Elizabeth Warren - Consumer Financial Protection Bureau

Join this Facebook group We Want Elizabeth Warren

She is helping to get the new Consumer Financial Protection Bureau off the ground and summarizes her agenda this way, "We’re trying to make these markets transparent, which makes it easier for community banks to compete both with large financial institutions and with their non-bank competitors.”

Elizabeth Warren is up against strong Republican opposition - - - and some Democrats who are close to the financial sector may be lukewarm as well. But a public hearing on her case represents our best opportunity to experience a modern version of the Pecora Commission – the Senate Banking Committee hearings of the 1930s that laid bare the inner (and rotten) workings of the biggest financial firms while investigating the causes of the Wall Street Crash of 1929.

Elizabeth Warren's arguments are very hard for Republicans on the Senate Banking Committee, because after all, it was the Republicans who voted along party lines to bring us the Gramm-Leach-Bliley Act to de-regulate the banks in 1999. What a mistake that was - as we've seen it 2008. Even the International Monetary Fund agrees with this.

A proper Senate confirmation hearing would be the perfect platform for Elizabeth Warren to explain:
(a) not only do “too big to fail” banks now constitute a hugely dangerous government subsidy scheme, but
(b) based on these subsidies, they are becoming larger and acquiring more market power that can be – and has been – used to abuse consumers in a nontransparent fashion."

All attempts so far to construct some form of Pecora Commission have failed because the Republicans want nothing to do with cleaning up the financial sector; because the banks spend billions of dollars in their lobbying efforts and GOP election campaigns.

The Financial Crisis Inquiry Commission made some progress but could reach no consensus (or bring anyone to justice). Senator Levin’s hearings into Goldman Sachs grabbed attention and were most helpful in the Dodd–Frank Wall Street Reform and Consumer Protection Act. But no one is going to jail because the Department of Justice has preferred to pursue insider trading cases instead, perhaps taking the view that these are easier to explain to juries.

Republican Michele Bachmann, R-Minn., has introduced legislation to repeal the Dodd-Frank reform measure that President Barack Obama has already signed into law. She assailed the new law saying, “True reform must also end the bailout mind-set that was perpetuated by the last Congress. I am proud to work towards the repeal of Dodd-Frank because Congress must protect the taxpayers, instead of handing out favors to Wall Street.” (Make what you will of her statement...misleading and deceitful, or just plain ignorant?)

Elizabeth Warren's message is simple: the consumer “market” for financial products does not operate like a proper market because the leading firms (the bigger banks and also "non-banks" like some payday lenders) have figured out how to make a great deal of money by confusing their customers.

Of course, there are many honest players – mostly in credit unions and smaller banks. But when the playing field has been unfairly tilted towards the big cheating banks, honest small bank executives struggle to stay in business (or to keep their jobs). Some parts of the financial service industry have moved too far towards being unscrupulous and abusive to customers. This is bad for the people who are mistreated, it’s bad for the economy, and it’s bad for all honest people in the financial sector.

It’s time for the president to stand up to abusive financial practices facilitated by cynical and nontransparent subsidies for the big banks. We won't have to "kill all the bankers",we can just reform the laws that the Republicans put in place initially with the Gramm-Leach-Bliley Act and further deregulation along the way.

If nominated, Elizabeth Warren’s confirmation hearing would become a defining moment for thinking about finance in America. And reform would win. All the missed opportunities, botched bailouts, and kowtowing to megabanks would fade into the background. Every attempt at change must face many setbacks – and financial reform has really struggled to have any impact. If Elizabeth Warren wins, we all win.