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Elizabeth Warren's Warped Reality

To say any candidate, or either party, has a monopoly on distortions and hypocrisies in a campaign as fractious as this one would do a grave disservice to the spinmeisters on the other side of the aisle. But for bankers, the claims that Elizabeth Warren floated during her turn in the spotlight at the recent Democratic Convention deserve special scrutiny.

Warren, of course, is the Senate candidate from Massachusetts and self-described mother of the Consumer Financial Protection Bureau, who rarely passes up a chance to wag her finger at the financial industry. She certainly wasted no time on the convention podium lighting into bankers for all manner of alleged misdeeds.

Here are a few of the curious and/or spurious accusations Warren leveled during her warm-up act for the president that are particularly pertinent to bankers:

Warren: "The system is rigged. Look around. Oil companies guzzle down billions in subsidies. Billionaires pay lower tax rates than their secretaries. Wall Street CEOs—the same ones who wrecked our economy and destroyed millions of jobs—still strut around Congress, no shame, demanding favors, and acting like we should thank them."

Reality check: Demanding favors? Like the labor unions that helped push General Motors and Chrysler over the brink and then got the president to help cut in front of bondholders during a taxpayer-funded bailout? Or the class action lawyers who get rich suing job-creating corporations and then funnel some of the spoils to the Democratic Party?

Warren: "President Obama gets it because he's spent his life fighting for the middle class. And now he's fighting to level that playing field."

Reality check: Obama fighting to level the playing field? With a Fed chairman whose near-zero interest rate policy is hurting retirees and other savers while rewarding the profligate—most notably Uncle Sam? Even Neil Barofsky, the former Tarp Special Inspector General who is quite fond of Liz Warren, has blasted the Obama White House and Treasury Secretary for lying to the American people and disguising a giant-bank bailout as a homeowner rescue.

Warren: "Mitt Romney's the guy who said corporations are people."

Reality Check: This ploy must have come from a Political Dirty Tricks 101 class back at Harvard. As this video shows, Romney made the comment in a good-natured response to hecklers. Here's the full text of what he said: "Corporations are people, my friend. Of course they are. Everything they make ultimately goes to people. Where do you think it goes? Whose pockets? Whose pockets? People's pockets." 

FYI, Ms. Warren, a lot of the people Romney referred to are the teachers and firefighters whose taxpayer-insured pensions are invested in—horror of horrors—corporations.

Warren: "After the financial crisis, President Obama knew that we had to clean up Wall Street."

Reality Check: Obama's cleaned up Wall Street? Who's gone to jail, Ms. Warren? In the wake of the tech bust a decade ago, George W. Bush's Justice Department went after the deposed bosses at Enron, WorldCom and Tyco and put them in jail. President Obama's Justice Department has taken a pass on the likes of Jon Corzine of MF Global, Angelo Mozilo of Countrywide Financial and the boatload of cads who ran places like AIG, Bear Stearns and Lehman Brothers. Or, as Neil Barofsky said to me recently, given the "trillions and trillions of dollars of value that have been wiped out … it certainly seems like there should have been a rampant area for potential fraud cases."

Warren: "I had an idea for a consumer financial protection agency to stop the rip-offs. The big banks sure didn't like it, and they marshaled one of the biggest lobbying forces on earth to destroy the agency before it ever saw the light of day. American families didn't have an army of lobbyists on our side, but what we had was a president—President Obama leading the way. And when the lobbyists were closing in for the kill, Barack Obama squared his shoulders, planted his feet, and stood firm. And that's how we won."

Reality Check: Sure, the big banks didn't like it, and you're right that plenty of sleazy practices flourished. But there are more than 7,000 banks in the U.S. And the Dodd-Frank Act that your bureaucracy is a part of has done tremendous collateral damage to thousands of banks that were innocent. Whether you realize it or not, that means it's also hurting millions of the small businesses and people you claim to represent.

Neil Weinberg is the editor in chief of American Banker. The views expressed are his own.


(21) Comments



Comments (21)
Rep.Mel Watt from NC did the very same thing standing on his political grandstanding box. He blamed Brokers for everything without any reaseach whatsoever.Walt
Posted by sparky100883 | Wednesday, September 12 2012 at 12:10PM ET
Cherokee Liz is a real piece of work. Too bad that the government doesn't create any wealth. Great place for arrogant, aggressive, space occupiers though.

Posted by cnoblejr | Wednesday, September 12 2012 at 12:18PM ET
I am not sure what the point is here. Should bankers have gone to jail? Who and for what? Why are the large banks that were bailed out--the ones that needed money, not the ones that Hank Paulson forced to the table--are the leading political contributors, first to Obama and now to Romney. Are you suggesting that they are not demanding favors. Are you suggesting that those largest banks who hold 95% of the CDS do not constitute systemic risk? The banking industry problem is indeed that the thousands of banks that were not the problem have failed to advocate a solution that says that banks should not be too big to fail, that regulation cannot substitute for a vibrant marketplace. If Glass-Steagall is not to be the solution, then perhaps capping bank size should be. The alternative is regulation that buries us all. The problem is not Warren, but an industry that has sat by and let the industry become defined by the needs and implications of mega-banks that serve no societal purpose to justify the risk they create.
Posted by dpaul | Wednesday, September 12 2012 at 12:20PM ET
There's finally someone standing up to the lies of this President and his party.
Posted by Finally | Wednesday, September 12 2012 at 12:22PM ET
Haha, Lizzie hit a nerve did she? Fact is, there would be no CFPB if it wasn't for the shameful behavior of banks and the rest of the financial sector over the last 30 plus years. From predadory loans to deceptive credit card terms to check clearance practices designed to maximize bounced check service charge revenue to betting against the very securities you peddle to your customers as safe... the list of sins goes on and on. The bad apples have brought shame on the financial industry. Hey, here's an idea: If you don't want Dodd-Frank and CFPB, conduct business in a way that doesn't make them absolutely necessary.
Posted by j.doe | Wednesday, September 12 2012 at 12:25PM ET
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