Geithner: Wall Street Wouldn’t Like Elizabeth Warren

-

A DC insider close enough to Secretary of the Treasury Timothy Geithner shared with me a vignette in which someone suggested to him that he find a way to diversify the “image” of his relationships with the economy community and broaden it to include people like Elizabeth Warren.
This person implied that someone had suggested Geithner consider Warren for a Treasury Deputy Secretary position.
Elizabeth Warren is the Leo Gottlieb Professor of Law at Harvard Law School, Chair of the Congressional Oversight Panel created to investigate the U.S. banking bailout (TARP), and first developed the notion of a Consumer Financial Protection Agency.
Geithner’s alleged response: “Wall Street wouldn’t like it.”
No kidding!

The Daily Show With Jon Stewart Mon – Thurs 11p / 10c
Elizabeth Warren
www.thedailyshow.com
Daily Show
Full Episodes
Political Humor Health Care Crisis

On Tuesday night, Warren put it all out there on Jon Stewart’s show. She’s so sober and sensible. Watch the clip above, but here are some of her best zingers:

“Well, these guys really do get it.” Warren told Stewart — the CEOs, bankers, and people in power — “They get it. And they work best behind closed doors.” If the decisions are in their hands, she said, “Nothing, nothing will change. You know, I want to turn to these guys sometimes, and I want to say: what part of ‘we bailed you out’ do you not get? These are people who would not have their jobs because they would not have their companies.”
“The chips are all on the table,” Warren added. “We are going to write what the American economy looks like for 50 years going forward. And right now the CEOs have any real change bottled up in the Senate.”

– Steve Clemons

Comments

39 comments on “Geithner: Wall Street Wouldn’t Like Elizabeth Warren

  1. DonS says:

    . . . Krugman cites Elizabeth Warren’s emphasis on protection of consumers from bad banking practices via an agency charged with that responsibility as parallel with the Canadian approach — which has been successful.

    Reply

  2. DonS says:

    Kkrugman has a column relevant to this post, on the Canadian example.
    He points out that it is Canada’s regulatory structure which contains risk, and concludes its not size (alone), nor low interest rates (alone), that can be chiefly faulted in banking collapse, at least by parallel with Canada’s experience.
    I spend a good deal of time in Canada, and do a lot of banking there. The soundness of their banks helps me have confidence that money is safe in those accounts.
    Sadly Krugan notes what looks like a bad fate for the reform legislation now in Cogress which in some part mimics the Canadian approach. Our Congresscritters are too wedded to banking money/bribes I guess if the current environment is not enough to wake them up. It strikes me as a perverted form of ‘trickly down’ mentality or, asused to be the meme before it was no longer true, ‘what’s good for General Motors is good for the country”. The Republican push to reduce regulation, seriously gaining momentum under Reagan, continues to wield its power and its damage.
    http://www.nytimes.com/2010/02/01/opinion/01krugman.html

    Reply

  3. DonS says:

    “primarily a function of the size . . or . . . behavior deemed too risky for the stability”?
    It’s both. Except for oligarchic fantasies, why should so much power, control, and financial leverage be accumulated in 3 or 4 mega institutions? Without the size and the consequent political influence these gigantic institutions would not have nearly the political clout to change the rules to facilitate their ever riskier behavior.
    With serious regulation they could not engage in nearly the kind of behaviors, including mergers and acquisitions that fuel the cancerous growth.
    The political system floating as it does on seas of money cannot be trusted to resist such influence. That’s one reason why structural changes need to be made to insure that safe banking practices, that the consumer can rely on, are separated from the inherently riskier activities of go go investment banking. And the regulation necessary to rein in risky practices that threaten the macro economy are absolutely essential — I would think that is obvious by now.
    Now, while the effects of these nefarious actors in freshly with us, and the particular points of tension in the system very clear, is the time to act.

    Reply

  4. David says:

    I am totally a layperson regarding financial institutions and the workings of their empires, but I find your suggestion appealing, Elizabeth.

