UPDATE:
(A very big h/t for Kossack catnip, for bringing this to our attention in the comments!)
Is Obama Planning a Plan B for Warren?
Is Obama Planning a Plan B for Warren?
President Barack Obama said today that he hadn't made a decision about whether to name Warren, a Harvard Law School professor, as director off the new Bureau of Consumer Financial Protection. But he did say that, no matter what, she'd play some role in getting the agency up and running. In an interview on ABC's Good Morning America, it almost seemed like he was promising people she'd have "some" job, just not "the" job.
"I have the highest regard for Elizabeth," Obama said on the program. "We have not made a decision about who we're going to appoint yet. But here's my guarantee, is that Elizabeth is going to be working with me, working with Tim Geithner, the Treasury secretary, to help in thinking about how do we make this consumer agency as effective as possible, looking out for consumers. She is going to be actively involved in that process."
IMHO,
if this story from the Wall Street Journal blogs is accurate -- and it appears to be quite self-evident that it is -- then the administration is considering making a major political mistake here, if they don't appoint Warren to the CFPB. (I believe this'll create a critical public backlash of significant proportions. And, frankly, ameliorating that isn't exactly on my "to-do" list, as far as blogging's concerned. In fact, I'd call this
"My own, private Waterloo.")
Furthermore, it's just another verification--proof positive as it were--that the Wall Street status quo is calling the shots here, since this is, IMHO, in many practical/political ways, a significant political affront to the consumer public. (And, doing to her what ended up happening to Paul Volcker this year ain't gonna' cut it!)
So, as if we were standing in the middle of an interstate highway, knowing that we were about to be hit by a car, I'll say: "Let's wait and see what happens." But, by then it'll be too late. That's the downside--and end result of listening to the proponents--of "incremental" change, sometimes; you see, incremental change ASSUMES one has the TIME to affect change, incrementally. I would strongly suggest reading the article available via the next link in this diary. (Perhaps the biggest Wall Street bailout of all--a very large increase in the cost to consumers to use a bank--is about to occur in our society. And, it is for THAT reason--if it is allowed to occur unchecked--why this appointment is more significant than many may realize.)
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Back to the original diary...
From a snarky comment I made in a diary yesterday...
"The banking community cannot wait for Elizabeth Warren to be appointed Chair of the Consumer Financial Protection Bureau. They long for the day when more than half of their profitability will be questioned! They cannot wait for the time when they'll wake up every morning to be challenged about the fairness of their egregious charges. And, they look forward with great anticipation to their bank's quarterly Board of Directors' meetings where they'll be continually threatened about their jobs being on the line due to their diminished profits caused by having a true consumer watchdog advocating for a public that has been ravaged by Wall Street's greed for decades.
Yes, the banks cannot wait for Liz Warren to assume the chair of the new CFPB!"
For more on this, I 'd suggest this thought-provoking read: "The Real Reason Geithner is Afraid of Elizabeth Warren."
Meanwhile...
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(Diarist is authorized, in writing, by Naked Capitalism Publisher Yves Smith to reproduce her blog's diaries in their entirety.)
How HAMP Makes Elizabeth Warren The Only Choice For Consumer Protection » New Deal 2.0
Naked Capitalism
Crossposted from New Deal 2.0.
By Mike Konczal, a Fellow at the Roosevelt Institute.
July 23rd, 2010
No one else has been a stronger advocate for public disclosure. There's a debate going on about who should be nominated to run the Consumer Financial Protection Bureau at the Federal Reserve. One side says Elizabeth Warren, while another says someone from Treasury, likely Michael Barr. At a quick glance you might not see a big difference. As Felix notes, Michael Barr is very strong on consumer finance. But I think Warren would be a far superior choice. There are many reasons why, but I want to discuss a very specific one here that distinguishes her from anyone in Treasury. The biggest: she is a strong critic of HAMP, Treasury's largest intervention into the massive foreclosure crisis hitting millions of regular Americans, and she demands accountability on behalf of the people.
HAMP As Failure
The Home Affordability Modification Program is widely considered to be a failure. Here is Shahien Nasiripour reporting on the latest numbers from June. They haven't remotely hit the numbers they projected. Homeowners continue to suffer from a lack of modifications due to servicer problems and the overvaluation of their books. I wrote here about how the creator of the mortgage bond instrument in the early 1980s said in 2007 that a major market failure was coming. There was need for government action.
HAMP is such a failure that it is a bit of a game among the financial bloggers as to who has the best write-up of how bad it is each month and what the killer statistics are that prove it. I'm calling Stacy-Marie Ishmael over at FT Alphaville this month's winner with BarCap vs HUD on HAMP.
Evidence shows that there are principal increases for 80% of the people who go through HAMP. That is the exact opposite of what you'd like to see! It lowers interest rates, but it also increases the length of the loan.
Figure 16: Loan Modifications By Principal Reduction
And for those who don't have principal reduction, there is a massively high redefault rate. People lose their homes anyway, even after jumping through cumbersome hoops.
Figure 17: Redefault Rate for Modified Loans
Predatory lending is hard to define, but a product is predatory that sinks people deeper into debt without the expectation that they can pay it off. And that is exactly how HAMP functions. For millions of people HAMP is their main interaction with the government and embodies what the government is capable of, and this creates disillusionment and discredits the liberal state in a profound way.
And Warren Demands Accountability
The Congressional Oversight Panel, lead by Warren, has been in the lead at making information public and bringing the complaints of the people straight to those in power. (It falls under her jurisdiction because HAMP uses TARP money.) When you see the fights on youtube between Warren and Geithner, the biggest ones, the ones that make Geithner cringe the most, it is about how HAMP isn't working. Click through on that link to watch a video that gets straight to this. She demands accountability from the government and from the banking sector on the single most important issues facing Americans right now.
This is important. There's pressure to be quiet, to hope that a quick housing and economic recovery will just make this whole foreclosure crisis go away. But Warren has demanded answers. COP released a report in early 2009 about the problems with HAMP, data collection and foreclosure, a report that still stands up. She's done that at every step of TARP, but it matters here specifically for consumer protection.
And this is exactly how the CFPA should work. They fight to get good information disclosed to the public about how the banks and the Treasury department are failing the American people, reporters and wonks explain the information to the public, Treasury is held accountable. Treasury is currently working overtime to make HAMP work better; every month they are putting pressure where they can to make it better. That's how a healthy government is supposed to work, but it can only be done if the tone is set by an outsider. And Elizabeth Warren is the one qualified candidate with a proven track record of standing up to the banks and to the Treasury.
And as Steve Clemons wrote: "It's about time that at minimum, the White House got a `team of rivals' on economic policy rather than just a `Team of Rubins.'"
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HERE'S WHAT YOU CAN DO TO HELP...
Support the Bold Progressive's appeal to our senses and sign the petition to appoint Liz Warren to that position.
And...
Take this letter from Congresswoman Carolyn Maloney and, leaving the signature space blank, send it along to YOUR congresscritter for their John Hancock.
Or...
Just get in touch with the White House and tell 'em: "To hell with the Senate confirmation...please, just get it done, Mr. President!"