TUESDAY TALK WITH ELIZABETH WARREN 12OKT10

Consumer Czar Warren Sees Transparency in Banking as Top Priority 5OKT10

ELIZABETH WARREN, the country needs more people like her in office, both appointed and elected......the entire nation would be better off. 
Elizabeth Warren, who’s standing up the Consumer Financial Protection Bureau, talks transparency on PBS news hour, “This is about making sure that families have the power to make good decisions, that they can see the contracts, they can see what the stuff costs, and they can get a competitive market to start working for them.” http://to.pbs.org/aAgCYP

NEWSMAKER INTERVIEW    AIR DATE: Oct. 5, 2010

Consumer Czar Warren Sees Transparency in Banking as Top Priority

SUMMARY

Elizabeth Warren, the head of the Consumer Financial Protection Bureau, talks to Jeffrey Brown about the goals of her new agency and how she plans to empower Americans to make better financial choices.

Transcript

JIM LEHRER: Now: setting up a new federal agency to protect consumers. Jeffrey Brown has our newsmaker interview.
JEFFREY BROWN: Perhaps the most contentious among government responses to the financial crisis of the last few years was the creation of the Bureau of Consumer Financial Protection. And perhaps the most polarizing figure in that debate is the woman whose idea it was and who was recently appointed to get it going, Elizabeth Warren.

A professor at the Harvard Law School, Ms. Warren served as head of a congressional panel that kept an eye on government bailout funds. And she joins me now. Welcome to you.
ELIZABETH WARREN, Consumer Financial Protection Bureau: Thank you.
JEFFREY BROWN: So, after years of writing and talking about this, here you are. What's the first priority? When would consumers know that you -- that this agency now exists?

