Elizabeth Warren, political power, and the banks

Originally posted at AMERICAblog

Suzanna Andrews Vanity Fair has a long article on Elizabeth Warren, one of the most effective advocates for the middle class:

Arrayed against Warren, and today against the very existence of the C.F.P.B., was the full force of what many, most notably Simon Johnson, the M.I.T. professor and former International Monetary Fund chief economist, have called the American financial oligarchy: Wall Street firms and banks supported mainly by Republican members of Congress, but also politicians on the other side of the aisle, along with members of Obama’s own inner circle.

At a time of record corporate profits, a time when 14 million Americans are out of work, when millions have lost their homes and, according to the Census Bureau, the ranks of those living in poverty has grown to one in six—that Elizabeth Warren could be publicly kneecapped and an agency devoted to protecting American consumers could come under such intense attack is, ultimately, the story about who holds power in America today.

The article goes on to discuss the creation of the CFPB and the massive amount of money the banking industry spent to oppose it. Despite their opposition, the CFPB was created and Warren was eventually picked by the President to get the agency up and running.

One of the things that Vanity Fair does well is tease out the reasons and ways in which Treasury Secretary Tim Geithner, President Obama’s top adviser on the economy, has opposed Warren at every turn:

“Geithner hated her,” says a former administration official. Part of it was seen as personal because she had scorched him in public. But the whole thrust of her work on the oversight panel—getting the facts out to the public—was at odds with Geithner’s perceived conviction, shared by the Wall Street establishment, that the details of the banks’ TARP rescue should be hidden from public scrutiny whenever possible in order to give the banks time to recover, an assessment that a Treasury spokesperson disputes, insisting that “Secretary Geithner initiated unprecedented disclosure requirements for financial institutions.”

I hope it’s startling to you to be reminded that Geithner thought “that the details of the banks’ TARP rescue should be hidden from public scrutiny whenever possible.” It’s a strong reminder of who he is, what he believes in, and who he thinks his core constituency as Secretary of the Treasury of the United States is.

Beyond whatever ideological sympathies exist within the Obama administration towards Wall Street, they have demonstrated a strong political need to keep bank executives happy with them. Wall Street is a key part of the Obama re-election campaign’s fundraising base.

In early spring, several weeks before Obama’s April announcement that he was running for re-election, 24 Wall Street executives gathered in the Blue Room of the White House for a meeting with the president. According to the New York Times account of the meeting, Obama spent more than an hour listening to the financiers’ thoughts on the economy, the deficit, and financial regulation. After the meeting, Obama would follow up with phone calls to the executives who had not been able to attend. The event, the Times wrote, was organized by the Democratic National Committee and “kicked off an aggressive push by Mr. Obama to win back the allegiance of one of his most vital sources of campaign cash.” The financial industry contributed $43 million to Obama’s 2008 presidential campaign, a record haul. But his relations with Wall Street had soured—remarkably many of them were enraged over his criticism of their bonuses in late 2009, which is also when he called them “fat cat bankers.”

I don’t think politics are the sole reason that the President decided to fire Elizabeth Warren, though it’s certainly a contributing factor. As the administration tries to leverage #OccupyWallStreet into electoral support, it’s important to remember that Wall Street is their actual political power base, not the people protesting it.

Andrews’ piece is also a strong reminder of how successful Elizabeth Warren has been at confounding powerful political players, from Geithner and Obama to former Senator Chris Dodd and the entire banking lobby. She out-organized the banks, as well as opponents on both sides of the aisle, to not only get the Consumer Financial Protection Bureau created, but get the interim job running it. She’s shown tremendous political prowess. She’s now running for Senate in Massachusetts and seems to have a very good shot at not only the Democratic nomination, but winning the seat. While there are reasonable questions about whether or not moving towards the Democratic Party is a better choice than moving away from it, if elected, I would hope that she continues to fight against Democratic officials who are captured by Wall Street. She will have to carve out space within an institution which resists independent voices, but if there’s anyone who has demonstrated an ability to function at a high level amidst politicians who are only accountable to wealthy elites, it’s Warren.

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