Vanity Fair profiles Elizabeth Warren, and makes a solid introductory point about how Obama sold her down the road:
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.
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.”
Keep reading, this gets better:
In those speeches, sometimes using slides filled with numbers and graphs, she 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.”
About those Wild West conditions, a couple of things from my own experience. When I lived in Dallas, a friend had worked in the mortgage industry prior to the crash. He described it as insane and immoral, saying that what “60 Minutes” reported on the fraud and chicanery in the business he saw first-hand. Along those lines, a real estate agent told me back during the last days of the housing bubble that she was selling big houses to people who couldn’t afford them. What am I supposed to do? she said. The people want these houses. The banks are giving them the money. They’re one paycheck away from default, but if they want the house and the bank is telling them they can have the money, who’s to stop them?
The point I’m trying to make is that the people at the banks ought to have known better, and done better. Ever bought a house? I have. It’s very, very complicated, the financing. I’m college educated and I had a hard time understanding the details of how we financed the house we bought in Dallas. So I trusted that the money-lenders weren’t steering me wrong. And they didn’t. But I could have so easily walked into a nightmare if I had been in the hands of unscrupulous bankers and agents who took advantage of my ignorance and desire to own a home to sell me money I couldn’t really afford to pay back, because there was a payday in it for them. I don’t know when, if ever, I will buy another house, not only because it was traumatic to lose so much money on it when we had to sell for our move to Pennsylvania, but because I know that I will never have enough expert knowledge to understand well enough what I may be getting into with a mortgage, and I will have a very, very difficult time trusting the system — precisely because I think my government cares more about protecting the industry than it does about middle-class consumers like me.
Today, Warren says, one “vision of how America works is that it’s an even game, that anybody can get started—just roll those dice; that booms and busts will come and millions of people will lose their homes, millions more will lose their jobs, and trillions of dollars in savings retirement accounts will be wiped out. The question is, Do we have a different vision of what we can do? This agency is out here in a sense to try to hold accountable a financial-services industry that ran wild, that brought our economy to the edge of collapse,” she said. “There’s been such a sense that there’s one set of rules for trillion-dollar financial institutions and a different set for all the rest of us. It’s so pervasive that it’s not even hidden.”
Perhaps the most widely watched hearing is the one that took place in September 2009. A video of part of that hearing can still be found on YouTube, under the title “Elizabeth Warren Makes Timmy Geithner Squirm.” It opens with Warren asking the question that was on the minds of many taxpayers: “A.I.G. has received about $70 billion in TARP money, about $100 billion in loans from the Fed. Do you know where the money went?” What followed during the rest of the hearing was the spectacle of the Treasury secretary tripping over his words, his eyes darting around the room as Warren, calm and prosecutorial, kept hammering him with questions. At another hearing, in December 2009, Geithner appeared to be barely able to contain his annoyance, at one point almost shouting at her. Warren’s questioning “was masterful,” says Neil Barofsky, who ran the TARP oversight for Treasury. “She eviscerated him.” But Warren would pay a price for those hearings.
Tell me again why I, as a conservative, am supposed to fear and loathe this woman? Because I’m not seeing it. I know George F. Will freaked out and called her a “collectivist,” but what on earth is conservative about believing that powerful financial interests should be able to do whatever they want without any government oversight or restraint? Who is more likely to be looking out for ordinary middle-class conservatives, big ol’ Massachusetts liberal Elizabeth Warren or the Republican senators from Alabama who helped torpedo her nomination to run the consumer protection bureau? I understand the philosophical disagreement conservatives have with the general liberal view of government’s role (and I think Rich Lowry articulated that better than the snippy Will did), but I am honestly puzzled by why so many conservative commentators aren’t just as pissed off as Elizabeth Warren about what the financial industry and their rent-boys on Capitol Hill — which includes, please note, prominent Democratic senators and Obama Cabinet officials — have gotten away with.
UPDATE: I just posted this in the comments thread:
Scott in PA, I sincerely don’t understand why Warren’s views on the need for more effective regulation on finance — on the people whose irresponsible behavior, permitted by government, crashed the economy, causing tremendous misery to the commons — translates into “contempt for individual achievement.” More philosophically, I don’t get why so many conservatives (versus libertarians) fail to grasp the morality of the unwritten social contract that binds us to each other, and to the past and the future.
Try this thought experiment: What if Elizabeth Warren were not interested in using the government to rein in hugely socially destructive behavior by big banks, but rather had devoted herself to reining in hugely socially destructive moral behavior by individuals? Let’s say she made it her business to mount an argument that (for example) alcoholism had become such an enormous problem for us, resulting in an intolerable level of suffering to families, and destruction to the economy. Let’s say she was advocating stricter government regulation of alcohol sales for the sake of the common good.
You could argue that she was wrong about that. You could say that the problem doesn’t exist, or isn’t as bad as she claims. You could say that her proposed solution would be worse than the problem. But could you really say that Warren had “contempt for individual liberty”? I suppose you could, if you were a hard-core ideologue, or an anarchist. It wouldn’t pass the smell test with ordinary people.
This is, by the way, the argument for drug prohibition today. Many people oppose the drug war as futile; others — the majority — say that the cost to the common good of legalizing narcotics would be too great. Do people who favor strong anti-drug regulation show a “contempt for individual liberty”? Some extreme libertarians would probably argue yes. But I think very few conservatives who favored liberalization of the drug laws would do so on ideological grounds, but rather prudential ones (e.g., they don’t work, and are more trouble than they’re worth).
My point is that this attack on Warren as a “collectivist” who “has contempt for individual achievement” is manically ideological; it’s rationale would not be accepted by conservatives when applied to many issues of personal morality that have clearly destructive implications for society. If believing that the common good ought to be given more priority in our society than it has today makes one a “collectivist,” then a large number of traditional conservatives are collectivists.
You approvingly quote George Will’s tut-tutting characterization of Warren’s supposed position: “Society is entitled to socialize — i.e., conscript — whatever portion it considers its share.” Well, again, apply that thought to government regulation of private morality. Will apparently believes society has no right to “conscript” individual liberty for the sake of the common good when it is quantifiable as money, but to be philosophically consistent, it seems to me that he would have to take a strong libertarian stance that society has no right to “conscript” freedom in other areas. Is Will prepared to state that the argument holding that the liberties of homosexual couples to marry should be curtailed because it will weaken the institution of marriage in general is a malign one because it amounts to a kind of collectivism? I doubt that very much. Conservatives like Will fall all over themselves to protect and defend maximal economic liberty, when they would not do the same with regard to personal liberties. Liberals are typically the reverse. As Your Working Boy wrote in “Crunchy Cons,” with comic hyperbole, “Democrats are the Party of Lust, Republicans are the Party of Greed. They’re both deadly sins.” More seriously, Wendell Berry has written (in “Sex, Economy, Freedom & Community”) that our very American habit of refusing to see the social implications of our economic and sexual mores and behavior on the common good is a big problem.