ELIZABETH WARREN: Oh, they know now.
JEFFREY BROWN: They know?
ELIZABETH WARREN: They know in part because this agency doesn't exist because there was some interest group behind it, because there was a lot of ton lobbying money behind it.
They know because the only reason this agency exists is because millions of American families said, hey, yes, that really sounds like a sensible deal. That's a part of financial regulatory reform that I think is important and could make a difference in my life. They are the best allies of this agency. They are the owners of it.
JEFFREY BROWN: So, what's the priorities? What do you do first? I mean...
ELIZABETH WARREN: Well...
JEFFREY BROWN: And is your authority clear about what you do?
ELIZABETH WARREN: So, I think the priority is to keep in mind what the end goal is.
And the end goal here is on financial products, these credit products, so that American families can evaluate how much they cost, can see the risks in them, and can easily compare one product to another. And that means what these products have to be is short and easy to read and very clear in their terms, not buckets and buckets of fine print -- in between, you know, clause 16 and clause 17 lurks something else that will come out and bite you.
JEFFREY BROWN: Well, in fact, you have been very blunt in the past. And even recently you used that term tricks and traps of the banking industry. So, this is what you're still after, and you're not backing away from any of that?
ELIZABETH WARREN: I'm not only backing away from any of that. What I'm really doing is reaching out to the banking industry and saying, some of you want to find another way to compete for your customers. Some of you have tried to put good products out there.
But those products get overshadowed by the ones that are full of tricks and traps, the folks who can pretend to offer you zero percent financing, when the reality is, they know they're going to make the money through the back door.
So, what I hope this is about is something that's good for families and quite frankly something that is also good for the financial institutions that are really willing to do head-to-head competition and serve those families.
JEFFREY BROWN: Well, I introduced you as a polarizing figure. And, in fact, there was lots and lots of opposition to you taking this from the financial sector, from Wall Street, from many Republicans.
Do you have a lot of fence-mending to do here? And how are you doing that?
ELIZABETH WARREN: You know, I -- I suppose people would say I have a lot of fence-mending to do. But the truth is, I just don't see it that way.
What I see is that I'm here to help markets work for consumers. And that means lots of transparency. That means really being able to read and evaluate those products. That means some financial institutions are going to do very well.
Those who are really not afraid of the competition, who are really ready to come in and say, look, apples to apples, here's what I offer. And I'm will to compete for my customers, not by tricking them, but I'm willing to compete by giving them better customer service, giving them lower prices, doing cool new iPhone apps. Knock yourself out on competition.
Just do it in a way that the customer can see it. Don't do it in a way that surprises the customer through fine print, because that's never good news.
JEFFREY BROWN: Now, I said you have been appointed to get this agency going. In fact, the president named you a special adviser to the White House and Treasury. And that was widely seen as a way of avoiding what would be expected to be a contentious Senate confirmation hearing.
ELIZABETH WARREN: I don't think so.
JEFFREY BROWN: You don't think so?
ELIZABETH WARREN: No, I don't think so. So, look, there are two jobs on the table. And they were always there by statute. One certainly is the director of the agency. That's confirmation process. In a world of secret holds in which one senator can keep you from coming to the floor for debate, that would be a very long time, likely, for this agency for anybody who got named.
And, as the president explained to me very clearly, during that process, if I were nominated, I wouldn't be allowed to talk about the agency and I wouldn't be allowed to do anything to help getting it stand up.
There is a second job that was available. And it's clear in the statute. Somebody is supposed to get out there and get that agency going. And the truth is, one has a cool title, but the other one gets to work right now.
JEFFREY BROWN: So, is it an interim position that you have got, or...
ELIZABETH WARREN: I have a job for as long as the president wants me to have this job.
JEFFREY BROWN: Now, the -- so it's not an end run around getting...
ELIZABETH WARREN: It's a different job.
JEFFREY BROWN: You don't see it that way? Different job.
ELIZABETH WARREN: No. I mean, it's in the statute.
JEFFREY BROWN: And a director will be named?
ELIZABETH WARREN: Of course. Of course.
JEFFREY BROWN: Now, the opposition, the critiques continue to come. Just the other day, in the op-ed piece in The New York Times, William Cohan noted the agency will cost about $500 million a year.
He says that's a lot of -- quote -- "a lot of money for taxpayers to fork over every year to support a new government bureaucracy designed to protect us from our own worst impulses."
Now, that's the continuing -- we have heard this for a while now. People made mistakes, right? People took mortgages they shouldn't have taken, or they got credit, they accepted credit they shouldn't have taken.
And you're going to be out there to help that?
ELIZABETH WARREN: No. So, let me start with a couple of pieces. The first one is about the cost. We are not going to let this one slip by. The cost is designated as 10 percent of what the Federal Reserve gets, what the Fed gets. And the reason for that is, remember, the Fed all along had the power to protect American consumers, to clean up the consumer credit market, and the Fed failed to spend it, and -- spend their money in that way.
And so the notion is, you say, in effect, to the Fed, OK, Fed, 90 percent of your job is what it always was. It's monetary policy and all that other cool stuff. Ten percent is set aside for consumer issues. And that's what this agency is about. And that's the money it will get. This is not about spending new money.
But the second part of your question...
JEFFREY BROWN: But that's now going -- you're saying now that will be spent.
ELIZABETH WARREN: Now it is designated.
JEFFREY BROWN: And designated.
ELIZABETH WARREN: And it will be spent not on general monetary policy. It will be spent on consumer issues. And I think that's good.
JEFFREY BROWN: OK. And the second -- OK.
ELIZABETH WARREN: But the second one, this question about personal responsibility, you know, I really just want to say here, let's be clear.
This is not about an agency that comes in and says, oh, you shouldn't spend money at the mall or you should do or you shouldn't do that. This is about making sure that families have the power to make good decisions, that they can see the contracts, they can see what the stuff costs, and they can get a competitive market to start working for them.
They can compare it -- right now, try it. Compare four credit card contracts and tell me which one is more expensive. You literally can't do it. I don't care how long you pore over it, pages and pages and pages of fine print. You will never figure out the costs.
JEFFREY BROWN: And your hope is to get that down to...
ELIZABETH WARREN: I want to get it down very short, and I want people to be able to say, oh, that's the cheap one, because, when that starts to happen, people make better decisions, better personal responsibility, but they also have a market that's driving down costs right at the margin for what it is to produce it.
JEFFREY BROWN: All right, Elizabeth Warren, thanks for talking to us.
ELIZABETH WARREN: Thank you. 

