Monday, September 19, 2011

Senator Elizabeth Warren (D-MA)?


Harvard Law Professor Elizabeth Warren is running for Scott Brown's (Teddy Kennedy's) Senatorial seat in Massachusetts.  She believes that her compassion for the middle class to which she doesn't belong  but knows from a distance will translate into legislative zeal for smiting big corporations, the entities she believes control DC, if not the cosmos.  She's willing to work her heart out to win the trust of Bay State voters.  Noman doubts neither the sincerity nor depth of Warren's convictions.  He does doubt the clarity of her thinking, her commitment to liberty, and whether she has sufficient faculties for self-doubt and critical reflection.  One thing nobody should doubt, however, is her animus towards large financial corporations, the boogie-men of her life-long work.

Noman has blogged about Professor Warren in her capacity as Grand Pooh-bah of a federal agency she lobbied as an academic to create, and staffed up without Congressional oversight after the passage of Dodd-Frank.  (See, "Will the Real Elizabeth Warren Please Stand Up," 3/15/11; "For Lovers of Unchecked Power," 3/17/11; and "Elizabeth Warren Redux," 3/30/11)  It's not everyone who gets to see their political dreams come to life.  Her umbilical connection to this brainchild and long career of bashing Wall Street, however, made her confirmation as its inaugural director impolitic.  After a concerted but failed charm offensive this summer, President Obama threw in the towel and looked elsewhere for leadership.

Noman's quarrel with the governing notions that Warren espouses is their leap from an undeniable problem, to a tendentious attribution to some demonized boogie man, to a federal agency or some variant of big government empowered to do social justice.  Noman further chaffes at the abysmal track record and waste of all such public initiatives.  Finally, he resents the Statist business model: to appropriate and amass all moneys desired to insulate the salvific initiative in ways not enjoyed by the taxpayers (debtors) footing the bill.

Despite superficial similarities, Liberal methodology inverts Christian charity, which teaches that Jesus fed the multitude one fish and loaf at a time through the agency of his disciple's faithful perseverance in his instructions.  Federal (or state) do-gooding operates by piling up mountains of fish and loaves before commencing.  Needless to say, lots of food doesn't get to the intended beneficiaries.  But, passing it out is certainly a gravy job.

Senate Banking Committee hearings to vet President Obama's choice to lead the Consumer Financial Protection Bureau (CFPB)--the Grendel to which Warren is mother--kicked off the week before last.  Richard Corday faced Senators who treated him with kid gloves, preferring to spare him rancor better directed towards the controversial Bureau he would head.  Observations about his twins' smiles and his five-time reign as Jeopardy champion dominated the proceedings.


Corday, who has been called Warren-light, like her is no friend of Wall Street.
“There’s a belief here that Wall Street is a fixed casino and it’s back in business, and we’re left holding the bag,” Mr. Cordray, then speaking from his office as Ohio’s attorney general, told The New York Times last year. “It’s important for us to show we’ll go after a company that does wrong.”
That's all true as far as it goes.  Taxpayers were certainly stuffed with the losses from the mortgage meltdown.  Wall Street gamblers certainly walked away from the casino with their winnings intact despite nearly breaking the house, and industry.  We're certainly mad as hell.  But, Wall Street bonuses get mostly re-funneled to left-wing causes (e.g., gay marriage in NY) and as campaign contributions to Democratic politicians who in turn bail Wall Street out of its messes.  That's been the game since President Clinton's election and Treasury Secretary Rubin's tenure, i.e., Mexican crisis (1994), Asian financial crises (1997), Russian crisis (1998).  (For a good read on moral hazard stemming from Clinton-era policies, see Peter Schweizer's Architects of Ruin.)  So, it's tough for that Party's acolytes to persuade onlookers that their inveighing is anything more than political grandstanding.

Moreover, the sacks over Uncle Sam's head are the Government Sponsored Entities (GSE's): Fannie Mae and Freddie Mac.  Somehow, Democrat's labyrinthine reform of the system managed to bypass and exempt that financial black hole.  The CFPB will be riding herd over bank's swipe fees and foreclosure mechanisms, but not over the government-guaranteed mortgage traffickers that unleashed finanical armageddon on the world's financial system while generating hundreds of millions of dollars in GSE bonuses for Democratic Party fixtures such as Franklin Raines, Jim Johnson, Daniel Mudd, Jamie Gorelick, and Rahm Emanuel.  Nor should we forget campaign contributions to Democratic politicians Chris Dodd, Barack Obama, and John Kerry, the top three recipients of Fannie Mae's largesse.  Think about it; Fannie Mae's top three political beneficiaries include the Democratic Party's most recent two Presidential nominees and its Senatorial patron of financial reform, which conveniently exempted the GSE's.  Andrew Klavan connects the dots for the reader.


