The piece has a lot of quotes (from Geither or anonymous) in the first half about her being grandstanding/simplistic/God-complexed, which I think it frames with enough salt, and then an interesting counterpoint further down:
But as she came in and began working, some administration officials felt like there were "two Warrens." In public, she was all righteous fury. In private, they say, they often saw a more reasonable figure.
"They thought she was just doing it for publicity instead of doing it to create leverage to get in the room," says one official who worked both at the CFPB and in the Obama administration. "She created an outside pressure base that allowed her priorities to be heard."
Even those most critical of Warren say she brandished her pragmatism more than her populism while at Treasury and say she was effective as a result. She readily brought in some top Treasury officials and her first hires for the consumer agency were a surprising mix of people from financial-services firms like Capital One and Morgan Stanley along with bureaucrats and academics. The inspector general, whose job is to find problems, was rather complimentary of Warren's tenure. Some former officials also say they were impressed at the administration skills of an academic with almost no management experience.
It's also amusing that even Geithner's rebuttals written for this specific piece clearly evince the same epistemic bubble he's accused of.
I should actually write something about what I like about her...
Warren comes off as a hero.
Yeah, I hadn't appreciated the level of antipathy from Summers and Geithner. Gotta like that.
I do wonder what the details are behind her critique of the bailouts. Summers suggests that she was opposed to them, but I don't think that's right, and I don't think the article makes clear her actual position.
Her critique, as I understand it, is that many things weren't done, and focusing the bailouts on enriching bankers, rather than helping foreclosure victims, was a mistake.
Yes, I think one of the big critiques at the time was there was policy room for giving mortgage-lenders or -holders haircuts with the goal of keeping people in their houses where possible rather than just let millions of foreclosures go through, and Treasury did almost nothing on that front despite having legislative authority to make it happen.
I normally despise Politico's handling of this sort of story -- the publication is usually heavily focused on Establishment apologetics when it does news analysis. But I thought the writer here did a really nice job. You get a real sense of who Geithner is, for example.
"There were real fairness issues, as well as political issues, around using tax dollars to help their neighbors who got in over their heads," Geithner wrote.
Christ, what an asshole. This not-even-a-nominal-Democrat is spouting frivolous rightwing talking points. The Politico writer really lets him hang himself.
4: Those points and the resentment around them was part of what kicked off the Tea Party movement. I think more could have been done about appealing to enlightened self interest: "Sure, your neighbors may be in need of a bit of help here, but ultimately helping them keep their home helps support your property values. You really don't want to have to sell your home while a third of your neighbors are going through foreclosure." Also, more recognition that a lot of people who got in trouble had unsustainable mortgages pushed on them by the banks and Wall Street, as described in The Big Short.
4: Those points and the resentment around them was part of what kicked off the Tea Party movement. I think more could have been done about appealing to enlightened self interest: "Sure, your neighbors may be in need of a bit of help here, but ultimately helping them keep their home helps support your property values. You really don't want to have to sell your home while a third of your neighbors are going through foreclosure." Also, more recognition that a lot of people who got in trouble had unsustainable mortgages pushed on them by the banks and Wall Street, as described in The Big Short.
4: Those points and the resentment around them was part of what kicked off the Tea Party movement. I think more could have been done about appealing to enlightened self interest: "Sure, your neighbors may be in need of a bit of help here, but ultimately helping them keep their home helps support your property values. You really don't want to have to sell your home while a third of your neighbors are going through foreclosure." Also, more recognition that a lot of people who got in trouble had unsustainable mortgages pushed on them by the banks and Wall Street, as described in The Big Short.
4: Those points and the resentment around them was part of what kicked off the Tea Party movement. I think more could have been done about appealing to enlightened self interest: "Sure, your neighbors may be in need of a bit of help here, but ultimately helping them keep their home helps support your property values. You really don't want to have to sell your home while a third of your neighbors are going through foreclosure." Also, more recognition that a lot of people who got in trouble had unsustainable mortgages pushed on them by the banks and Wall Street, as described in The Big Short.
Oops. Browser hung while trying to post my response, then posted multiple times.
5-8: Those points and the resentment around them was part of what kicked off the Tea Party movement.
As I said: " frivolous rightwing talking points." TARP was also reviled by the Tea Party types, but that apparently doesn't trouble Geithner. (Nor should it!)
If the Fed would have lowered the interest rate below zero, all Money would still be inflating.
When the crash came, Warren saw a reckoning for a system she had long said was fraudulent and the chance to revamp it. Geithner felt his first, second and third priorities were to save that same system from collapse because then no other goals were [sic] possible.
