Wednesday, September 14, 2011


In a post about Elizabeth Warren's plans to challenge Scott Brown in Massachusetts, Ezra Klein writes about the Obama administration's approach to dealing with the financial crisis:

The Obama ... supported TARP during the campaign and administered the second bucket of funds once in office. It rejected efforts to rescind Wall Street bonuses and held meetings with bank presidents. It delayed financial regulation for more than a year and wrote the law in as non-punitive a fashion as possible. At one point, President Obama told an assemblage of Wall Street CEOs that "my administration is the only thing between you and the pitchforks."

... the fact remains: the White House chose to stand between Wall Street and the pitchforks. Rather than joining with the public against the bankers who had caused the crisis, they were joining with the Bush administration and the bankers to chart a cooperative path back to record profits for the financial industry. Insofar as Americans saw the financial crisis as an "us vs. them" moment, the White House fell into the "them" category as often as they fell into the "us" category.

You know, as much as I'd have liked to see the banks and banksters subjected to massive amounts of pain, I never expected it, even when I thought the Obama administration had instincts that were much more progressive than they turned out to be. What I thought was realistic was that some banks and fat cats would be subject to pain. That's what happened after the S&L crisis, even though, then as now, ordinary citizens were the ones who mostly picked up the tab. I think some meting out of pain to the perpetrators might have made a difference to voters -- in 2010, in the polls now, and in 2012. I think Obama could have pursued the same policies otherwise, if that's what he wanted to do -- if there'd just been a few perp walks, and a few serious prosecutions, I think people would have been less disgusted.


But Ezra's post is about Elizabeth Warren, and here's his main point:

Elizabeth Warren was a lonely voice for consumers, and against the administration's treatment of the banks, during this period....

Then, it was Warren's idea for a consumer protection agency that became the administration's central populist demand in the financial-regulation bill. They were never able to explain how the law would actually punish the banks, but they could at least explain how it would help consumers. And the answer to that question, basically, was "we're going to do what Elizabeth Warren told us to do."

All of which will make Warren's candidacy an interesting test case for a very particular theory of the current political moment. Unlike most Democrats, she's not tainted by the bailout. Unlike most Republicans, she's not held back by a mistrust of all regulation. She can run the campaign against Wall Street that many have been hoping to see for the last three years.

I hope so, and I hope it works. But as The Hill noted last month, Warren's forthrightness is going to make it extremely difficult for her to raise enough money to run this race -- what high roller is going to bankroll her, and if the high rollers don't, how is she going to compete against a guy who amassed an $8 million war chest as of last spring?

I really hope I'm wrong about this, but I know how GOP rhetoric distorts reality -- what's going to happen is that an extremely well-funded Brown is going to paint Warren as a White House stooge, part of the team responsible for the bad economic things the administration has done and the things it's failed to do. Low-information voters may well find this message plausible. They may also be persuaded that Brown is actually the Wall Street reformer he's now pretending to be. (He'll probably sell himself as a believer in "sensible" reform, as opposed to Warren, who'll be portrayed as "extreme.")

On the other hand, Brown's popularity has slipped to 49% (though only 26% of poll respondents view him unfavorably). And it's still a blue state (though it was blue when he was elected, wasn't it?).

I just don't want to see Warren lose in what could easily be a horrible year for Democrats, because that would make it hard for her to have credibility as a gadfly after that. I just wonder if she'd accomplish more staying outside the tent and poking pitchforks in.