Who’s Afraid of Elizabeth Warren?

August 11th, 2011 at 7:36 am | 76 Comments |

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On July 21st, we marked the one year anniversary of the passage of the Dodd–Frank Wall Street Reform and Consumer Protection Act, the Democratic Congress’ legislative response to the catastrophic financial collapse of 2008.

Dodd-Frank failed to end the Too-Big-To-Fail doctrine.  Quite the opposite. By creating  a new category of “systemically important institutions” Congress has put a gold star on institutions which will always be bailed out.

Congress has institutionalized a system of privatized profit and socialized loss. What Dodd-Frank did do was to set up a new regulator, the Consumer Financial Protection Bureau (CFPB).

President Obama’s first CFPB head, Elizabeth Warren, has been attacked by some conservatives (and many lobbyists) as a dangerous zealot.  The Obama administration gave up trying to confirm her, and last week withdrew her nomination in favor of the former Attorney General of Ohio, Richard Cordray (whom Warren had hired as head of enforcement for the Agency).

The irony is: Elizabeth Warren was probably a better choice from the conservative point of view.

The main organizing idea for the CFPB is to consolidate statutory authority already in existence under current law and house it in a regulator devoted exclusively to consumer protection.  The existing banking regulators, especially the Comptroller of the Currency, are rightly believed to care much more about protecting market share for banks then protecting customers from banks.

CFPB has jurisdiction over two main products – credit cards and home mortgages.  In the case of home mortgages, the rules which the CFPB is working on require banks to lend to customers who have some ability to pay off the loan and to disclose to the customer in plain English the nature of the obligations he or she is assuming under the loan.  Neither of these rules has its precedents in the Communist Manifesto.  Since the taxpayers are the insurers of last resort for all home mortgages, we have a strong interest in seeing that persons to whom home loans are being extended can actually pay them back.  We currently own or guarantee over a trillion dollars worth of home loans in default on the balance sheets of Fannie, Freddie and other significant financial firms which did not bother to assess whether the borrower could actually pay back the loan.  Because Dodd-Frank exacerbated the risks associated with the-too-big to fail doctrine, as a second best solution, a federal suitability requirement for borrowers serves to provide some protection to taxpayers from acquiring another portfolio of nonperforming assets.

In the case of credit cards, the main thrust of the CFPB’s rules go to the disclosure of the fees and interest being paid by customers.  Some in the Agency would like to impose a suitability requirement on financial firms for the ability of customers to pay off their card balances.  Given that such a rule would result in a significant diminution of credit availability to low income (and no income) persons, disproportionately important groups to the Democratic collation, that rule, one suspects will not get very far.

Data from last year indicated that over 75% of credit card holders revolve a monthly balance, the balance averages about $7800 per cardholder and the average interest rate paid on those balances was about 16.5%, when including late fees and other penalties disproportionately paid by this group of cardholders.  (Lacking access to a Bloomberg terminal in my summer watering hole I have not been able to update these numbers, the interest rate is almost certainly lower, I am not sure about balances given the economic distress that many of these cardholders may be experiencing).  Conservatives can agree that it’s a legitimate purpose of government is to prevent persons from being defrauded.  Do we really want the bulk of the population to be carrying consumer debt, often incurred frivolously, without any understanding of the long-term cost, at usurious rates of interest?

Elizabeth Warren’s most widely known scholarship (profiled on Sixty Minutes no less) indicated that commercial banks derived as much as 70% of the profits of their entire consumer banking operations from the tranche of credit card holders who revolved large balances but did not default, instead paying monthly minimums indefinitely, becoming increasingly buried in indebtedness.  I don’t know if her numbers were correct (they were widely disputed) but given the vigor with which she was attacked by the representatives of the big commercial banks, I suspect she was on to something.  Most of these cardholders are financially naïve, have short time horizons and are prone to consuming more than they produce.  Disclosures that will cause some of them to alter their behavior so that they produce less negative savings may also align their interests with a broader fiscal conservatism.

The critique of the CFPB from the right is as follows: (1) its theoretical jurisdiction is enormous – encompassing extensions of credit to consumers generally; and (2) it is unaccountable to Congress and to the political process because it is run by an Administrator rather than by a Commission (in which there is minority representation) and it is funded by money made in the open market operation of the Federal Reserve (Washington speak for ‘the Fed prints its budget’) rather than being subject to a Congressional appropriation.  The first critique is correct; its theoretical jurisdiction is vast.  So too is that of the Federal Trade Commission, which has jurisdiction over “unfair and deceptive trade practices” in commerce (exempting financial services firms and common carriers, which had sufficient lobbying stroke to be carved out).  A solution would be to limit its jurisdiction to insured depositary institutions and their affiliates (and probably pawn shops and pay day lenders as a give to the left).  It could also be constrained by the case law interpreting unfair and deceptive practices developed under the FTC Act.

