naked capitalism Thu 2010-09-16 17:05 EDT

Elizabeth Warren on Way to Being Sidelined as Head of Consumer Protection Agency, Relegated to ``Advisor'' Role

The body language of the Administration has been clear from the outset on the question of whether Elizabeth Warren would get its nomination to head of the new financial services consumer protection agency. Despite the occasional public remark regarding her undeniable competence, which really amounted to damning her with faint praise, Team Obama has never been on board with the idea...The reality is that the Administration was never going to appoint her; the only question is whether she can be kept in their orbit and not be a net negative as far as their dubious priorities are concerned...the Warren marginalization isn't about personalities, although the powers that be love to pigeonhole thorns in their side that way. The clashes reflect fundamental differences in philosophy. Geithner, the Administration that stands behind him, and Dodd all are staunch defenders of our rapacious financial services industry, even though they make occasional moves to disguise that fact. Warren, by contrast, is clearly a skeptic, and a dangerous one to boot, because she understands the abuses well and is able to communicate effectively with the public. Expect Warren to be pushed further to the sidelines, just as Paul Volcker has been (oh, and pulled out of mothballs when the Administration desperately needed to create the appearance it really might be tough on banks)...

advisors; consumers protection Agency; Elizabeth Warren; Head; naked capitalism; relegation; role; sidelined; way.

Credit Writedowns Tue 2010-01-05 19:08 EST

Volcker: `I wasn't persuasive enough' for Obama to heed my economic advice

I don't know quite what to make of the Paul Volcker interview published late last week in Business Week. In case you missed it, Business week published a frank interview of former Federal Reserve Board chairman Paul Volcker with media giant Charlie Rose the day before Christmas Eve...``The American political process is about as broken as the financial system. Therefore, one has to be a bit skeptical. Just to give you one little example, one unrelated to the financial crisis. Here we are on Dec. 29, almost a year after the Inauguration, and there is no Under Secretary of the Treasury. That should be an important position. How can we run a government in the middle of a financial crisis without doing the ordinary, garden-variety administrative work of filling the relevant agencies? The Treasury is an outstanding example of a broken system, but it's not the only one.''

credit writedowns; economically advice; heeded; Obama; persuasion; Volcker.

naked capitalism Fri 2009-10-23 09:20 EDT

Paul Volcker, Mervyn King, Glass Steagall, and the Real TBTF Problem

Paul Volcker wants to roll the clock back and restore Glass Steagall, the 1933 rule that separated commercial banking from investment banking, but Team Obama is politely ignoring him. Mervyn King, the Governor of the Bank of England, is giving a more strident version of the same message...I think Volcker is wrong, but not for reasons one might expect...The problem is that we have had a thirty year growth in securitization. A lot of activities that were once done strictly on bank balance sheets are merely originated by banks and are sold into capital markets...you could in theory go back to having much more on balance sheet intermediation (finance speak for ``dial the clock back 35 years and have banks keep pretty much all their loans''). Conceptually, that is a tidy solution, but it has a massive flaw: it would take a simply enormous amount of equity to provide enough equity to all those banks with their vastly bigger balance sheets. We're having enough trouble recapitalizing the banking system we have...I have yet to see anything even remotely approaching a realistic discussion of how to deal with too big too fail firms, and we have been at this for months. My knowledge of the industry is not fully current, but even so, the difficulties are far greater than I have seen acknowledged anywhere. That pretty much guarantees none of the proposals are serious, and nothing will be done on this front. That further implies the system will have to break down catastrophically before anything effective can be done. I really hope I am wrong on this one.

Glass Steagall; Mervyn King; naked capitalism; Paul Volcker; Real TBTF Problem.

Taibblog Sun 2009-09-20 09:51 EDT

Will Obama listen to ex-Fed chief Paul Volcker's warnings?

Matt Taibbi

So former Fed chief Paul Volcker yesterday was spouting off about how nuts it is that certain ``too big to fail'' commercial banks that receive mountains of public money are allowed to run around acting like high-risk hedge funds...This would be meaningful if the Economic Recovery Board that Volcker runs for Obama were actually a chief policymaking center for the president. But the reality is that the Volcker group is a kind of show-pony the Obama administration kept on as a way to give consolation jobs to the more progressive economic advisers who led them through the campaign season, people like University of Chicago professor Austan Goolsbee...Obama did a bit of a bait-and-switch, hiring progressives to run his campaign and jettisoning them once he got into office. I hear about this phenomenon from different corners of the policymaking universe, from health care to defense and intelligence spending. But my sense is that the switch was most violent in the realm of economic policy...

ex-Fed chief Paul Volcker's warnings; Obama listen; Taibblog.