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She's a friend to us, not to bankers

Joseph Conrad wrote in the novel Lord Jim: "You shall judge of a man by his foes as well as by his friends." I agree. Nixon's famed enemies list, compiled by the president's top aides, included an array of people who tried to do good in the world: people such as Daniel Schorr, the civic-minded CBS newsman, and actor Paul Newman, a humanitarian activist. These "enemies" said a lot about Nixon, the man.

Similarly, we can learn about the new Republican House leaders by considering their "enemies." One of those is Elizabeth Warren, a Harvard law professor and an indefatigable activist for the middle class, who was enlisted by President Barack Obama to set up the new Consumer Financial Protection Bureau.

They hate her.

The bureau's job is to protect consumers from predatory and deceptive credit card and banking practices. It was Warren's idea. She has researched and written for years about how hidden fees and costs continue to trick financial consumers. She's a natural choice to head up the new office. But Warren is like poison to the Chamber of Commerce and the American Bankers Association — Republican BFFs — meaning Senate Republicans would surely have blocked her nomination had they gotten the chance. Instead she became an assistant to the president and special adviser to the Treasury secretary, roles that don't require Senate approval. The bureau she is establishing will be operational in July.

Warren's name must send tendrils of smoke out the ears of Republican Rep. Spencer Bachus of Alabama, the new chairman of the House Financial Services Committee. Soon after securing the chairmanship he told the Birmingham News that "in Washington, the view is that the banks are to be regulated, and my view is that Washington and the regulators are there to serve the banks."

It's nice to know that Bachus learned so much from the 2008 financial crisis. Bachus later tried to partially backtrack from his startling remarks, but, like the drunken rants of Mel Gibson, one's unvarnished truth is easy to recognize.

Bachus' views stand in polar opposition to Warren's. In a speech last year Warren gave a clear-eyed historical account of how financial regulation was instrumental to a rising middle class. After describing how her grandmother, who died in 1970 at the age of 94, had suffered early in her life through the insecurities of a boom and bust America, Warren noted that the reforms enacted after the Great Depression had brought remarkable security and prosperity to America's middle class.

Warren pointed to the law protecting bank deposits, the reforms of Glass-Steagall, that separated risk-taking on Wall Street from community banking, and the Securities and Exchange Commission's oversight of the market, as having given us "50 years of economic peace." During which time, Warren said, "we built a strong and prosperous middle class in America."

Then came deregulation, Glass-Steagall's repeal, and a flat-lining of incomes for average workers, who turned to credit to stay afloat. With no cop on the beat, as Warren likes to say, the financial sector saw an opportunity for exploitation. Credit card companies, mortgage banks and lenders of every stripe made a fortune by lowering themselves into the mud, using "tricks and traps" to nab consumers with hidden fees, "gotcha" penalties and ballooning interest charges. To them, the financial products consumer is a golden patsy; and Warren's efforts take a hatchet to their money tree.

Bachus fiercely opposed the creation of the new bureau, and will use his chairmanship to interfere with Warren's efforts. In November, Bachus co-signed letters to the inspectors general of the Treasury Department and Federal Reserve that demanded an investigation and a report to Congress regarding Warren's work. He cites "a clear absence of accountability and transparency" in the bureau's implementation, which can be read as an excuse for Bachus to call hearings to thwart Warren's progress.

Apt here is the ancient adage that "the enemy of my enemy is my friend." As a perceived enemy of Republicans in Congress, who govern for the financial industry rather than for their constituents, Warren is a friend to us all.

She's a friend to us, not to bankers 01/22/11 [Last modified: Saturday, January 22, 2011 3:30am]
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