    Reply

  5. Elizabeth Miller says:

    I’ve been thinking about the whole concept of ‘too-big-to-fail’ and how it should go the way of the dinosaur.
    I’ve come up with a new phrase … ‘couldn’t possibly be too big to fail!’ … and I’m wondering how best to go about making that a reality. My question for you is this – do you think that ‘too big to fail’ is primarily a function of the size of financial institutions? Or, could it be that what we really need here is financial regulatory reform that would prevent financial institutions – no matter how big they are – from engaging in behavior deemed too risky for the stability of the system as a whole and an effective resolution authority that would give government the proper tools to wind down failing institutions – no matter how big they are – in an orderly manner and simply allow them to fail?
    As you have undoubtedly guessed by now, my area of expertise most definitely does NOT revolve around financial crises and how to fix them. So, I would really be interested in hearing everyone’s thoughts on this.

    Reply

  6. DonS says:

    Elizabeth, Volcker and Geithner may indeed be nominally on the same team, but they have very different approaches. Geithner cringes at the idea of breaking up big financial firms. Volckner sees it as essential. Obama gives generalities and bromides so we look at his subordinates and their utterances to divine which way the administration may be leaning at any given time — unless we think simply sowing confusion is the goal, enabling maintenance of the status quo.
    I do not know the details of the financial reform legislation being worked on, and need to research that more. My guess, as with much obama high profile legislation is that it is inadequate, and that it will become moreso as the financial industry lobbyists work their will. Hence the need for obama to get off the fence and figure out what power the presidency provides, should he decide to use it.

    Reply

  7. Elizabeth Miller says:

    Steve,
    May I say that your ‘headline’ was very cringe-worthy and very much like the kind of nonsense we see so much of on the pages of the Huffington Post, on any given day.
    Although, I am sure readers here know the difference between what is factual and what is inuendo, or worse.
    What is it with crazy headlines and most blogs, anyway?

    Reply

  8. Elizabeth Miller says:

    DonS and Dan,
    Last time I checked, Volcker and Geithner are on the same team working for the same president to accomplish the same goals. It is a great team!
    The financial regulatory reforms that both Secretary Geithner and Elizabeth Warren would like to see pass Congress are working their way through the Senate, having passed the House already. I sure hope it doesn’t go the way of health insurance reform.

    Reply

  9. David says:

    Apparently financial interests donated a chunk of change to Brown’s successful campaign in Mass in the last two weeks of the campaign. Reason is obvious, and an obvious actual component of the Republican assault on Democrats in the mid-terms. Block reform, block environmental intiatives (Brown: I drive a [big] pickup [for personal transportation]), block changes the insurance industry opposes, etc., etc. This is a mid-term battle over fundamental premises, fundamental understandings, and progress vs. a retro status quo, all couched in all sorts of vague, superficial campaign talking points. Love the fact that the guy who outed a CIA operative is free to shape the outcome of the 2010 elections. Only in America, among the purportedly enlightened self-proclaimed first world countries.

    Reply

  10. DonS says:

    An op ed in the NYT yesterday by Paul Volcker, the newly resuscitated anti-Geither adviser, gives in general outline a somewhat more coherent vision of where the financial reforms need to be taken; much more in line with the analysis Ms Warren has been giving, and more in honest alignment with an honest attitude that sees no institutions as sacred cows. It is a general framework, and clearly acknowledges that nothing has been done yet to address what he calls the “structural issues” involving banks and other problematical financial entities.
    Of course, this could just be Obama’s latest twist on the populist theme he has been showcasing. But if real reform is to get done it presumes that the Rubinites and Congress can be induced to actually recognize the damning facts and cooperate or at least get out of the way. It could turn into another health care fiasco unless Obama reforms his own approach first. That includes getting rid of inadequate and failed advisers, and using his bully pulpit for something more that promoting impossible bipartisanship.
    http://www.nytimes.com/2010/01/31/opinion/31volcker.html?em

    Reply

  11. DonS says:

    Elizabeth, I did see the Banking Comm hearings. My takaway was quite different. What “actions” have “put in place strong financial regulatory reforms and protect consumers”? I hear vague talk of possibilities.

    Reply

  12. Dan Kervick says:

    Elizabeth, what is it you think Warren doesn’t understand about the differences and similarities between the S&L crisis and the mortgage meltdown.

    Reply

  13. Lurker says:

    woohoooo…score Elizabeth Miller. Nice job.

