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With fervent fans behind her, Warren wages crusade as happy warrior populist

Jonathan Ernst / REUTERS

U.S. Senator Elizabeth Warren departs after the Senate passed a spending bill to avoid a government shutdown, sending the issue back to the House of Representatives, at the U.S. Capitol in Washington, September 27, 2013.

Almost everyone expects Hillary Clinton to run for the party’s 2016 presidential nomination; most Democrats think it would be a loser’s bet for anyone to challenge her.

Sen. Elizabeth Warren, D- Mass., a hero to progressives, has said she isn’t planning her own White House bid. But there’s plenty of speculation. The New Republic, a liberal magazine, ran a cover story this week entitled “Hillary’s Nightmare” making a persuasive case for Warren to run.

Whether she makes a play for the nomination or not, Warren has a fervent fan base. She “does speak with remarkable clarity about issues and knowledge and passion about issues that are complicated but important,” said Lisa Donner, executive director of Americans for Financial Reform. Warren reinforces people’s sense that “they are right to be angry when things are unfair, and that the deck is stacked -- but that it is possible to fight back and win.”

There are precedents for a more liberal, or at least iconoclastic, challenger to take on the establishment’s choice for president. In 1980, Sen. Ted Kennedy tried to wrest the nomination away from incumbent Jimmy Carter, and in 2000, former Sen. Bill Bradley challenged heir apparent Vice President Al Gore.

Sen. Elizabeth Warren speaks at an event sponsored by the Roosevelt Institute about banking reform in America.

For now, three years out from the contest, Warren is helping define an agenda for her party and for its next presidential candidate, no matter who that turns out to be.

The Massachusetts Democrat pressed her critique of what she sees as lax regulation of banks and Wall Street at Thursday’s confirmation hearing for Janet Yellen, President Barack Obama’s nominee to head the Federal Reserve Board of Governors.

“The truth is if the regulators had done their jobs and reined in the banks, we wouldn’t need to be talking about Quantitative Easing because we could have avoided the 2008 crisis altogether” Warren told Yellen.

The Fed itself may have abetted the behavior that caused the crisis, Warren suggested, by slack oversight.

And even now, she complained to Yellen, the Federal Reserve, which has supervisory authority over banks, is failing to do its job: “Those responsibilities just aren’t a top priority for the (Federal Reserve’s) Board of Governors... We need to make reining in the banks a top priority for the board.”

Three years after Obama signed the Dodd-Frank regulatory regime into law, the biggest banks are larger than before and “the risk to the system has grown,” Warren said as she addressed a conference on financial regulation Tuesday sponsored by the Roosevelt Institute and Americans for Financial Reform. “The Too Big to Fail problem remains,” allowing “a system that that lets investors and CEOs scoop up all the profits in good times and then sticks the taxpayer with the losses when things go wrong.”

She slammed regulatory agencies for missing more than 60 percent of their statutory deadlines under Dodd-Frank to issue detailed rules for the firms they monitor. When regulators fail, it’s time for Congress to step in, she said. 

Warren is pushing for a new law which would bring back the old (pre-1999) separation between traditional depositary banks and riskier activities like investment banking. “I’m confident David can beat Goliath on Too Big to Fail. We just have to pick up the slingshot again,” Warren repeatedly says in her speeches.

Warren is perhaps too polite to say it, but it was President Bill Clinton who signed into law what progressives see as the root of much of the evil that caused the 2008 crisis: the 1999 Gramm-Leach-Bliley law. That act broke down the barrier between depositary banks and investment banks.

Warren speaks for progressives who feel that something is seriously wrong in the fifth year of a Democratic presidency when the financial sector is thriving and income inequality is growing.

Her crusade comes at a time when Obama is in the doldrums with a drooping approval rating, although he, like Warren, talked Tuesday about wanting more stringent regulation of the financial sector.

“Financial reform is not about punishment; it’s about making sure that everybody plays by the same set of clear and transparent rules that … discourage fraud and manipulation, and above all, protect the American people,” Obama said.

Many progressives consider Warren the leader who can advance the unfinished agenda from the financial crisis.

“We’ve already seen with Elizabeth Warren on the Senate Banking Committee, just her aggressive questioning of regulators, of how they’re doing their job, caused huge changes,” said Mike Konczal, a fellow at the Roosevelt Institute.

While Republicans contend that the Dodd-Frank law is an overreach and is mind-numbingly complex, Warren’s focus is on the parts of the economy still left unregulated which she wants to regulate.

At a Senate Banking Committee hearing Tuesday on the agency she helped create, the Consumer Financial Protection Bureau, Warren pressed director Richard Cordray on whether he couldn’t do more to regulate the $780 billion car loan business.

“Car dealers don't finance most of these loans,” she explained. “Instead they often act as intermediaries … But too often the dealer gives the consumer a higher interest rate than the financial institution quoted and then pockets the difference.”

She cited one study which estimated these costs at more than $26 billion annually.

Cordray told Warren what she already knew: in the writing of Dodd-Frank, even though the CFPB was given the authority to regulate nearly every kind of consumer loan, somehow an exception was made for car dealers.

“It makes no sense to me that there should be any exception here for consumers who are being tricked out of billions of dollars every year on car loans,” Warren complained.

Yet despite her frequent complaints, Warren’s gift is to be cheerful in a Happy Warrior way. She seems upbeat even as she’s discussing gray economic realities; she manages to smile a lot even as she is castigating Wall Street bankers.

But she stays relentlessly on message. One of her fans, Alexis Goldstein, who works for a group called The Other 98 Percent, said after hearing Warren speak Tuesday, “Her point is: why are we still giving such preferential treatment to the biggest banks?  They’ve recovered. What are we doing about the middle class and what are we doing about working people? She’s saying that it won’t hurt the economy if we make some intelligent changes – whereas everyone else I think is too afraid to even think about any kind of reform.”


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