N.S.P.
Chapter One: Lizzie takes Jerry to school.
During the 2020 Biden team deliberation on who would share the ticket as VP, Sen. Elizabeth Warren’s name came up. South Carolina Rep. James Clybourn, Democrat House Black Caucus leader, shared what would become an inevitable optic — a black woman VP. Despite her hurried exit from the Presidential candidate race and a testy, “I was on that bus,” Biden attack during a Presidential debate, Sen. Kamela Harris was the prominent woman of color on Biden’s short list.
Many progressives were disappointed that Warren, a second term Senate Democratic Caucus member, was passed over. A colleague commiserated, ‘Biden should keep Warren in a West Wing closet and bring her out to run his economic policies.’
I politely disagreed. No, I said, keep her in the Senate, don’t squander her talent and public voice. She is not (I was shouting now) ‘closet material!’
‘Nevertheless, she persisted’ persisted.
Warren had been elected in 2018 to a second Senate term. In my opinion, America is better off.
Specifically, now, is America benefitting from Warren’s Senate presence as several banks are failing caused by the very absence of regulations Sen. Warren has been advocating for during her tenure in Obama’s cabinet and since as Senator.
By the way, that’s twelve and a half years.
And despite the schadenfreude opportunity, Warren keeps her eye on the ‘macro moment,’ as her recent questioning of Jerome Powell attests.
On Monday, March 13, Federal Reserve Board Chair Powell testified before the Senate Committee on Banking, Housing, and Urban Affairs. (1)
Republican members of the Committee sat in silence while Democratic members praised Powell for his service and deliberate inflation-gutting interest rate “adjustments.”
And then along came Sen. Elizabeth Warren.
Citing the December 2022 Federal Reserve Report on the unemployment rate, Warren stated that at 4.6% annual unemployment, the current inflation policy of raising interest rates would add another 1% unemployed. That means an additional 2 million people who currently are employed would lose their jobs.
Powell: I don’t recall…
Warren: It's in your report, Chairman Powell. 2 million currently employed working people would lose their jobs…What would you say to them?
Powell: I would say to them… that working people would be better off without 6% inflation.
Warren: And would you agree, Chairman Powell that since World War II the Fed has raised the interest rate 1 point over 1 year, 12 times, and how many times has raising the interest rate avoided a recession?
Powell: Zero times.
Warren: That’s exactly right…and in those interest rate increases, 11 out of the 12 times the Fed raised interest rates, the unemployment rate has increased 1 per cent…which means with this year’s interest rate increase of 1%, an additional 1.5 million on top of the 2 million workers… That’s 3.5 million would lose their jobs with your plan… It's a runaway train. How do you plan to stop it?
Was she really arguing that 2 million folks were about to lose their jobs?
No, she was schooling Powell to get off his high horse and instead of raising the interest rate — approximately 1% over the past year — to have the Fed reconsider its fiscal non-policy which will force 2+ million workers to lose their jobs.
Powell countered, inferring that in effect, sacrificing 2- 3.5 million jobs was a sounder FISCAL decision than straining middle class pocketbooks.
The real clunker was Powell’s defense that ‘(this is) all I can do.’
Really?
Powell can do a lot more and he knows it. He said as much to the American public, by offering up all the conditions reducing his playing hand: supply chain, war in Ukraine, post-Pandemic pressures.
Yawn.
Rolling her eyes, Warren cocked her head as if to say, ‘We know all that, Chairman. It's in your report.’
What Warren was asking was for the Fed to assume leadership and get tough with banks: stop protecting “too big to fail,” and stop spreading risk onto the middle class. ‘As governors of the nation’s economy, you have purview over banking, its operation and excesses.’
In other words, act like a steward of the American economy. Her tone echoed the demand: ‘do your job, fulfill your mission.’ (3)
Chairman Powell learned from Warren that she is pointing her finger not at a bunch of financial tables, certainly not at a crystal ball, but at a mindset that says the greater good is aligned with ‘big bank’ interests — the one per-centers who set the rules and trade the bank shares.
