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As reader Adrien put it, “Just in case people thought that running for VP would distract Warren from keeping tab on Mary Jo White,” Elizabeth Warren took on the SEC chairman for diverting scarce agency resources to an “information overload” project, an issue only in the minds of interests like the Chamber of Commerce, not investors themselves. Warren depicted White as performing even worse than she has prior to this date, of going in “the opposite direction” of the SEC’s mission of investor protection.
The two clips below show the tension between them. Even with the less than stellar video quality, White looks to be quietly annoyed while Warren is setting up her charge, that the White created a project that advances a pro-corporate agenda, and also takes agency resources away from long-over Dodd Frank rulemaking.
You’ll notice Warren and White disagreeing over the substance of the initiative. White first attempts a misleading feint, by trying to depict the project as part of the JOBS Act. Warren responds by saying that the JOBS Act requirements to simply disclosure apply only to a “subset” of companies and even then on a “subset” of information items. Warren keeps pressing White for evidence that investors were saying they were getting too much information
White then shifts ground and depicts her project as part of an ongoing SEC mission and does manage to cite a Thurgood Marshall decision as supporting her effort. White also describes her initiative as part of a long-standing SEC effort and contends it will increase disclosure in some areas. The Wall Street Journal takes up that theme in its coverage of the hearing:
The disclosure project culminated with an April “concept release” that sought public comment on a range of disclosure topics. Far from simplifying or scaling back disclosures, the release sets the foundation for the SEC to eventually require companies to disclose more about how much in profits they park abroad and even how global warming could affect their businesses.
However, if you click on the link and look at the Journal’s report, it seems more consistent with Warren’s description than White’s:
The Securities and Exchange Commission is getting back to basics as it considers an update to financial reporting rules.
The Commission on Wednesday issued a “concept release” outlining some of the questions it is considering as part of a disclosure rules review. The release runs 340-pages and considers some fundamentals as it begins a months-long process to potentially update the rules…
SEC Chairwoman Mary Jo White said in a statement Wednesday that the commission is trying to balance competing interests of investors who “want more, not less, information” and those of companies who complain about “requiring unnecessary, immaterial disclosures.”
In other words, White’s stonewalling seems to confirm Warren’s charges: that this impetus for this project came from corporations, who should not be the SEC’s top priority, and that there was no reason to give it precedence over past-due Dodd Frank rulemaking.
It should also be noted that the SEC got headlines today for staff recommending that the IEX exchange application be approved. One has to wonder whether this was timed to divert attention from the Senate hearings, since Warren could be expected to pound Mary Jo White. And this is another lousy outcome. As we pointed out earlier, the SEC made high-frequency trading, which has no value to society or end investors, possible by approving rule NMS. Worse, as we have discussed, rule NMS has resulted in the most unstable market structure possible. But rather than challenge the patently-false “more liquidity is always better” mantra, the SEC has, years after the controversy began, made a response that it can claim addresses the issue but keeps the underlying status quo intact.
Since I’m sure readers will bring it up, let’s look at the other issue Adrien mentioned in passing, that of Warren enthusiastically throwing her support behind Hillary Clinton and saying she’d be willing to become her Vice President (an outcome we see as unlikely). Pam Martens and Russ Martens did first-class shredding of how signing up with Clinton, while demanding no policy concessions, was a betrayal of her principles. From their post:
Senator Warren has built her career on criticisms of Wall Street’s money spigot, which she correctly says is corrupting government, perpetuating the growing divide between the super rich and the other 99 percent, while perverting so many members of Congress that meaningful Wall Street reform like restoring the Glass-Steagall Act hangs in limbo. And yet, despite years of pounding the table on these issues, last Thursday Senator Warren went on the Rachel Maddow show on MSNBC and spiritedly endorsed Hillary Clinton for President – an establishment politician with a criminal FBI investigation hanging over her head for violating State Department policy in the handling of her emails on a private server in her home while Secretary of State. Clinton is also the only Presidential candidate to have personally accepted millions of dollars from Wall Street for giving speeches and who is now refusing to release the transcripts of what she told Wall Street in exchange for those hefty fees.