Senator Richard Shelby of the Senate Banking Committee and Chairman Spencer Bachus of the House Financial Services Committee have proposed legislation to make the CFPB a Commission and make its budget subject to an annual appropriation.  Both proposals are eminently reasonable.  Making the CFPB a commission was supported by Henry Waxman during the consideration of the legislation that became Dodd-Frank. (It was dropped in the Senate because of opposition from consumer groups).  The left has said the Republicans will defund the CFPB.  An obvious solution would be that its budget should begin by being an amalgamation of the consumer protection budgets of those agencies whose jurisdiction was transferred to the CFPB (and said agencies budgets should be reduced accordingly, no net new spending, though don’t hold your breath on banking regulators giving up budget authority even if they have lost jurisdiction).

The area in which the CFPB jurisdiction was altered from that of the regulators whose authority it subsumed was in the area of enforcement.  Specifically, the Board’s rules can be enforced by State Attorneys General. (Most Federal banking rules can only be enforced by Federal officials).  Many State Attorneys General on the Democratic side have tight relationships with their local trial bar.  A number will deputize plaintiff lawyers to act on behalf of the state in bringing actions and will pay them by means of a percentage fee of the recovery.  The potential for our friends in the trial bar to view a potential new set of deep-pocketed defendants in the form of too-big-to-fail banks should not be underestimated.

The bulk of Elizabeth Warren’s work focused on regulatory solutions to protecting consumers.  She certainly will know the empirical evidence indicating the minimal benefits to consumers of litigation.  Richard Cordray, the Attorney General of Ohio until the landslide of 2010, approaches questions from the perspective of enforcement in the courts.  The literature is clear that the costs of private enforcement are overwhelming borne by shareholders and customers of financial firms and the benefits to consumers are usually nil.  The Act contained this because of the central support the trial bar gives to the Democrats and their ability to ram it though the House in the Senate in the last Congress with essentially no Republican support.  I suspect Warren would have been more focused on the readability of disclosures to ordinary consumers (which can change behaviors).  Cordray may be more inclined towards a litigation-focused regime that could garner support from the national trial bar for a potential challenge to Ohio Governor John Kasich in 2014.   A deal in which the Shelby-Baucus legislation moved in exchange for an up or down vote on Warren would not have been a bad one.

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76 Comments so far ↓

  • balconesfault

    I think tha the main reason the GOP opposed Warren is because she clearly is dedicated to good governance (I suspect that a lot of the reason TARP got paid back rather than disappearing down ratholes was thanks to Warren’s work throughout the process tracking where the money was going).

    The GOP no longer believes in good governance … and especially opposes anyone demonstrating it possible while a Democrat sits in the Oval Office. This was kneejerk pure and simple obstructionism … although it didn’t hurt that their decision to block her was greased with a lot of lobbyist cash.

    • busboy33

      Agreed. I think Warren scared alot of people on both sides of the isle be appearing to be that most rare of Washington creatures — someone who seems driven by a strong moral and ethical compass as well as a sense of duty and obligation to the Nation. Might be pure theater, but she projects trust, honesty, competence and integrity.

      No way she was going to get the job.

      • sdspringy

        Nonsense, TARP is a rabbit hole, all in red. Believe the talking points but the reality is far from the fantasy your pushing.

        http://hotair.com/archives/2011/03/17/just-a-reminder-tarp-still-at-least-123-billion-in-red/

        And just a reminder TARP was for the taxpayer viewing enjoyment, a sideshow where money is concerned, the real dollars following out of the government, ie us, was behind curtain No.1

        http://www.commondreams.org/headline/2011/04/16-1

        • armstp

          TARP is not a rabbit hole. All of the money has come back from the banks. The only cash still outstanding that has not come back to the government is that given to Fannie, Freddie, AIG and GM.

          The government’s investments in AIG and GM should eventually come back as the government continues to sell its stakes in those companies. The government should be able to get almost all of its money out of GM and AIG.

          Fannie and Freddie investments should take longer. However, the government should eventually sell its stakes in those companies and get most of its money out.

          I would suspect that the governments losses in TARP should be minimal if not zero. They may lose a little on Fannie and Freddie, but that will be offset by some of the profits they have generated from the money they gave the banks.

          This was money well spent and recovered. It was to save the economy, unlike all the money that was spent in the Bush wars and we continue to spend thanks to Bush, which as truly a rabbit hole.

        • sdspringy

          There is no war without Congressional approval. Since 2007 Democrats could have and should have defunded those wars. Why didn’t that happen, you can’t answer but you are always ready with the only bullet the Dems have, “Bush’s Fault”.

          123 BILLION is not coming back, that’s not a rabbit hole, that’s black hole. Fannie/Freddie will cost TRILLIONs to bail out, we haven’t been allowed to see that tab yet but it’s coming.

          TARP was the cartoon before the main feature. All the money the FED loaned out with the toxic assest as collateral is lost, not coming back. That was taxpayer money, not paid through taxes but through inflation. It will hurt everyone, except the rich, funny how you support that type of financial rescue.

        • armstp

          sds,

          You are just making stuff up. You post a link and then you discount the information in your own link when you respond to me.

          Money very much will come back from Fannie and Freddie.

          Actually SDS, if you read my post properly, I don’t say anything about “Bush’s fault”, although it is, I say that compared to the spending on Bush’s wars the TARP is minor and that Bush’s wars are the true rabbit hole.

  • TerryF98

    And the Conservatives answer to the banksters that brought the country down?

