Who was that familiar face on MSNBC’s “Morning Joe” recently, holding forth about the banking industry? The super-earnest guest argued that “banking should be boring,” and wants to bring back the Glass-Steagall Act, one of Franklin Roosevelt’s Depression-era reform bills. Ah yes; the hundred-megawatt smile; the Dos Passos-era haircut; the broad vowels redolent of her Oklahoma birthplace. It’s Senator Elizabeth Warren, a.k.a. the Big Noise.
I call Warren the Big Noise because in her brief political career she has proved to be a panderer of Charles Schumer-esque proportions. For 28 years we had a showhorse senator, John Kerry, better known for posturing on television (his unflattering nickname was “Liveshot”) than getting things done. With her PR savvy and her lawyerly gift of gab, Warren makes for a worthy successor.
Then-Harvard Law School professor Warren hit the big screen in September 2009, with her famous interrogation of Treasury Secretary Timothy Geithner. She was chairwoman of the bipartisan Congressional Oversight Panel, which was scrutinizing the massive bailouts authorized by the Troubled Asset Relief Program. A former president of the New York Fed, Geithner was the errand boy for Big Capital appointed to President Obama’s first-term Cabinet so we could remember whom to blame for the 2008 recession.
Warren quizzed Geithner about the government’s massive rescue package for insurance giant AIG, a key player in the mortgage default mess. Warren knew, and Geithner knew, that AIG had steamrolled the government to win a 100-cents-on-the-dollar bailout, courtesy of the US taxpayer.
For five-plus minutes, Warren flogged Geithner with the wet noodle of her purported outrage, knowing full well that the money was long gone and Geithner couldn’t do anything about it. As a charter citizen of the country I call post-shame America (new arrivals — Representative Mark Sanford, Anthony Weiner, Eliot Spitzer), Geithner was the perfect foil for this staged morality tale. The hero was Elizabeth Warren, who became an icon for “speaking truth to power” and accomplishing . . . very little.
Handily elected to the Senate, Warren has continued her successful career of baying at the moon. She routinely anathematizes Wall Street, the “corporate capture of the federal courts,” and loves to browbeat hapless regulators when the cameras are rolling. Inveighing against the high cost of student loans won her many headlines, and criticism from people who actually understood the issues on the table. Matthew M. Chingos and Beth Akers of the liberal Brookings Institution called Warren’s idea of financing student loans through the Federal Reserve discount window a “cheap political gimmick” and an “embarrassingly bad proposal.”
That posturing ended when the Senate shelved the Student Loan Affordability Act.
The Brookings Institution also thinks Warren’s latest hobbyhorse, updating the 1933 Glass-Steagall Act, is a silly idea. Glass-Steagall, as Warren interprets it, forbids staid commercial bankers from gambling with depositors’ money in the “casino” atmosphere of hedge funds and derivatives markets. An unholy alliance of Democratic pols (Bill Clinton), troglodyte members of Congress (Senator Phil Gramm) and Wall Street lobbyists torpedoed Glass-Steagall in the late 1990s.
It’s delusional to think that banks caused the recent recession, and that limiting banks’ investment activities will prevent another economic collapse. Countrywide Financial Corp. and its odious CEO Angelo Mozilo weren’t part of a bank when they were wreaking havoc on the mortgage market. Goldman Sachs, which notoriously bet both sides of the market downturn, wasn’t a bank, and nor was Lehman Brothers, the investment firm whose bankruptcy triggered the economic crash in the summer of 2008.
Banks didn’t own the rating agency patsies, Moody’s and Standard & Poors, either. S&P is owned by a publishing company, McGraw-Hill.
Warren’s staff sent me this statement: “Senator Warren has fought for years to level the playing field for middle-class families and to hold big banks accountable. She believes in using a variety of tools in the toolbox to promote a consumer advocacy agenda and has a proven track record of results ranging from influencing the implementation of the bailouts and saving taxpayers money.”
I say she is a feckless demagogue; they say she is a tireless and principled crusader for economic justice. The truth is probably somewhere in between.Alex Beam’s column appears regularly in the Globe. He can be reached at firstname.lastname@example.org.