The big banks loathe Ms. Warren, who has made a career out of pointing out all the ways they gouge financial consumers – and whose primary goal is to make such gouging more difficult. So, naturally, the Republicans loathe her too. That she might someday run this bureau terrifies the banks. So, naturally, it terrifies the Republicans.
The banks and their Congressional allies have another, more recent gripe. Rather than waiting until July to start helping financial consumers, Ms. Warren has been trying to help them now. Can you believe the nerve of that woman?
To listen to the House Republicans, you’d think the financial crisis of 2008 was like that infamous season of the long-running soap opera “Dallas,” the one that turned out to be a season-long dream. Subprime mortgages? Too-big-to-fail banks? Unregulated derivatives? No problem! With the exception of their bête noire, Fannie Mae and Freddie Mac, the Republicans act as if nothing needs to be done to prevent another crisis. Indeed, they act as if the crisis never happened….
It’s not just the House Republicans either. Already the Office of the Comptroller of the Currency has reverted to form, becoming once again a captive of the banks it is supposed to regulate. (It has strenuously opposed the efforts of the A.G.’s to penalize the banks and reform the mortgage modification process, for instance.) The banks themselves act as if they have a God-given right to the profit they made precrisis, and owe the country nothing for the trouble they’ve put us all through. The Justice Department has essentially given up trying to make anyone accountable for the crisis.
Thank goodness, then, for the attorneys general – and for Ms. Warren. On Main Street, where the attorneys general operate, it is pretty obvious that problems persist. During the subprime boom, many states tried to stop the worst lending abuses, only to be blocked by federal banking regulators. Now that the country is dealing with the aftermath of those abuses – the rising tide of defaults and foreclosures – it is the attorneys general who are, once again, put in the position of trying to stamp out abuses, this time of the foreclosure process itself.
And as for the point of the hearing, which was apparently for Republicans to beat up on Warren:
The notion that Ms. Warren lacks statutory authority to talk to the attorneys general is an objection so silly it is hard to take seriously. Consulting with the only government officials around who are actually trying to do something for financial consumers is precisely what she ought to be doing. Given that her agency could wind up enforcing the terms, it’s practically a necessity.
As for the idea the Republicans have been spreading talk that the attorneys general are overstepping their bounds by trying to force reform – and a big penalty – on the mortgage servicers, that’s pretty silly, too. As Adam Levitin, a Georgetown law professor, has pointed out on his blog recently, settlements are private agreements between two parties. The banks can accept what the A.G.’s are proposing. Or they negotiate different terms. Or they can reject them outright, and go to court to fight over the proper remedy. It’s really not any different from the multistate tobacco settlement of some years ago, which imposed some minor reforms on the tobacco industry along with a giant financial penalty. Congress had nothing to do with it.
Really, these people are either idiots, or in Wall Street’s pockets to a truly embarrassing extent, or both.
As much as I would love to have Warren run for Senate, I doubt it will happen, and I think there’s a better use of her obvious talents. Obama should nominate her to head the consumer protection agency. Of course, she will be filibustered and will never be confirmed. But, as Nocera points out,
even if her nomination goes down in flames, Senate confirmation hearings would be clarifying. Americans would get to hear Ms. Warren explain why the Consumer Financial Protection Bureau has the potential to help Americans. And they would get to hear Republicans explain why the status quo – including the everyday horror of the foreclosure mess – is just fine.
That would supply a lot of very useful footage for 2012, among other things. And then Obama can name her to the job in a recess appointment. A year or so will be plenty of time for her to leave the agency in excellent shape, whereupon she can turn over its leadership to someone who is confirmable and go back to being a law prof. Win-win.