    Answer Obstruction and zero ideas, zero bills. Just a willingness to take as much Wall street cash as possible.

  • ottovbvs

    The banking industry is terrified of this mild mannered, middle aged, female professor. So much for the theory that academics are wimps. Needless to say their paid hacks in the Republican party are doing what they are paid to do. Obstruct.

  • Emma

    Banks view credit card holders in much the same way as the Southern masters viewed their slaves. Exploit them as much as possible, subjugate them mentally, terrorize them when necessary, and never let them escape. Congressional Republicans believe this is divine order of things, set forth in the Bible, enshrined in the Constitution, worshiped by campaign contributors, and held together by the benevolent bonds of affection of bank managers for their innocent wards, the consumers.

    • Houndentenor

      Debt = slavery. You can rant and rave about the unethical practices of bankers and other lenders but the only real solution is to do whatever you have to do to get out of that debt. If that means selling everything you can live without on Craigslist and living on rice an beans, then do it. Yes, I know how hard that it. I did it actually (well not the rice and beans, but I did cut eating out down to once a week). This is especially true of any debt without a fixed rate (doubly especially credit cards).

      • Primrose

        Houndentenor, if you “cut eating out to once a week”, I’m afraid you don’t know how hard getting out of debt is. Many of the people who have this enormous debt don’t eat out once a week in good times.

        A lot of of the more pressing credit card debt comes when the household loses at least one salary, usually the breadwinners. For those with mortgages, unemployment insurance is often not enough to pay much more. So they live off the credit cards until they get a new job. So unless the new job pays significantly more, they don’t have the spare cash to make any inroads. Since so many of these people have children, they can’t really sell the house and move to a cheap little rental in a bad neighborhood. They can’t stop all expenses. Children need a lot of stuff (Not thatwith the housing market as it is they couldn’t sell the house anyway.)

        There are the young who racked up credit card debt in college when they should have had limited credit and now have nothing jobs and giant student loans. I would also suspect that a lot of people with giant student loans and underemployment are using credit cards to make the difference because they just can’t carry a loan, the rent, and anything else in life. And with the problem of compound interest this will haunt them forever.

        There are the families who are not earning enough, who use the card for emergencies but that monster compound interest gets them. These people too don’t eat out all the time. They buy kids soccer shoes, and school clothes, and maybe ballet lessons. They pay for new transmissions or boilers

        And even within the quick spenders, they don’t tend to come from the higher brackets, or spend on endless designer stuff. They tend to come from the middle class or lower middle class and they are buying just a little too much stuff. Not enough to really notice until it builds up or understand that the minimum payment gets them nowhere.

        Emma is right, the credit card companies do prey off people. Debt has often meant slavery in the past which is why usurers are persona non grata all the way back to the bible. Don’t you know the song”owning my soul to the company store”.

        I fear that the Republican party has turned to an Ayn Rand philosophy of treating most of the American public as fodder and filler and obstacles to the greatness of elites. I read endlessly about how people should do one more or the other thing in terms of discipline and sacrifice and never corporations, or the corporate elite. I think the reason they fear Ms. Warren is that they have not been able to corrupt her. More than her agenda, they fear those they can not corrupt and control.

        • PracticalGirl

          There were a number of articles a couple of weeks back that pointed to an upward trend in credit card use among the middle class to pay for the basics. I’m traveling right now and a bit hampered, but there is strong evidence that the increased saving of the past two years is being eclipsed again by credit card debt to live.

          I’m struck by Warren’s assertion that large commercial banks’ consumer debt profiles consist of 70% revolving debt from consumers current on payments. Since we also know that the American economy is roughly 70% reliant on consumer spending to keep healthy, I continue to wonder whether or not we truly have an economy that is sustainable. At some point, won’t most spenders rind out of credit and money to spend and service debt. What then.

        • Banty

          Not all of that 70% are people paying minimums with no prospect to pay of the debt. A lot of people suwwweeeearr that they always pay off their credit cards in full, but once I get close enough to their situation to see (like coworkers talking over lunch), it turns out that Christmas is still overhanging February bills, and that extra side trip to Disney is still being serviced the next winter. So a lot of these are people who are taking their ‘hills’ (income in January and September, say) and filling in their ‘valleys’ (outgo in August and December) with revolving debt. Which is one of the great advantages of credit, after all. Like, you don’t have to pull a child out of college for a semester, because a commission is coming in two weeks after the tuition due date.

        • Banty

          “I fear that the Republican party has turned to an Ayn Rand philosophy of treating most of the American public as fodder and filler and obstacles to the greatness of elites. I read endlessly about how people should do one more or the other thing in terms of discipline and sacrifice and never corporations, or the corporate elite. ”

          Yep. I’ve noticed that in spades. It underlies the scaredy-capitalism cant about uncertainty and taxes. That combines with tough-talk about how individuals should buck-up-and-bootstrap. It’s like how public unions having any input on elective officials is incestuous because they may later bargain over compensation, but private firms having input on elective officials is just good business because they expect to bid for contracts for publicly funded work. It’s in how medical doctors must be well compensated enough to make sure they still see patients, but teachers compensation should be squeezed down and there is no concomitant fear on the availability and quality of any replacements.

