Just how scary is Elizabeth Warren?

September 14, 2010

That is the sort of question I get all the time from my business and banking contacts. And the White House may try to end run the Senate by temporarily appointing Warren to head the new consumer finance regulator. But how bad would she be for business and Wall Street (assuming she would be negative)? Here is how her opponents put it: “Let’s put an ideologue at the head of a new regulatory agency with extremely broad and undefined powers in a nation where business is crippled by uncertainty? Hey, what could go wrong?”

Then again, all the negative publicity might force her to be more moderate.  It also makes her an easier target for Republicans if they are in control of one of both Houses of Congress in 2011.  Here is what I wrote earlier this summer:

1. The Consumer Financial Protection Bureau created by the sweeping U.S. financial reform legislation will put Main Street protection under one roof. Though it technically will be housed inside the Federal Reserve, the agency will have vast power thanks to the fear of more sins like the ones that led to the housing crisis. It’s rare for a regulator to be empowered to perform “any” action necessary to protect consumers from abusive practices.

2. What’s more, virtually any link between consumers and a financial institution will get oversight. Rules will be tough to overturn. The new systemic risk council – made up of the Treasury secretary, Fed chairman and financial regulators – can only reject a proposal if it threatens the safety and soundness of the banking system.

3. The agency’s first director will set the tone, as well as precedent, for how far it can go. And Warren, who has been chairing a congressional panel overseeing the Tarp bailout fund, looks a leading candidate. The consumer protection bureau is her pet idea. The Harvard professor has said she believes banks are destroying the middle-class by loading them up with debt using deceptive products. Unions and anti-bank activists openly support her nomination.

4. Banks would prefer Michael Barr. Treasury’s point-man on the consumer agency is also an academic, but seems to have less of an ideological ax to grind. He may also be more sensitive to the need for financial institutions to earn their way back to health.

5. Warren’s bark is fearsome but Wall Street’s fears may be a little overblown. Rather than shutting down exotic ideas, she may instead push for more disclosure on them. But even if a Warren commission were to clamp down on some complex and risky products, it’s hard to believe the financial engineers won’t find a way to design simpler, and profitable, ones for consumers.

17 comments

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[...] House Mulls Interim Role for Elizabeth Warren at Consumer Agency Wall Street Journal Just how scary is Elizabeth Warren? Reuters Blogs (blog) DailyFinance -The Associated Press -TIME (blog) all 133 news [...]

I think the banks have had their picks for far too long. Oh they’ll raise a firestorm about Warren, using all the fear mongering they can to turn the tide. But Warren seems a good pick for the consumer, and it can’t hurt to have at least ONE person looking out for the people who carry the brunt of Wall Street’s recklessness.

Posted by drakefew | Report as abusive

[...] PostWhite House Mulls Interim Role for Elizabeth Warren at Consumer AgencyWall Street JournalJust how scary is Elizabeth Warren?Reuters Blogs (blog)DailyFinance -The Associated Press -TIME (blog)all 140 news [...]

I don’t know why a reputable news outlet like Reuters allows this mouthpiece for the radical right’s propaganda machine to publish his misleading, self-serving propaganda. Then again, I didn’t understand why people believed George W. Bush when he told us about the copious hoards of weapons of mass destruction in Iraq that must be confiscated quickly before Saddam could use them on us. I guess it’s a sign of the times.

The reason Mr. Pethokoukis and other rightwing ideologues are afraid of Elizabeth Warren is because she might bring real oversight to our finance industry. God forbid! It takes some nerve to oppose oversight of this industry that has cost Americans billions? trillions? of dollars due to corruption and mismanagement in our recent economic storm. That’s what we SHOULD be afraid of, not oversight. We’ve never suffered a collapse of our economic system due to having oversight and sound financial regulations in place. But our recent Great Recession is NOT the only time our nation has suffered greatly from a LACK of oversight.

Elizabeth Warren is extremely smart and passionate, and that’s just what our country’s consumers need. She’s perfect for the job and to oppose her is to oppose what is best for our nation and its economy. She poses as much a threat as Saddam did with his phantom weapons of mass destruction. We have to stop letting rightwing fear mongering browbeat us out of doing what is best for America or we will continue to suffer.

Posted by ginchinchili | Report as abusive

Damn ginchinchili, you beat me to the punch. Also want to add that the media in America these days is so right-wing that simply reporting facts dispassionately is viewed as left-wing liberal bias or worse – socialist! BARF!! America is the ultimate case of ‘do what I say, not what I do.’

By the way, gratz on selling Saudi Arabia $60b worth of military hardware! – gotta support totalitarianism around the world I guess.

Posted by CDN_finance | Report as abusive

Not as scary as Polusi!