CAN OBAMA FIGHT? from MOJO 25JAN10

.Mon Jan. 25, 2010 2:00 AM PST
Two days after Republican Scott Brown's upset win in Massachusetts, the Obama administration proposed two new measures that would limit the ability of big financial institutions to wheel and deal. In announcing these initiatives—one of which would prevent investment banks from playing the market with their own cash—President Barack Obama got rather feisty:

What we've seen so far, in recent weeks, is an army of industry lobbyists from Wall Street descending on Capitol Hill to try and block basic and common-sense rules of the road that would protect our economy and the American people. So if these folks want a fight, it's a fight I'm ready to have. And my resolve is only strengthened when I see a return to old practices at some of the very firms fighting reform.

Ready for a fight—that was the message. White House reporters later that day grilled press secretary Robert Gibbs and economic aide Austan Goolsbee on why the administration was poking at the banks at this particular moment, implying that Obama was revving up a populist attack in response to the Democrats' demoralizing loss in the Bay State. Gibbs and Goolsbee insisted that the release of these proposals had been planned since before Christmas. Gibbs also noted repeatedly that the president was committed to "fighting for what's important to the middle class."
Whether or not the Obama crew rushed out these measures, the more important question is this: if Obama now intends to be a populist battler, how hard will he fight?

Obama and his aides certainly believe he's been pounding away for the past year—to pass the stimulus bill, to win congressional approval of his budget, to expand the children's health insurance program, to cut several wasteful Pentagon programs, to enact credit card reform, to win support for climate change action, to advance financial reform, to win passage of a jobs bill, to move health care reform through the House and Senate. In the prepared remarks for a town hall meeting he held in Elyria, Ohio, on Friday, Obama declared 14 times that he's been "fighting." He vowed, "I'll never stop fighting for you." A few hours later, Obama tweeted to his 3.1 million Twitter followers, "So long as I have the privilege of serving as your President, I'll never stop fighting for you—on #HCR [health care reform] and so much more." And in his weekly address—finalized on the same day—he decried the influence of "special interests" and promised, "I'll never stop fighting to make sure that the most powerful voice in Washington belongs to you."

Yet Obama has rarely come across as a fighter during his first year in office. He frequently seemed more preoccupied with working an insider's game than confronting the interests and legislators standing between him and his policy objectives. With health care in particular, it looked as if he was playing three-dimensional chess in a mud pit. Proceeding as a calculating operator, rather than as an in-your-face brawler, Obama has indeed won legislative tussles and remains close to sealing a deal on health care. But if he wants voters to believe he's a fighter, Obama needs to show them, not tell, them.

Obama is not naturally combative. The week before his populist eruption, he presented a less confrontational attitude toward the banks. While proposing a tax on big banks to cover the TARP bailout funds not being paid back, Obama didn't explicitly pick a fight with the financial industry. He entreated it to cooperate:

What I'd say to these executives is this: instead of sending a phalanx of lobbyists to fight this proposal, or employing an army of lawyers and accountants to help evade the fee, I suggest you might want to consider simply meeting your responsibilities. And I'd urge you to cover the costs of the rescue not by sticking it to your shareholders or your customers or fellow citizens with the bill, but by rolling back bonuses for top earners and executives.

Instead of clobbering banks and lobbyists seeking to block this initiative, Obama was attempting to convince them to back off.

That's been the typical style of this administration. On Wednesday, I asked Gibbs about a recent Wall Street Journal report that Senator Chris Dodd, the chair of the banking committee, was considering dropping the White House's proposed Consumer Financial Protection Agency. "Is that something that the President would actually get angry about," I inquired, "and has he conveyed that sentiment to Christopher Dodd already?" Gibbs replied:

He's conveyed that—well, Senator Dodd was here yesterday, as the [press] guidance suggested, and the President addresses this morning in his interview that financial reform has to include a consumer protection agency. That's what he's talked about for quite some time, and that's what he continues to want.