          In each case, it is the interests of well-heeled and well-connected, middle aged and older people, that are served by our current rhetoric. The arguments are made one way for the set of items they want to preserve, another say for the set of items they don’t care about or may get in the way of the first. And the arguments contradict each other oftentimes. But no matter, they have media outlets happy to repeat, and repeat, and repeat, and repeat.

          “I think the reason they fear Ms. Warren is that they have not been able to corrupt her. More than her agenda, they fear those they can not corrupt and control.”

          I think this is exactly right.

        • Houndentenor

          What is most bizarre is the mix of Ayn Rand economics with corporate welfare (of which she would never have approved) and Christianity (which she openly detested).

        • Houndentenor

          It was not my intention to dump on people who have lost their job or had to take a job that pays 1/3 of the old one. Obviously you have to do what you have to do survive.

          But those aren’t the only folks in credit card debt. Debt has become a fact of life for most Americans. We don’t think in terms of what we can afford. We think in terms of what we can afford to make payments for. The credit card companies make enormous profits off our lack of patience to save for what we want to buy rather than save until we have the money.

          So, my apologies to the people who are doing the best they can in a bad situation, but if you are working full time and that money isn’t enough to pay all your bills, then you have to adjust. If you are waiting for some government entity to save you I think the blocking of Ms Warren is exhibit A of why that’s a pipe dream. The banking industry owns Congress and real reform that would help citizens is not going to happen. It should; but it’s not going to.

        • Banty

          People certainly need to be responsible for themselves and their lives. But we can’t expect people to become lawyers in order to do so. We should certainly do better by people than just say “read all the fine print, caveat emptor”. Ms. Warren is advocating a way to have clear disclosure, so people can make real decisions. Rather than sign up for a low interest rate mortgage, thinking it a fixed rate, only to discover too late it has a balloon payment. It’s all about, as she puts it, removing the tricks and traps from financial dealings with every day people.

          As you note, banks and financial institutions hate that. Those tricks and traps are a lot of their revenue stream.

      • ConnerMcMaub

        You’re obviously from a wealthy background if you think eating out “only” once a week is cutting back. Once a month at Olive Garden is more like it for a lot of families and that’s still middle class we’re talking about. Try living on minimum wage, we have millions who do. Supermarkets now start at minimum or 50 cents over minimum. Most people who wait on you at food places are making around 8 dollars an hour including tips. Pizza deliverers make 8-10 an hour before paying for their gas. You have no clue, dude.

        • Houndentenor

          Actually I do have a clue.

          If you want to talk about people earning minimum wage, I doubt very many of them have credit cards and they are instead going to those payday lending places. They are even worse than the credit card companies but that’s seriously off-topic.

          I was responding to middle class people that I hear moaning about their debt while sipping a $5 drink from starbucks. I know plenty of them. You’d be surprised how deeply in debt some seemingly well-off people are.

    • Churl

      Slavery? Possibly, but it’s the sort of slavery that the slaves sell themselves into, the great majority of them voluntarily if unthinkingly.

      • PracticalGirl

        I can’t disagree with that, Churl. Do you think, though, the way our economic machinery runs makes it a necessity, especially in times of low growth? Remember What happened right after 9/11′ when the economy was a at a stand still. The Big 3 American automakers all came in with 0% interest/down financing (focusing heavily on leasing) to stimulate the economy, a move predicated by the knowledge that consumer spending is what largely runs the machine. It worked, btw, but it was very costly to consumers. And the manufacturers took a huge hit as a result, on both the financing and on decreased orders for new product when all those leases flooded their retailers. Not sure in the end that this was “good” for anybody in the long run, but was all tat debt necessary to get uthe US economy moving again? Look back, and I bet you’d answer yes. But is it healthy or sustainable?

        • Churl

          I agree. Credit is certainly be helpful to get an individual, household, enterprise, or even a national economy through a bad spot, but only if the loan is what’s really needed to get over the bad spot and repaying the loan is feasible after the bad spot is passed. The repayment part is too often not considered.

      • Houndentenor

        Agreed. there have been plenty of news stories where even the lawyers who write those credit card agreements can’t tell you what all of it means. There’s no reason for the agreement to be pages and pages long. Your payment is due on this date, the interest rate is this and if you are late you get charged this much. Basta. There’s also no reason that any bank should be allowed to lend money at 30% or more than the prime rate. There’s a lot wrong and it needs to be changed, but since banks own Congress I’m not holding my breath.

        My advice still holds. Do whatever you have to do to get out of credit card debt. If you can’t right now, ignore me. I’m just someone who used to work for these robber barons and knows what crooks they all are.

  • Smargalicious

    ^^Har! The usual leftist sops cackle in with their misguided screed.

    Until we get an administration and congress that is business friendly, no recovery will happen.

    Next.

    • medinnus

      You mean an administration and Congress which are essentially “owned” by business in the way that fomented the banking crisis and the recession? Your statement implies that there is nothing wrong with Obama’s economic policies other than an attempt by business to hold the country’s economy hostage to extort their will over what the People of the United States want… sounds familiar. Its called criminal extortion, political corruption, and economic terrorism (like your pillicock-worshiping Tea Bagger traitors).

