The issue is the mindset --- Michael Hirsh says Warren could restore public confidence

"The Issue Is The Mindset"

by digby

Chris Dodd bobbed and weaved earlier today about whether or not Elizabeth Warren can be confirmed to the new CFPB and others are calling into question her ability to run an agency. I'm also hearing from both sides of the political aisle that it's wrong to argue that she should be confirmed because liberals are backing her. For all I know they are all right.

But I don't care. She needs to be nominated and then the Fed needs to immediately appoint her as interim chief of the agency because of what Michael Hirsh writes here:

Elizabeth Warren Could Boost Public Confidence

Obama’s economic team is the ultimate insiders’ club, which is exactly why an outsider is needed to lead the new Consumer Financial Protection Bureau.

There has been, in recent days, a groundswell of support for Elizabeth Warren, one of the top candidates to head the new Consumer Financial Protection Bureau. One less-noted reason for all this outspoken fervor is that, for many liberal critics, Barack Obama’s economic team is something of an intellectual cabal. Starting with Treasury Secretary Tim Geithner and chief economic adviser Larry Summers, the senior members of this team are all people “who have Bob Rubin on their speed dial,” as one of these critics told me. They are, in other words, part of the deregulatory brigade led by then–treasury secretary Rubin in the 1990s who helped set the stage for the financial disaster by giving Wall Street most of what it wanted, whether it was Glass-Steagall repeal or reduced regulatory oversight of derivatives trading.

[...]

Hence the enthusiasm among the losers [in Financial Reform] in this debate for Elizabeth Warren, the fiery Harvard Law professor who largely sided with the Volcker-Lincoln camp and who first came up with the idea for a consumer-protection agency. Warren is most definitely not a Rubin acolyte. She’s more likely to be the sort of person who reveals to the public just how many administration speed dials Rubin occupies. Warren has long abhorred the sort of inside-the-box thinking that led a lot of smart people in Washington to conclude for more than two decades that Wall Street could be left to sort things out on its own.

And it’s real outside-the-box thinking that may be needed now. Because as “pay czar” Kenneth Feinberg’s recent report makes clear, little has changed in how Wall Street operates, and the big banks are even now finding their way through the new law’s many loopholes and continuing to award traders outrageous amounts of money for taking speculative risks. Feinberg lamented the payout of some $1.6 billion in bonuses and retention awards even as the government was bailing out the firms in 2008 and 2009; as a solution, he proposed a voluntary “brake provision” that would allow the boards of companies to reverse their contractual obligations to pay out such extras. But as Wallace C. Turbeville, a former VP at Goldman Sachs turned financial blogger, put it: Feinberg “might have more success asking the lions of the Serengeti to give the wildebeests a sporting chance of making an escape ... The government’s flaccid approach to Wall Street compensation, embodied in the Feinberg report, is appalling. These young traders are simply doing what America has told them to do. They are allowed to earn obscene amounts of money using the advantageous information, technology, and capital of their employers. Making money from less powerful counterparties is like shooting fish in a barrel.”

[...]

Nonetheless, it is undeniable that those who have been most aligned with the “progressive” side of the Wall Street reform issue and, often, most farsighted and outspoken about the dangers are still on the outside of the administration looking in. Among them: Brooksley Born, the former chairwoman of the Commodity Futures Trading Commission who famously warned of out-of-control derivatives trading in the ’90s; Nobel-winning economist Joseph Stiglitz; and Michael Greenberger, the former Born deputy who as an outside consultant helped to toughen transparency requirements for OTC derivatives in recent months. One leading “progressive” critic told me recently, “Our ruling intelligentsia in economics runs the spectrum from A to A-minus. These guys all talk to each other, and they all say the same thing.” Or as Stiglitz himself put it at one point: “America has had a revolving door. People go from Wall Street to Treasury and back to Wall Street. Even if there is no quid pro quo, that is not the issue. The issue is the mindset.”



I heard Warren speak at Netroots Nation and she was eloquent on all of this. It's clear that her focus is on working families and not the banks and Wall Street. It's vital that someone represents those interests and she's the right one to do it because she comes to it with a political constituency (albeit one that is despised by certain members of the administration) but one which Obama will need as he goes into 2012 against the spoiled princes who are so rich that they are now more worried about being loved by strangers than they are about taking care of the golden goose. (After all, the administration has hardly laid a substantive glove on them, but they get hysterical at every tiny affront to their dignity.)

They truly believe they are doing God's work and they are going to work to pay Obama back for his imaginary apostasy. (Besides, Republicans are so much easier to deal with --- they are allowed to openly and proudly worship money, which makes the Masters of the Universe the Centers of the Universe, something the Democrats have a hard time with, what with all the minorities, unions and lowly paid womenfolk in their coalition.)

Warren has a very winning way about her which, if used properly, could be a huge political boon to the Democrats. Of course she will bother the Big money Boyz to no end, but that's the point. The public needs to see someone doing that or the whole Democratic party is going to be left holding Bush's ball mess with no way out. Hirsh concludes:
It may well be that Obama can’t win on this issue no matter what he does. After all, even among some so-called New Democrats, never mind Republicans, there is a growing sense that the president is anti-business. Still, if he can’t beat ’em, maybe he should join ’em.

I hope they're getting this. The administration is not going to escape being seen as anti-business. The Big Money Boys are Nobles fighting for their "honor" now and they want to teach the Democrats a lesson. So he may as well fight, and he's going to need unconventional Generals with big armies to do it. Warren is one of the few out there who has what it takes.

Update: Plus Krugman
.