Friday, April 18, 2014

WASHINGTON — Sen. Elizabeth Warren’s new book skewers the boys club who basically ran the nation’s fiscal policy in the early days of the Obama administration, contending they carried out a financial bailout that saved the banks but was a major “lost opportunity” to help regular people.

A Fighting Chance, due out next week, makes the case that America needs its government to look out for the metaphorical little guy.

While the Massachusetts Democrat details the successes she had working with the White House and President Barack Obama in those days, she also reveals the constant tension between her — an outsider and a woman — and the men on the inside.

She doesn’t always say it directly and she usually cuts the sting with some praise, but Warren seems particularly disappointed with two of the lions of Obama’s economic team: former Treasury Secretary Tim Geithner and former National Economic Council boss Larry Summers.

In the case of Summers, whom Warren knew vaguely from their shared days at Harvard — when as university president, he made unfortunate comments about women in science — she was warned about being an outsider during what seems to have been a not-so-pleasant dinner.

“Late in the evening, Larry leaned back in his chair and offered me some advice,” Warren writes. “By now, I’d lost count of Larry’s Diet Cokes, and our table was strewn with bits of food and spilled sauces.”

Then Summers spilled the advice.

“He teed it up this way: I had a choice,” Warren writes. “I could be an insider or I could be an outsider. Outsiders can say whatever they want. But people on the inside don’t listen to them. Insiders, however, get lots of access and a chance to push their ideas. People — powerful people — listen to what they have to say. But insiders also understand one unbreakable rule: They don’t criticize other insiders.

At the time, Warren led the congressional oversight panel reviewing the Troubled Asset Relief Program (TARP) that bailed out the banks.

“I had been warned,” she concluded of the encounter.

Warren has somewhat better things to say about Geithner — though in describing him at one point, she mentions his “boyish looks” without the customary intervening “good.” More important, it is his administration of the bank bailout over which she expresses her greatest disappointment.

She describes how she was moved by the victims of the financial collapse, including a women Warren calls “Flora,” who lost her home after believing the promises of a sleazy refinancing salesman. There’s a father in Las Vegas whom Warren identifies as “Mr. Estrada.” He testified in a field hearing about how his mortgage payments ballooned on the house he and his wife had stretched to buy so their daughters could go to a good school. The home was auctioned even as he thought he had reached a deal with the bank to lower payments. Warren writes over and over how the stories of people like Estrada and Flora motivate her and how they didn’t receive a fraction of the government help that went to the banks that caused the financial meltdown.

Warren came to Washington in late 2008 at the behest of Senate Majority Leader Harry Reid (D-Nev.) to work on the TARP oversight panel. She spent much of her time trying to get the Treasury Department to live up to the rhetoric used when Congress passed the $ 700 billion bailout — rhetoric that said the huge fund would not only help the banks, but also ease the sudden lending crunch, aid small businesses and keep the Floras of the nation in their homes.

But, she writes, Geithner brought home to her that “[d]espite the way it was sold, TARP was about saving banks, pure and simple.”

That revelation came in a meeting in a plush room at the Treasury building when Warren interrupted Geithner, who was delivering his talking points to her and other members of the panel. She pressed him on why so little was being done to help struggling homeowners.

He admitted that really was not the goal, she writes.

“The banks could manage only so many foreclosures at a time, and Treasury wanted to slow down the pace so banks wouldn’t be overwhelmed,” Warren writes, recounting Geithner’s explanation. “And this was where the new foreclosure program came in: it was just big enough to ‘foam the runway’ for them.”

“There it was,” Warren writes. “The Treasury foreclosure program was intended to foam the runway to protect against a crash landing by the banks. Millions of people were getting tossed out on the street, but the secretary of the Treasury believed the government’s most important job was to provide a soft landing for the tender fannies of the banks.

“Oh Lord.”

As for President Obama, while Warren praises him for supporting the Consumer Financial Protection Bureau that she envisioned, as well as for backing other elements of the financial reform law that created the CFPB, she ultimately blames him for Geithner’s stance.

“The president chose his team, and when there was only so much time and so much money to go around, the president’s team chose Wall Street,” she writes.

The failure to do more for regular Americans, and to do more to rein in too-big-to-fail banks, still stings today. “The lost opportunity still makes me want to scream with frustration,” she writes. “Small business owners, homeowners, men and women whose jobs had disappeared: these weren’t numbers on the page, these were millions of people who lost everything.”

Warren ultimately put her trust in Obama after he told her that she should be named the first director of the CFPB, but that he wouldn’t do it because she made bankers and Republicans “very nervous,” and Republicans had the votes to block her nomination. She ultimately agreed to take a job as a presidential adviser to get the agency up and running, though not before one more indignity along the way.

“One of the President’s advisers even suggested that someone else be named director while I could serve a ‘cheerleader’ for the new agency,” Warren writes. “I assume that was meant as a metaphor, but I had to wonder: Cheerleader? Would the same suggestion have been made to a man in my position? I did not rush out to buy pom-poms.”

In a hot, hour-long discussion outside the Oval Office, she writes, Obama made a personal appeal to her to take the adviser’s job. He told her she’d be working for Geithner, and she sought assurances that she’d have the power and resources to accomplish the task.

“You’re jamming me, Elizabeth,” Obama told her, and she writes that he “urged me not to overplay my hand.”

“Trust me,” Obama said.

Warren did, establishing the CFPB before entering the race to become a senator from Massachusetts.

Michael McAuliff covers Congress and politics for The Huffington Post. Talk to him on Facebook.
Business News on The Huffington Post

Share and Enjoy:
  • Digg
  • del.icio.us
  • Reddit
  • StumbleUpon
  • Yahoo! Buzz
  • Twitter
  • Technorati
  • LinkedIn

{ 0 comments }

WASHINGTON (AP) — A new government report says the Internal Revenue Service audits less than 1 percent of large partnerships, drawing criticism from Congress.

The Government Accountability Office says the number of large businesses organized as partnerships has more than tripled since 2002, yet hardly any get close scrutiny by the IRS. In 2012, only 0.8 percent were subjected to field exams in which agents do a thorough review of books and records. The GAO defines large partnerships as those with more than 100 partners and more than $ 100 million in assets.

Democratic Sen. Carl Levin of Michigan said many of the largest hedge funds and private equity firms are escaping IRS scrutiny.

The report says the audit rate has been persistently low since at least 2007.
Business News on The Huffington Post

Share and Enjoy:
  • Digg
  • del.icio.us
  • Reddit
  • StumbleUpon
  • Yahoo! Buzz
  • Twitter
  • Technorati
  • LinkedIn

{ 0 comments }