Elizabeth Warren: the woman who knew too much

(Vanity Fair)

In yesterday's post, I provided a link to this article about Elizabeth Warren in Vanity Fair, but I like it enough that I thought I'd post a few excerpts today:

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.

When the C.F.P.B. [Consumer Financial Protection Bureau] was first proposed to Congress, in early 2009, the Chamber of Commerce, the leading business lobbying group in the country, announced that it would “spend whatever it takes” to defeat the agency. According to the Center for Public Integrity, from 2009 through the beginning of 2010, it would be one of the biggest spenders among the more than 850 businesses and trade groups that together paid lobbyists $1.3 billion to fight financial reform.

Although a Gallup poll in the fall of 2010 would show that 61 percent of Americans supported Dodd-Frank—which was designed to curb the risky bank activities that triggered the 2008 meltdown and the ensuing recession—the financial establishment would continue to attack it even after it became law on July 21, 2010. ...

While Wall Street and the banks oppose virtually every aspect of Dodd-Frank—from the new rules on derivatives to higher capital requirements—the C.F.P.B. would become among the most controversial aspects of the reforms, the banking industry’s particular bête noire. Its chief mission, on the face of it, would seem unremarkable: enforcing the rules protecting consumers already on the books, bringing laws that had been overseen by seven different federal agencies under a single authority. Most of the rules were overseen by the bank regulators. The catch was that none of them had paid much attention to consumer protection. Their primary focus had been ensuring the “safety and soundness” of the banks, which for decades had translated as ensuring bank profits. For the banks, the C.F.P.B. meant not only a new regulator rifling around in their books but also a regulator with a mission that did not focus on their bottom lines. And in a world where the banking industry makes billions of dollars off consumers from what’s hidden in the fine print—including $22.5 billion in credit-card penalty fees last year, according to R. K. Hammer, a bank-card consultant—the banks perhaps had reason to be concerned.

Talk to most bank executives and they’ll still place the blame for the 2008 financial crisis on “irresponsible consumers” who took out mortgages they couldn’t afford; dishonest mortgage brokers; and—at the top of the list—the government, which used Fannie Mae and Freddie Mac to finance mortgage lending to “people who shouldn’t own homes,” as one senior New York bank executive put it to me recently. All of which is partly true but omits the enthusiasm with which Wall Street feasted on that market, and the fact, as Warren puts it, “that Wall Street made tens of billions of dollars” from it. In short, there is no remorse, let alone a sense of obligation, because bank executives generally do not believe they were the cause of the financial collapse. As Neil Barofsky, Treasury’s former inspector general charged with oversight of TARP, the $700 billion government bailout of the banks, recalls from his interviews with bankers, the attitude instead was that “shit happens.” The state of denial has been massive. On Wall Street today, says the vice-chairman of a private-equity firm, “there is this enormous persecution complex in the banking industry about Dodd-Frank, that everyone is going after the banks.” ...

In those speeches, sometimes using slides filled with numbers and graphs, she [Elizabeth Warren] would, as she did at a speech in Manhattan in early June, outline the impact on middle-class Americans of rising health-care costs, burgeoning debt, and the depletion of not only their savings but also, with the rise in joblessness, their confidence. She spoke of “the Wild West” conditions deregulation had created, where banks could sell virtually any product they wanted, on any terms: mortgages they knew consumers could not pay off, credit cards whose rates they could raise at whim, products that came with a mind-boggling array of penalty fees, many of them not fully disclosed. But it was her final remarks that brought down the standing-room-only house in June. “We cannot run our country without a strong middle class. We cannot run a democracy without a strong middle class,” she said, her voice quavering slightly. “If we hollow out the middle class,” she said, “then the country we know is gone.”

