The Republican reports that Scott Brown’s campaign called Warren a hypocrite for giving a sensible, thoughtful answer on whether she would have supported the TARP bill. Her comment that elicited this accusation was:
““Well, so it’s a good question, and I actually talked to a lot of folks at the time. I want to say two things about TARP. The first one is I think we were right in a financial crisis for the U.S. government to come in and say, ‘We are not going to stand by and let this economy plunge over the edge into a financial abyss and that there comes a time when we’re going to have to put the government’s faith behind our system.’ But I want to say this again. The mistake, from my point of view, was not the movement; it’s how we did it.”
In reality, as her team responded to the allegation, this is very consistent with everything she ever did or said on TARP.
“”This is just another ridiculous and misleading attack from someone Forbes magazine called one of Wall Street’s favorite Senators,” said Aletha Harney, Warren’s press secretary. “Scott Brown has time and again stood up to protect the big banks and hedge funds. Elizabeth has consistently said that some action had to be taken after the 2008 economic collapse, but she was outspoken and outraged that TARP was a blank check to the banks. And, she’s still outspoken about holding the banks accountable and protecting consumers.”
http://www.masslive.com/politics/index.ssf/2012/01/sen_scott_browns_campaign_spar.html
As is often the case with Rove like attacks, this attacks an area of Warren’s strength and falsely accuses her of what Scott Brown can reasonably be said to be guilty of. Had Warren been a Senator then, she would have been a capable ally of Senators who tried to make the bill better than the original Paulson proposal which was worse than the final bill.
Brown’s team states – unequivocally – that he is against TARP, but he says nothing of what he would have done as the stock market was plunging to around half its vale. But, that is not the hypocrisy. The hypocrisy is that part of Brown’s price for his needed 60th vote for Dodd/Frank was that he -singlehandedly – replaced a tax on the financial institutions to create a fund for their own future bailouts with using $19 million of recovered TARP money (ie tax payer money).
So, Brown, who is proclaiming that he was against the TARP bailout hastily enacted in response to a genuine crisis, used the leverage he had because his vote was needed to enable the NEXT bailout when another institution fails – again using tax payer money. With no crisis, the original intent of this fund in the Dodd/Frank bill was give the institutions a stake in NOT risking failure as it was their money that would have been used. Instead – thanks to Scott Brown – it is essentially a second TARP.
centralmassdad says
Her position is deliberately muddled.
In October 2008, the government had two options: (1) do nothing; or (2) do something to prevent outright disaster.
Option (1) was never in play except among crazy people. Option (2) could be pursued in one of two ways: (1) a bailout of the financial sector; or (2) nationalization of the financial sector. There wasn’t really a third option, other than the do-nothing option.
Each of the two options had serious drawbacks: a bailout, by definition, protects financial institutions from the consequences of terrible decisions, those consequences being insolvency and liquidation. If the companies suffered the consequences, then the bailout would not have prevented disaster.
A bailout thus necessarily “rewards” the bad behavior of the institutions and the people running them, in order to prevent disaster. From the other side, a bailout is necessarily a huge government intervention in the markets, also in order to avoid disaster.
Nationalization would have prevented “rewarding” the bad actor individuals, but would have been FAR more politically difficult to do on the spot. Even if it could, the risk remained that the government would not have the expertise or manpower to administer huge chunks of the financial sector. If nationalization took too long, or proved to be not practical, or proved (as it likely would have) politically impossible, there would have been disaster.
The government had a few weeks, at best, to act. In election season. Politicians from both sides rightly supported it and got punished afterward, either for supporting big government or “selling out” to Wall Street.
So, when Warren says she didn’t like “how it was done” she is really saying: Well, yes, I supported the part of the policy that prevented disaster but will distance myself from the part of the policy that is now unpopular, even though those parts are not separable. That is muddled.
Either that or she would have supported nationalization, but doesn’t want to say that out loud. That is a fudge.
Elizabeth has consistently said that something had to be done to put out the fire, but was outspoken and outraged that the burning building suffered water damage.
Bob Neer says
Wall Street’s current spin is that the bailout was a painful solution that pleased no one but, sadly, had to be done for the greater good.
That is what the fox said on his way out of the henhouse.
Sweden offered another model that produced a significantly better outcome. Thus, a reality-based argument is that a Swedish-style solution would have been better for the US than Republican created Democrat implemented botch of 2008-09.
Wikipedia:
karenc says
It is interesting to speculate whether Bush as a lame duck, Republican President could have proposed this and gotten enough Republicans to join the Democrats to pass it. The Republicans have demonized the word “socialism” and this certainly would have been called that.
centralmassdad says
That would be nationalization. See, you use the word right there.
Do you think that could have been accomplished during October 2008? With a Republican president and Congress? It sounds– not unlike with respect to many policies– you want to assume away the lack of political consensus.
Who is reality-based again?
kbusch says
Sweden had the government personnel to run banks; we probably didn’t.