      Nice to know that you openly advocate criminal extortion, political corruption, and economic terrorism, in addition to your Christianism and Racist bigotry bullshit. You really ARE a waste of oxygen as a human being. I hope you are judged fairly by your God, and enjoy your remaining time on Earth watching people treat minorities and homosexuals with respect and dignity, as they deserve.

      • busboy33

        c’mon medinnus . . . you aren’t really trying to talk to the jackhole, are you? You’ve been at FF far too long for that sort of naivety.

        • Primrose

          Ah, busboy33, even the most scrupulous anti-troll among us can’t completely shut it off. Sometimes, one feels the need to answer not so much as to expect a response but as a kind of firewall against the hate.

        • laingirl

          It’s best to ignore trolls like Smarg and not even read his comments, but he drops so many turds it becomes difficult at times to act like they don’t stink.

    • teabagger

      smeg = clown

  • Xunzi Washington

    ^^ Har! The usual content-less, superficial, empty and uninteresting screed.

    Until you can actually write things that my two year old couldn’t, no one will read you.

    Next.

  • Houndentenor

    Elizabeth Warren is the rarest thing in today’s business community and government. She’s an ethical person. No wonder so many people hate her. She’s exactly what we need and what the crooks and liars fear most.

  • sdspringy

    Another academic in charge of a massive portion of the US economy, what could go wrong.

    Warren has none, zip, nada experience with any form of buisness. It would be like electing a college professor of 12 years who never published a paper, who was in a state legislature and mainly voted present, who had a minor tenure as a Senator then electing this person President. Hows that working out for ya???

    • Oldskool

      It’s working much better than the two-term Texas governor who drove the country into this ditch, who doesn’t know his ass from third base.

      • sdspringy

        Really, ever look at current spending levels and wonder how Bush still controls what the Democrats do??
        Either Democrats have no control over their bodily functions or your an idiot who can’t find any other solution to the government spending problems other than to reach back 3 years and blame someone else.

        • balconesfault

          Really, ever look at current spending levels and wonder how Bush still controls what the Democrats do??

          Sure. Four ways.

          He pushed through a massive tax cut which we can’t politically get rid of thanks to the GOP.

          He pushed through a massive increase in Medicare spending without raising revenues to pay for it – and there’s no political will on either side of the aisle for eliminating the prescription drug benefit.

          He left Obama ongoing problems in Iraq and Afghanistan that have continued to suck money out of our economy, when he could have focussed on and “solved” (to the extent it’s solvable) Afghanistan years earlier while not ever getting us involved in occupying Iraq.

          About $250 billion a year of our Federal Budget is just interest on the amount of debt built up under Bush.

          And those are without mentioning the economic free-fall that Obama inherited on January 23, 2009.

          All in all, that’s one helluva anchor that Bush tied to anything Obama needs to do to turn the economy around.

          Limiting someone’s good options is a form of control. And Bush certainly limited the good options that America currently has available to us.

        • armstp

          If McCain would have been President he would be dealing with exactly the same deficit and debt that Obama is dealing with. It was a massive shit sandwich that Bush handed off.

        • Banty

          “He pushed through a massive tax cut which we can’t politically get rid of thanks to the GOP.”

          Ah, but legislation has to be passed to keep it that way. The tactics and politics of obstruction works more than one way, you know.

        • sdspringy

          Obama extended that tax policy, it’s yours. IF your party hasn’t the strength of their convictions it’s your problem, your weakness and not the problem of the Republicans.

          Obama will also back peddle and keep troops in Iraq, against the wishes of even you Balcon. Who you gonna blame then, did Bush make Obama make that campaign promises then make him break it???

          Democrats had complete and utter control of the Federal government for 2 full years, complete filibuster proof majorities. Yet everything is Bush’s fault. Do you realize how small and pathetic that is??

          Every legislative advantage existed yet Democrats FAILED to correct any of the woes blamed on Bush. Whose the inept, idiotic, legislative fault does that belong to, NOT Bush.

          Grow a set of balls, take some responsibility

        • balconesfault

          Every legislative advantage existed yet Democrats FAILED to correct any of the woes blamed on Bush.

          No, every legislative advantage did NOT exist.

          For every legislative advantage to exist, every Democrat in the Senate would need to think like a Republican, and put party first above everything else.

          For better or worse – Democrats don’t work that way. There isn’t absolute party discipline. There is no lockstep. And with 40 Republicans filibustering every bill, it only took one or two Democrats having reservations about a way a bill was structured to stop everything.

          Personally, if there were a healthy Republican Party acting in opposition, I’d consider this to be a strength, since debate within a party is a way of strengthening it … while as we’re seeing within the GOP the elimination of debate within a party as it moves to litmus tests and absolute party loyalty on each and every issue is a formula for ossification and extremism.

        • Bagok

          Dems had 60 in the Senate from 7/7/09 through 8/24/09. The rest of the time they had to get at least one Republican vote to pass legislation.

    • Banty

      “Warren has none, zip, nada experience with any form of buisness. ”

      What, if she were assistant manager at a McDonald’s, or had her own contracting business going at some point, she’d be all hunky-dory by you? Somehow I don’t think so.

