Hey, Warren, put all your money where your mouth is

November 26, 2010 · Posted in The Capitol · Comment 

An extravagant proposal.


Every so often Warren Buffett goes on TV and calls for higher taxes. This from the guy who’s paid, according to Forbes, perhaps less than $ 10 million in taxes, a tiny percentage of his $ 50 billion net worth. I say perhaps because, to the best of my knowledge, Buffett has never made his tax returns [...]

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Hot Air » Top Picks

House Republicans Take Aim At Elizabeth Warren To Slow Down Financial Reform

November 23, 2010 · Posted in The Capitol · Comment 

Since they can’t realistically repeal the Dodd-Frank financial reform law due to President Obama’s veto pen, Republicans have been gearing up to slow down the law’s implementation by hassling regulators with hearing appearances, questionnaires, and resolutions of disapproval. To that end, Reps. Judy Biggert (R-IL) and Spencer Bachus (R-AL) sent a letter yesterday to the newly-constituted Consumer Financial Protection Bureau (which operates as part of the Treasury Department until July 2011), voicing concerns about the Bureau’s supposed lack of oversight.

The lawmakers took particular aim at Harvard Law Professor Elizabeth Warren, the special adviser to the President who is currently leading the Bureau, saying they planned to scrutinize everything she does:

“There is a clear absence of accountability and transparency” about the activities Treasury is undertaking to establish the consumer bureau, the letters said…The lawmakers signaled they planned to scrutinize Ms. Warren’s every move, writing that they “are concerned that Professor Warren will be approaching this task without any experience managing — or creating — an organization of this scale and importance.”

Bachus and Biggert asked for a response to their concerns by January 10th, and according to the Wall Street Journal, “the reports requested by the lawmakers will likely lead to hearings.”

As the Center for Public Integrity reported, Republicans have a handful of options available for slow-walking financial reform, among them “peppering agencies with letters and with oversight hearings.” And they’re keying in on Warren as the focal point of their efforts, despite her vast qualifications for the position and the lack of substantive complaints against her that the GOP has mustered.

Of course, transparency and accountability are valid concerns, and Treasury should be completely open about the process of setting up the Bureau. But since Republicans are staunchly opposed to the Bureau’s very existence, this looks more like an effort to bog its employees down in paperwork and appearances on Capitol Hill, rather than a good-faith effort at oversight.

The way in which Republicans are treating Center for Medicare and Medicaid Services (CMS) chief Don Berwick is illustrative. Last week, Berwick appeared before the Senate Finance Committee to ostensibly answer questions about the agency’s progress in implementing the Affordable Care Act. Instead of using their time to ask productive questions, Republicans simply griped about how they didn’t have enough questioning time.

As more of letters like that sent by Bachus and Bigger head out the door, and the almost inevitable hearings begin to take place, we’ll be able to see whether House Republicans actually have an interest in implementing Dodd-Frank in a responsible manner, or if they’re simply intending to try crippling the ability of the Bureau to get off the ground.

Wonk Room

Warren Buffet: Don’t Extend Bush Tax Cuts to the Wealthy

November 22, 2010 · Posted in The Capitol · Comment 
 
   

 Bazillionaires, listen up to one of your own!

While millionaires and billionaires are whining that the Bush-era tax cut to the rich—those who make more than $ 250,000 a year—should be extended, one of America’s wealthiest men says: NOT

In an interview with multibillionaire Warren Buffet set for broadcast Thanksgiving day, Christine Amanpour repeats the Wall Street line about why Congress should extend the tax cuts for the rich before they expire next year.

They say you have to keep those tax cuts, even on the very wealthy, because that is what energizes business and capitalism.  

To which Buffet replies:

The rich are always going to say that, you know, just give us more money and we’ll go out and spend more and then it will all trickle down to the rest of you. But that has not worked the last 10 years, and I hope the American public is catching on.

The American people have caught on—but what about Congress? Republicans on Capitol Hill want to extend the tax cuts for those making more than $ 250,000 or more a year. President Obama and most congressional Democrats want to extend the cuts for middle- and lower-income families, but not for those making $ 250,000 or more.

Congress has only a few days left during this “lame-duck” session, and as AFL-CIO President Richard Trumka says, lawmakers should not compromise on this issue but vote to end tax cuts for the rich and extend tax cuts for the rest of us.

The election is over and now it’s time for politicians to show courage and stand and fight on these issues for working families. Let the millionaires fend for themselves for a change.

