120806_elizabeth_warren_605_apSenator Elizabeth Warren delivered this speech on the Senate floor last Friday night:

“Democrats don’t like Wall Street bailouts. Republicans don’t like Wall Street bailouts. The American people are disgusted by Wall Street bailouts

“And yet here we are, five years after Dodd-Frank with Congress on the verge of ramming through a provision that would do nothing for the middle class, do nothing for community banks, do nothing but raise the risk that taxpayers will have to bail out the biggest banks once again…

“So let me say this to anyone who is listening at Citi[group]. I agree with you Dodd-Frank isn’t perfect. It should have broken you into pieces!

“If this Congress is going to open up Dodd-Frank in the months ahead, then let’s open it up to get tougher, not to create more bailout opportunities. If we’re going to open up Dodd-Frank, let’s open it up so that once and for all we end too big to fail and I mean really end it, not just say that we did.

“Instead of passing laws that create new bailout opportunities for too big to fail banks, let’s pass…something…that would help break up these giant banks.

“A century ago Teddy Roosevelt was America’s Trust-Buster. He went after the giant trusts and monopolies in this country, and a lot of people talk about how those trust deserved to be broken up because they had too much economic power. But Teddy Roosevelt said we should break them up because they had too much political power. Teddy Roosevelt said break them up because all that concentrated power threatens the very foundations up our democratic system.

“And now we’re watching as Congress passes yet another provision that was written by lobbyists for the biggest recipient of bailout money in the history of this country. And its attached to a bill that needs to pass or else we entire federal government will grind to a halt.

“Think about that kind of power. If a financial institution has become so big and so powerfulthat it can hold the entire country hostage. That alone is reason enough to break them up.

“Enough is enough.

“Enough is enough with Wall Street insiders getting key position after key position and the kind of cronyism that we have seen in the executive branch. Enough is enough with Citigroup passing 11th hour deregulatory provisions that nobody takes ownership over but everybody will come to regret. Enough is enough. Washington already works really well for the billionaires and the big corporations and the lawyers and the lobbyists.

“But what about the families who lost their homes or their jobs or their retirement savings the last time Citigroup bet big on derivatives and lost? What about the families who are living paycheck to paycheck and saw their tax dollars go to bail out Citi just 6 years ago?

“We were sent here to fight for those families. It is time, it is past time, for Washington to start working for them!”

Right on!


With this appearance on CNBC last week, the Legend of Elizabeth Warren continues. Look how she shoots down these two smart-alecks who dare come at her armed with nothing more than some producers’ notes and a little cocktail party conversation. “No!” Elizabeth says, and they are gobsmacked. You know, I love Hilary Clinton, but whenever Elizabeth decides to run for president, I’m her guy.


Was this best political convention of my lifetime? Almost certainly; not only was the roster of spectacular speakers unbelievably rich, bu whoever assembled the order respected the themes of the speech with a subtle and almost literary elegance.

Invoking Ted Kennedy near the beginning of the proceedings Tuesday was a brilliant stroke. Summoning the ancients is always a powerful move, but in this case, Kennedy’s appearance resonated with particular strength. The fact that his loss was recent delivered poignancy; his oratory from 1980 was inspirational; and his role in Obama’s ascendency in 2008 was palpable. But most important, the story of Teddy’s life is the answer to the pressing question of this election: do we stay the course or change? Teddy’s life was all about staying the course, and like Moses, he never reached the Holy Land, which would have been the enactment of national health care insurance, during his lifetime. But it happened, in part because Kennedy anointed Barack Obama to carry on; by implication, we have not attained economic recovery yet, but if we stick with Obama, we will. This theme was reprised by Julian Castro, conjuring the struggles of his grandmother and mother that resulted in his present stature, and Michelle Obama, with her stories of her family and marriage. All of these speeches were cashed in on Wednesday, when Bill Clinton not only defended the administration, but exposed the poverty of the Republicans, in a brilliant speech that at once skewered the Republicans while investing the entire campaign with a previously elusive optimism: not only are we going to get out of this predicament, not only do we have a plan, but we are going to be better equipped for the economy of tomorrow, and we will be a more inclusive, more prosperous, more equal nation, a more perfect union, than ever before.

