Elizabeth Warren - Through The Wringer

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.

-- Republican Representative Spencer Bachus (AL), Wednesday December 8, 2010.

Given his posture of obeisance to bankers, Bachus was undoubtedly unhappy to see Obama place Elizabeth Warren, Harvard professor and chair of a Congressional Oversight Panel investigating the 2008 bank bailouts, in charge of the new Consumer Financial Protection Bureau (CFPB):

Elizabeth Warren stands for transparency. After decades of abuse, consumers of financial products deserve prices that are clearly stated up front, risks that are plainly visible, and absolutely nothing buried in the fine print. This kind of transparency allows people to comparison shop in an effective way; it will also spur market competition and encourage the kind of innovation that really benefits consumers. It’s time to end the deception that comes packaged with complicated agreements wrapped around hidden fees and all kinds of nasty surprises.

Republicans are now winding up on Elizabeth Warren. The CFPB's job--and her job--is to regulate consumer credit markets. House Republicans held a hearing on Wednesday with Warren as star witness:

She may or may not be nominated by the president to serve as its first director when it goes live in July, but in the here and now she’s clearly running the joint.

And thus the real purpose of the hearing: to allow the Republicans who now run the House to box Ms. Warren about the ears. 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.

The banks and their Congressional allies have another, more recent gripe. Rather than waiting until July to start helping financial consumers, Ms. Warren has been trying to help them now.

. . .

At the request of the states’ attorneys general, all 50 of whom have banded together to investigate the mortgage servicing industry in the wake of the foreclosure crisis, she has fed them ideas that have become part of a settlement proposal they are putting together. Recently, a 27-page outline of the settlement terms was given to banks — terms that included basic rules about how mortgage servicers must treat defaulting homeowners, as well as a requirement that banks look to modify mortgages before they begin foreclosure proceedings. The modifications would be paid for with $20 billion or so in penalties that would be levied on the big banks.

Naturally, the banks hate these ideas, too. So the Republican members of the subcommittee had another purpose as well: to use the hearing to serve as a rear-guard action against the proposed settlement.

Senate Republicans have also indicated they would strive to block her nomination as head of the CFPB. It's clear that Congressional Republicans hate the very thought of protecting consumers against banks. In fact, they hate the idea of any financial reforms, whatsoever, arising from the banks' fraud, malfeasance, and mishandling of not only their own businesses by the American economy, including the Dodd-Frank bill, which created the CFPB:

The home page on the House Financial Services Committee’s Web site has been turned into a screed against Dodd-Frank. Clearly, the committee is going to spend this session trying to minimize the effect of the legislation, starving agencies of the funds needed to enact the regulations mandated by the new law, for instance. In fact, that effort has already begun.

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.

The bankers' actions leading up to the Great Crash of 2008 were clearly criminal; they just haven't been so adjudicated in a court yet. And yet the Republicans in Congress are gunning for the one person in the one governmental Bureau that is designed to help protect you against those same banks.

To put it bluntly, Republicans have no problem at all with big banks fucking you over however they like.

And yet, having said that, certain members of the Obama administration, too, are not so keen on Warren:

If anything, Mr. Geithner at this stage is more pro-banking lobby than even Mr. Bachus. During the Dodd-Frank reform debate, Mr. Geithner would frequently argue that “capital, capital, capital” was all we really needed to fix the financial system.

. . .

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.

. . .

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?

As recently as late last month, Warren publicly (and rightly) disagreed with Geithner's assessment of the strength of the banking sector:

"We have more concentration in the banking industry than we had before [and] we're going to have a ‘too big to fail' problem lurking around the edge of this financial system until we've demonstrated how we're going to deal with financial institutions who take on too much risk."

Just the kind of demonstration Geithner is dead-set against. Geithner, after all, helped to defeat the Brown-Kaufman Amendment, which limited the size of banks to protect the economy from their failure.

So far, Obama has made no moves to nominate Warren as head of the CFPB (her appointment now is temporary). Whether he does or not will indicate fairly clearly whether he stands with American consumers, or with the Republicans and the big banks.