AFL-CIO NOW BLOG

When Warren Buffett Retires

October 28, 2010 · Posted in The Capitol · Comment 

Seeing that he has named a possible successor, Megan goes on to explain why his success is unlikely to be replicated:

The lure of value investing is that all you need is common sense, hard work, and the courage to resist your own greed, but in fact, Buffett's intelligence is really singular. Reading his thoughts on the bubble in 1999, you're struck not merely by his courage in naming the bubble, but his ability to crystallize such an incisive critique of the prevailing zeitgeist.  Moreover, the kinds of stock values that made Buffett rich are thin on the ground these days-the proliferation of screening tools, and other sorts of company information, means that few people are able to make money simply by identifying "hidden gems".  Buffett has survived through a combination of unique vision, good management, and the magical effect of the Buffett name on the investments he does choose to make.  It's going to be hard to impart that to a successor.





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The Daily Dish | By Andrew Sullivan

The Warren Commission and Financial Reform

October 3, 2010 · Posted in The Capitol · Comment 

A lot of hope was placed on the back of Elizabeth Warren and the financial reform act passed by Congress at the behest of the Administration and formally known as the Dodd-Frank Wall Street Reform and Consumer Protection Act. Concurrent with belittling the liberal Democratic activist base as ungrateful whiners, the Administration and Democratic leadership has touted Liz Warren and Dodd-Frank as prime examples of accomplishments that should thrill and satisfy the base. But are those “accomplishments” really all that and should they mollify Democrats, at least on financial reform issues? The initial returns indicate no.

First, the ability of Dodd-Frank to do the job intended as to rapacious financial institutions is highly debatable at best, and that is being generous. It is already established the bill did not clamp down sufficiently on the reckless casino style trading in derivatives and synthetic financial products, and may even have opened a new portal for abuse by the Wall Street Masters of the Universe high frequency traders.

Gretchen Morgenson in today’s New York Times lays out beautifully the bigger picture on the lack of reform in the “reform”:

THE government is pulling a sheet over TARP, the Troubled Asset Relief Program created during the panic of 2008 to bail out the nation’s financial institutions. With the program’s expiration on Sunday, we can expect to hear lots of claims from the folks at the Treasury that it was a great success.

Such assertions would be no surprise from a political class justifiably concerned about possible taxpayer unhappiness, the continuing economic turmoil and the midterm elections. But if we have learned anything during this crisis, it is that the proclamations emanating from the Washington spin machine must be taken with an extra-hefty grain of salt.

Consider the claims made last summer that the Dodd-Frank financial reform act reduces the threats that large, interconnected banks pose to taxpayers and the economy when the banks are deemed too big to fail. Indeed, as regulators hammer out the rules governing derivatives transactions, it’s evident that the law has created a new set of institutions that will almost certainly be deemed too important to fail if they ever get into trouble. And that means there won’t really be an effective way to keep those firms from taking big, profitable, short-term risks that are dumped on the taxpayers when the bets fail.

Our roster of bailout candidates includes the clearinghouses, created under Dodd-Frank, that are meant to increase the oversight of derivatives trading. Because most derivatives transactions are expected to go through these clearinghouses, they will be “systemically important” under the law. As such, Dodd-Frank specifically provides that “in unusual or exigent circumstances,” the Federal Reserve may provide such entities with a financial backstop, including borrowing privileges.

Remember this: Financial backstop is just another term for a taxpayer bailout. And the major banks and brokerage firms are the members of the clearinghouses, so a backstop would essentially be for them.

According to the Bank for International Settlements, the entire derivatives market had a gross credit exposure of $ 3.5 trillion at the end of 2009. Obviously, even a small fraction of that amount could represent a sizable call on the taxpayers if a clearinghouse hit the skids.

So much for eradicating too-big-to-fail.

So much for ending “Too Big To Fail” indeed. Like upwardly spiraling health care costs from “healthcare reform”, it appears all that has been done is to institutionalize the very problems in need of eradication.

Well, how about Elizabeth Warren, surely her placement in the Obama Administration is a giant positive the Democratic activist base can hang their hat on and take to the bank, right? In a word, no. Now, before we go further, I want to make perfectly clear that I admire and respect Warren greatly and probably as much or more than anybody in the public sector today. For that reason, writing the following pains me greatly, but I believe the facts and circumstances warrant honesty about the situation surrounding Liz Warren.

Here is what I said back on September 17th:

I spent a good chunk of the night a couple past reading the bill and the enabling provisions for formation of the CFPB. Done properly, the contemplation is for sucking in huge swaths of power, almost like a smaller version of the reorganization that formed the DHS, but is a good way. I think Warren will be interested in consolidating this power in an agency that might actually help people; I do not think any of the others involved, whether Geithner, Summers, Obama, Banksters, MOTUs and the agencies the power would be carved out from, will be interested in this at to any real degree at all. As is, Geithner and his Treasury team will have the last word on this, not Warren.

