort of like patronizing a brothel. The allegations against Waters are probably in a similar category.

    Maloney could be alot worse, when you remember that she represents the one out of the 435 districts that may actually benefit from an oversized and overcentralized financial sector (this is an exaggeration, the 4th CD in Connecticut might benefit more).

    1. Procopius

      Charlie Rangel has surely taken advantage of any perks he could grab throughout his long career, much more overall than the piddling thing Maxine Waters is accused of, but he was not really more egregious than most. The charges against him were pretty clearly just intended to get him out of the way for others.

  8. prostratedragon

    If the Dems had their minds right they’d be pushing for Rep. Waters to chair the committee, and looking to do the equivalent of sending Rep. Maloney out to manage its interests in Vegas for a while, because that’s the nature of the situation brewing and Waters the kind of consigliere it needs.

  9. mannfm11

    Yeah, lets get rid of the woman who knows damn well they are stealing us blind and replace her with a wolf to guard the henhouse. At least the Democratic Party would have enough integrity to suggest putting a southerner in charge instead of the person the bankers elected to Congress. We can only hope the air comes out of this rally and it collapses on these jackasses first and they need another bailout. And this time Congress does the right thing and bankrupts them, goes through the files, builds a prison with pit bull guard dogs that will hold a few thousand of them. Maybe they can skin potatoes instead of us.

  10. Patriot

    We can only hope that the big international banks will fold up their tents and leave the USA. Of course, we should ask that they leave our assets here as well on the way out.

  11. Jessica

    Thank you for taking the time to nail down all the loose ends on this one, in other to label the objections sure to arise for exactly what they are.
    A fauxgressive would have partly held back their fire, especially on the social class angle.

  12. andrew hartman

    waters would be a disaster for any kind of bank reform effort. sure, sure, the
    commentariat here has to laud her street smarts and loose mouth out of
    some duty of lefty solidarity, but she will lampooned and neutralized from the
    start. that’s not saying maloney is the right choice. the reform effort needs
    someone like that little guy from texas of decades ago……

  13. Conscience of a conservative

    I can’t comment on Ms. Maloney’s credentials, and hope it’s not an attempt to weaken the House Financial Services committee’s ability to act as a financial overseer, but to say that Colin Powell or Obama acts white strikes me as reverse racism. Colin Powell has accomplished much and communicates intellingently and with conviction. He’s also accomplished a great deal. And while there’s a great deal not to like about Obama saying he’s culturally white, is not even a discussion point, nor should it be.

    Going back to the House Financial Services Committe. I’d like to see competant people on it, those that understand the issues and don’t appear to be bought and paid for and look out for the Tax Payer, but Maxine Waters? Give me a break. I make it a point to watch CSPAN rebroadcasts of committes she’s served on, and she does not come across as understanding the issues and has attacked regulators who investigated the Real Estate lobbies business practices. In short she is not competant.

    1. LucyLulu

      I fail to follow how pointing out Obama’s or Powell’s being culturally white is a racist statement, especially given their racially mixed genetics, and at least in Obama’s case, strong familial and culturally white influence (I’m unfamiliar with Powell’s upbringing). There are distinct differences between behaviors and mannerisms seen in traditional black culture and those of traditional white culture, and this is the difference that I understood Yves as pointing out. There was no slur or derogatory tone intended towards Obama or Powell. Are you are a racist unless you pretend as if there are no cultural differences? (Allow me to invite you to a wake sometime.) It is is naive however to think that there aren’t others who hold racist attitudes and may find “more black” individuals to be unsuitable for positions of power and prestige, and thus might find Ms. Waters a poor choice for the Chairmanship.

      1. Conscience of a conservative

        On CNN a parent reported that a teacher told her son that her son was not acting “Black enough” in the classroom. I think as a society we’ve been educated enough, that Italians, Jews, Blacks, Asians, Hispanics, are not deemed to act one way or another. Strikes me as racist to say that a Black person ought to act, speak or express himself one way or another.