A perusal of Corday's lawsuits as Ohio attorney general--a position that voters, not banks, recently kicked him out of--indicates that Corday specializes in the post hoc spinning of business mistakes into crimes or causes of action.  That is standard operating procedure for the white collar plaintiff's bar, a Democratic hegemon, which enriches its members at the expense of overcharged consumers, the ultimate payers of settlement bills in lawyer shakedowns.

Regarding Warren, the Times ran the Corday testimony story with a sympathetic interview of her that deserves extensive comment.  The video interview is linked.

With appropriate facial and tonal accents to stress her incredulity that anyone could be so insensitive as to disagree, she said that:
-legislators were writing bills already to kill CFPB before it has a chance to clean up one thing;
-Dodd-Frank is too popular to kill, so enemies are trying to maim it;
-CFPB's independent funding comes from the Fed like that of all banking regulators;
-funding autonomy is necessary to preserve the Bureau's independence from trillion dollar institutions that can lobby Congress, but not the Fed;
-bankers aren't scared of their ability to live with the Bureau once she explains to them that it's only going to ensure clear prices, clear risks and product comparisons;
-some people are dead set at denying the President a political win, even when he's worked so hard on this;
-the President offered her a choice of starting up the Bureau or running it once it was started, and she opted for the former;
-she's studied the economics of working families her entire adult life, and they are being hammered ever harder and harder
-we now live in an America where millions, ten-of-millions of people are one bad medical diagnosis, one pink slip, one terrible interest-rate reset away from complete financial collapse.
First, note the automatic leap at the end.  Somebody, somewhere (a gob of people) lives in danger of suffering.  Government is the medium through which their problem must be addressed.  Period.  How else might one eradicate suffering?  Never mind that this route never does, and only perpetuates suffering in the form of dependency while it bankrupts the nation.  What's important are intentions, not results; sentiment, not reason; anything but reflection.

Presumably, money to tilt endlessly at these windmills abounds, and only ignorant and/or selfish taxpayers--people defective in intellect and will--don't see it that way.  Elizabeth Warren, for one, is not going to stand for them.  And, neither is hardworking President Obama.


The Times streamed this interview in the service of evermore government control; evermore access to incontestable funding; evermore government jobs at ever-higher salaries and benefits.  So, Noman assumes it depicts Warren at her best.

With respect to killing or maiming the CFPB, which burst forth fully armed from the head of Congress, Noman understands the points on the negotiating table to be (1) reforming its governance structure, (2) sourcing its funding to a politically accountable font, and (3) submitting its judgments to a broader appeals process.  Those sound like debatable points of prudential judgement regarding crucial matters rather than efforts to kill or maim anything.

Moreover, one would only see these disagreements as lethal threats if one viewed the CFPB as something beyond reproach: e.g., a spotless avenger wielding potentate powers to smite the wicked and do social justice.  Clearly, she hasn't considered an alternative perspective: that it is a human institution filled with bureaucratic tendencies and fallible people prone to human error, self-interest and prejudice--no less so than corporate actors, who are at least not inflated with the hubris of state--that needs to be watched, monitored and controlled for the sake of liberty.  Let us assume that its avengers will not accept the princely emoluments offered them in return for their good graces.  If this behemoth is to control the financial corporations, who will control the controllers, especially when they are so well insulated from accountability?

Cries that the CFPB be spared the inconvenience of funding concerns, contrary voices at decision central, and accountability beyond only like-minded people (just as Democrats intended it to be) inspires neither confidence in government nor a sense of security from federal, not private, overreach and abuse.  Noman's alarm is heightened by the spectacle of would be public servants too blind to see their own limitations.

To the extent that she rightfully perceives animus, it might partly be explained by the manner in which Democrats went about their business while enjoying fillibuster-proof majorities in Congress, the period during which Dodd-Frank became the law of the land.  Exhortations to bipartisanship and national unity were risibly directed only to opposition Republicans and unwilling taxpayers.  Democrats took what they felt entitled to, and answered protests by saying that they won.