But the thing is, the power Geithner has is vested in the head of CFPB once confirmed or installed by recess appointment, which could have been Warren. That is a HUGE difference that Obama has intentionally and actively worked his ass off to prevent occurring. Today is the first big date, the date Geithner specifies the operative date for transfer of powers from other areas and agencies, which is the date the whole formation will then be calendared off of. It is a huge date. That is one of the main reasons why they strung Warren out till today, so she had no input on that. So Obama Could have named Warren immediately and pushed hard for fast confirmation or recess appointed her so that she had the power to do this right. Instead, he intentionally strung her out and insured that Geithner had all the real authority to not make the CFPB what it ought to be and has, further, insured that Warren never is confirmable in the future (the logistics after the mid-terms will make it impossible). Heckuva job.

For any so inclined, go read the actual CFPB enabling provisions in the the Dodd-Frank Bill. I think you will begin to understand what I am describing as to the awesome power that could be in CFPB if it was taken and done right. That power, and the ability to NOT exercise it, however, because of the Obama white House path, stays in Geithner/Treasury hands, and subject to the incredibly relentless influence of MOTU Banksters until a CFPB head is confirmed or recess appointed. And that, folks, is exactly why the Obama Administration refused to nominate or appoint Elizabeth Warren to be the actual head of CFPB. There was never a chance.

But there is a lot of good Warren can accomplish in her weird hybrid post Obama crafted for her, right? Not really, especially in relation to the awesome power she could have wielded, and should be wielding as head of CFPB. Yves Smith at Naked Capitalism sums it up very well:

It is now official that Warren is at best a placeholder; she cannot have much impact. She can’t make much in the way of policy or personnel choices; that would encroach on the authority of an incoming director. And even her ability to influence the choice of a nominee is questionable. Her taking the advisory role now assures that the nomination of the permanent director will come after the midterm Congressional elections. Given the virtual certainty of Democratic losses, the odds are high that Team Obama will settle on a “conservative” meaning “won’t ruffle the banking industry” choice, and argue its hands were tied.

So the Obama camp has played this extremely well. They get to avail themselves of the Warren brand, give her a Potemkin role, and use it to push the timetable for nomination of the permanent director out, which give them cover for installing a more compliant choice.

That is exactly right. And, as I stated above, what the Warren co-option by Obama and Geithner has done is not just to score political points from gullible Democrats desperate for a hint of intelligent financial policy from a moribund Administration, but more importantly to provide cover for the hollowing out of what could have been, and should have been, awesome power of a CFPB in competent and motivated hands of somebody actually interested in real consumer and citizen protection. Someone like Elizabeth Warren. It is a craven bait and switch and you, the consumer and citizen, are on the losing end.

Want more evidence? From Sewell Chan Thursday’s New York Times:

The Obama administration is starting to set up the new Consumer Financial Protection Bureau, but relief for consumers befuddled by the complex disclosures that accompany credit cards, auto loans and mortgages will not come about right away.

Under questioning from senators on Thursday, the deputy Treasury secretary, Neal S. Wolin, acknowledged that regulators would not have substantive power to write rules governing a vast array of consumer loans until a permanent director of the bureau is in place and until July 21, 2011, when responsibilities from seven other federal agencies are transferred to the new bureau.
…..
At the hearing, Senator Richard C. Shelby of Alabama, the top Republican on the Banking Committee, said that the Treasury Department had emphasized the need to move quickly on writing new rules governing consumer loans, and questioned whether the department could do that “without a confirmed director.”

Mr. Wolin replied that “there is limited rule-writing authority, but it is constrained until such time as there is a confirmed director.
….
Finally, Mr. Wolin acknowledged to the senators that “the authority to actually issue a rule that would bind private parties, for example, in the mortgage area is a tough one until such time as there is a confirmed director.”

Therein lies the truth the Obama Administration has carefully obscured. They not only denied Elizabeth Warren the post she deserved and the power the country needed in her hands, they co-opted her as cover for frustrating the very purpose of the CFPA. There is no real power for the CFPA, and the true “rule writing” cannot occur, until there is a formal head.

Elizabeth Warren is completely marginalized and, whatever little authority she does currently have disappears the second a real head of CFPA is confirmed. And do not kid yourself, while confirmation of Warren to head the CFPA would have been possible, even granted it would have been a very tough fight, in the current Congress, it will be impossible with the reduced Senate majority in the coming Congress. Thanks to the conduct of the Administration, there is now no chance whatsoever of Warren ever being confirmed. Mission accomplished.

The ever more arrogant and belligerent to the progressive base can call it whiny all they want, the truth is they are selling them, and the rest of the country and mostly gullible press, a bill of goods.