      What is it with this run-a-business is like run-a-government mantra anyway? Just because someone sets up near a stream, and builds a mill, does not mean one understand how the water cycle from ocean to mountains to stream, etc. She has put her finger exactly on a hugely impacting problem, defined it correctly, and planned actions against it. That’s what we need her to do.

  • Southern Populist

    I love Elizabeth Warren.

    Obama and the Democrats’ failure to fight for Professor Warren tooth and nail shows just how phony and craven they really are when it comes to protecting ordinary people against banking predation.

    The GOP’s tactics and maneuvers gave Obama the excuse and pretext he needed to dump Warren just as banking interests wanted all along.

    Professor Cornel West called Barack Obama “a black mascot of Wall Street oligarchs and a black puppet of corporate plutocrats.”

    Cornel West is 100% RIGHT.

    The rest of Obama’s supporters ought to wise up too.

    • balconesfault

      While the criticism that Obama has been too friendly with Wall Street has merit (although nobody has offered a serious proposal for how Obama could have, given a totally obstructionist GOP minority and a media ready to label everything Obama proposed as borderline socialism, worked to rehabilitate the economy without Wall Street’s partnership), I keep wondering how much West’s vitriolic attacks on Obama have been motivated by a personal animus.

      Hell – it started with the inauguration:

      http://www.theatlanticwire.com/national/2011/05/cornel-wests-continuing-feud-barack-obama/37842/

      According to West himself, President Obama betrayed him on two counts after his election. The first was personal. It all started with a mix-up over inauguration tickets. Obama became increasingly hard to track down after his election but came through with a ticket for West. Tickets for West’s mother and brother were nowhere to be found, and the three ended up watching the event from their hotel room. West told Hedges:

      What it said to me on a personal level was that brother Barack Obama had no sense of gratitude, no sense of loyalty, no sense of even courtesy, [no] sense of decency, just to say thank you. Is this the kind of manipulative, Machiavellian orientation we ought to get used to? That was on a personal level.

      Seriously, dude?

      • Primrose

        I like Cornel West but have to agree. Really, you think with an inauguration going on and a new presidency to start he’s going to be able to remember that?

        • Smargalicious

          Cornel West is a militant reparationist who wants to involuntarily redistribute wealth from taxpayers to non-taxpayers. He is a fool.

  • balconesfault

    I think that Ann Warren wouldn’t have stayed as long in the twilight zone of a non-confirmed nominee as long as she did if she didn’t believe in Obama … and I suspect that Obama’s unwillingness to escalate the confirmation battle over Warren has more to do with a long-term strategy of not destroying her political future than in some Machiavellian plot to appease Wall Street.

    The dumbest guy in this escapade might be Scott Brown – who should have been pushing his GOP counterparts to confirm Warren to keep her busy over the next 16 months. But then nobody ever accused Brown of being a brilliant guy.

  • armstp

    Remember the Democrats are actively recruiting Warren to run for Senate against Scott Brown. That could be a factor why she did not get the job to lead the new agency.

  • Banty

    “The left has said the Republicans will defund the CFPB. An obvious solution would be that its budget should begin by being an amalgamation of the consumer protection budgets of those agencies whose jurisdiction was transferred to the CFPB (and said agencies budgets should be reduced accordingly, no net new spending, though don’t hold your breath on banking regulators giving up budget authority even if they have lost jurisdiction).”

    And what protects the budgets of those other agencies? This would only make it easy to squeeze the budgets of those agencies, forcing them to squeeze out CFPB funding, and be a much more diffuse, and therefore opaque, process than what’s currently proposed.

    This is ludicrous; it’s a patch. Not even a patch. The CFPB needs to be independent, else the firms they regulate will buy out the legislators who would merely fail to appropriate its funds.

  • LFC

    Smargalicious said… Until we get an administration and congress that is business friendly, no recovery will happen.

    What do you propose that a “business friendly” administration and Congress do? Deregulate? That worked out great for both the Savings & Loans and the derivatives industry. Or California who got screwed left and right by Enron et al. Cut business taxes? America already has one of the lowest tax burdens among industrialized nations. And its companies have record cash on hand. And just had a record year for profits. Pass legislation to help small businesses? The Democrats tried about a year or so ago and the Republicans shot it down, even though the legislation was paid for.

    So by all means, tell me what specific policies a supposedly “business friendly” government would do.

    • Smargalicious

      Here you go:

      “…The U.S. economy is teetering on the edge of a double-dip recession. High unemployment and a weak housing market are dragging down economic growth. But there’s another major issue that isn’t getting much attention these days: The business climate for entrepreneurs and investors in the U.S. is starting to lag behind other countries’.

      The U.S. dropped from No. 2 to No. 9 in our fifth annual ranking of the Best Countries for Business. Blame the high tax burden and a poor showing on trade and monetary freedom compared with many other developed nations. The 35% federal corporate tax rate is the highest of any OECD country according to the Tax Foundation. Meanwhile the government’s significant intervention in the economy during the economic downturn has weakened economic freedom in the U.S…”

      http://www.forbes.com/2010/09/07/best-countries-for-business-business-washington-best-countries-10.html

      • LFC

        First, any source talking about tax rate instead of actual taxes requires a massive bitch-slap. The tax code is not just a rate. See the chart below to see why that massively distorts the actual taxation of American business. And again you fail to address the facts of record corporate profits and record corporate cash on hand.