Along the way there were revelations. Tammy Duckworth delivered a no-nonsense speech, and the image of her artificial legs beneath her skirt tells me that no one on the room is tougher. Deval Patrick delivered a stemwinder, Jennifer Granholm tore down the house, John Kerry joyfully and hilariously ripped the opposition, Elizabeth Warren showed her clear-eyed grit, and the gallant Gabby Giffords showed that the convention planners were ruthless in their refusal to leave any emotional stone unturned. It’s true that the last night of the convention didn’t live up to the previous two. Joe Biden‘s talk was rich with emotion, but it seemed that he went on too long, and by the time the president spoke, everyone was suffering speech fatigue. By the time he talked, we were stuffed. Oh, no thanks, I could not possibly have not another plate of auto rescue! But the president is never bad, and while he wasn’t brilliant last night, he wasn’t bad. He was strong, he was hopeful, and he was humble; his use of Lincoln’s quote was highly effective. The Republicans should take little solace in Obama’s failure to deliver a coup de grace. Obama will get a small bounce from the convention, but my guess is that he will get separation in the swing states, and Romney with dimming hope.


It has always shocked me that it took nearly four years after the Crash of 1929 for the famous Pecora hearings to take place. One cannot believe that all that time passed before the Senate held hearings that exposed the corrupt and short-sighted practices that ruined the economy. Well, here we are, coming up on three years since the fiasco of 2008, and we still have not had the high profile hearings that focused public attention in a way that led to real reform. Why, there’s going to be an HBO movie about the crisis later this month! HBO got a movie before we got hearings!

Fortunately, we might still have a chance. Writing in The Baseline Scenario, Simon Johnson argues that if President Obama would come out and nominate Elizabeth Warren to head the new Consumer Financial Protection Bureau (CFPB), and agency she did so much to design, her confirmation hearings could provide the focused exposure necessary to real reform. “A proper Senate confirmation hearing,” says Johnson, “would be the perfect platform for Ms. Warren to explain, (a) not only do “too big to fail” banks now constitute and hugely dangerous government subsidy scheme, but (b) based on these subsidies, they are becoming larger and acquiring more market power that can be – and has been – used to abuse consumers in a nontransparent fashion.

“All attempts so far to construct some form of Pecora Hearings have failed – partly because the issues are complex and partly because of partisan fighting. The Financial Crisis Inquiry Commission made some progress but could reach no consensus (or bring anyone to justice). Senator Levin’s hearings into Goldman Sachs grabbed attention and were most helpful in the Dodd-Frank reform debate but again no one is going to jail – and few people even grasp what were the real issues at stake. And the Department of Justice has preferred to pursue insider trading cases, perhaps taking the view that these are easier to explain to juries. But Elizabeth Warren cuts through the complexity and offers a message that – outside of Washington – plays well across the political spectrum.

“Her message is simple: the consumer “market” for financial products does not operate like a proper market because leading firms (bigger banks and also nonbanks, like some payday lenders) have figured out how to make a great deal of money by confusing their customers. . . . If someone attempted to sell boxed cereal in the same fashion that many financial products are now sold, that person would be drummed out of the cereal business. The norms of that sector (and many other nonfinancial sectors in the United States) would not stand for this degree of deception and malpractice.”

Johnson is convinced that Warren’s confirmation hearing would become a defining moment for thinking about finance in America. “And reform would win,” he says. “All the missed opportunities, botched bailouts, and kowtowing to megabanks would fade into the background. Every attempt at change must face many setbacks – and financial reform has really struggled to have any impact. But at the end of the day, if Elizabeth Warren wins, we all win.” And there’s still a chance we could move faster than Pecora!


Coming to the end of the second year of the Obama presidency, what is sadly apparent is that one of the most gifted politicians of my lifetime–gifted intellectually, gifted rhetorically–has completely failed to articulate the narrative of our times. It’s perplexing, but he has never explained chapter and verse how and why we have found ourselves mired in this economic situation full of debt, unemployment and uncertainty. He lost the narrative on his stimulus bill, he lost the narrative on health care reform, and he he lost the narrative on Wall Street reform. As such, he has been chewed up by his opponents, who have presented a garbled mass of half-truths and insinuations to undermine him. And although he is surrounded by excelelnt economic thinkers, none of them–not Timothy Geithner, not Paul Volcker, not Larry Summers–has been able to help the president recapture the narrative.