Posted by Raif | Report as abusive

I think Ginchinchili & CDN may have read this article with closed minds – first of all, he is responding to questions asked by readers & mkt contact/sources – read point 5 again (5. Warren’s bark is fearsome but Wall Street’s fears may be a little overblown. Rather than shutting down exotic ideas, she may instead push for more disclosure on them. But even if a Warren commission were to clamp down on some complex and risky products, it’s hard to believe the financial engineers won’t find a way to design simpler, and profitable, ones for consumers.)

I don’t think this was one sided and it even offered up the potential for moderation – however, reading your comments, you are doing what people fear of Warren, having a personal agenda by which they will manage – instead of absorbing everything written, you both simply went for the author’s throat because the headline goes in one direction and you never allowed yourselves to read both sides

Posted by KBICEnergy | Report as abusive

[...] agencyWHTCWhite House Mulls Interim Role for Elizabeth Warren at Consumer AgencyWall Street JournalReuters Blogs (blog) -DailyFinance -The Associated Pressall 139 news [...]

KBICEnergy: I’ve read plenty of Mr. Pethokoukis’ editorials and his agenda is crystal clear. Consider the title of this piece. Mr. Pethokoukis is fully aware that American readers will often read the title of articles but skip the body of the piece. People who read this writer know his extreme right views and reading “Just How Scary Is Elizabeth Warren?” tells them that they don’t want ANYONE who is ANY amount of scary. For those who read the piece, the entire article is negative about Elizabeth Warren EXCEPT the last point. But to write an attack piece on Ms. Warren and then add at the end that Wall Street’s fears “may be a little overblown” does not qualify this piece as being balanced, as you’re suggesting, and certainly will leave the reader thinking, overblown or not, we certainly don’t want her.

The Radical Right does this all the time. Look what they’ve done to Obama. He’s a Muslim. He’s a socialist. He’s not an American. He wants to create death panels with his government takeover of our healthcare. He might even be the anti-Christ. Most recently Newt Gingrich was echoing a charge made by writer Dinesh D’Souza, claiming that Obama is a zombie possessed by his father’s ghost, carrying out his father’s Kenyan anti-Colonial ideology. This is a former Speaker of the House, for god’s sake, and could be our next president. In praising D’Souza, Gingrich said he showed the “most profound insight I have read in the last six years about Barack Obama.” The following is quoted from D’Souza’s text which Gingrich was referring to:

“Our President is trapped in his father’s time machine. Incredibly, the U.S. is being ruled according to the dreams of a Luo tribesman of the 1950s. This philandering, inebriated African socialist, who raged against the world for denying him the realization of his anticolonial ambitions, is now setting the nation’s agenda through the reincarnation of his dreams in his son. The son makes it happen, but he candidly admits he is only living out his father’s dream. The invisible father provides the inspiration, and the son dutifully gets the job done. America today is governed by a ghost.”

It’s insane, but not to a lot of Americans, thanks to this radical rightwing propaganda machine that I keep referring to. It convinces people that this madness may in fact be true.

Too much of mainstream America gets tricked into thinking, okay that may be a bit over the top (just like in Pethokoukis’ point #5, “may be a little overblown” but…) but there must be SOMETHING wrong with this President because certainly all these people can’t be liars lying about our President openly to the public. There must be SOME truth to SOME of these charges. Could he be a LITTLE BIT anti-Christ? And that’s all it takes to turn large segments of populations against someone or something, in this case Barack Obama. If you doubt the effectiveness of this propaganda technique, do a little reading up on how the Nazi Party came to power in Germany during the 1920s.

It’s dangerous, it’s detrimental to our nation, and I’m sick and tired of seeing it and being able to do nothing about it. And there’s never any backlash against the liars and perpetrators. Bush used the same propaganda machine to fool us into thinking we’d better invade Iraq or be hit by a nuclear bomb. I had to sit back and watch this crap unfold, knowing we were being deceived into a huge mistake. I was proven right, but the only consequences being paid were by the 4,420 US soldiers who lost their lives, and their families, not to mention the tens of thousands who were wounded, and their families, and before it’s all over it will have cost our nation a trillion dollars at a time when we need that money for real priorities, for problems that REALLY exist. Bush, his cronies, and their supporters have casually brushed the whole affair aside and are now focused on bringing down President Obama using the same kind of deceptive, misleading tactics, and again, detrimental to our nation’s best interests. ENOUGH IS ENOUGH.

Posted by ginchinchili | Report as abusive

So, ginchinchilli, failing to nominate Elizabeth Warren will lead to another Holocaust? I don’t get it.

Posted by deregulator | Report as abusive

I like the comment made earlier “We’ve never suffered a collapse of our economic system due to having oversight and sound financial regulations in place”. To me, Elizabeth Warren sounds as though she believes in protecting the citizens of the U.S.. Seems these days that everyone is concerned about only protecting large corporations. The U.S. government represents its citizens as a whole, not individual firms or banks held by domestic & foreign investors. Besides, in a Capitalistic society, government is supposed to play a small role, mainly protection. The “free market” crowd (Wall Street)is happy to accept government money and then complain that the government is interfering with the free market. If we ran everything like a true free market, many more banks and firms would have went bust. Frankly speaking, the greed of the corporations got us in this mess so why should we be concerned about whats best for them. All too often people get confused about who the government is supposed to represent and protect. “Once you here the truth, the rest is just cheap whiskey”.