        1. YankeeFrank

          There’s a difference between pointing out that people act differently — some blacks act culturally “white”, etc. — and noting that there are people who are bigoted and will look down on those who don’t “act white” — and supporting such prejudice. Its silly to pretend there aren’t constructs such as “acting white” or “acting black” when there clearly are. Of course this is cultural shorthand but it is convenient and generally understood as being imprecise. I’ve seen Obama “act black” in front of black audiences many times. They go nuts for it, and he’s very shrewd. The point is that some people look at someone who reads as black culturally and dismiss them as dumb or just “not right” for the job. This is obviously prejudiced and nasty behavior, but it exists. Its not wrong to acknowledge and/or comment on the existence of this phenomenon.

      1. JurisV

        And, I have to add, the Whitewash in the Army’s report on the investigation of the massacre at My-Lai. I believe he was a Major at the time and he was looking out for the trajectory of his career path. I have a particular discomfort with his performance on that report because I spent the year after My-Lai as a draftee in Chu-Lai — home of the Americal Division that had My-Lai as part of their area of responsibility. My-Lai cast a pall on even the already dysfunctional environment.

        All that said, Powell did nothing more than any member of his aspirational class would have done then or in the decades that followed. He was a consummate politician — not a rebel. Thus the big “go along” failure with the UN speech. Class norms are incredibly powerful and usually invisible to people in their particular class. But almost super-nova bright to those in another class.

        Thanks for the lesson Yves !

        1. LucyLulu

          You must have some thoughts on our continued role in Afghanistan in light of the recent massacre of 16 civilians!

        2. b.

          It is challenging to find ways to discuss the crimes and the political pathology of a set that includes Powell, Rice, and Obama, but it is very necessary.

          Discussing their failures of judgement and/or ethics individually is not a problem at all, so maybe there is no commonality other than “corrupt politicians of any complexion”. But I would guess that a lot of African-American voters saw something more than “just another corrupt politician” in Obama on election night – certainly not “another Powell” or “another Rice” – and they have been disappointed in more than one way, worse even than any other minority and first time and young voters.

          And for that reason alone – for the pompous, debilitating fraud that the Hope’n’Change of 2008 have become, and the bleak outlook it implies – the question has to be asked, by them, if nobody else. The paralysis of the Black Congressional Caucus – and their voters – persists to this day, in the shadow cast by the Nobel Peace Price winning claimaint to MLKs legacy.

          On a related note, Maxine Waters co-sponsored this:

          If you follow the magically vanishing co-sponsors through the Democratic ascendance in the House, claim to committee chairs, and the election of Obama, I’d say that Waters is definitely one of the better members of Congress, based on this one data point alone. I certainly hold her in higher regard than anybody who sponsored it when it was guaranteed to be held up in GOP-run committees, and looked the other way when the issue could and should have been brought to the floor.

          I would blame Waters for not voting against the AUMF – who but Lee did? – but then, I blame Lee for not having resubmitted her resolution for the 111th Congress and the Iran war, so nobody can accuse me of being moderate in my expectations of elected officials.

  14. LucyLulu

    “The Tea Party can go to hell. And I intend to help them get there.”
    — 2011 Winner, Best Comment Made by Politician

    “She is wacko……She has no grasp of the technical side of finance.”
    Utterly perfect for the job. She’s hired.

  15. RueTheDay

    While we do need a tough, “banker-skeptical” type person in this role, Maxine Waters isn’t it. Just judging from two data points Yves posted – that Waters inserted a position into Dodd-Frank requiring banks to hire more women and minorities and that during the crisis she sought government assistance for a minority-owned bank in which her husband was a shareholder shows that Waters is part of the problem, not part of the solution.

    The primary issue is that banks take big gambles with third party money while facing an asymmetrical risk/reward profile (those controlling the banks get all the upside while society and the taxpayer get all of the downside, both directly and via externalities). Somewhere along the line, those on the left abandoned the notion of regulating the banks to minimize downside risk while preserving their core function in favor of letting them run wild and directing some of their excesses to fund their pet programs. It was a mistake that needs to be stopped, but Waters appears to think the solution is to keep up the excesses but to just divert more of the excesses in the direction she wants.