That’s why the president needs Elizabeth Warren, the chair of the Congressional Oversight Panel of the Troubled Assets Relief Program. A forceful advocate of greater accountability and transparency, Warren has spent the two years of the crisis clearly, cogently and concisely explaining to the American what’s gone wrong, and what needs to be done. Sometime soon, the president will appoint a director to run the Bureau of Consumer Financial Protection, an agency Warren has done much to envision and midwife into existence. But there is a storm brewing behind the scenes. As ABC’s Jake Tapper reports, sources say Treasury Secretary Geithner “has concerns about her appointment”–I think that means “opposes”– given some of the pointed criticisms Warren has made about the Obama administration’s policies.

  • In Warren’s April 13 report on Treasury’s $75 billion foreclosure prevention program, she wrote that “Treasury’s programs are not keeping pace with the foreclosure crisis. Treasury is still struggling to get its foreclosure programs off the ground as the crisis continues unabated.”
  • In her May 13 report on Treasury’s attempts to help small businesses, she wrote that “Because small businesses play such a critical role in the American economy, there is little doubt that they must be a part of any sustainable recovery. It remains unclear, however, whether Treasury’s programs can or will play a major role in putting small businesses on the path to growth.”
  • In her June 10 report on Treasury’s AIG bailout, she wrote, “The government argues that AIG’s failure would have resulted in chaos, so that a wholesale rescue was the only viable choice. The Panel rejects this all-or-nothing reasoning. There is no doubt that orchestrating a private rescue in whole or in part would have been a difficult – perhaps impossible – task, and the effort might have met great resistance from other financial institutions that would have been called on to participate. But if the effort had succeeded, the impact on market confidence would have been extraordinary and the savings to taxpayers would have been immense.”

“Warren,” Tapper writes, “has been an aggressive watchdog over the Treasury Department and, more personally, a tough questioner of him in oversight hearings, for instance asking why shareholders and officials with US automakers had to make severe sacrifices to continue while recipients of TARP funds have made millions; or pushing Geithner to explain why AIG counterparties such as Goldman Sachs were paid 100 cents on the dollar.”

I can’t say that Geithner’s policies have been wrong; indeed, they mostly seem quite prudent. But He seems very much to be a Bank Man, meaning that he sees the interests of the big, powerful banks as one and the same as the interests of America. And goodness, we’re all adults here, maybe that’s right. But Geithner is not helping the president win the popular argument. The presence of Warren should help the administration win the policy fight, and even if she doesn’t change a single one of Geithner’s policies, it should force him to explain himself better. She is a talent and an asset and a force, and the president needs her on his team.


Sen. Chris Dodd, the jolly legislator who spent his career partnering with Ted Kennedy in roistering and promoting the liberal agenda, is spending the most significant moment of his political widowerhood by turning into a puddle of goo. Charged with reforming the banking system–what he has called “one of the two most important issues of our time”–Dodd, who has announced his retirement from the Senate, seems to be collapsing in the face of an onslaught of lobbying, and is leaning to taking one of the key provisions of the plan—creating a Consumer Financial Protection Agency—and turning what ought to be a ferocious and independent tiger into part of the Department of the Treasury. Some valediction

Forget for a moment that the Consumer Financial Protection Agency has earned the staunch backing of Elizabeth Warren, whose reputation for intelligence and integrity is burnished every time she opens her mouth. Just think about what we’ve learned about the working of government during the last two years. The Department of the Treasury exists to promote the general welfare and well-being of the banks. As a matter of philosophy and religion, Treasury believes strong banks mean a strong America. I don’t think this implies that Treasury is complicit in chicanery or that even it would make sense for Treasury to believe anything different, and as anybody who worked for Lehman Brothers can tell you, Treasury doesn’t roll over just because a bank wants it to. But read a book like Too Big to Fail by Andrew Ross Sorkin and it will be clear: placing a consumer advocacy within Treasury is either to consign it to oblivion or to invite it to be compromised.  If this agency is to do all the good it needs to, it’s mission can’t be subsumed under anyone else’s agenda.

One reason Dodd is pressing for this alternative is that he is emulating the fool’s errand President Obama has continued to pursue, and is seeking bipartisan support. Never has there been a moment when an enemy–fat cat bankers–presented a riper target of opportunity. Why Dodd and Obama and the Democrats are holding their fire in favor of pursuing some weird, spiritual quest for zen bipartisanship is a stumper.