There was another context to Warren’s dust-up of Powell. Senator Warren’s questioning raised the issue of the Fed’s complicity with marginality: allowed to continue unchecked, economic marginality expands, sweeping in individuals, families, neighborhoods, communities, regions.
On Monday a vivid, California-grown image revealed to the nation what economic marginality looks like. Across the valley from Silicon nation where one failed bank kept depositors and financial markets in limbo for 72 hours, is the town of Parejo. Over the weekend a levee breached, flooding the town in five feet of water. When asked why FEMA, who knew of the inadequacy of the levee for over a decade, and had not addressed the levee’s risk, FEMA explained the depressed property values of Parejo were not worth saving.
Chapter Two: Republicans take Lizzie’s legacy to Court
In a blatant effort to rewrite history and sound government policy, Republicans are digging deep into their obliviousness to render obsolete the Consumer Financial Protection Bureau. David Lazarus in The Los Angeles Times writes:
“But my favorite Republican salvo came last week from Sen. Ted Cruz and Rep. John Ratcliffe, both of Texas…Their bill, sweeping in scope, devastating to consumers, consists of a single sentence, ‘The Consumer Financial Protection Act of 2010 is hereby repealed and the provisions of law amended or repealed by such act are restored or revived as if such act had not been enacted.” (4)
Recall that Sen. Warren was invited by former President Obama to serve as the Special Advisor for the Consumer Financial Protection Bureau, which was created as part of the Consumer Financial Protection Act, aka Dodd-Frank Wall Street Reform which she had considerable input in drafting. One of the administrative initiatives of the new Bureau was to take enforcement of consumer financial malpractice from the Federal Reserve and consolidate it with the Bureau.
“Under its first director, Richard Cordray, the CFPB was aggressive in actions against financial companies in its first five years (2011–2016). It handled nearly one million consumer complaints, its enforcement actions returned almost $12 billion to 29 million consumers, and it enacted new financial regulations.” (5)
And then came the Republicans.
Of primary concern during the 2016 Republican Party Platform writing, indeed one of the few conspicuous polemics of the platform, was the dismantling of the CFPB. “The authors stated that the CFPB was a ‘rogue agency,’ with a director with dictatorial powers, and its actions have been unfair to local and regional banks while favoring big banks.” Of note is that during the recent Silicon and Signature bank failures, financial ‘experts’ were advising investors not to move their investments away from regional banks to ‘too big to fail banks.’ (6)
And then came the de-funders.
“Last month… the Justices (SCOTUS) agreed to hear a case about the way Congress funded the Consumer Financial Protection Bureau when it created the independent agency in response to the 2008 financial crisis. The agency’s survival is at risk in the case which the Supreme Court will likely decide in their next term starting in October.
At the core of the case is the Appropriations Clause, which prohibits government spending ‘but in Consequences of Appropriations made by Law.’ Experts consider that exclusive ‘power of the purse,’ as a core part of the Constitution’s separation of powers, because the legislature is a check on how a president can spend funds.
Last year, for the first time ever, the U.S. Court of Appeals for the 5th Circuit found that clause also limited Congress and ruled that the CFPB’s structure violated the Constitution because its funding comes from outside the appropriations process.” (7)
This case, if the Supreme Court decides to hear it, will be the fourth case involving the CFPB to be read in Federal court since the agency’s formation. Warren has deferred comment on the Republican effort(s) to subvert the CRPB by questioning its funding to the White House who is preparing for the agency’s defense in the fall.
The current bank failures have rewritten this script which, according to Republicans, reflect on “woke” bank practices and administration, not on their party’s failure to lead.
Nevertheless, she persisted…
March 13–15
Notes
2-Egberto Willes, Medium
3-Elizabeth Warren, “Silicon Valley Bank is Gone. We Know Who is Responsible,” Opinion, New York Times, March 13
4-David Lazarus, The Los Angeles Times
6-ibid.
7-Roll Call