    Reply

  14. Elizabeth Miller says:

    You’re very welcome, David.
    >Thanks for the link, Elizabeth

    Reply

  15. Elizabeth Miller says:

    DonS,
    I can understand what you’re saying and that since Tim Geithner was part of the financial system that is so severely damaged that he is simply not in a position or even in possession of the appropriate mind set to tackle the mess in which we find ourselves. I can understand that can often be true. But, given what I know about Geithner – and, granted, it’s not a wealth of knowledge – and how he has handled this crisis going back to 2007 when it all began to unravel, I think your criticisms of him are patently unfair.
    We may differ so greatly on this because we are coming at it from two completely different perspectives. All I know is that what Geithner was able to achieve in the last year in order to prevent a collapse of the financial system should be evident – the proof is in the pudding, so to speak. Financial disaster has been averted and at less cost to the taxpayer that was predicted. The reform package he is working to advance reads as being fairly muscular to me and, hopefully, the Senate won’t be successful in watering these proposals down.
    I also like the fact that he has an international background which positions him very well to deal with critical global issues that must also be resolved to prevent another crisis like this from ever happening again.
    Did you have a chance to watch Geithner’s recent testimony and Q&A with members of the House Banking and Finance Committee? I really believe that if Geithner’s critics would just spend some time listening to his arguments and explanations for the actions he has taken to stabilize the financial system and put in place strong financial regulatory reforms and protect consumers, then the noise level of most of his critics will dial down … a notch or two, at least! :).
    Lately, I’ve been reading David Fiderer’s pieces in the Huffington Post. Just wondering if you’ve heard of him or have an opinion on his take on this stuff.

    Reply

  16. DonS says:

    Elizabeth, in starkest terms, Gaithner is part of the problem — the enabling network that created the crisis, including the artificially low interest rates underwritten by the Fed that facilitated the mortgage orgy and subsequent bubble — not a credible part of the solution.
    However, due to America’s schizophrenic attitude toward white collar robbery, he, Summers, Rubin, and other smart guys sit fat and happy, and are not in jail.
    In more accurate, terms since Gaithner and that ilk are authors of the policies and practices that nearly took down the economy they are psychologically not equipped to:
    1) admit and internalize that that is exactly what they did — with a significant degree of knowledge. No one fully knows markets, so of course they could not have exactly anticipated that the results of their greedy policies and practices would be as extreme as they were — though in the backwash of Glass-Stegaall abolishment they, if anyone, should have heard the steps of the 30′s bank collapse close behind.
    2) craft remedial policies and approaches that have as their basis the recognition and indictment of exactly the practices they created.
    I’m not even alleging conscious avoidance here. I’m mere pointing out a basic and thoroughly credible psychological pattern (of sublimation and denial) that prevents Gaithner or the other primary actors from coming to the economic crisis with untainted mindsets. They literally are not equipped to grasp and accept some of the very fundamental issues, mainly proceeding from greed and recklessness, feeling of invincibility, and a reckless addiction to the adrenalin rush of risk.
    Far from jailing them, have we heard a peep of apology commensurate with the damage done? That, Elizabeth, is a hallmark of denial, sublimation, and projection. Gaither makes a stab at dissing those who fomented the crisis, as does Obama, but anyone familiar with reading body language sees a lack of authenticity, discomfort, and fraudulence. And why not? Stoked by the unconscious guilt he bears, it is impossible for him to demonstrate authenticity of belief or demeanor.
    And it’s not as if there aren’t economists out there who didn’t foresee the collapse. So why, now, would we want to have the very culpable, and psychologically crippled, financiers in charge?

    Reply

  17. PissedOffAmerican says:

    “I would love to have a civil discussion with you about all of this but the responses I have been getting here over the course of the last several months don’t give me much hope that there is the slightest chance of that ever happening”
    That may change if you put down the pom-poms and discuss things from something other than a marketing platform. You didn’t exactly get off on a firm foundation by denying Biden’s part in the run-up to the Iraq invasion. And your prolific internet sales campaign of all things Biden doesn’t exactly say wonders for your objectivity. I think you’ll find, if you haven’t already, that Kool-Aid isn’t a very popular beverage here.

    Reply

  18. David says:

    Thanks for the link, Elizabeth.