One reason for reader frustration with Warren is that many Vichy Left and some bona fide progressive writers have hailed Warren at the Great Hope of the Left, when she was never going to be that. She has always been focused on her agenda of the welfare of middle class families, and she has been willing to go to war only where she has a mastery of the terrain from a technocratic standpoint, which further narrows her focus. It should come as no surprise that she has fallen in line with Democratic party positions on other issues. Even on some matters that ought to be in her wheelhouse, like student debt, Warren has offered band-aids that fail to address the underlying issue of feather-bedding and galloping cost increases particularly in administrator costs and staffing, that have nothing to do with improving the caliber of teaching and research, at colleges and universities.
We were leery of her Senate bid and argued forcefully against it. Initially, we looked to have made a bad call. Warren disproved one of our reservation, that of not being able to exert much influence as a single new Senator, by punching well above her weight through her brutal interrogations in Senate hearings and occasional but very effective speeches.
However, over time, our concern that she would be co-opted is being borne out. As we wrote in 2011:
For someone who has presented herself as a stanch defender of the middle class, to put herself in the position of being a Democratic pol, subject to the requirement of going along to get along, is a Colin Powell “there are WMDs in Iraq” level PR poly. And the long term damage to Warren’s reputation is likely to be as severe as Powell’s taking a bullet for the Bush Administration proved to be.
Running for Senate means Warren has implicitly agreed to support Obama on:
1. Balancing the budget on the backs of middle class families, in particular cutting Social Security and Medicare
2. Standing with Obama on his bank friendly policies, such as:
– Not prosecuting the banks for fraud and mortgage abuses
– Remaining silent as the CFPB is neutered (she can’t do her promise “blood and teeth on the floor” routine from within the Senate; she’d be restricted to letters asking
obnoxiouspointed questions in letters and hearings)
3. Supporting the war in Libya
4. Refusing to take unemployment seriously
5. Continuing the policies of extraordinary rendition and torture, which put US soldiers at risk and damages US credibility around the world
Even if Warren bucks the will of the party with some frequency, she will nevertheless be perceived to have sacrificed her independence and agreed to serve as a standard-bearer for all that Obama and corporatist Dems stand for. I find myself in the unusual position of agreeing with house nemesis Dan Duncan:
Right now Warren’s beauty as a candidate is frozen in time. She should keep it that way….
In this frame, she is free from time, yet she is simultaneously frozen in time. She is free to singularly co-exist as being both a “DC Outsider” and a Status Quo Harvard Insider. She does not have to confront compromise and “the process of governance”. She is “Forever Progressive.”
To Warren’s credit, she has withstood the inevitable longer than one might have expected. But she does not seem to understand how she is likely to be used, as in misused, by the Clinton campaign.
The Clintons are partners with Wall Street, as defined by Ambrose Bierce in The Devil’s Dictionary:
When two thieves have their hands so deeply plunged in each other’s pocket than they cannot separately plunder a third party.
Clinton will not support anything stronger than cosmetic moves against financial firms. She is too dependent on Wall Street support, and the Clintons, like the Lannisters, do have a long track record of honoring their debts. So it is utterly implausible that Hillary will have a Damascene conversion and take up Warren’s bank agenda.
So Warren is begin set up to play the same role that Paul Volcker did in Obama’s 2008 campaign: regularly visible in public with the candidate,. Since Warren is a politician while Volcker was not, that includes stumping for Clinton, with voters getting the impression that Warren was in line for a major post in the Clinton cabinet, as it was assumed that Volcker would become Treasury Secretary (the rumor was on a relatively short-term basis, for a year or two and most to deal with the crisis, given his age). Instead, after the election, Volcker was dispatched to Siberia, to head an important-sounding committee that was removed from the action.
Warren is unlikely to be tossed aside quite as rudely, but another way to shackle her would be to give her a Cabinet post that has little to do with the financial services industry. That would help Clinton meet her goal of having half her key posts filled by women, while cashiering a major thorn in the side of the banking industry.
It would be better if I were proven wrong, but to paraphrase one of Lambert’s favorite sayings, in this election, it’s hard to be cynical enough.