  16. Thomas

    My God…Carolyn “Haven’t we already been to Mars?” Maloney vs. “Mad Max” Waters…can’t you guys come up with somebody better than those two??

    1. Art Eclectic

      Exactly. Waters is no better. Even if the bank ethics violations are overstated, she’s been a driving force behind some of the more egregious home financing shenanigans that are a part of the problem.

      Downpayment assistance programs are a huge giveaway to builders and other skeevballs looking to take advantage of people who are too close to the edge financially to be buying a house, yet Reps like Waters think they need to “help” people get into mortgages that are a ball and chain around their necks so they can participate in the American Dream of being in debt for your entire life and not being able to sell your underwater house.

      1. F. Beard

        Reps like Waters think they need to “help” people get into mortgages… Art Eclectic

        So only the so-called “credit-worthy” should have access to counterfeit money – so-called “credit” – while the “non-credit-worthy” have their purchasing power stolen?

        The truth is that NO ONE is credit-worthy since credit is a form of counterfeiting.

      1. coop

        I agree. Brad Sherman was one of the very few that voted “NO” on the Bank Bailout (HR3997) repeatedly whereas Maloney was on board from the start. I think Sherman’s credentials are solid in that regard. According to his website, he was a CPA and tax specialist so he has a working knowledge of the mechanics of finance. I think if his name were proferred instead of Maloney’s, the lobbyists would start thinking that retaining Waters would not be so bad.

      2. LMS

        Sherman would be much better. Not a fan of Waters and it has nothing to do with whether the banks are or are not playing the race card. She is willing to stand up to the banks, but to what end? What she wants is redistribution of wealth, and my concern is that she would seek to accomplish this without insisting that we address the root causes that created the wealth disparity in the first place. We MUST expose and eradicate the systemic fraud in the financial sector, and there can be no compromise on this point. Waters will focus on government-engineered countermeasures to address the rich/poor gap, e.g. subsidies for low-income individuals, punitive taxes on banks. These policies may be defensible on their merits given current economic circumstances, but they are not a substitute for making the necessary structural changes.

        Put another way, Waters may realize the banks have been robbing us blind, but all she wants to do is rob them back. We need a more permanent solution.

    2. Yves Smith Post author

      With all due respect, this is not an open process. This is Waters v. Maloney. Sorry about that, but you need to hold your nose and pick. Maloney is being maneuvered into place solely due to her being seen as preferable by the banksters. Miller is a complete non-starter.

  17. Dean

    Let’s not forget one thing: congress critters are good at two things: campaigning and raising money to campaign.

    Looking at the situation through Tom Fergueson’s eyes, a major source of campaign cash comes from committee assignments and the amount of money a committee member can raise. While the thrust of the post is Waters is being pushed aside for a more favorable supplicant who is more polished, Ms. Maloney can make it rain Wall Street cash and Ms. Waters can’t. That is the truly disgusting underlying sub-subtext to this charade.

  18. Bravo

    “The Politicker story discusses Water’s input into Dodd Frank, that of a provision requiring more minorities and women be hired, which is criticized (by a Republican) as “radically changing employment law.” If that provision of Dodd Frank were so game changing, then where is the called for minority- owned business participation in the ongoing foreclosure audit review process now taking place at all the big banks? Or is that yet another provision of the law that doesn’t apply to big banks? Shouldn’t Maxine Waters be making noise on that issue?

    1. Yves Smith Post author

      The foreclosure audit reviews are under the purview of the OCC. All Waters can do it beat up John Walsh. The tests allow banks to hire subcontractors, which they do, and the Dodd Frank employment rules extend only to firms taking Federal money directly. I suspect if she’d try drafting language to extend to contractors (think how many firms that would have covered) it would never have been passed and would have been subject to legal challenge if someone had been asleep and it had gotten through.

  19. Enraged

    “She has no grasp of the technical side of finance.”

    Greg Smith does. And he still told Goldman Sachs to go to hell, regardless. With his middle finger high up.

    All those games played by WS won’t go on forever and there i such a thing as reaping what we sow. Question of time and the time is very much now. Most people are feeling it, worldwide.