On which he was entirely correct, and the financial system was in fact very substantially revamped, and the smart assholes in Treasury really did save the world there. Geithner didn't see the little people from his mountaintop, but that wasn't his job. Big finance was his job. The elected officers he worked for were supposed to look out for little people, but didn't. I don't know what Warren thinks in private, but based on this article she doesn't seem to acknowledge that the bailout was actually necessary.
More clearly, the bailout was a necessary but not sufficient response to the crisis; Warren seems to recognize the insufficiency but not the necessity (and, in fairness, Geithner & C the inverse). Her efficacy at CFPB suggests that she was more moderate in private than in public; but if so why are the Obama veterans still so hostile?
Back in '09, Warren's committee released a report that seems to recognize that TARP was necessary and effective:
Because so many different forces and programs have influenced financial markets over the last year, TARP's effects are impossible to isolate. Even so, there is broad consensus that the TARP was an important part of a broader government strategy that stabilized the U.S. financial system by renewing the flow of credit and averting a more acute crisis. Although the government's response to the crisis was at first haphazard and uncertain, it eventually proved decisive enough to stop the panic and restore market confidence. Despite significant improvement in the financial markets, however, the broader economy is only beginning to recover from a deep recession, and the TARP's impact on the underlying weaknesses in the financial system that led to last fall's crisis is less clear.So it seems unlikely that she doesn't recognize that TARP was necessary. Do you think it's possible that the bad feeling from Geithner comes purely from the fact that she's consistently argued, correctly as you say, that it was insufficient?
based on this article she doesn't seem to acknowledge that the bailout was actually necessary.
The article doesn't really address her position -- a significant oversight -- but to the extent that it does, she does seem to acknowledge the necessity. In the article (and in my memory of the actual events), she questions the execution of TARP, but not the need for a bailout. Summers and Geithner appear to be performing a pretty ordinary trick of political rhetoric: Refusing to acknowledge that you can oppose the management of a program without opposing the program itself.
The writer had lots of opportunities to highlight Warren's opposition to the bailout, if that opposition existed, but instead we get stuff like this:
"After the rush-rush-rush to bail out the big banks with giant buckets of money, this plan seemed designed to deliver foreclosure relief with all the urgency of putting out a forest fire with an eyedropper," Warren wrote in her 2014 memoir, A Fighting Chance.
Meanwhile, as I noted above (4.2), Geithner comes out fairly explicitly against foreclosure relief.
15, 16: Ok then. The article was all the evidence I had. 15 last, for Geithner, point taken. OTOH though you've got
One former Treasury official says people in the department were glad Warren addressed the letter to Obama so he could finally understand what it was like to have to deal with her on a daily basis.
but if so why are the Obama veterans still so hostile?
I covered that in 4.3 as regards Geithner. The same applies to Summers: Christ, what an asshole.
Ken Troske, I think, has the right answer: She wouldn't play ball.
Ken Troske, a conservative economic professor at the University of Kentucky on the oversight panel's staff. "Then we get into this hearing, then she climbs down his throat in ways that are extraordinary," he recalls. "I mean, you guys are on the same team?"
Warren wasn't on Team Oligarch.
Man disagrees with woman, man anonymously tells reporter that she was difficult and unpleasant to work with. That doesn't seem as if it needs much explanation. I mean, it could be true, but I wouldn't take one political enemy saying it to a reporter as worth much.
Geithner is a garbage person and was a garbage hire as Treasury Secretary. The financial crisis was allowed to happen by the Bush administration, and the Obama administration was left to pick the pieces... with the exception of Geithner, who was the fucking head of the New York Fed when the crisis hit. The New York Fed's mandate includes keeping an eye on Wall Street. Instead of being blamed, he got promoted. It really shows the mainstream Democratic love for Republican daddies.
That news story lowered my opinion of Obama (though to be fair he wasn't quoted in the article). Is he under the impression that he did a good job handing the crisis? The US did better than the EU, but the response was so biased towards saving the banks from their own poor choices that it poisoned American politics.
18: Warren reported somewhere that Summers told her that if you want to be an insider, the number one rule is "never criticize another insider".
Summers is a funny case, because in his economics he is not Team Oligarch. It's like he can't help himself but turn into a suck-up when around people with real power. He's like Sinatra hanging out with gangsters.
20.1 is 100% wrong. The crisis accumulated for more than a decade, under multiple administrations and Fed chairs (and authorities elsewhere, especially Europe, who were equally culpable). When the crisis hit, the Bush administration and the Fed handled it, and got TARP passed against the opposition of Congressional Republicans. Geithner was central to that crisis response at the NY Fed, and continued it at Treasury.
17: Obama's government, like all governments, had different factions. Members of some factions were assholes.
