A new deal for the 21st century

Jan 20, 2011 19:13 UTC

Below is an excerpt of a speech titled “A New Deal for the 21st Century: Less Entitlement, More Accountability.” I am scheduled to deliver the keynote talk today in Indianapolis at an event sponsored by the Indiana Leadership Forum.

In a January 2011 article in The Nation magazine, author William Greider bemoans the death of New Deal liberalism: “When the party of activist government, faced with an epic crisis, will not use government’s extensive powers to reverse the economic disorders and heal deepening social deterioration,” Greider writes, “then it must be the end of the line for the governing ideology inherited from Roosevelt, Truman and Johnson.”

Greider is not the only observer to note the end of the New Deal and the related unwillingness of liberals to fight efforts by members of both parties to roll-back the size of government. “[T]he public is being sold a big lie — that our problems owe to unions and the size of government and not to fraud and deregulation and vast concentration of wealth,” former Secretary of Labor Robert Reich told the New York Times. “Obama’s failure is that he won’t challenge this Republican narrative, and give people a story that helps them connect the dots and understand where we’re going.”

President Herbert Hoover said of the New Deal that it was an attempt to crossbreed Socialism, Fascism and Free Enterprise, part of a collectivist revolution led by FDR and carried within the Trojan horse of economic emergency. The New Deal was also a way for the Democrats to finally end decades of largely unbroken Republican rule in Washington. FDR had, after all, nominated Al Smith three times as Democratic presidential nominee. The former New York governor had lost each election. FDR and the New Deal not only enabled the growth of government, but also of the private and public unions that came to underpin the finances of the Democratic Party after WWII.

Today the debate among and between liberals as to how the government should respond to the latest financial crisis is a function of not so much about ideology but of shrinking revenue and burgeoning obligations. The New Deal Model of defined benefits has been replaced with defined contributions or, more recently in the auto industry, profit sharing.

Whereas after WWII the U.S. seemingly had the resources and borrowing capacity to address any national want or need via government fiat, today constraints on resources seems to be the dominant theme. This fundamental lack of growth and revenue, particularly in the private sector economy, is leading to a dearth of job opportunities — a reality that seems to have replaced the open horizons and endless opportunities that are part of the mythology of the American dream. But this is a circumstance that has been building for decades.

At least since the early 1970s, when the Nixon Administration made the decision to leave the gold standard and embrace a series of socialist policy expedients, stagflation, that is, rising prices and receding job growth and economic activity, have been the predominant trends, relieved by tax cuts and spurts of monetary exuberance by the Fed.

Where we are going as a nation looks an awful lot like America a century and more ago, the era of rampant political corruption and financial excess known as the Gilded Age, taken from Mark Twain’s wonderful novel. The Gilded Age was an era following the Civil War that saw rapid growth and relatively low inflation, even compared with the post-WWII period.  But it was also a period when large railroads and banks basically ran the country unchecked.

Today large banks are in explicit control of Congress and the White House, and the individual American seems helpless to push back. And Democrats and Republicans alike today look to big business for financial sponsorship. The Robber Barons of the 21st Century are the managers of large banks and of the various government sponsored-agencies, and their corrupt political enablers in Washington.

Liberal advocates such as Greider, Reich and others focus on the bad acts committed by ostensibly private banks and investors during the most recent Fed-induced mortgage boom. Today’s liberals have a hard time dealing with the takeover of our public institutions by large corporations, which are themselves largely unaccountable to their shareholders. Many people fail to identify the corrupt relationship between the federal government and large banks, for example, as driving social issues such as domestic jobs losses, foreclosures and growing disparity between rich and poor.

“Increasing inequality in the United States has long been attributed to unstoppable market forces,” Robert Lieberman writes in Foreign Affairs reviewing the new book, “Winner Take All Politics”. “In fact, as Jacob Hacker and Paul Pierson show, it is the direct result of congressional policies that have consciously — and sometimes inadvertently — skewed the playing field toward the rich.”

