I’m thrilled to see that Elizabeth Warren is running for US Senate from Massachusetts, against Republican incumbent Scott Brown. Why? Watch her short election announcement; she speaka my language. Read her statement of priorities: it’s all economy, economy, economy; again, given the situation in the country now, good. Here’s an excerpt from a 2009 interview she did with Newsweek back when she was in the running to head up the new federal consumer protection bureau proposed in the wake of the 2008 crash:
Congress is trying to reform financial regulation, and it can get a little abstract. Where should people focus?
To restore some basic sanity to the financial system, we need two central changes: fix broken consumer-credit markets and end guarantees for the big players that threaten our entire economic system. If we get those two key parts right, we can still dial the rest of the regulation up and down as needed. But if we don’t get those two right, I think the game is over. I hate to sound alarmist, but that’s how I feel about this.
Should the government step in and break up the biggest banks?
There are a lot of ways to regulate “too big to fail” financial institutions: break them up, regulate them more closely, tax them more aggressively, insure them, and so on. And I’m totally in favor of increased regulatory scrutiny of these banks. But those are all regulatory tools. Regulations, over time, fail. I want to see Congress focus more on a credible system for liquidating the banks that are considered too big to fail. The little guys aren’t immortal; they pay for their mistakes. The big guys can’t be immortal either. A free market cannot operate in a too-big-to-fail world.
Why are people so angry about the government’s efforts to save the economy?
Many Americans want to know if the people in Washington are on their side or on the side of the powerful banks. There should never be a doubt about the point of any government action: it should always be to help families directly, or help markets in ways that help families. If that isn’t clear, I think the action is wrong, or the description of the action is wrong.
The administration has been reluctant to pressure the banks because they say they need the financial system’s cooperation in their recovery policies.
The notion that we need to ask the permission of the big banks about which approach to use is just wrong. Who’s asking the American family which provisions are OK with them? I understand that we need to get the economy back on an even keel, and destroying large financial institutions isn’t going to do that, but neither is destroying the American middle class. We need to be asking, what are the best tools to repair the economy? Not, what are the tools most acceptable to the big banks?
Preach it, lady. Of course Senate Republicans scuttled her bid to run the new agency. It cannot be said, though, that Democrats were fully behind her. From The Atlantic:
Those enemies of Warren, of the CFPB? Republicans, first and foremost, namely Senate Banking ranking member Richard Shelby (R-AL) and the forty three other Republican senators who signed a letter to Obama in May raising heck over the “unfettered authority” the CFPB had supposedly been granted by the Dodd-Frank Act, passed in the wake of the mortgage meltdown. That’s no surprise. But Warren’s also annoyed with the press for buying the GOP’s story that it’s simply a more efficient consumer advocate they’re eager for, when really what Republicans want is for the CFPB to die an early death. She also blames her own political naiveté. She’s been “too busy busting [her] tail” in starting an agency, she says, and didn’t pay all that much attention to those inside the Beltway sharpening their knives. Some heard those noises over at 1600 Pennsylvania. Perhaps she’s heard the chatter that Obama was more sold in public than in private on her eventual appointment as CFPB’s first-ever director. But Warren gives Obama and fellow Democrats a pass.
“Let me put it this way,” said Warren on yesterday’s call. “I’m saving all the rocks in my pockets for Republicans. And if that’s too partisan for you, then shame on me.” Other officials drone. But Warren, an Oklahoma native and once-and-future Harvard Law School professor, never mastered the Washington monotone. She speaks with passion. It’s not too much to say that it’s that sort of thing that didn’t help her case all that much. You’ll hear talk in Washington that Warren was too anti-bank, too anti-Wall Street. And there’s something too that, by her own admission. “We’re not here to serve banks. We’re not here to serve Wall Street. We’re not here,” she emphasizes that last bit, “to serve Congress. We’re here to serve American families.” But there’s a real way in which Warren just seemed, well, too invested in her cause — creating a powerful Washington presence that would bring transparency, structure, and some measure of sanity to the consumer credit market.