  20. ray

    paul wellstone, howard dean, john edwards, eliot spitzer all examples of true rooseveltian democrats who have been busted down one way or another. there have been many others- seems like a trend to me. as an aside all of the political asassinations since jfk have been liberals. No regan and wallace were not assasinated although bush sr and nixon benefited from the shootings. the system is hostile to anyone anti corporate or who gets in the way of the appointed corporate tool

    1. Kakko

      There were attempted assassinations on both Ford and Reagan. Last time I checked they both had “R” next to their name.

      The problem with your analysis is that 1/2 the Dems on your list had their careers ended by sex scandals. A man who can’t be trusted by his wife can’t be trusted by his country. Real honest politicians such as Kucinich get run out of town by their own party.

  21. PQS

    “She is anti-bank. She doesn’t like anybody that wears a suit and a tie. She yells at them, and says why aren’t you doing more to address the housing problem, why aren’t you doing more to raise the boats of the less fortunate. It is a total misunderstanding of what capitalism is.”

    Winning quote for its window into how the Banksters think of themselves….between that characterization and the endless articles about Banker Hurt Feelings, I’m beginning to wonder if the entier Finance Industry isn’t populated by 50% sociopaths and 50% panty waists. I mean, really, in my industry (construction) if I’m not accused of ripping someone off at least twice a week, I consider it a good week. Not to mention, of course, how everything in construction is overpriced, all the workers are overpaid, and everything we do takes way too long.

    We could raise about $50B, I imagine, if we sold tickets to Maxine Waters interrogating every so-called SD in High Finance, and asking them tough questions like “Why aren’t you doing more to help homeowners?”

  22. moslof

    Your reference to Cynthia Mckinney was spot on. In a recent interview she discusses the possibility of Nader/Paul/Mckinney independents to compromise/unite as the party of the 99%. The following quote illustrates your point well.

    Because, there’s no more Left and Right. It’s only Right and Wrong now… and the old “Right” is Wrong… and the old “Left” needs to be more Right… does that make sense?

    1. cwaltz

      Paul as a representative of the 99%? Not in any universe that actually believes that minorities are part of the 99%.

      A guy who believes that it ought to be a right to allow discrimination ain’t a man of the people no matter how much he might pretend otherwise.

  23. DWoolley

    “Under the outstanding leadership of Mr. Frank Raines, everything in the 1992 act has worked just fine. In fact, the GSE’s [Fannie and Freddie] have exceeded their housing goals. What we need to do today is to focus on the regulator and this must be done in a manner so as not to impede their affordable housing mission. A mission that has seen innovation flourish from desktop underwriting to one hundred percent loans.”

    Rep. Maxine Waters (Hearing on H.R. 2575 – The Secondary Mortgage Market Enterprises Regulatory Improvement Act Before the H. Comm. on Financial Services, 108th Cong. 8-10 (2003)

    For those not in the know, Franklin Raines was the Fannie Mae CEO accused of cooking the books which resulted in Fannie paying a $400M civil fine. Mr. Raines’ paycheck in 2003? $20 million (basically for putting the ship on the rocks). BTW, he was a “friend of Angelo” and received “those” loan benefits. This is Rep. Waters definition of “outstanding leadership”, ah, no thank you.

    1. Yves Smith Post author

      Please read the Morgenson/Rosner book Reckless Endangerment, or the Tom Ferguson/Rob Johnson papers on the Paulson Put. Both make clear the GSEs were pork machines for the Dems. That’s the real reason the Republicans are so keen to dismantle them (I agree but for different reasons, mixing housing finance and housing policy is a bad idea, it’s just about impossible to track the impact of the subsidies via cheap financing in a precise enough way to even do a rough cut of costs and benefits).

      The Black Caucus really wanted higher minority homeownership rates. The FHA had performed well in extending 3% down payment loans for decades. Default rates were comparable to prime. Not for profits lending in minority neighborhoods had similar results. It wan’t nuts to think that there wasn’t enough credit going to minority borrowers, and the system did a great job in the end of overdoing all along the income spectrum.