Regarding the CFPB's funding, the attempt to sequester mountains of guaranteed resources mirrors the Liberal understanding of related concepts such as "investment."  Money does not superabound in nature, lying in wait to be picked up and put to happy use.  Wealth is generated by risk, hard work and good luck, and in all events is subject to the ravages of unseen vicissitude.  Even savings can be eviscerated by government-induced inflation.   Well-heeled lenders including financial institutions and governments are discovering the iron law of indeterminacy in Greece, just as the Reserve Primary money market fund discovered it when Lehman Brothers collapsed in 2008.  Contingency, uncertainty, and decomposition are the rules in life.  Why not for government initiatives, too?  It takes astute management to compensate for scarcity, not a cornucopia of limitless cash.  Are Statist dreams the only force not subject to change in President Obama's America?  Dare beleaguered taxpayers and impatient government creditors not hope?

Unlike specifically banking-related regulators, Dodd-Frank was a conscious attempt to reach beyond a singular type of institution to control financial activity wherever it occurred in the ubiquitous realm of shadow financing; in other words, everywhere.  The CFPB is everybody's regulator inserting political influence into credit decisions.  It is more a super regulator by design: a FTC, SEC and CFTC rolled into one and injected with steroids.  It is more akin to the "one ring to bind them all" than it is to the FDIC.  It is not like every other banking regulator and perhaps warrants the people's scrutiny over its purse strings more closely than the others.

Professor Warren should consider that the trillion-dollar institutions menacing her from across the bargaining table are a check and balance on CFPB's power, something she evidently thinks can be dispensed with, at least when she has it.  She might consider what will happen when she and her team don't.  She also might raise her estimation of private sector actors and lower it of public sector ones in order to accord her perspective with reality.  People are people, with all their virtues and vices.  Whether they work in the private or public sector is beside the point that neither people nor institutions are perfect.  They all need to be held accountable.  In the private sector they can at least be ruined by their imbecilities (if government lets them be).  In the public sector, they simply bewail the lack of funding, point to more problems and demand more money to stop the suffering.


If CFPB exists only to mandate clear prices, risks and products, then it is not needed.  Surely in the labyrinth of existing consumer protection law one can find statutory authority to write those regulations.  Do we really need another federal behemoth for those specific purposes?  Professor Warren must have something else in mind, like forcing banks to knuckle under to foreclosure settlement demands and submit to the CFPB's aggrandizing overreach, as she did just last March.

With respect to people supposedly attacking the CFPB in order to deny President Obama a political victory, he has already won the political victory.  Dodd-Frank is law.  Whether he has worked hard or not--presumably during one of his interminable vacations--the give and take of the regulatory process is the price we pay for pluralism, diversity and freedom in America.  The Constitution does not mention the regulatory state.  Thus, contestation on this ground is already a Statist victory for which she should rejoice, not complain.  It is telling that Professor Warren needs to impute policy differences to bad will and personal motives, as if she can't fathom a legitimate reason for disagreement.

Perhaps it is nit-picky to observe that her recollection of events is fanciful.  Given that we've been publicly subjected to her charm offensive to head the Bureau for half a year, Noman suspects that President Obama's offer was for her to staff up the Bureau while he gathered confirmation votes, and to railroad her nomination through once he had.  She will not be heading the Bureau because Senators in her own Party repudiated her choice, or at least declined to expend political capital defending her, not because she made a choice offered to her by the President.

Noman wishes that she had children in addition to a Golden Retriever.  They might have wizened her, taught her something about reality and monopolized more of her time.

She has studied the economics of working families her entire adult life, albeit from the distance of a tenured perch at the pinnacle of ivory-towerdom.  Perhaps she might profitably study the track record of institutionalized government initiatives to alleviate suffering.  Noman suggests she focus on their unintended consequences.

By her reckoning, millions to tens-of-millions live one disaster or bad break away from complete financial collapse in today's America.  Is that in contradistinction to yesterday's America, or to any other nation in the history of humanity?  Noman reckons that her supposition is far too modest by a factor of 10.  Everybody lives in danger of financial collapse, even tenured professors whether they know it or not.  So does every country, as the PIGS nations and the US are demonstrating currently, and countless others have proven throughout history.