Other than that, I wish we could have nationalized banking. In addition to not rewarding bad behavior, money would not be pouring in from the banking industry to prevent it from being effectively regulated. The politics of not nationalizing has proved bad as well.
karenc says
I think that it is the Brown team refusing to accept anything other than either a yes or no answer. It is clear from her answer that she would have voted yes – it is also clear that it wasn’t what she would have wanted. That position puts her in the mainstream of Senate Democrats of the time.
Note that Scott Brown does not hold himself to the same standard – often saying he was for parts of bills he voted against and against parts of bills he voted for. I would bet that it is rare for any Senator to have a bill before them that represents exactly what they would have preferred to be the bill.
centralmassdad says
I support the policy but I don’t support the policy. This way I can take credit for the policy, but avoid blame for the policy.
Standard political double talk, though an entirely forgivable one, designed to avoid a Kinsley Gaffe.
To me, it says, “Yes, I understand that we needed to take extreme and emergency measures, and that nationalization was a non-starter (and which would scare the sane independents who I need in 10 months), but I also need the energy and enthusiasm of the most liberal, populist people, and these are folks that require their complex economic policy to fit on a bumper sticker and I can’t piss them off. Can we move on now?”
Of course Brown is going to try to highlight the contradiction of what she is saying. He is a smart politician and a skilled campaigner. Her ability to reply to his pressure, without giving the left or center the willies, will give a good indication of whether she is cut out for this line of work.
karenc says
Do you have a problem with all the jobs bills that Brown said he was FOR, but voted against for various reasons. That is the same thing.
centralmassdad says
And I didn’t say I have a problem with this particular fudge; I just recognize it as a fudge, and a necessary one. And as a test of her political ability, as opposed to her policy ability.
There are few things in play. First, I want to understand what’s going on. For EW, I understand exactly why she must play the for-it-against-it game. There is no perfection in this world, and so any legislator will be in that position. In other words, I want to understand the policy. Her policy is: she supported TARP, regrets that Wall Street made a killing, but wouldn’t have tanked the economy to make sure Wall Street got theirs. Okay with me.
Second, is how she does the dance. Brown is going to call her out on this; she must be able to respond effectively, without shooting herself in the foot. In other words, she must be able to sling some BS to deflect Brown’s jab, without saying “I was for it before I was against it” and without deflating her winged base or chasing away moderate voters. So she can’t say: “You know what, there really wasn’t a way to prevent Wall Street from cleaning up. Sucks, but true.” Or: “We should have nationalized the financial sector outright” She must therefore fudge.
What use is it to have a Senator who agrees with you on policy, but has no ability to see any of those into effect, or even to gather influence? “I’m in favor of single payer.” Big deal. I’m in favor of cold fusion and the development of the warp drive to colonize Alpha Centauri, for all the good it will do us.
Brown does the same thing; his political life depends on keeping his own wing placated without scaring away the center. Democrats are rightly trying to make that hard for him, but truly are not as skilled at forcing Republicans to make difficult votes to test them as are their GOP opponents.
karenc says
It will be interesting to see what her future reaction is to this and other things.
michaelhoran says
“I think that it is the Brown team refusing to accept anything other than either a yes or no answer.”
Unfortunately, Elizabeth Warren has a real problem with “yes or no answers.” Pushed three times at the Stonehill debate to simply say yes or no in re Occupy’s right to Occupy, Ms Warren refused.
I’ve seen the same reluctance to say “yes” or “no” in response to other questions (see her PDA questionnaire). I find this tendency to evasion, coming from a candidate who doesn’t seem to have given much thought to anything besides the woes of middle-class budgets, more than mildly disturbing.
It’s not that her reactions are finely nuanced responses to complex questions–they’re attempts to evade responsibility. Her much-vaunted courage has been sorely lacking since the day she declared.
kbusch says
by the way
sabutai says
Maybe I’m a rarity in thinking that the biggest issue in the current economic rece/depression isn’t the value of the stock market, which was rebounded nicely even with this half-a**ed TARP program.
karenc says
hemorrhaged from September 2009 through early 2010, but to a very real degree, unemployment increases lagged the event – so, when the decision had to be made, the magnitude of what was happening was not that clear looking just at unemployment statistics – so I thought it unfair to use that.
centralmassdad says
Indeed, the stock market was a lagged as well. The relevant numbers at the time were interbank lending rates, and how close money market acounts were to breaking the buck. Both of these were at red alert all summer, and went into screaming crisis mode the Monday after Lehman.
The stock markets only tanked when it seemed like Congress didn’t understand how dire things were.
Christopher says
As I recall it got so loaded down with pork to basically bribe members who did not vote for it the first time to vote for it the second time, making it very expensive at precisely the moment it should not have been. I think those who voted against had the right instincts and contrary to CMD I don’t think they were crazy.
karenc says
change from the Paulson proposal that I think essentially just gave the treasury an ok to spend billions without having to explain much at all and little or no oversight.
Do you think there was a fall back, more reasonable plan that would have been put up had the one that passed failed – or that they really would have done nothing? I don’t recall any speculation on it – and a lot of consternation from Democrats who felt they had to vote for it.