  24. JB McMunn

    In 2003 before the Fianncial Services Committee Maxine Waters said:

    “Mr. Chairman, we do not have a crisis at Freddie Mac, and in particular at Fannie Mae, under the outstanding leadership of Mr. Frank Raines. Everything in the 1992 act has worked just fine. In fact, the GSEs have exceeded their housing goals. What we need to do today is to focus on the regulator, and this must be done in a manner so as not to impede their affordable housing mission, a mission that has seen innovation flourish from desktop underwriting to 100 percent loans.” http://www.youtube.com/watch?v=IyqYY72PeRM

    Forgive me, Dr Seuss and Horton:

    Is there a way
    her brain could be duller?
    A moron’s a moron,
    No matter what color

    1. Justicia

      Fannie Mae had a long history of cooking its books and lying. So, it’s not surprising that in 2003 Waters rode to Raines’ defense. In fact, Newt ‘the Great Mind’ Gingrich was getting paid to defend Fannie:

      Gingrich said he didn’t remember exactly how much he was paid, but a former Freddie Mac official said it was at least $1.5 million for consulting contracts stretching from 1999 to 2007.


      1. Justicia

        oops. here’s the rest of the quote from that story:

        Gingrich’s hiring was a small — but because of his name, important — piece of a much larger initiative by the company. Freddie Mac and its larger competitor, Fannie Mae, are government-sponsored enterprises, created by Congress to buy up mortgages so that the housing industry has a ready flow of funds.

        The two companies had long been the darlings of Democratic politicians in Washington, hailed as the champions of affordable housing, but they had few supporters on the political right.

        Freddie Mac executive Hollis McLoughlin sought to remedy that by hiring a stable of conservative consultants, including Gingrich.”

  25. Justicia

    Great post, Yves. You heard Politicker’s dog whistle loud and clear. She’s ‘inappropriate’ because she’s anti-bank — not anti-bank for any good reason, mind you, but because she’s an angry, wacko black woman.

    With Maloney and Schumer in key positions Wall St will be well fed.

    Good post by Simon Johnson on the JOBS legislation — backed by Schumer. (The name of the bill is always a tip off that it will do exactly the opposite: Clear Skies; Homeland Security.) JOBS would remove sunshine from the securities markets and return us to the roaring 20s when you could separate the suckers from their money a lot faster. No need for financial disclosure (why, Mr. Market knows everything anyway); no need even to tell the truth.


  26. steelhead23

    Guys, I read a bunch of comments here suggesting that Maxine Waters is not sufficiently educated to serve as the Finance Committee Chair. “She doesn’t know banking”. Etc, etc. Methinks ye fail to see the big picture. If you’re heading into the biker bar to find out who owns the Electra Glide you just ran into, would you prefer Steve Colbert or Mike Tyson beside ya? Count me four square behind Maxine. Indeed, at this point in time, what we need is a leader willing to growl, if not bite. Go Maxine!

  27. ray

    I love all you a’holes that cant bitch about freddie and fannie enough. problem is the fanny/ freddie (F&F) loans have a lower default rate than your favorite wall street firms run by white guys. the f & f loans into the ghetto had lower default rates. F & F had lost market share to the banks and shadow banking industry for years so their loans were a result of the problems.F and F did not create many if any loans but securitized loans already made by firms who didnt care if they were crap because they would be sold off to fools downstream. You are too ignorant to put the blame on deregulation and the political corruption allowed by reganomics created by all the political leadership-regan,bush(2),greenspan,clinton etc

  28. Anubis1

    While I agree that it is quite obvious as to the fact that maxine Waters is being tarred and feathered by the Mighty Wurlitzer you also haven’t dealt with her personally.
    A friend who’s super educated and also worked for a contractor that received Federal dollars had to show her around ect. when she came to visit.He’s black but not off the wrong side of the street. Hardly a Occupy type but also wants constantly to lift up his community.
    Maxine Waters probably has serious resentments and that would hinder any nuanced dealings with the real PTB. Period.

    This guy had nothing nice to say. While some of this maybe classism and sexism, she did have a certain rep as in “I don’t give a F*(!”, and while her patronage was very beneficial to him he felt she was somewhat obstructionist and narrow.In short a big spending demo who wanted revenge constantly. I do believe part of this article to some degree.