The political narrative in America over the past fifty years has been a function of the Cold War, left vs. right, liberal vs. conservative, but is this really an accurate description of the political situation in America today? The focus by some commentators on the rich echoes the debates of a century ago, when Americans felt that opportunities were being decreased by the wealth and power of the great captains of industry and finance, the likes of Carnegie, Morgan and Rockefeller. In the new book, “Exploring Happiness: From Aristotle to Brain Science” by Sissela Bok, the author notes:

“Opinion surveys show that Americans are twice as likely (60 percent) as Europeans (29 percent) to believe that the poor can get rich if they only try hard enough. While most Europeans feel that where you end up is largely a matter of luck or other circumstances beyond your control, fewer than half of Americans agree. Armed with these beliefs, lower-income Americans are less likely to blame society when inequality grows and more inclined to believe that persons of great wealth must deserve their good fortune.”

Today, however, political as well as economic power is exercised by managers such as JPMorganChase CEO Jamie Dimon, whose former colleague Bill Daley is now White House chief of staff.  Daley, the seventh and youngest child of the late Chicago Mayor Richard J. Daley, is not only the representative of JPMorgan in the White House, but is the replacement for Rahm Emanuel as chief fund raiser for Obama in the 2012 general election.

“These banks again have unfettered access to the very top of the political decision making in the United States,” says MIT professor Simon Johnson, “and reflects the fact their status is completely undiminished, despite all the mistakes they made and all the damage they did to the rest of the economy.” Johnson argues that unless the largest banks are broken up, another major financial crisis is inevitable, a view that shared by a number of other Americans in and out of government.

Click here to continue reading the speech.

In a new period of instability, Obama becomes Hoover

Oct 7, 2010 14:50 UTC

Yesterday I participated in a “Living in the post-bubble world: What’s next?” event with Nouriel Roubini. The key take-away from the discussion is that the U.S. and global economies are headed into a new period of instability and competitive currency devaluations.

The primary driver of this breakdown in the international consensus around free trade and global markets is the overt policy by the Fed to use quantitative easing or “QE” to devalue the dollar. The final comments by John Makin illustrate this point very nicely.

Now the Fed claims that further QE, which will include the purchase of hundreds of billions in debt issued by the Treasury, will help stimulate the U.S. economy and reverse the secular deflation that is depressing real estate valuations, employment and business investment. But the trouble is that QE is having little positive impact on American households. Without refinancing, there is no reflation of balance sheets or consumer spending.

As I noted in an earlier comment, “Bernanke conundrum is Obama’s problem,” the Fed’s attempts to help American households is being blocked by the largest banks. We wrote about the issue again this week in The Institutional Risk Analyst, “Refinancing, Not Foreclosures, is the Issue.”

While the Fed has been attempting to refloat these same banks — and their bond holders — on a sea of cheap money, the central bank is ignoring the larger, structural problems in the real estate sector. Forget mere valuations losses on ABS and derivatives on same. The real surprise heading for Washington and Wall Street is when everyone realizes that the big risk facing the U.S. economy is not from the foreclosure crisis, but from the actions of the “Big Five” financial monopolies — Fannie Mae, Freddie Mac, Bank of America, Wells Fargo and JP MorganChase – to prevent tens of millions of American homeowners from refinancing performing mortgages.

In public, the Fed is keeping a brave face on its policy moves, but in private current and former Fed officials acknowledge that there is little that the central bank can do to reverse the deflation that seems to be accelerating. There is a 40% probability of a double-dip recession, Nouriel Roubini said during the discussion.

I would argue that such metaphors miss the many differences in the present economic collapse compared with previous “recessions.” Indeed, as Tom Zimmerman of UBS noted very astutely, by easing interest rates in 2001-2002, the Fed avoided a recession then, so now we are going through double the adjustment process.

What is to be done? For starters, American policy makers need to acknowledge that the real intent of the Fed’s resumption of QE is not to stimulate directly domestic economic activity, but instead to drive down the value of the dollar — an adjustment that is long overdue. The monetary ease already injected into the U.S. economy justifies a significant drop in the value of the greenback, an adjustment that America’s creditors and trading partners have long resisted. A cheaper dollar means less export revenue for China and the other mercantilist nations of Asia and a de facto default for America’s foreign creditors.

Second, in concert with QE, the Fed needs to dust off the bully pulpit and start to publicly discuss why the largest U.S. banks are unable or unwilling to refinance the more than 30 million households which have relatively high-cost mortgages. As I have noted previously, the large banks and the housing GSEs, Fannie Mae and Freddie Mac, are using fees and other subterfuges to block refinancing for millions of Americans. This renders Fed interest rate policy largely ineffective.

