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Naked Capitalism: Elizabeth Warren To Be Sidelined by Administration

15 Sep

In the face of growing evidence of rampant fraud throughout the financial system, the foreclosure processes stealing homes from American familes and the illegality of MERS and other ‘gimmicks’ created by the financial sector to ‘have its way’ with the economies of the world at huge profit to the financiers and devestating losses to everyone else, this news is almost predictable. But just the same, it’s a damn shame, and there ought to be a way to change it.

Elizabeth Warren has been the lone sane voice in this crisis from the beginning – and so it only stands to reason that she will be silenced, one way or the other…

MSNBC’s description of her ‘lack of support in the financial sector” is almost so blatantly idiotic as to be laughable, if it weren’t for the fact that the entire Obama administration is clearly owned and run by the same financial sector.  If these are our champions we are some poor dogs indeed – Timmy Geithner is running our economy and our country – and the administration seems content to let it stay that way – pity the American middle class doesn’t seem to understand what that means.

Pity, that.

Elizabeth Warren on Way to Being Sidelined as Head of Consumer Protection Agency, Relegated to “Advisor” Role

from naked capitalism by Yves Smith

The body language of the Administration has been clear from the outset on the question of whether Elizabeth Warren would get its nomination to head of the new financial services consumer protection agency. Despite the occasional public remark regarding her undeniable competence, which really amounted to damning her with faint praise, Team Obama has never been on board with the idea. Michael Barr, assistant treasury secretary, was noised up early on as a possible candidate, but the PR push halted abruptly when her many supporters pointed out the obvious, that she was clearly the better choice. Then we had the no doubt authorized Chris Dodd kiss of death, that he thought she was qualified but doubted she could be confirmed by the Senate.

The reality is that the Administration is never going to appoint her; the only question is whether she can be kept in their orbit and not be a net negative as far as their dubious priorities are concerned. Timothy Geithner has become a central actor on all Adminstration economic policy matters, giving him more reach, and thus more face time with the White House than is normal for a Treasury secretary. Given how Warren has successfully, and correctly, roughed Geithner up before Congress in her role as head of the Congressional Oversight Panel for various TARP administrative shortcomings, he was guaranteed to be at best a non-supporter.

But on a much more basic level, the Warren marginalization isn’t about personalities, although the powers that be love to pigeonhole thorns in their side that way. The clashes reflect fundamental differences in philosophy. Geithner, the Administration that stands behind him, and Dodd all are staunch defenders of our rapacious financial services industry, even though they make occasional moves to disguise that fact. Warren, by contrast, is clearly a skeptic, and a dangerous one to boot, because she understands the abuses well and is able to communicate effectively with the public.

Expect Warren to be pushed further to the sidelines, just as Paul Volcker has been (oh, and pulled out of mothballs when the Administration desperately needed to create the appearance it really might be tough on banks). Perhaps they hope her tenuous standing as acting head can be used to keep her in line. But she may also believe she has more influence even in a likely to be weakened position than on the outside as a critic. And sadly, that may prove true. Individuals, no matter how stellar their resumes, command far less media attention than those who hold powerful posts.

Now the Administration is pretending to hide its cards on this one. Technically, it could bypass confirmation altogether and have Warren as de facto leader of the agency, and never name a permanent director. However, the end game seems obvious: keep her in orbit through mid-terms to prevent a hissy fit from her many fans, then name a more bank friendly permanent director (the argument no doubt being that her effectiveness is compromised by her not being confirmed, and with the odds high that the elections will put more Republicans in Senate seats, the Administration will argue its hands are tied). However, this timetable could be optimistic; as a special advisor, she serves at the pleasure of the Administration and will be a lame duck as soon as a permanent director candidate is put forward.

Will Warren last? Both Brooksley Born and Sheila Bair have been accused of not being team players. With the team being industry cronies, that’s a badge of honor. But each also had a clear bureaucratic role, and Born was still pushed out. I’m surprised Warren is accepting such a compromised position. Perhaps she believes she still has a bully pulpit and can embarrass the Administration into doing the right thing. But it will take a very thick skin for her to follow that course of action.

From MSNBC. Note its original headline was “Wall Street critic won’t get top consumer job”; it has been revised to the anodyne, “Wall Street critic to help set up consumer agency“:

The White House will name Wall Street critic Elizabeth Warren to a special advisory role in setting up the new Consumer Protection Agency called for by the financial regulatory overhaul, a source familiar with the White House’s plans told NBC News on Wednesday….

The 61-year-old Harvard University professor had been considered the leading candidate to head the bureau itself, but her lack of support in the financial community could have set the stage for contentious Senate hearings that may have ultimately derailed her confirmation…

Others mentioned as contenders to lead the agency are Michael Barr, an assistant treasury secretary who was a key architect of the administration’s financial regulatory plans, and Eugene Kimmelman, a deputy assistant attorney general in the Justice Department’s antitrust division.

 
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