Related posts:

  1. How a Previously Qualified Elizabeth Warren became Unqualified, According to a Previously Progressive Chris Dodd
  2. Elizabeth Warren Drops Harvard Course at Last Minute
  3. As the White House Dithers on Warren, 525,000 Homes Have Been Foreclosed On

Emptywheel

In Elizabeth Warren We Trust?

October 1, 2010 · Posted in The Capitol · Comment 

ProfessorBainbridge.com

Don’t trust Elizabeth Warren

October 1, 2010 · Posted in The Capitol · Comment 

Another radical appointed to an important agency by Obama.
American Thinker Blog

In Elizabeth Warren We Trust?

September 30, 2010 · Posted in The Capitol · Comment 

A while back some kook named Brent Budowsky argued that when president Obama nominated “Elizabeth Warren to lead the new consumer protection agency,” which Budowsky claimed would cause “the Democratic base will erupt and turn out to vote in far greater numbers than any current poll suggests.” Obama subsequently did name Warren, albeit by some political sleight of hand designed to avoid a Senate confirmation battle. I, for one, have seen no evidence of a hiccup amongst the Democratic base, let alone an eruption, in response. As I predicted, Liz Warren is many things but the savior of the Democrats in 2010 is not one of them.

I bring this up because Todd Zywicki’s blistering WSJ op-ed on Warren is today’s must read. Zywicki essentially accuses Warren of cooking the research books to promote political goals, which is about the worst thing an academic can do in his/her professional capacity:

The Obama administration has promised that the Federal Reserve’s new Consumer Financial Protection Bureau will be independent from politics, a model of regulatory expertise grounded in sound data and economics. Naming Harvard Law Prof. Elizabeth Warren as de facto agency head undermines both goals.

By appointing another White House czar to avoid Senate confirmation, the administration politicized the powerful new bureaucracy from its birth. And by appointing an individual with a track record of using questionable research to advance policy ends, it has jeopardized the second goal as well.

The op-ed continues with critical commentary on several Warren scholarly works, which Zywicki claims were shoddily done and intended to advance a left-liberal political agenda. He concludes:

The head of the Consumer Financial Protection Bureau is one of the most powerful bureaucratic positions ever created in the American political system. It can regulate or ban almost every consumer credit product in the country, yet it is beyond Congress’s power of the purse because its budget is guaranteed as a percentage of the Fed’s annual revenues. Under normal circumstances, the Senate would have the opportunity to ask Ms. Warren to explain the way in which she has sometimes interpreted data in her research before entrusting her with control of the agency.

By doing an end-run around the confirmation process, the Obama administration has eliminated our opportunity to find out. And by installing the head of the agency as an assistant to the president inside the White House, it has insulated her from meaningful congressional oversight.

These are pretty serious charges, which deserve a serious and impartial inquiry.




ProfessorBainbridge.com

WSJ “In Elizabeth Warren We Trust”

September 30, 2010 · Posted in The Capitol · Comment 

(Todd Zywicki)

My latest WSJ contribution: “In Elizabeth Warren We Trust.”




The Volokh Conspiracy

Warren Buffett: Good Investor, Crummy Economist

September 27, 2010 · Posted in The Capitol · Comment 

By Daniel J. Mitchell

Warren Buffett once said that it wasn’t right for his secretary to have a higher tax rate than he faced, leading me to point out that he didn’t understand tax policy. The 15 percent tax rates on dividends and capital gains to which he presumably was referring represents double taxation, and when added to the tax that already was paid on the income he invested (and the tax that one imagines will be imposed on that same income when he dies), it is quite obvious that his effective marginal tax rates is much higher than anything his secretary pays. Though he is right that his secretary’s tax rate is much too high. 
 
Well, it turns out that Warren Buffett also doesn’t understand much about other areas of fiscal policy. Like a lot of ultra-rich liberals who have lost touch with the lives of regular people, he thinks taxpayer anger is misguided. Not only does he scold people for being upset, but he regurgitates the most simplistic Keynesian talking points to justify Obama’s spending spree. Here’s an excerpt from his hometown paper.

Taxpayer anger against President Barack Obama and Congress is counterproductive because policy makers took measures including deficit spending to stimulate the economy, billionaire investor Warren Buffett told CNBC. …“I hope we get over it pretty soon, because it’s not productive,’’ Buffett said. “We will come back regardless of how people feel about Washington, but it is not helpful to have people as unhappy as they are about what’s going on in Washington.” …“The truth is we’re running a federal deficit that’s 9 percent of gross domestic product,” Buffett said. “That’s stimulative as all get out. It’s more stimulative than any policy we’ve followed since World War II.”

About the only positive thing one can say about Buffett’s fiscal policy track record is that he is nowhere close to being the most inaccurate person in the United States, a title that Mark Zandi surely will own for the indefinite future.


Cato @ Liberty

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