It also is time for Chairman Bernanke and other Fed governors to publicly own up to the surreptitious transfer of hundreds of billions of dollars per year from American savers to the largest banks, a cowardly strategy that is allowing the Obama Administration and Congress to avoid making tough decisions about restructuring the U.S. financial system. The spectacle of Treasury Secretary Tim Geithner publicly accounting for repayment of TARP while the largest U.S. banks sink into insolvency is a national scandal.

As the Fed starts to get ahead of the curve in terms of the continuing crisis in the banking sector, the economists inside the central bank should start to ponder a new policy approach: QE to devalue the dollar and modestly higher interest rates to restore balance between the continuing needs of the banking industry and American savers.

Retired Americans, working families and corporate treasurers are all being taxed via QE and zero interest rates to subsidize the largest banks. It is time for Fed Chairman Bernanke to reassert the independence of the U.S. central bank and demand that Congress and the Treasury start to do their jobs. If we need to restructure the largest banks, then we should make the cost explicit and conduct the process publicly for all Americans to see.

As I told the AEI audience, the avalanche of mortgage defaults now hitting Bank of America, Wells Fargo and other large lenders could force these banks to seek new government bailouts in 2011, an outcome that will expose the Obama Administration’s incompetence for all to see.

For the economy, the slow process of muddling along championed by Secretary Geithner will ensure that Barack Obama becomes the Herbert Hoover of the Democratic Party. From the Crash of 1929 until the end of his term in 1932, President Hoover repeatedly predicted the end of the crisis. The rest is history.

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Bernanke conundrum is Obama’s problem

Sep 9, 2010 16:56 UTC

In the wake of Institutional Risk Analytics’ comment last week about the lack of ideas inside the Obama Administration for resolving the economic mess, President Obama suggested new tax credit and infrastructure spending. Neither of these ideas is likely to become real, however, since the Republicans are expecting to take control of at least one house of the Congress in two month’s time.

Over at the Federal Reserve Board, a different kind of policy gridlock persists. The Federal Open Market Committee thinks low interest rates are helping the economy, but the opposite is the case. The monetary policy mechanism that provided liquidity to households when the Fed lowered the cost of credit is broken. Both the central bank and the White House need to recognize this fact and act to address it with effective policy.

Offit Capital Advisors noted in an August 1, 2010 commentary entitled “The Invisible Tax” that the zero rate policies by the Fed are draining hundreds of billions of dollars in income each year from the U.S. economy. Offit estimates that $350 billion per year is being foregone by investors in state and federal obligations and transferred to the government due to Fed low rate policy. The income foregone by individual and corporate savers and transferred to the banks is something closer to $600 billion annually or nearly $1 trillion in total.

When theses subsidies from low interest rates are added to the huge mortgage banking profits being taken by the top four banks from Fannie Mae and Freddie Mac, the largest U.S. banks are literally draining a large portion of the income from the American economy. The fact that these large banks and GSEs are refusing to refinance many residential mortgages in order to preserve their profit margins only adds insult to injury, a political fact that will be made clear at the polls in November.

The chart below, which is inspired by a chart used by David Zervos at Jeffries & Co in a research note on this same topic, illustrates the problem. MTGEFNCL is the yield of the par 30-year FNMA mortgage backed security. USMIRATE is the effective rate for all outstanding mortgages in the US from the Bureau of Economic Analysis. In days gone by, you could add 50 bp to the FNMA yield to get the zero point mortgage rate to homeowners, but not today with banks adding points to the effective cost of mortgages. The Fed target rate is the federal funds rate.

rates-2

Note how the progression of Fed interest rate cuts from the 1980s to today resulted in a significant reduction in average mortgage borrowing costs for households. This is the case until 2008, when mortgage rates implied by the bond market fell significantly but households were not able to refinance.

What is preventing a refinancing wave today? Fees charged by Fannie Mae and Freddie Mac (Loan Level Pricing Adjustments and Adverse Market Development Fees) and a mortgage origination industry that is highly concentrated in the big four banks, who are working for 4-5 points on new origination loans. Those frictions, which can add up to 7 to 10% of the face value of the loan, raise mortgage rates to borrowers by hundreds of basis points. Banks and the housing GSEs, however, saw significant benefits in declines in funding costs thanks to low Fed rates.