20: but the response was so biased towards saving the banks from their own poor choices that it poisoned American politics.
Warren says something similar in the linked story, and you can see variations on this argument made all the time, but I am skeptical. I can't work out how American resentment of unearned wealth and hyper-privileged assholes led to the election of Donald Trump, for instance.
22 is 110% wrong. Maybe 111%? The financial crisis happened because the Bush administration and the Fed first arranged a bailout of Bear Stearns, and then let Lehman go bust. (Lehman ramped up their risk taking after they saw Bear get rescued.) No Lehman bankruptcy, we would have had a recession, but not Great Depression II. The drop in lending standards only happened in the years before the financial crisis, when Geithner was already head of the New York Fed.
I understand the appeal of the "it was a long-time coming" narrative, because it's easier to take that something that terrible happened because collectively we deserved it, and not because of avoidable contingent events. But the Great Recession didn't have to happen, and different policymakers would have prevented it.
23: I more had in mind the fact that the left is much crazier now than under Bush -- the protests by Sanders supporters at the DNC, the people voting for Jill Stein, etc.
Though you can make a case for Trump. The effect of the financial crisis was that it discredited the mainstream, so it created space for wackos, conspiracy theories, and Russian propaganda.
24: I think you and I may have rehearsed this argument before: The roots of the crisis (in my opinion) go back to the Clinton/Summers/Greenspan/Rubin administration and the Commodity Futures Modernization Act.
But 24.2 is 147.53% correct. For the whole thing to blow up the way it did, you needed to have regulators like Geithner and others screwing up in sustained fashion over a substantial period.
25.1: Not many people voted for Stein, and I don't think they were motivated by anything but their own fucked-up need for showy purity. And while the Sanders people at the DNC annoyed the hell out of me, I don't think they had any meaningful impact. The convention came off quite nicely all the same.
I suppose there's a plausible argument that the left lost its enthusiasm for the Dems, but turnout didn't seem to suffer for it.
first arranged a bailout of Bear Stearns, and then let Lehman go bust.
Wait, was there a short-term alternative? My broad understanding based mostly on Krugman's book, that CDOs and other ways of quietly lending by anyone with a credit line (mostly repos I beleive but am not certain) created shadow banks which grew without limit. Did the fed have the regulatory authority to stop hedge funds from lending so crazily? AIG was the other big issuer of innovative credit via options, I thought. I understood, perhaps incorrectly, that what they were doing was at the time permitted, would have required new regulation (so congress) to prevent.
24: Had Lehman been bailed the problem would not have been resolved, it would only have been postponed. Fundamentally there were vast amounts paper based on bad mortgages, and entire European banks running on overnight borrowing. Eventually the bad debts were going to come due, everyone was going to recall their loans, and shit would hit. The only way to solve that was to sterilize the bad debts (as illustrated by TARP, which did so, and Europe, which didn't - such that today no-one is willing to buy Deutsche, even at a firesale). Maybe a drawn-out US bailout could have avoided a recession (though I doubt it would have proved politically possible without the pressure of disaster); certainly adequate stimulus policy could have prevented a recession; certainly different regulatory policies could have prevented the financial crisis. Do not for one second attribute to me a belief in inevitability or in cosmic justice.
If one assumes that for policymakers like Geithner, health/profitability of banks = healthy economy, one could explain both the circumstances that lead to the Great Recession and the response to it. Pre-recession, bankers and wall street were making enormous amounts of money, thanks to easy lending and poor regulation, with considerable support from policymakers like Greenspan. When the recession happened, their primary concern again was their constituency of financiers, hence TARP and the complete lack of interest in helping foreclosure victims, and the blind ey turned to the open criminality of many mortgage lenders (Wells Fargo, Countrywide etc). Essentially this to me was a form of regulatory capture. I think the Politico article forgets about the criminal aspect of the crisis, and both helping victims of the crisis and punishing a bunch of rich criminals would not have adversely affected economic recovery, IMO.
The rich need lots of positive reinforcement or they'll have no choice but to destroy society.
I don't often disagree with the Distinguished Gentleman of the Gridiron, but I think the story of 2016 is exactly that a small but sufficient number of people in particular places voted for Stein, amid lowered turnout,* especially among people of color, for the candidate that 'even the liberal' whoever/whatever said was basically a crook.*
It was so clear that she was going to win, that everyone got their licks in, right, left, center, Russian, purity/vanity voters, and so she lost to a guy who got a lower percentage of the vote than Romney. Unfortunately the cosmic justice from too many of us who refused to be grownups for just a single fucking day is being visited on kids in cages.
