Tuesday, March 22, 2011

Macro Economics

The big banks loathe Ms. Warren, who has made a career out of pointing out all the ways they gouge financial consumers — and whose primary goal is to make such gouging more difficult. So, naturally, the Republicans loathe her too. That she might someday run this bureau terrifies the banks. So, naturally, it terrifies the Republicans. -- Joe Nocera, N.Y. Times

Rather than writing the same thing over and over again, I should create a keyboard macro to save time.  An issue invariably arises, usually involving the economy, which provides a golden opportunity for the Democrats to demonstrate that they are the Party that cares about regular, working people while the Republicans are shamelessly in the pocket of Big Business and the ultra-wealthy.  Extending the Bush tax breaks is a perfect example.  The current budget debate in which the Republicans only want to cut domestic programs but nothing else and are threatening to shut down the government is another.  All the Democrats have to do is stay united and stay principled.  But other than a few lonely progressives, the Democrats, including the President, invariably cave and their message remains forever muddled.

Here they go again.  If the Democrats could ever be savvy enough to create a symbol to demonstrate their zeal for protecting the public from the greed, corruption and unaccountability of the financial industry it would be Elizabeth Warren.  She is a brilliant Harvard law professor who argued for a new agency to protect consumers before the financial crisis hit.  She chaired the Congressional Oversight Panel tasked with investigating the bank bailout, where took on the financial giants as well as the government.  She also comes across as warm and earnest, speaking in plain-spoken terms with a southern accent. 

Elizabeth Warren has been tasked by President Obama with setting up the new Consumer Financial Protection Bureau, which was a key part of the reforms that were passed in the wake of the financial meltdown.  An independent agency that will be operational in July, it will have the power to regulate credit cards, mortgages and other financial products.  Last week, Warren appeared before Congress and explained the agency's goals: "We firmly believe in the importance of making prices clearer, making risks more obvious, and cutting back on the fine print and legalese that can make it impossible for families to compare a mortgage or credit card with two or three others."

Naturally, the Republicans want to skewer Elizabeth Warren and gut the power of an agency that is being set up to protect ordinary Americans from big financial institutions.  According to news reports, the Republicans are concerned the agency will be "too powerful and are trying to portray Warren as the "unaccountable" head of a bureaucracy immune from oversight.  They want to cut its funding and control what's left by replacing a single director with a 5-member board.

CNN reported that "the hearing was one of the more hostile Warren has yet faced on Capitol Hill."  Joe Nocera in the Times described her as being treated by Republicans like a "pinata."  Paul Krugman wrote that the Republicans "lined up to grill and attack" her even though the accusations made no sense.  According to Krugman, the point was "to ensure that neither she nor anyone with similar views ends up actually protecting consumers."  He explained that for Republicans, "people like Ms. Warren . . . who warned that we were heading for a debt crisis before it happened" threaten their attempts to revise recent history and argue that the financial crisis was caused by too much regulation, not too little. "Such people must therefore be demonized, using whatever tools are at hand." 

One key question remains is who will be appointed to run the agency.  Elizabeth Warren is the obvious choice.  Krugman again: 
Given Ms. Warren’s prescience and her role in shaping financial reform legislation — not to mention her effective performance running the Congressional panel exercising oversight over federal financial bailouts — it was only natural that she be appointed to get the new consumer protection agency up and running. And it’s hard to think of anyone better qualified to head the agency once it goes into action.  The fact that she’s so well qualified is, of course, the reason she’s being attacked so fiercely. Nothing could be worse, from the point of view of bankers and the politicians who serve them, than to have consumers protected by someone who knows what she’s doing and has the personal credibility to stand up to pressure.
And this is where the opportunity comes for the President and his fellow Democrats.  Krugman wonders whether "the Obama administration will see the war on Elizabeth Warren for what it is: a second chance to change public perceptions" about who is truly to blame for the financial crisis.  "By the sheer craziness of their attacks on Ms. Warren, however, Republicans are offering the administration a perfect opportunity to revive the debate over financial reform, not to mention highlighting exactly who’s really in Wall Street’s pocket these days. And that’s an opportunity the White House should welcome."


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