        Second, please explain to me what they mean by “trade and monetary freedom.” This is very vague. Since you seems to understand all of this, I’m sure you can spell it out in detail.

        Third, the statement “the government’s significant intervention in the economy during the economic downturn has weakened economic freedom in the U.S.” has got to be one of the dumbest things I’ve ever heard. We lost “economic freedom” by preventing a collapse of our economy? Aaaaaah, yeah. I’ll take that trade any day.

        And one more thing. In 2008, #2 on the list was Ireland. That worked out REAL well.

        Given a choice between giving business whatever it wants and doing what’s best for our nation, our nation wins every time. Much of that IS to be a good climate for doing business, just not necessarily one that let’s a business do anything it wants. We did that with the S&Ls in the the 80s and the entire financial industry in the 00s, and it f***ed us.

        http://thinkprogress.org/wp-content/uploads/2011/07/final-chart.png

        • balconesfault

          First, any source talking about tax rate instead of actual taxes requires a massive bitch-slap.

          Bingo. We’re talking about a periodical run by a man who has been politically advocating for lower taxes his whole career – personal and corporate. No reason why the editorials in his publication won’t reflect this bias in everything they write.

  • Danny_K

    Lobbyists don’t like regulation. I don’t think there’s anything else to be said about it.

    Making the CFPB a commission requiring annual appropriations is transparently a way to weaken its mandate and make it easier to kill off in future Congresses. If we need a politically supine, poorly funded watchdog agency that doesn’t actually do anything, we already have the SEC.

  • Southern Populist

    I suspect that Obama’s unwillingness to escalate the confirmation battle over Warren has more to do with a long-term strategy of not destroying her political future than in some Machiavellian plot to appease Wall Street.

    Obama walking away from Warren is definitely an attempt to appease Wall Street.

    The legislation that created the Consumer Financial Protection Bureau (CFPB) was passed last year when the Democrats still had 59 in the Senate and a big majority in the House.

    Obama could have easily had Warren confirmed then but chose not to. It certainly raises the question, why did Obama not confirm Warren then?

    I don’t buy the theory that Obama is protecting Warren’s political future.

    Warren can do far more good for the country running the CFPB than she can serving as a member of the US Senate. At the CFPB, Warren would exert direct control over writing and enforcing these anti-predation banking regulations. In the Senate, she won’t be able to do that. Warren is young and has plenty of time to run for the Senate later in her career if she wants to.

    Moreover, the Democrats don’t need Elizabeth Warren to retake that Senate seat in 2012. The 2010 election was conducted under very unusual circumstance, and that seat will almost certainly flip back to the Dems anyway no matter who they run assuming a minimally competent candidate.

    No, walking away from Warren is a flat out example of appeasement.

    Cornel West might be an ego maniac, but I doubt he would say things that he does not believe about Barack Obama’s policy positions because of personal enmity.

    If you look closely, it’s very clear that Barack Obama has a history of appeasing powerful oligarchies in much the same way the Republicans do. This Elizabeth Warren matter should not be viewed in isolated terms IMO. It is part of a running pattern.

    I interpret decisions like not closing Gitmo, not drawing down in Iraq and Afghanistan as fast as he promised, and launching a new war in Libya as examples of appeasing the MIC. Obama will never say that, of course. No president is ever going to say “we need to stay in Afghanistan to keep the Military Industrial Complex in business.” He will always say something like “our gains are fragile, we might lose our gains if we don’t maintain these troop levels, and civilians are under threat.”

    To some extent, the left-liberal base in this country gets exploited by powerful interests in much the same way the Tea Party is exploited as cannon fodder by the Koch brothers and other plutocrats.

    - DSP

    • balconesfault

      Obama could have easily had Warren confirmed then but chose not to.

      First, the makeup of the House is irrelevant.

      You really don’t believe she would have been filibustered by a unanimous GOP Senate Caucus?

      What color is the sky in your world?

    • balconesfault

      I interpret decisions like not closing Gitmo, not drawing down in Iraq and Afghanistan as fast as he promised, and launching a new war in Libya as examples of appeasing the MIC.

      Obama could not close Gitmo. He had to actually send the detainees somewhere, and Congress basically declared they would not fund them being sent elsewhere. Barring a decision to unilaterally start releasing detainees on this basis, it was case closed.

      Drawdowns in Iraq have proceeded on schedule. What are you talking about?

      During his campaign he promised, otoh, an increase in troop strength in Afghanistan.

      Libya is incomprehensible – my guess its an example of a POTUS succumbing to those who tell him victory will be quick and easy and lots of good things will result and he’ll get lots of kudos as a result, without anyone stopping to consider laws of unintended consequences. He is certainly accountable for the waste there.

      In general, I think that Obama’s cautious approach to dismantling the worst and most costly portions of the GWOT have to do with a knowledge that if he reins in Bush’s worst excesses, and ANY significant terror strike against America occurs in the interim, the GOP and media will unanimously lay the blame on the success at the door of the Democratic Party, and no Dem will get elected President for another 20 years.