Not exactly mad-as-hell rhetoric. If the White House had come down heavier on Dodd, a fellow Democrat, Obama could have picked up easy points as a fighter. The soundbite writes itself: "We respect Senator Dodd and appreciate his various contributions to enacting the president's agenda. But the President is clear on this: he will oppose any Democrat or Republican who sides with the big banks and tries to prevent us from setting up an agency to protect consumers from the sleazy practices of big banks and financial institutions." Okay, maybe strike "sleazy." But it's not that difficult to display some fight.

The following day, Gibbs was asked if the White House was anticipating and preparing for a major political battle over the just-unveiled financial reform measures. He again missed an easy opportunity to exhibit White House fire:

I don't doubt that—this happened before we broke for Christmas, that when some of these activities were being voted on, that scores of lobbyists were called to Capitol Hill to generate activity in opposition to financial reform. I have not sensed a retrenchment by those lobbyists on this issue and I think the special interests, in order to protect the good that they have, will do all they can to derail what's good for the American economy.

There was nothing technically wrong with that answer. But it was not exactly loaded with passion. An hour or so earlier, Obama had proclaimed he was ready, even eager, for this fight, yet the White House did not seem to be on a war footing.

What happens in Washington—especially on complicated matters such as health care and financial reform—can, no doubt, appear like an incomprehensible swirl to voters who don't follow the ins and outs of the legislative rigmarole. To these voters, Obama's role in this jumble probably seems confusing. He's been sucked into the mess. For instance, he's overseen the generous bank bailout and stocked his administration with Big Finance insiders, while also talking about cracking down on financial institutions. He's refused to state clearly his preferences for critical aspects of health care reform, while the White House has engaged in closed-door dealmaking with legislators and industry representatives to win votes. What Obama's really fighting for can be hard to discern.

Consequently, if Obama aims to be widely regarded as a warrior for the middle class, he will have to take some mighty swings that cut through the clutter. Proclaiming "I am a fighter" will not be enough. He will have to name his foes (financial institutions, insurance companies, Republicans, and perhaps recalcitrant Democrats) and truly exchange blows. He may even have to lose a high-profile battle or two to persuade voters he is slugging away on their behalf. Muhammad Ali talked a good game, but he fought a better one. A true populist pugilist is defined not by his words, but by his actions, and a year into his presidency, Obama has not yet lost one of the more valuable presidential assets: the ability to define himself. He can still be a populist, if he acts like one.