“I have become con-tro-ver-see-uhl,” she says, “which I think is code for getting something done.”
Unless Jeff Jacoby tells me something bad I don’t know about her — and what I don’t know about Elizabeth Warren is a lot — I’m rooting for her. I can understand her holding her fire (for now) against the Democrats, for tactical reasons, but if she wins — and I hope she does — then I hope she goes to DC with both barrels blazing, and with the understanding that the enemy of the financial interests of ordinary Americans is the capture of both parties by Wall Street and the banks. If she goes to DC and gets captured by Democratic partisans, it will be a colossal waste.
I don’t know where she stands on social issues, but as a Harvard professor, I’m sure it’s well to the left of where I stand. But I’m tired of seeing my support for social conservatism dictate my vote for candidates who, in my view, work to undermine the stability of families by taking the sides of powerful financial interests. If Elizabeth Warren were a standard-issue Democrat, I wouldn’t give a fig for her candidacy. But she proved by her frustrated service in Washington that she can be an authentic populist. Why isn’t the Republican Party producing people like her: candidates who take clear and unambiguous stands against the bigness of banks, regulatory capture, and in favor of Main Street over Wall Street? (Well, I thought Sarah Palin was going to be that kind of candidate once upon a time. Maybe she can be again…).
UPDATE: A reader sends some links from folks make strong substantive criticism of Warren, e.g. Prof. Todd Zywicki. This isn’t just partisan folderol. If she really has cooked data to make political points, that’s a serious charge, and ought to be seriously investigated. I am intrigued, though, by Christopher Caldwell’s piece in a recent Weekly Standard in which he says that people misunderstand Warren, and that from one point of view, she’s a closet right-winger. Excerpt:
It is not surprising that Warren found no place in Washington. The cameo role she played on the national stage made her an idol to the leftmost part of President Obama’s coalition and a hate object for conservatives—and yet her understanding of the financial crisis is best described as populist, conservative, even right-wing. It arises from what has happened to the American middle class in the past four decades.
Warren’s Harvard affiliation is something of an incognito. By her own account, she comes from an Oklahoma family whose only claim on the adjective “middle class” was its avoidance of the word ain’t. When she was 13, her father, a maintenance man, had a heart attack and had to stop work. Her mother got a job in the catalog-order department at Sears until he was well enough to return. Going bust was something her family narrowly avoided. Warren has devoted the last decade of her career to explaining why those who wind up in similar positions today are seldom so lucky.
Unfortunately for Warren, no one was in a position to promote her politically for her pains. She was the only white working-class Democrat left in captivity. Republicans saw her as a Naderite and also someone who might steal a bit of their own thunder. Democrats saw someone who was quite possibly a Democrat only through Ivy League peer pressure or lack of self-knowledge. Almost every step the Obama administration took in the early stage of the crisis pitted its own heavy hitters against her. When Warren was involved in the congressional TARP oversight panel, she quarreled with Treasury Secretary Tim Geithner over why the insurer AIG was bailed out in such a way as to make whole all of its creditors—notoriously including Geithner’s friends at Goldman-Sachs. She was right and won the argument. Geithner was more strident and won the battle.
There were good reasons for the president not to nominate Warren, including the ones advanced by congressional Republicans. That anyone should run a bureau of his own design is an affront to the spirit of separation of powers. Warren understood economics less well than many of her congressional interlocutors, and she understood diplomacy less well than any of them. But she understood the finance crisis better, she was the first to see it coming, and she did so by the simple means of listening to the American middle class. That is not nothing.
No, it damn sure isn’t.
UPDATE: Jim Antle says, “once burned, twice shy”:
For now, suffice it to say that the Jim Webb experience has dampened my enthusiasm for Democrats who pepper their speeches with populism and traditionalism while also being a netroots wet dream.