    Reply

  19. Elizabeth Miller says:

    DonS,
    Actually, here is the David Fiderer piece that will interest you …
    http://www.huffingtonpost.com/david-fiderer/how-paulsons-people-collu_b_435549.html
    “How Paulson’s People Calluded with Goldman to Destroy AIG and Get a Backdoor Bailout”
    It is quite the read!

    Reply

  20. Elizabeth Miller says:

    Here is another great place to find excellent and in-depth analysis – if hard for me to understand all of it – about how this crisis has unfolded…
    http://www.huffingtonpost.com/david-fiderer
    Devid Fiderer has written some very interesting pieces about all of this over the course of the last few months.
    Don might be particularly interested in his latest piece!

    Reply

  21. Elizabeth Miller says:

    Dan,
    One example that illustrates what I said about Elizabeth Warren revolves around a discussion with Geithner about simple bankruptcy.
    During one hearing – I believe it was the last one that her TARP panel has held – she couldn’t seemingly understand why simple bankruptcy would not work to prevent the collapse of AIG or why a default of AIG to any of the third parties would have caused severe and worldwide damage to the financial system as a whole.
    At one point, she even equated what was happening in September of 2008 to what had happened in the Savings and Loan crisis of the a couple or three decades ago, with respect to the housing crisis. I mean, even you must agree that was a stretch!
    This is not to say that I haven’t learned a great deal from her, and the rest of the panel members, during these hearings and, as I have said above, she has done a fair job of chairing these hearings.

    Reply

  22. Elizabeth Miller says:

    I think I’ve already told you where to find information on all of this. I have been closely following the TARP oversight hearings that Elizabeth Warren has been chairing, as well as the various congressional hearings.
    Until you can tell me you have done the same, why should I bother spending time laying all that out for you? I have provided links but you just need to visit c-span.org and search for them yourself.
    I would love to have a civil discussion with you about all of this but the responses I have been getting here over the course of the last several months don’t give me much hope that there is the slightest chance of that ever happening.
    Why is it that you can disparage Secretary Geithner (and others) at will and I must cite chapter and verse when I attempt to defend him?

    Reply

  23. DonS says:

    “I have no doubt that she is learning a great deal from her interactions with the treasury secretary, ”
    Elizabeth it appears you wouldn’t know a condescending comment if it struck you inthe face. Now what crucial interaction with Gaithner could Warren profit from? Maybe how to suck up or cower before the masters of Wall Street.
    Seems like the previous administration managed to deep six Lehman Brothers under suspicious circumstance verwsus propping up Goldman. Seems like Goldman got a sweetheart deal. Seems like the rules were made on the fly not the result “avilable options” to the govt.
    Maybe Ms Warren just makes too much sense for your insider brain. Ihave no doubt that her greatest liablitiy is that she is a straight talker, and does not genuflect to the supposed uniqueness and centrality of those who pull the strings behind Wall Street.

    Reply

  24. Dan Kervick says:

    “But, there is a lot that she does not appear to understand about what is required to mitigate the fallout of this financial crisis and what options were available to government.”
    Why don’t you explain it to us Elizabeth. You consistently make these very general statements to the effect that you are in possession of superior wisdom and deeper understanding about the subtleties of various government actions. But you never lay out and defend the details in concrete terms … which leads one to suspect that you are just blowing smoke.

    Reply

  25. Elizabeth Miller says:

    Well, Elizabeth Warren is certainly doing a fair job of chairing the TARP oversight committee.
    But, there is a lot that she does not appear to understand about what is required to mitigate the fallout of this financial crisis and what options were available to government.
    However, I have no doubt that she is learning a great deal from her interactions with the treasury secretary, not to mention with certain other members of the TARP oversight panel.

    Reply

  26. Neo Controll says:

    “silly vignettes” says E. Miller.
    Would that be like silly little Elizbeth Warren, thinking she can play with the big boyz.
    Sexist.