Ruin and its attendant suffering are the nature of contingent being in a corporeal, finite world.  Some live closer to the edge than others.  The beauty of the American system, however, is that one's proximity to the edge isn't fixed by fate, culture, blood line, the system or ultimately any exogenous force.  America's economy and wealth dynamics are fluid due to its free enterprise system, not due to government assurances.  Even a working class girl from Oklahoma can grow up to become the Leo Gottlieb Professor of Law at Harvard Law School, and perhaps even a Senator.  The marvel in America today is that so many Americans don't live on the precipice, not that so many do.

Should we passively accept the fates of suffering and demise?  Of course not.  But, that's not the alternative to Statist ministrations.  Which brings Noman to the gravamen of his dispute with Warren, President Obama, the Democratic Party and the European Social-Welfare State.

The only way, ultimately, to deal with the potentially cataclysmic phenomena that Warren cites in favor of yet bigger government is for people to prepare as best they can, and to develop habits of resilience, self-reliance, resourcefulness and concern for others.  The worst way is to foment habits of dependency and entitlement in people, to fill them with expectations that mommy-State will take care of everything.


For those that inevitably fall through the cracks--inevitable given the uncertain condition of life in a degenerative body in need of continual sustenance--we the people need local institutions to pick them up, not government bureaucracies.  Hopefully, fewer people will break down once the nation's ethos is restored to to its roots.

Local protagonism--family, neighbors, friends, church, town--encourages people to make prudent choices of association, habit, and indulgence.  It renders individuals less inclined to stand on their rights, and more attentive to what is required of--not due--them.  It breeds accountability of helper and helped to each other alike.  It eliminates or deters graft, corruption, waste, callousness, bribery, lobbying, and influence-pedaling: all the human sycophancies that flourish wherever power and money aggregate in the splendid isolation of far-away places.

Noman has quoted Mamet on point in recent posts (See "The Secret Knowledge," (9/2/11); "What Check is Upon These Champions?" (9/4/11); "An Election Season Proposal," (9/10/11); and "Last Man Standing Won't Take It Sitting Down," (9/12/11)).  He offers one more in point of contrast with the prospective Senator from Massachusetts.
Most Victorian novels featured the stock character of the profligate son. He was a gambler, and, having run through his inheritance, was constantly appealing to his father to pay his ever renewed gambling debts.
The father inevitably paid, "for the honor of the family." And he paid wringing his hands and cursing his fate. And the son thanked the father, wept, swore to reform, and continued gambling.

Why not, as there was, to him, no cost? He had been taught, by his father, that there was no penalty for losing. What worse lesson for a gambler?

For, if losing is cost free, why bother either to (a) learn to gamble or (b) quit? The serious gambler learns young, and painfully, that he must control his impulses, that he must not pursue fantasy, neither wish for the cards to turn, but learn the odds and husband his resources for those times when the cards or dice do favor him.

There is a technical term for the gambler who can neither learn nor quit; he is called a sucker.

Our politicians, left and right, are, to belabor the metaphor, the wastrel son: they are free to spend, to chase fantasies, and to squander resources, for the resources are not theirs, and there is no penalty for their misuse or loss.

The wastrel son gambles, at no cost, for the thrill it provides; the wastrel politician does so in pursuit of fantasy (good works) or money. The money may be in direct support for his campaigns, or in free redecorating of his summer home; or it may be issued in the form of plaques recognizing his good works, which plaques, on his retirement from office, may be traded in for money.
Pampered professors and politicians will not learn to stop being suckers, and playing us for suckers, without the electorate's strong guidance in November of 2012 and every election thereafter until the end of time.  We the people will never be free from the molestation of witless do-gooders promising an end to suffering in return for all our resources.

When the election is held, it will be a referendum on the wastrel son.  We will be playing for big stakes: the national family's survival or bankruptcy.


Noman wishes the people of Massachusetts good luck in their Hobson's choice between an impervious Liberal and a back-stabbing RINO (Republican-in-Name-Only).  Pity for Senator Brown, who was ushered into the Senate on the wings of tea-party contributions, good-will and buzz.  After voting against ObamaCare as he campaigned to do, he promptly turned coat and supported Liberal sops.  More importantly, he broke rank to support Dodd-Frank and its creation of the CFPB, ironically depriving himself of the knock-out issue in next year's election contest against its designer.  It serves him right.

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