But while audiences applauded her, Warren’s opponents lacerated her. She was called incompetent, power-hungry, ignorant, a media whore, and, in a widely televised moment, a liar, by a Republican congressman during a hearing in May. “It was like she was the Antichrist,” says Roger Beverage, the president of the Oklahoma Bankers Association and one of the few bankers who publicly supported her. She had become the lightning rod for the opposition to the C.F.P.B. Says Barney Frank, the Massachusetts congressman who is the “Frank” in “Dodd-Frank,” “It’s partly sore-losership. They are blaming her for something they all swore would never happen.” But it was also because she was eloquent and convincing, and relentlessly tough in her criticism of Wall Street and its enablers.

That bluntness was evident in an interview even in late May, when Warren, who learned only in July that she wouldn’t get the job, still believed that Obama might ask her to run the C.F.P.B. “It’s money and power, the only two things we are talking about here,” she said, speaking of the people who were trying to kill the C.F.P.B. “in the back alleys,” as she put it. “There are many who are rich and powerful who say the system works fine as it is,” she continued. “America had been a boom-and-bust economy going into the Great Depression—just over and over and over, fortunes were wiped out, ordinary families were crushed under it. Coming out of the Great Depression we said, We can build a structure that makes us all safer. And notice, it’s from the end of the Great Depression to the 1980s that we built America’s middle class. That’s when we got stronger as a country. That’s when that big, solid, boring, hardworking, play-by-the-rules group in the middle emerged and defined what America was. You still had the ability to become a billionaire, but the center stayed strong and, notice, provided opportunity for growth, opportunity for getting ahead, opportunity that your kids were going to do better than you did. That was what defined America. And then we started, inch by inch, pulling the threads out of that regulatory fabric, starting in the 1980s.” ...

By this spring, Spencer Bachus, along with his fellow Alabaman, Senator Richard Shelby, was one of the C.F.P.B.’s leading opponents. But they would be joined by the vast majority of Republicans. Some of them had previously admitted to having no particular interest in or understanding of banking, but had developed strong feelings about the C.F.P.B. after receiving campaign donations from banking groups. Among them was former MTV Real World star Sean Duffy, a Wisconsin Republican elected to Congress in 2010, who has been showered with $178,000 in campaign donations from the financial sector for his next election. But the real battle was against Dodd-Frank. Attempts were popping up throughout Congress to slash the budgets of regulatory agencies, including the C.F.P.B. There was even one that denied funding for a consumer-complaint database at the Consumer Product Safety Commission, which businesses had opposed on the grounds that consumers might call in fake complaints. In a sense, says Barney Frank, the C.F.P.B. and Warren had become “a symbol” in a broader battle that was partly ideological. The anti-government, free-market, unregulated-business-as-the-savior-of-America sentiment of the Republican Party today, assisted by Wall Street’s campaign donations, dovetailed perfectly with the interests of the country’s banking Goliaths. To a degree, the attitude regarding Warren, Frank says, was “How dare this woman criticize the free-enterprise system?” ...

As for Elizabeth Warren, on September 14, ending weeks of speculation, she officially announced that she was entering the Massachusetts Senate race. Today, Warren is considered the Democratic front-runner in what is likely to be one of the most closely watched congressional elections next year. In early September, one poll put her within nine points of Scott Brown—even before she had announced her candidacy. A few weeks later, after her official entry into the field, another poll had her ahead of Brown by two points.

Speaking from a car on her way from one campaign event to another, Warren told me that the stakes are too high for her not to run, too high not to try to continue the fight “for the middle class.” Too high not to try to bring it into the belly of the beast, to the floor of the U.S. Congress. Middle-class families “are getting hammered and you know Washington doesn’t get it,” she said. “G.E. doesn’t pay any taxes and we are asking college kids to take on even more debt to get an education, and asking seniors to get by on less. These aren’t just economic questions. These are moral questions.”

There's a lot more to the article - more about Elizabeth Warren's background (born in Oklahoma, she started out as a Republican) and more about Washington politics, including her treatment by Barack Obama and other Democrats, who are also eager for campaign funds from the banking industry.

I recommend that you read the whole article yourself. And then,... well, here's Elizabeth Warren's website in her campaign for the U.S. Senate. Decide for yourself what's next.