Posted by Blackbird1996 | Report as abusive

Warren fits right in with the Obama agenda of having Government take over all of the economy. Just take a look at Cuba, comrades and tell me how well is that working out. Not a fair comparison your say. All right then let’s look at Venezuela; power outages, inflation of 25% per year, violent crimes up 50% over the last two years. Or let’s take Greece, or Spain or …are you ideologues ever going to open your eyes and look at reality.

Posted by DaBear | Report as abusive

hey ginchinchili,

Stop posting books of unrelated garbage. If you had valid arguments it wouldn’t take a “War and Peace” novel to make your point.

Posted by DaBear | Report as abusive

DaBear: I know, I know, the radical right hates information. That’s why Sharron Angle refuses to answer questions from the press and refuses to debate Sen. Reid, because information allows people to get to the truth, and if people get to the truth, the Republicans don’t have a platform to stand on.

BTW, the government isn’t trying to “take over all of the economy”. But if I’m wrong, please fill us in, and try to give some details rather than Obama’s trying to take over our economy. That’s rather vague, don’t you think? Probably not.

Posted by ginchinchili | Report as abusive

Dabear I enjoyed ginchinchili spot on comments a lot more then the piece on which he is commenting.

I think that the argument james here is making is a much weaker one… one which he is hanging onto being he hasn’t changed his thoughts since the summer and needed to reiterate rather then add a link.

That the banks prefer someone else should be irrelevant being the rest of the lot will be banker boys. it should not be something banks can lobby for and twist GOP arms to ensure they are ‘protected.’ The director has to create a balance and fairness and be looking out for the citizens and Warrens will do that.

Heaven knows someone finally has to or you lot are definitely screwed. (not the rich/GOP … I meant ordinary citizens in your country)

Posted by hsvkitty | Report as abusive

‘Let’s put an ideologue at the head of a new regulatory agency with extremely broad and undefined powers’

You mean like Eliot Ness? Gosh, that’d be a terrible idea.
It’s a dirty job, but somebody has to do it….

http://nbyslog.blogspot.com/2010/09/obam as-dithering-why-is-elizabeth.html

Posted by nbywardslog | Report as abusive

Thanks ginchinchil for your good comments. I am glad to see some well thought out comments and historical perspective…. seems like a lot of historical mis information out there. Even the idea that regulation is wrong or bad for the economy never seems to be questioned. the chant of “freedom” seems to drown out the responsibility that goes along with the freedoms we have. Also, freedom is not “license” to do whatever you can get away with. What a terrible message to send to our kids. Gordon Gekko has never really left our culture.

Thanks again for standing up to the babble.

Posted by dewalt4618 | Report as abusive

This is one of those issues that only has one side: without question Ms. Warren should be appointed to head the new agency. Any argument to the contrary is transparently disingenuous. The idea that this agency, which was Warren’s brain-child by the way, should be led by Asst. Treasury Secretary Michael Barr, is preposterous. Barr has been a cheerleader, apologist and sychophant as related to the HAMP program, and that alone should eliminate his name from consideration for the job. This agency only has one chance to add value and that lies in its ability to be a contrarian, not one of the gang.

As

Posted by Mandelman | Report as abusive

The two sides in this discussion are not, as one might be tempted to suppose, equal and opposite. To see this, notice which comments are considered, articulate and correctly spelled. Notice which comments have the opposite characteristics.

As Americans, we’re exposed to a continuous stream of technology-driven persuasive messages, many of them insincere and dishonest. It becomes ever more necessary for our populace to cultivate skills of critical watching, listening and reading. Without voters who can detect dishonest propaganda, our democracy becomes a ship without a plan, steaming at the whim of demagogues into unknown ports, on secretive missions conceived in anger and fear.

The functioning of a healthy democracy requires educated and informed voters. What can we expect if our people continually fall for lies and mob arousal techniques, while ignoring sense and deliberation?

We voters lead the nation. We have to know what we’re doing. Otherwise, America can’t work.

Posted by dratman | Report as abusive

Ginchin, you have certainly made your biases clear! You have also distorted every fact you could get your left hand on. But let me ask you: exactly how did a “lack” of regulation lead to the housing bubble, the collapse of which triggered the financial crisis of Fall, 2008? Precisely which existing federal regulators failed to do their jobs, and how will the new Democrat proposals fix that? And while you’re at it, please discuss the role of personal responsbility in financial affairs. Thanks in advance for your erudition.

Posted by OldBull | Report as abusive