The banks, of course, do not exist in a vacuum. As JPM and the other money center’s desperately fight to survive, they are actually making conditions worse in the real economy, for consumers and business alike. As this reality comes more sharply into focus and the forward growth prospects for the U.S. economy are revised lower, the final blow to consumer confidence will come in the form of higher interest rates by the Fed.

Now into year three of the Fed’s quantitative easing, with visible duration on all first mortgages is already 2x 2005-2006 levels, the party is over for the largest zombie banks. And federal regulators cannot claim that they were not warned. The table below is from a presentation by Alan Boyce, CEO of Absalon, given at an FDIC-sponsored mortgage conference organized by Professional Risk Managers International Association in 2009 and shows the changes in the duration of the US mortgage system:

Mortgage

Duration

101

% ARMs

FNCL OAD

Market Size

Total OAD

Sep-97

18%

5.0 est

$3.72t

$15.3t

Sep-99

9%

5.0 est

$4.35t

$19.8t

Sep-01

10%

4.33y

$5.22t

$20.3t

Sep-03

12%

4.53y

$6.68t

$26.6t

Sep-05

28%

3.61y

$8.58t

$22.3t

Sep-06

30%

3.40y

$9.67t

$23.0t

Mar-07

25%

3.86y

$10.25t

$29.7t

Mar-08

19%

4.70y

$10.55t

$40.2t

Mar-09

14%

5.04y

$10.43t

$45.2t

Sep-09

12%

5.34y

$10.34t

$48.6t

Source: Absalon

Notice in the table that the option-adjusted duration (OAD) of the mortgage sectors has roughly doubled during the period of Fed zero rate policy – this due to the steepness of the yield curve, a flight from adjustable rate mortgages to fixed rate loans, and high interest rate volatility. As the central bank is slowly forced to allow rates to rise in order to restore income to savers (or perhaps defend the dollar), the OAD for all manner of U.S. securities will explode. This interest rate trap illustrates the key policy error made by the Fed under Alan Greenspan and with the complicity of Ben Bernanke.

“From September 2003 to September 2006, the Federal Reserve Board (“FRB”) directly reduced the total mortgage market OAD by doing three things: they flattened the yield curve, they talked down options volatility and they encouraged homeowners to take out ARMs,” notes Boyce. “This sucked out a huge amount of OAD from the mortgage system despite increasing the outstanding amount of mortgages by $3 trillion. If the FRB had not driven down the OAD, we would never have made all those loans. The change in OAD was $3.6 trillion dollar duration years. To put it in perspective, the Chinese bought $600 billion of Treasuries and Agencies during that time period, with an aggregate duration of $1.2 trillion. The latter is 1/3 the “weight” of the former but is well understood and is the commonly accepted explanation of the Greenspan Conundrum.”

There are many things that need to be done in order to correct the immediate and structural problems in the U.S. economy. But one of the top priorities for President Obama and Chairman Bernanke is to press the banks and the GSEs to immediately accelerate efforts to refinance performing loans in their portfolios to lower rate mortgages now, before interest rates begin to move.

We cannot undo the decisions made by the Fed in past years, but we can recognize at long last that there is no free lunch. The low rates policies of 2002-2006 created a distortion in the financial markets, a shift we are still struggling to deal with a decade later. The first step to fixing the problem is to lighten the load on households now so that today’s homeowner is not tomorrow’s loan default event.

COMMENT

Capitalism. So passe

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Memo to Obama: time to break the refinance strike by the big banks

Aug 31, 2010 16:56 UTC

There are growing signs of unease bordering on desperation inside the Obama White House. Most of the O Team now understands that the real, private economy never got out of Dip Number One. The prospect of a permanent downward shift in “trend growth” to a lower track, and continued double digit unemployment, are driving a search for alternative measures that has even touched conservatives in the worlds of finance and economics.

The Obama Administration and the Fed have taken the position that the crisis affecting the U.S. economy and the financial sector is slowly ending. In fact, the largest banks remain profoundly troubled by bad assets on their books as well as claims against these same banks for assets sold to investors. By allowing banks to “muddle along” and heal these wounds using low interest rates provided by the Fed, the Obama Administration is embracing a policy of deflation that has horrible consequences for U.S. workers and households.

