Thursday, May 26, 2011

Why are the GOP House members so afraid of Elizabeth Warren?

There is a saying that has been attributed to trial lawyers, to the effect that you don't ask a question unless you know the answer -- Something that the GOP members of the Oversight Subcommittee on TARP and Financial Services that is investigating the establishment of the CFPB should have kept in mind.

During a recent hearing of the oversight committee when they were questioning Elizabeth Warren.
From trying to claim that Warren and the CFPB had overstepped their brief by advising other entities than the Treasury department and the President.

The problem there was that, much previously, the CFPB had already sent a letter to Congress stating the extent of advising that they had done, at the direct order of the secretary of the Treasury.

Another GOP House member tried to imply that Warren had set up inflated salaries for staffers, yet those salary levels had been actually set by Congress, and the pay scales were in line with the salaries set up for the *other* bank regulatory agencies.

There were other "misunderstandings" about the length of the appointed officials terms (Warren had to point out that five year terms for head of the bank regulatory agencies is common, not the one year that the House member implied was the norm); about some claims that the CFPB would have exemption from oversight because they would be unique in not having to be funded by annual appropriations, yet no banking regulator is so bound. It was pointed out, by Ms Warren, that the long-standing practice is that banking regulators' budgets are paid for by fees charged against the entities that they regulate, so that the agencies are somewhat insulated from the political process, thus preserving some degree of independence. Unlike other bank regulatory agencies, the CFPB budget is capped at $600M a year, so that the agency may need to go to congress, and get involved in the political process, if it is determined that the annual budget may need to exceed that level -- which no other bank regulatory agency has to do.

One of the members was trying to grill Warren as to why none of the complaints that the CFPB would be responsible for have been made public, when the agency is not yet accepting complaints. That house member kept on trying to get Warren to commit to statements on confidentiality of complaints, even though the regulations and procedures are from from being fully developed, never mind approved. (The impression I got there was that the Representative wanted to make sure that complaints that were not acted upon would be made known to the banks or financial institutions involved, in detail - again, my feeling is so that those consumers who might complain or employees be potential whistle-blowers be made available for harassment by those same financial institutions)

Even a dispute over when Ms Warren would be able to leave the hearing, which resulted in the GOP subcommittee chair calling Ms. Warren a liar about what was scheduled. Interestingly, another minority witness has blogged that he had not even been informed about changes in scheduling, but the majority witnesses had been so informed. That following of that dispute is one that has a life of its own in the news cycle, with some Members of the House, from both parties, apologizing to Prof. Warren.

If you think I'm being too harsh in my characterization of the GOP House members in the subcommittee, view the video. Please.

From where I sit, if Elizabeth Warren makes these GOP members so nervous that they feel so bound to block her appointment to this agency, with no real reason except that she might be effective, that it looks like she really is the right person to head the agency, as well as the right person to build it.