    Reply

  27. Elizabeth Miller says:

    NC,
    I’m afraid your comment betrays a deep ignorance about who Geithner is and what he has been doing for you lately. Seriously.
    But, that’s okay. Perhaps, in time, you’ll begin to appreciate what this administration did to get us out of this financial crisis and what they continue to work on to prevent another similar set of circumstances from ever happening again.
    If only you – and countless others – could get over your understandable anger over the “bailouts” and redirect that energy to supporting what Geithner et al. are doing to ensure that a muscular package of financial regulatory reforms continues to make its way through the House and Senate.
    Besides, you’ll probably feel better if you start emitting some decidedly more positive energy around this extremely critical issue – not only for your country but for the rest of the world.

    Reply

  28. Neo Controll says:

    You’ll love old Timmy almost as much as Biden. Er, except you already love Biden,
    The point is that Gaithner is not just a swell guy after all, he is the embodiment of all the scum that has fucked the economy and continues to protect their con games. Got that? His head needs to roll.

    Reply

  29. Elizabeth Miller says:

    Steve,
    Despite your best efforts, Secretary Geithner will not be leaving his post.
    And, I predict that you’ll eventually end up being a fan. You might want to try to get a very long interview with him. It shouldn’t be difficult because he is well aware of the fact that he has not been communicating nearly enough with the American people. You know, this is a classic case of the more you get to know him, the more you like him!
    So, enough with the silly vignettes, already! :)

    Reply

  30. David says:

    “No, shit, Tim,” certainly springs to mind. Time for Obama to re-direct Geithner’s priorities.
    And no, Obama is not in Wall Street’s back pocket. America is.

    Reply

  31. DonS says:

    “Obama HAS to find a job for that lady”
    Agreed.
    Right now her job is watchdog. She takes it seriously and does it well. Question is does Obama want someone who is for the citizen, against big business manipulation. Politics be damned?

    Reply

  32. nadine says:

    John Waring, I did not hear adult policy discussion. I heard Obama setting up and knocking down straw men, his favorite form of argument.

    Reply

  33. Dan Kervick says:

    Just watched that video again, and Obama HAS to find a job for that lady, and make her the national point person for financial reform.

    Reply

  34. Dan Kervick says:

    Warren surely needs some kind of place in the administration. She’s someone a whole lot of Americans will believe in. It’s about that time when a President cuts loose some of the Didi Meyerses and George Stephanopouloses he rode into town with, and reaches out to strong and capable people who have proven their stuff in the public eye.
    But the job she was born for is the one that they haven’t created yet: Head of the Consumer Financial Protection Agency. Let’s get her into the Treasury Department now, with some sort of independent portfolio and freedom of action, and then move her up to the new position when it exists. Let’s also let it be known that this is her audition for that top job. She will be popular, and that will help get a major financial reform bill passed.

    Reply

  35. John Waring says:

    I’ve been extremely critical of the administration of late, but I now have to give credit where credit is due. I’ve been watching the C-Span video of the president first addressing, and then answering questions, at the House republican retreat in Baltimore today.
    I just heard an informed, substantive, adult discussion of policy. The give and take was lovely. The president’s remarkable gifts were on full dispay.
    As soon as possible, more. Please.

    Reply

  36. Pahlavan says:

    I think the only way to turn this around is for America to find a way to cure itself of its addiction to the “right now, right here” mind set. We’ve programmed ourselves to put speed and convenience above and beyond everything else. So much that our operating cost for maintaining that lifestyle is contributing to the enormous profit margins of the powerful people (the major multi national or the too big to fail corporations) that have hijacked America’s political parties and use their power to “Choke the America Public” under the erroneous goodwill notion of “For the American Public.”

    Reply

  37. John Waring says:

    Elizabeth Warren is great.
    I wonder what would have happened if she had been the democratic candidate in the last MA election. I suspect Mr. Brown would not be packing his bags for DC.
    I wonder what the conclusion of Mr. Obama’s first year in office would have looked like if he had taken the Elizabeth Warren approach instead of the Mr. Geithner approach.
    My prayer today is for the administration to get a clue.

    Reply

  38. Ben Rosengart says:

    Wall St. is too used to getting *everything* it wants. It’s a
    constituency which needs to be respected — but give and take is
    part of any respectful relationship.

    Reply

  39. Cato the Censor says:

    That one small anecdote completely sums up what a shill for Wall Street Geithner is. The fact that Obama appointed him demonstrates that the President isn’t really serious about financial reform.

    Reply

Add your comment

Your email address will not be published. Required fields are marked *