In a post over the weekend on ZeroHedge –  “Bernanke Fed Drives Deflation With Zero Rate Policy” — I described the negative effects of the Fed’s low interest rate policy on bank earnings, as well as consumer and corporate spending and saving. When interest rates are low, savers move their preference for liquidity to infinity, especially after the past several years of market breakdown. Retirees spend less because the interest earned on bonds and savings has plummeted.  Here’s an excerpt:

When the Fed buys securities through QE, it is removing duration from the markets, pushing down yields and volatility. For a while this boosts the net interest margin (NIM) of leveraged investors such as banks, who are able to borrow at lower rates to fund current assets. As assets re-price to the low rates maintained by the Fed, however, NIM begins to disappear. Over the medium to longer term, think of duration and NIM as being linked, so obviously a sustained period of QE is bad for NIM. This is why NIM in the U.S. banking sector is starting to fall.

Just as the earnings of leveraged investors like banks are starting to suffer due to zero rate policy, so too the spending by all manner of savers, from retirees to companies and not-for-profits to municipalities, is falling too. Fed Chairman Bernanke and the other members of the FOMC are killing the real economy to save the banks — but none of the benefit flowing to the banks is reaching U.S. households. In fact, the Obama Administration has been providing political cover for the Fed to conduct a massive, reverse Robin Hood scheme, moving trillions of dollars in resources from savers and consumers to the big banks and their share and bond holders.

The first priority is to make clear to the largest banks, especially the top four institutions — JPMorganChase (JPM), Bank of America (BAC), Wells Fargo (WFC) and Citigroup (C), that the party is over when it comes to providing credit to the real economy. Until President Obama and Fed Chairman Bernanke recognize that six institutions — FNM, FRE, BAC, C, JPM and Wells Fargo — have broken the mechanism which makes interest rate easing work, we will make little progress fixing the economy.

“In every Fed easing event during my career in finance (1986, 1992, 1998, 2002), it was the wave of refinancing of debt after the Fed eased interest rates that put permanent disposable income into the hands of households,” notes a former Fed official who worked in the banking industry for decades. “In this last easing, however, FNM, FRE and the TBTF banks have conspired to break the transmission mechanism for monetary policy and are now strangling the U.S. economy to save themselves from past errors.”

Rules changes made by FNM and FRE since the Treasury’s conservatorship began in 2008 have prevented millions of American consumers and business from refinancing their mortgage debts. The Bernanke Fed will attempt to compensate for this de facto freeze on refinancing with QE II, but this will fail.

So what should President Obama do?

First, the Obama Administration should use the power provided in the Dodd-Frank legislation to force an accelerated cleanup of bad assets and to mandate refinancing and principal reductions for performing loans with viable borrowers. If any banks resist, the Treasury should use the power under current federal law to remove recalcitrant officers and directors of these same banks.

Second, President Obama also needs to focus on the growing competitive problem in the U.S. mortgage sector. The mortgage banking industry suffered significant consolidation since 2007. In particular, the competitive, third part origination players went out of business via bankruptcy or by being taken over. The industry is now dominated by a cozy oligopoly of Too Big To Fail banks (TBTF).

The top three banks control 55% of all mortgage originations. The top 10 banks control 95%. The top five run the only surviving channels to sell loans to Fannie Mae (FNM) and Freddie Mac (FRE), and force their pricing upon the entire banking industry. Small banks give up half the economics of a typical loan to sell a loan to FNM or FRE indirectly, through WFC or JPM. Why is there no antitrust investigation of the top banks by the Department of Justice?

The Obama Administration should move to restructure FNM and FRE now, not in 2011. The Treasury should use its existing authority under the conservatorship to force FNM and FRE to make rules changes to allow for the refinancing of all existing residential mortgages, if only to reduce the current cost of the debt and increase disposable income for households.

By moving on reforming FNM and FRE, the Obama Administration can provide relief to home owners and also send a strong message to Wall Street and global investors that the practice of “too big to fail” is at an end. We should always remember that the model of the government sponsored enterprises (GSEs) goes back to fascist Italy and Germany of the 1920s. The very public demise of these GSEs is an important part of ending TBTF for the large banks — but only part of the story.

President Obama should make some political hay over the fact that loan origination margins for the top four banks have gone from ½ point to over 4 points in the last two years. This is the subsidy for Wall Street above and beyond the zero interest rate policy of the Fed. The Obama Administrations needs to require changes in the way in which FNM and FRE do business with the banking sector and with mortgage holders, and use these changes to reform the mortgage market in preparation for legislation from the Congress.

