MIT Professor, author and former International Monetary Fund (IMF) Chief Economist Simon Johnson noted, on Thursday, (See: "Who's Afraid of Elizabeth Warren?") that it's certainly beginning to appear that--at least as far as the ongoing, Wall Street mortgage fraud settlement negotiations with our states' 50 attorneys general are concerned--Treasury Secretary Tim Geithner's quite perturbed with presidential advisor Elizabeth Warren and her Consumer Financial Protection Bureau for taking the lead in advocating Main Street's position on the matter.
But, over the weekend, in "Heroes As Villains: The Case of Elizabeth Warren," and "An Advocate Who Scares Republicans," even Paul Krugman and the NYT's Joe Nocera, respectively, note that when political push comes to shove, Democrats from the administration on down, are more than ready to justify their inaction and tacitly feed Ms. Warren to the GOP wolves, as strong headwinds from the Wall Street go all out to vilify Warren.
As Johnson stated it--which should come as no surprise to anyone who's been following Mr. Geithner's ongoing, two-plus-year reign over all things financial in this country--after pointing out multiple comments which underscored general GOP disdain for Warren on Capitol Hill, many of Ms. Warren's and Main Street's economic hurdles lie on the other side of the aisle: "...Mr. Geithner at this stage is more pro-banking lobby than even Mr. Bachus." Johnson was referring to House Financial Services Committee Chair Spencer Bachus (R-AL).
As a Democrat--even as a pragmatic Democrat--please take a few seconds to think about that.
To jog our memories, Johnson reminds us that Bachus is the person who recently said...
“In Washington, the view is that the banks are to be regulated, and my view is that Washington and the regulators are there to serve the banks.”
Johnson's Geithner reference was with regard to a piece that appeared in the New York Post, around eight days ago, prior to Warren's appearance before the House Financial Services Committee, earlier this past week. In that article, we learn that Secretary Geithner "isn't happy" with Warren's CFPB taking the lead advocacy position in the ongoing mortgage/foreclosure fraud settlement talks.
Warren ripped again
By MARK DeCAMBRE
New York Post
Last Updated: 4:57 AM, March 11, 2011
...Geithner has privately told others that he isn't happy with Warren's involvement in the talks either, according to sources familiar with the matter...
...To be sure, one CFPB insider insisted that the agency only got involved in the mortgage negotiations after being "sought out as advisers" by state attorneys general.
"Politicizing the funding of bank supervision would be a dangerous precedent, and it would deprive the CFPB of the predictable funding it will need to examine large and powerful banks consistently and to provide a level playing field with their non-bank competitors," Warren said in a recent speech.
To say that Geithner's been "annoyed" by Warren, despite spin and related public statements to the contrary, from virtually the very first day he was in office, is to put the matter quite kindly. The facts are that she's been a thorn in his side since day one, IMHO.
As I noted above, we've reached a point where even folks like Krugman and Nocera are making significant note of how our party's leaders are conspicuously silent at this critical juncture:
Krugman, in his blog, yesterday (see link, above)...
...Warren has clearly faced a lot of hostility from within the administration, too. And as I see it, this also comes precisely because she was right: that gives her the kind of credibility that, in turn, makes her something of an independent force — which some people don’t like at all.
Of course, that very credibility could make her an important asset to the Obama administration, for whom she could serve both as an able administrator and as a symbol of commitment to reform. But so far, the administration seems eager to avoid drawing any contrasts with the GOP, even when it has both justice and public opinion on its side.
Nocera, in Saturday's NYT (see link, above)....
...It’s not just the House Republicans either. Already the Office of the Comptroller of the Currency has reverted to form, becoming once again a captive of the banks it is supposed to regulate. (It has strenuously opposed the efforts of the A.G.’s to penalize the banks and reform the mortgage modification process, for instance.) The banks themselves act as if they have a God-given right to the profit they made precrisis, and owe the country nothing for the trouble they’ve put us all through. The Justice Department has essentially given up trying to make anyone accountable for the crisis.
Thank goodness, then, for the attorneys general — and for Ms. Warren. On Main Street, where the attorneys general operate, it is pretty obvious that problems persist...
...Let’s face it: there isn’t anybody in Washington more fearless about standing up to the big banks. No wonder they don’t like her...
