Who is the person in the Obama administration who has been most firmly pro-consumer and staunchly in favor of strict banking regulations? Elizabeth Warren, a Harvard Law School professor/consumer economist. Professor Warren is trying to clean up the marketplace so consumers will understand what it is they are buying. She has acknowledged that when reading credit card disclosure forms, for example, even she, who teaches contract law at Harvard, is unable to perform a comparison because the verbiage is so confusing (and is designed to be).
Some would say her plan would help markets run more perfectly, like markets are supposed to according to economic models. You'd think free market proponents would like that. Alas, not.
Giving all comers to the marketplace an equal playing field is frightening to Congressional Republicans. So they tried to tar and feather her. They played games with the timing of her testimony. They claimed she misled Congress (after she submitted requested documents to the committee in March and was never questioned subsequently) because her agency had advised the Iowa Attorney General in addition to advising federal agencies. She was called a liar. They did their best--unsuccessfully-- to make her "lose it" at the hearing. In fact, Congressional bravery and brilliance almost attained the trough (pun intended) reached in the Anita Hill hearings on Clarence Thomas.
In March, Nobelist and NYT columnist Paul Krugman commented on this same phenomenon:
The fact that she’s so well qualified is, of course, the reason she’s being attacked so fiercely. Nothing could be worse, from the point of view of bankers and the politicians who serve them, than to have consumers protected by someone who knows what she’s doing and has the personal credibility to stand up to pressure.We are at WAR, after all, and the rules of engagement say Take No Prisoners. This is a war on the middle and lower classes of the USA, and no Elizabeth Warren cum Jeanne D'Arc is getting out alive.
I figured this out yesterday, when the May 23 headline of Investors Business Daily (not available free online) shouted "1,000 Small Banks May be Shut Down Due to Dodd-Frank." Subtitles: A Flood of Costly New Rules" and "Banker Scourge Warren vows aggressive efforts by her consumer agency." The article goes on to quote Warren:
'We will build a strong enforcement arm. More than half our budget will be committed to establishing supervision and meaningful enforcement.' That has bankers petrified...Sounds pretty scary to me. Enforce banking regulations? Outlaw discrimination? Terrifying. Course it just might save us from the major depression that's looming, if banks are actually called to account, and prevented from bamboozling their clients, mortgagees and insurers. What a brave new world that would be. Better take down the interim head (Professor Warren) of what Investors Business Daily termed "the only agency dedicated solely to consumer protection" before the agency even launches in July. Can't let the plebeians win even one battle in this war. Wouldn't want them getting any ideas.
The powerful credit cop also will enforce "fair-lending" rules outlawing credit discrimination...
UPDATE: I got an email signed by Sen. Al Franken just now asking me to sign a petition asking Obama to make a recess appointment of Elizabeth Warren to head the Consumer Financial Protection Bureau. This because Repubs have said they will block all appointments to lead this agency unless the scope of the agency is changed (read: agency is disempowered). So I signed. We plebes have to do something to defend ourselves. Consider signing.