By reducing barriers to refinancing by FNM and FRE, and aggressively forcing private banks to mark mortgages to market and accept principal write-downs or short sales to clear the backlog of bad debt, the Obama Administration can restore balance to the economy and create a healthy basis for new growth.

COMMENT

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Obama & Frank: double dips and Washington exit strategies

Aug 23, 2010 14:59 UTC

The official version of reality in use this week at the White House says that the U.S. economy is recovering, slowly but surely, and unemployment is falling.  The same perspective says that residential real estate markets are stabilizing and banks are starting to lend more aggressively.  None of these statements are true, but there are quite a few people in the White House who believe them nonetheless.

My view is a bit different, namely that unemployment is likely to remain at current levels during the balance of 2010.  The sharp reduction in credit available to the real economy and the overhang in the mortgage markets are not likely to improve anytime soon.  I spoke about the economic outlook with Larry Kudlow and James Glassman on CNBC last Friday: “Double Dip Fears Mount.”

While the public sector of the U.S. economy received a great deal of assistance due to various forms of stimulus, the private sector never recovered from the first “dip” during 2008 and much of 2009.  Virtually all of the Fed’s assistance from zero interest rate policy has gone to the banks or the U.S. Treasury, with no help for American households and workers.  This means higher unemployment and lower economic activity in coming months or even years.

“When the FOMC tries to boost the economy and credit creation, none of the benefit is working its way to investors or consumers,” we wrote last week in The Institutional Risk Analyst (“Zombie Love: Do Fannie and Freddie Provide Any Benefit to the U.S. Economy?”). “Because the Fed and the White House are allowing the banking sector to heal its collective wounds via zero interest rate policy from the Fed, the banking system is not passing along any of the benefit of Fed easy money.  Thus while the banks absorb all of the subsidies from the Fed and Treasury, U.S. households, businesses and private investors are slowly destroyed.”

“Policy makers in Washington know all of this, of course,” we continued. “Nobody in the Obama White House or the Fed dares to admit in public that the ‘quantitative easing’ by the FOMC is pretty much useless in terms of helping the real, private economy.”

No surprise, then, that Wall Street economists are gradually pushing down their “growth” estimates for the U.S. economy for the balance of 2010 and beyond.  This grudging admission of the truth is mirrored in shrinking analyst estimates for revenue for sectors from banking to retailing to autos.  With growth receding, there is no surprise in reports that investors are fleeing equities, as the New York Times reported on Sunday.

The financial crisis of 2008 and the aftermath raise fundamental questions about money, debt and value in a way that Americans have not seen in over a century.  The response to the crisis by the Fed, focused entirely on Wall Street, begs the question of whether Main Street can survive.  The falling expectations for the economy are translating into truly horrible poll numbers for Democrats and the Obama Administration, but also for all incumbents.  The rate of turnover in the Congress this year could be one of the highest in the post-WWII era.

If the Democrats in Congress take a trouncing as is widely expected, then President Obama may decide not to run for another term.  While that possibility may seem far-fetched, my sources in Washington say that President Obama may seek to become the first American Secretary General of the United Nations.

According to this admittedly speculative scenario, President Obama will choose not to run again so he can take a shot at the UN post.  Obama knows that he never could win the position after two terms.

The other interesting twist that some see emerging after the November election due to the poor economic outlook involves the newly created Consumer Financial Protection Bureau, or CFPB.  The chair of the Congressional Oversight Panel, Harvard Law Professor and bankruptcy expert Elizabeth Warren, is one of the leading candidates for the job, but the banking industry naturally is opposed.

It is becoming clear that the Obama Administration may not pick a candidate for the CFPB job until after the November election in order to dodge this very political issue.  By holding the voting on the new agency head until after the election, members of both parties will be able to extract maximum contributions from the banking lobby.  But I hear that the choice may have already been made.

It may surprise some observers that House Financial Services Committee Chairman Barney Frank may want the CFPB job for himself.  Frank reportedly has already expressed interest to the White House.  Sad to say, Chairman Frank probably has seniority over Chairman Warren.

“Barney did some heavy lifting,” says a source on the committee who is close to Frank.  “He might want a different gig, especially if he loses the chairman’s seat in November.  Frank would not want to hang around in Congress as part of the minority.  Being the first CFPB emperor, however, could be a more interesting gig than, say, eventually being made head of HUD of the FHA.”

You heard it here first.

COMMENT

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