ELIZABETH WARREN AND GOLIATH from SOJO 11FEB10

I had a most instructive conversation this week with Elizabeth Warren, the Harvard economist who is also the Chair of the TARP Congressional Oversight Panel. Warren has a way of cutting through the jargon and confusion of many economists and of this economic crisis -- right to the moral core of the issues at stake. I knew her for her keen insights, but I didn’t know she was from, as she puts it, a “mixed marriage from Oklahoma” -- Baptist and Methodist -- and that she is a former Methodist Sunday school teacher. In the interview I did with her for Sojourners, her moral and even theological comments were as impressive as her economic analysis of our present crisis. She said the battle for financial regulatory reform is like the battle between David and Goliath. (You can read the interview in the April issue of Sojourners magazine, which comes out in early March.)
Warren’s narrative of the U.S. economy, and the banking industry in particular, was very clarifying. For most of U.S. history, our country went through repeated periods of boom and bust, with all the consequences of those cycles. But after the Great Depression, a number of new financial regulations -- rules for the road -- were put into place that were designed to protect average Americans in particular from the continued abuses of the big banks and the often terrible results in bad times for ordinary people. Two important examples were the FDIC (Federal Deposit Insurance Corporation) to protect people’s savings and the Glass Steagall Act of 1933 to prevent banks from speculating with depositors' money. And the new rules worked for several decades, creating both prosperity and security for many American families and an emerging middle class. But starting in 1980, the rules were first watered down and gradually removed, and banks were free again to engage in both the abusive and very risky speculative behavior that helped to bring on the Great Depression, and resulted again in the current Great Recession.
She explained how credit card and mortgage application forms used to be only a page or two and were both clear and understandable to the average person -- even allowing people to easily compare and contrast the deals offered. But now, as all of us know, these forms have expanded to 30 pages or more with lots of complications, hard to comprehend provisions, and “fine print” that cleverly hides a long list or traps, tricks, and a myriad of both exploitive arrangements and outright abuses that greatly benefit banks at the expense of borrowers and card holders. In clear moral terms, Warren described the current behavior of our biggest banks as deliberately deceiving, entrapping, and cheating unsuspecting customers into very precarious and ultimately disastrous financial positions. And with no more rules of the road, the banks were leading their customers into the financial ditch. An economic crisis has been the result with massive suffering and pain for millions of Americans.
We are now living in a “lawless” economic environment, according to Warren, where our biggest banks have become our most dangerous predators -- and with no protections for the rest of us against the “law of the jungle,” as she puts it. The consequences for our economy, our culture, our families, and even our souls have been disastrous. This is not the way we should want to live, Warren says, and it is creating a world which we should not want our children to grow up in. She makes the urgent case for reform with the compelling analysis of a top economist, the family values of a grandmother, and the moral arguments of a person of faith. The sins of the financial world have become both a moral, and even religious, issue from the perspective of the Methodist tradition “which still shapes me.”
Warren is the “mother” of the idea for a new Consumer Financial Protection Agency (CFPA),which is in the current financial reform bill recently passed by the House of Representatives, and is now slowly making its way through the U.S. Senate. But the big banks are aggressively fighting back, trying to prevent their own regulation only one year after the financial meltdown for which they were in large part responsible. There seems to be no remorse, let alone repentance, from the big banks -- only record new profits enabled by their taxpayer-funded bailouts, and enormous bonuses to the executives who made the very decisions that brought the economic system down on the heads and hearts of so many Americans. The biggest banks in America are giving shame a bad name.
Why are new rules, regulations, and protections necessary? Because of the human condition, the realities of human nature, and a biblically orthodox understanding of human sinfulness. Yes, the reasons we need the protections offered by a Consumer Financial Protection Agency are as theological as economic. And it is amazing to me how many of those who oppose any regulation of Wall Street also claim to be religious conservatives. They subscribe to what I label in my new book, Rediscovering Values: On Wall Street, Main Street, and Your Street — A Moral Compass for the New Economy, “the myth of the sinless market.” I am a conservative Christian too, conservative enough to have a healthy appreciation for human sins, human failings, and fallen-ness, and after witnessing the behavior of America’s biggest banks during this economic crisis, an old theological term called human depravity. It is simply bad theology to trust large corporations not to pollute our waters, poison our air, or cheat their unsuspecting customers. They have to be prevented from doing so for the sake of the common good. Good financial and economic rules reflect, not only good economics, but also good theology. And the free market fundamentalism of Wall Street’s defenders is, among other things, bad theology.
But as Elizabeth Warren, a good Methodist, warns, the banks are trying everything they can think of to kill financial reform. And we must not let them do that. In the name of a fairer economy, of family values, of moral values, and of sound biblical theology, the faith community must now make itself heard on the urgent issue of financial regulatory reform. We must hold our biggest banks accountable to the common good. So let our Senators not just hear from the bankers, but now also from pastors who see what such abusive banking behavior has done to their families and parishioners, to devastated communities with shuttered houses, to the prison of debt that more Americans find themselves in. People of faith across the land must now tell their elected representatives that we will be “watching and praying” to see what they will do about necessary financial reform. We don’t have the money in our financial coffers that the banks do to finance their political campaigns, but we do have our voice and our votes which will be turned against them if they vote against the best interests of our people and for the greed of the bankers. Jesus said it well -- choose this day who you will serve, God or Mammon (Money). Let’s now put that choice to our Senators, who need to hear from us this next week while they are in their district offices during the Presidents' Day recess. Critical decisions are being made for or against critical financial reform right now.
Jim Wallis' interview with Elizabeth Warren will be featured in the April issue of Sojourners magazine