      It would be nice if the media held Bush accountable for 9/11 in any way shape or form, but we’ll never see that. But since the media’s default narrative is that Dems are weak on defense, then the Dems would definitely take a major hit if an attack occurred under Obama’s watch. And being able to get hours and hours of airtime claiming it’s because any of the evil, costly crap he saddled us with was dismantled is Dick Cheney wettest wet dream.

  • gover

    To admit to the need for the CFPB and Elizabeth Warren would be a tacit admission that predatory lending occurred and was, in fact, a problem. Also, it would impede future predatory lending. No wonder the banks hate it.

  • sublime33

    I totally understand why some citizens resist government intervention at all levels. There is a reasonable fear about faceless bureaucrats making decisions that might have a profound effect on you, while you have little recourse.

    What makes absolutely zero sense is when these same individuals have absolutely no qualms about corporations having total control over certain aspects of your life – notably insurance and financial services. They totally distrust government but have no distrust at all about insurance companies and lending institutions. These people are nothing but puppets responding to the strings being pulled by special interests. They don’t take time to think that it might make perfect sense to distrust both the government and big business. But they won’t hear that on Rush, or Glenn Beck or FOX.

    • sinz54

      Credit card companies do not have “total control over my life.” In fact, they have no control at all.

      I don’t have to use the card; if I use the card, I can pay the balance off in full each month (making my effective APR zero); if I don’t like the card anymore, I can cut it up with scissors and never be bothered again.

      I’ve had experiences where a credit card company started charging an annual fee on a card they had sold to me with no annual fee. I just stopped using the card. End of story.

      Only the government can have “total control over my life,” because only the government is authorized to use deadly force.

  • sublime33

    And as a further note, when someone says “I don’t want the government running health care or the banks”, I agree. But I also add that I sure as hell want the government to police health care and the banks, just like I want them to police the ports, the Securities and Exchange Commission, the FDA, etc. I also want the government to ensure that if a life insurance company promises to pay my beneficiaries a sum of money when I die, someone can enforce that they are solvent so they can keep those promises.

    • sinz54

      We already had plenty of laws on the books to deal with enforcement against fraud. For example, a credit card company that falsely claimed you owed more than you really did. That’s fraud, and we have laws against that.

      That’s not what this is about.

      This is about whether we need the Government to restrict the types of financial products that are made available to potential consumers.

      The whole rationale for this Consumer Financial Board is the assumption that consumers were conned into taking subprime mortgages and other risky loans, and that consumers need to be “protected” from such offers. Were they conned? Or were they just greedy and ignorant, trying to buy homes they had no business buying?

      There’s an old saying: Never invest in anything you don’t understand. If you don’t do your homework and learn that real estate is a relatively illiquid, highly leveraged investment, you deserve what you’re going to get. Caveat emptor.

      Here’s an analogy: In 1974, the National Highway Traffic Safety Administration had issued a regulation that automobile seat belts had to be integrated with the car’s ignition system, so that the car wouldn’t start unless you had buckled your seat belt first. The assumption was that drivers were too dumb and careless to choose to buckle their own seat belts unless they were forced into it.

      It didn’t take very long before a public outcry forced the abandonment of this regulation.

      The right answer was to give the public the facts: Seat belts really do save lives. If some drivers insist on not wearing them anyway, that’s their prerogative, and they have to live with the consequences.

      I have no sympathy whatsoever for someone who buys a $300,000 house without doing their homework on both the house and the financing. You don’t make a purchase like that on a whim–unless you’re already a gazillionaire.

      • balconesfault

        The whole rationale for this Consumer Financial Board is the assumption that consumers were conned into taking subprime mortgages and other risky loans, and that consumers need to be “protected” from such offers. Were they conned? Or were they just greedy and ignorant, trying to buy homes they had no business buying?

        A lot of them were clearly conned.

        Let’s face it – people with average intelligence are going to have a hard time running all the traps the should when lenders start throwing “creative financial instruments” at them.

        We know there’s a massive societal risk there – and it behooves us to enforce MUCH more disclosure, putting the onus on making sure that lenders are making borrowers well aware of those risks.

  • Chris Balsz

    I’m not sure why we need a new regulatory agency, and not a reform of the Bankruptcy Act and the Fair Lending Act.

  • Argy F

    I am irreparably suspicious of (& hostile to) the view of those who present arguments that are, in effect, simply a condemnation of of people in debt.

    I watched movie versions of Dickens’ classic A Christmas Carol as a wee bairn and had no trouble absorbing the import. Seems some folks never have — and never will.

    Absorb the meaning that is.

  • Frum: Warren Would Have Been a More GOP-Friendly Choice to Lead the CFPB — Troutman Sanders CFPB Team

    [...] journalist David Frum argues in an August 11, 2011  Frum Forum blog entry that Republican senators should have supported a Warren appointment averting the possibility of [...]

  • Steve D

    “Data from last year indicated that over 75% of credit card holders revolve a monthly balance, the balance averages about $7800 per cardholder and the average interest rate paid on those balances was about 16.5%, when including late fees and other penalties disproportionately paid by this group of cardholders. ”

    $7800?

    But it’s the banks who are to blame for all the problems, right?