...Senate Republicans have vowed to block her appointment if President Obama nominates her. Yet even if her nomination goes down in flames, Senate confirmation hearings would be clarifying. Americans would get to hear Ms. Warren explain why the Consumer Financial Protection Bureau has the potential to help Americans. And they would get to hear Republicans explain why the status quo — including the everyday horror of the foreclosure mess — is just fine.
It has been much noted in recent months that President Obama seems unwilling to start a fight with Republicans. Maybe that’s why he has shied away from nominating Ms. Warren to a job for which she is so clearly suited. But if protecting financial consumers — and helping the millions of Americans struggling to hold onto their homes — isn’t worth fighting for, then what is?
As some reading this might note, and as I've pointed it out in numerous posts -- and as recently as in a diary in the past 24 hours -- I think that even this woefully inadequate demand for $20 or $30 billion in mortgage modifications that the President and advisor Warren are now trying to squeeze out of Wall Street is quite pathetic, and really not much more than a charade once one realizes that the Treasury Department already has access to at least this amount in unspent, preapproved funds to accomplish this task.
It's been widely reported, and as I've noted it in my own diaries of late via a recent ProPublica investigation, the government's efforts to keep people in their homes via the HAMP program has been nothing short of a dismal failure.
From a practical standpoint, it's now being projected by many of our country's leading experts on residential real estate valuations, that as many as half of our nation's mortgageholders will be underwater (owing more on their homes than they're worth) by year's end. Then again, much to the chagrin of those promoting our corporatocratic recovery (while Main Street languishes in pain), this situation was projected to come to fruition two years ago by experts at Barclays and Deutschebank. So, it's not exactly new information.
The truth is that very little's been accomplished to ameliorate Main Street homeowner suffering over the past couple of years.
As Johnson notes...
...[Geithner's] team agreed to Basel III, which requires banks to have less equity funding than Lehman had the day before it failed. There is no sign that systemically important financial institutions will be required to have a significant extra capital buffer – although this is supposedly not yet decided. And despite the undecided capital standards and large evident problems still facing banks (the foreclosure fiasco, commercial real estate woes, continuing high unemployment), the Financial Stability Oversight Council – which Mr. Geithner chairs – is about to sign off on letting banks increase their dividends.
This makes no sense at all in terms of economic policy, but this is exactly what Mr. Geithner is presiding over. (If anyone you know at Treasury thinks this assessment is unfair, send them to Anat Admati’s webpage at Stanford.)
And having Elizabeth Warren on the scene – providing an alternative pro-consumer perspective – is apparently increasingly inconvenient to Mr. Geithner. For example, he has expressed displeasure at her engagement in the mortgage settlement process.
President Obama missed his best opportunity to reform the financial system when advisers – including Mr. Geithner – recommended that he defer to the top 13 bankers in March 2009. His team further punted when they failed to push for real change in spring and summer 2010, when the financial legislation was before the Senate. Mr. Geithner and his people were instrumental in defeating the Brown-Kaufman Amendment, which would have limited the size and the leverage (debt relative to equity) of the largest banks in the United States.
Will Mr. Geithner go for the trifecta? He was instrumental in bailing out the big banks without any strings. He held back serious attempts at legislative reform. Will he now prevent Elizabeth Warren, our potentially most effective modern regulator, from even coming up for a vote in the Senate?
When Geithner leaves the Treasury Department, he will return to the vampire squid's lair from whence he came, upgrading his former, $500,000+ per-year gig as President of the NY Federal Reserve for a $10- or $20-million-a-year chairmanship with one of the too-big-to-fail firms that he's done more to enrich over the past few years than any other U.S. citizen, save for--perhaps--Ben Bernanke. But, that's certainly an arguable point, if ever there was one.
What's inarguable here, however--White House apologists aside--is that, once again, when it comes down to a critical choice between Wall Street and Main Street, we're dealing with a political party -- OUR party -- whose leadership is almost as much in thrall to Wall Street as the G.O.P.
Perhaps nowhere is that more self-evident than with regard to what's happened to Elizabeth Warren over the past few days.
This country's leading advocate for Main Street is being fed to the wolves, as our party's leaders standby and, at the very least, witness this mugging in broad daylight.
IMHO, it's the political version of the Kitty Genovese story, writ large.
In the words of Joe Nocera this weekend: "...if protecting financial consumers — and helping the millions of Americans struggling to hold onto their homes — isn’t worth fighting for, then what is?"
IMHO, Elizabeth Warren is being thrown under the bus...by both parties...and, it is unacceptable.