    He is probably more center than right, but I still remembered his groaning about her.
    I do think she has been brave, regarding exposing Contra/Company dealing cocaine in the past and it’s obvious that she has a point of view. But also Wall Street and the Company work hand in glove pretty much all the time in some areas. And the DC Consensus has nice long, long memories.
    In short in todays climate she’s cooked, almost ready to be served.

  29. Anonymous

    Leaving aside Yves’s usual bizarre ethnicity analysis (‘culturally white’? maybe there’s room for such a ridiculous point re: the president since his family is euro, but Colin Powell? The guy’s Jamaican through and through. How cloistered would you have to be to live in a place like NYC and think people like Powell are somehow exceptional and ‘culturally white’? Methinks you’re projecting the caricature in your head, not any actual people), and the idea that Waters is from some kind of out group (as you yourself pointed out, her husband owns a bank for Christ’s sake, and I have to wonder about the lucidity of you and your commenters who listen to a woman like Waters and think she’s anything less than brilliant. Not always in full command of the details? Sure, but as you pointed out, who in congress is?), I think a big part of the problem Waters is having RE: the fin services committee chairmanship is the tactical mistake she made in trumpeting her seniority on the committee so early, and so loudly. She’s made a point to prominently mention her seniority in several press appearances in recent months. While there’s no argument that the IB lobbyists are watching (and managing, to the degree they can) the committee assignments very closely, I think Waters’s so prominently trumpeting her seniority has created some space for the lobbyists to conduct their opposition publicly, in the press, and so manufacture a larger controversy than would’ve occurred otherwise.

    I think this unforced error by Waters illustrates the real underlying challenges for her. First, like many politicians, she is a bit of a showboat, and starts to skirt loose canon territory once she gets going, particularly during press appearances. And, second, Waters is not actually anti-finance or anti-wealth at all, as much as her sorry opponents try to paint her that way. Instead, she’s pro African American wealth, and African American finance, as are many of the more senior CBC members. So, ideologically, there’s already the potential for conflict between politicians like Waters and the bulge bracket IBs.

    This last point, though, points up Waters’s trump card, and if I had to put my money on it, I’d say it’ll be the centerpiece of Waters’s push to keep the committee’s senior dem spot in coming months. Many CBC members in recent decades have made finance the primary focus of their legislative careers, and Waters has lead in this regard. As a result, CBC members are very well represented on the finance-related committees and subcommittees on the house side. Any suggestion that their long, careful, diligent project to drive federal finance policy in African American interests will be undone or otherwise impeded right when so many of the politicians who crafted this strategy are so highly placed on the house side will lead to a showdown in the house dem caucus leading up to the new congress. Pelosi will not want that kind stand off, and because so many of the top power brokers on the house dem side are CBC members, and because CBC members will form somewhere around 20% of any house dem majority, she won’t be able to risk it. My money is that the options are only three: Waters takes the chairmanship, with or without mollification to the IB lobbyists as damage control; Waters steps aside for a more junior, less fire-breathing CBC member like Mel Watt, in exchange for some significant concessions on policy and/or leadership portfolios; or Waters steps aside for Maloney in exchange for large concessions on policy (anything less than a de facto ‘co-chairmanship’ would be a non-starter, I would think), or a very prominent leadership title (which would be very difficult, given how top heavy the house dem side is).

    The wild card that could disrupt one of these elegant solutions is the president. His conflict aversion and cowardice are well known, especially on ethnicity questions. I think the president’s the one element that could disrupt CBC members’ long finance project, even more so than the IB lobbyists. And it’s not clear yet how he or CBC members will play his second term, but I don’t think it’s at all fantastical to think many CBC members will be far more willing to take the president to the mat in his second term, and especially if he tries to pull another push-Rangel-aside move.

  30. joel hanes

    Shall we compare Ms. Waters’ intellectual attainments with those of
    Louie Gohmert ?
    Mike Pence ?
    Jim DeMint ?
    James Inhofe ?
    Eric Cantor ?

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