IMO, the only reason for optimism is that enough folks will have gotten this that in 2020 we can even overcome the rampant cheating Trump is sure to direct.
* Yes, some of that was suppression, maybe even enough to the difference. The thing about most of the suppression mechanisms, though, is that with foresight, they can really be somewhat mitigated. I hope people are making sure everyone has an appropriate ID, far enough in advance to meet the needs . . .
** Or had people killed. Or, most likely, both.
The crisis was not because of bad paper -- that's the "we deserve it" explanation. The crisis was because the banking system completely seized up, which caused real output to drop through the floor, which caused housing prices to plunge because everyone was suddenly unemployed. The US housing market had a bubble, but the crash was much bigger than the bubble.
Mortgage standards only started dropping around 2005, which made the US housing market bubbly. Before that, things were normal. After that, easy credit made housing prices go up, which made it easier to borrow, etc. This all happened against a backdrop of Keynesian stimulus in the form of Bush cutting taxes and increasing spending. Thus in multiple ways the housing bubble was a Bush-era phenomenon. But the bubble would not have caused the world economy to collapse if the administration didn't trigger a banking crisis.
Nobody is willing to buy Deutsche because it's a criminal organization that's paid like $10 billion in fines. Plus, German policymakers pursued all of the wrong macroeconomic policies, like balancing the budget.
To be more specific about the falling down on the job from Treasury which was seen and criticized at the time: the Emergency Economic Stabilization Act did say the Treasury should help homeowners and prevent foreclosure. (Sec. 109, "Foreclosure mitigation efforts.") To implement this, Obama wanted to spend $75 billion to restructure loans (HAMP) to what homeowners were capable of paying, and pay lenders the difference.
Per this GAO report, when Treasury actually announced the program, it was $50b, which they later amended to $37.5b. And six years later in 2015, they still had left over $17b unspent. There are oodles of GAO reports, both contemporaneous and retrospective, on how poorly HAMP was administered.
Also, the same EESA described the purposes of the Act for the comptroller general (= the GAO) to evaluate as "(i) foreclosure mitigation; (ii) cost reduction; (iii) whether it has provided stability or prevented disruption to the financial markets or the banking system; and whether it has protected taxpayers."
28: Lehman going bankrupt was bad because it was tied to every other bank, so if the Fed had bailed it out it would have prevented spill-over to other banks. They could have done it with sufficiently punitive terms that it would have discouraged other banks. (Also, Lehman got in trouble because it was packaging up CDOs, and didn't manage to sell them in time.) Shadow banking is a systematic risk to the extent that it imperils real banks, the banks where people and businesses deposit their cash every day.
I'm still mad at Bank of America for sending me a snooty letter when it lowered my credit limit. First, I didn't ask for the credit limit I had, they just kept raising. Second, excepting the bailout, I had more fucking money than they did at the time.
32 one could just as easily say the Clinton campaign was so confident that they were going to win that they felt safe in antagonizing the left / labor and the 2020 Dem candidate knows not to do that.
Sure, OK. Anyone who felt 'antagonized' enough in 2016 to let Trump in doesn't meet any definition I use for 'Left' but that's because I use 'Left' as a set of policy preferences, not a tribal identifier. Obviously no longer valid.
In any event, the mistakes of 2016 aren't gong to be repeated. We'll have all new ones for 2020.
That article reminded me of the sinking feeling I had when the Obama admin announced they were going to give real power to Geithner, Summers, and Emanuel. Pretty much anyone could see the need to keep the financial system afloat, the question was would they also pursue further change in any meaningful way (like consumer protection, what a crazy idea) or mainly take care of the banks. Those assholes weren't going to do much for non banks and they didn't.
Warren's creditslips.org blogging is still up. She does have a post where she suggests that bailouts that don't address structural issues were going to lead to more bailouts and not stop the crisis. It could be read as anti-bailout, but I think it's more anti-only-bailout.
In general, framing the issue as pro or anti bailout, in simple terms, seems wrong and unhelpful. The question was about how to fight the crisis with public policy and Warren and Geithner didn't agree on which tools to use and how to use them. Bailouts could have been leveraged in other ways.
I'm surprised nobody's reposted her TPM blog.
It looks like she was cross-posting Credit Slips with TPM. I don't think the TPM blog exists outside of Internet Archive copies.
43. I thought he was much younger. That shocked me.
OT: How can you get banned from a furry event? You just put on a fur costume that covers your face.
I assume you still have to have a ticket.
So did the gerry get mandered or not?
They made Rambo: Last Blood. It's in his stool and he dies trying to kill colon cancer with a BAR.
Brian Dennehy is getting Oscar buzz for his role as a polyp.