As of now, I am in control here, in the White House

For Elizabeth Warren, It’s Good to be the Czar

White House Bank Czar Elizabeth Warren has already drawn up a list of particulars for mortgage lenders to sign that would subject them to a host of new regulations and make them shave down the amount they are owed by debtors.

Fine, it’s a legitimate point of view, albeit one that may well extend the housing crisis by milking along those who can’t pay their mortgages – instead of moving them into foreclosure – and creating costs banks will pass on to their customers.

But what’s ugly here is that Obama de facto appointed Warren to a position that should require Senate approval, without getting Senate approval. And now she’s regulating away as if she was de jure in the position. She’s wielding power, accountable to exactly nobody as she battles the evil banking fat cats.

Elizabeth Warren and Obama
Warren listens as Obama appoints her.
photo by Keith Koffler

Technically she’s not in charge of the Consumer Financial Protection Bureau, created by the Dodd-Frank financial reform bill. She’s just a nice White House assistant supposedly helping with setting the thing up. But everyone knows she’s been running the CFPB since Obama brought her into the White House last September.

Subjecting her to Senate hearings would have forced a discussion of her background and Obama’s housing policies, and forced her to preview what she might do as head of the agency. And it would have taken time, and the president’s agenda is too important to wait.

So instead of running the agency directly, she uses Voodoo to do it from her office at the White House.

Now, under the guise of a “settlement” with banks over past “abuses,” Warren is trying to start regulating them. The Wall Street Journal opinion page picks up the action.

This brouhaha started last year when mortgage servicers—J.P. Morgan Chase, Wells Fargo and other banks—were accused of mishandling foreclosure documentation. The feds have been investigating, and it turns out that most of the infractions were technical while very few borrowers lost their homes without cause. But state Attorneys General and White House special assistant Elizabeth Warren have spotted a political opening to smack the banks one more time and dole out $20 billion to potential voters in 2012.

They’ve sent a proposed 27-page “settlement” to the banks that would, among other things, force mortgage servicers to submit to the bureau’s permanent regulatory oversight; impose vast new reporting and administrative burdens; mandate the reduction of borrowers’ mortgage principal amounts in certain circumstances; and force servicers to perform “duties to communities,” such as preventing urban blight. We warned during the Dodd-Frank debate that the new consumer bureau would become a political tool for credit allocation, and here we already are.

The legal language is so vague, and the potential liabilities so vast, that no CEO could in good conscience sign the agreement as it stands . . . Homeowners and bank shareholders will ultimately pay for the compliance burden and the $20 billion to reward delinquent borrowers, as servicers pass on the costs. Never mind that these banks didn’t originate many of those loans and typically don’t own them now.

Warren, as predicted by her opponents, has started acting without purview in a position meant to have congressional purview. Score another win for opaqueness in the “openness” administration.

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11 Responses to For Elizabeth Warren, It’s Good to be the Czar

  1. If we survive this presidency, all the czar positions need to go. There are more unelected bureaucrats running this government than there are elected representatives in congress.

  2. Her little know-it-all demeanor bugs me. Subjective, I know… As for brave new world, out here in AZ, city employees have to submit to a cheek swab to see if they smoke–if so, they pay almost $500 more for health ins. Oh, well, put on your dosimeter, kids, the radiation is coming, I am sure Dr Obama will dance around that soon.

    • By the way, Liz, baby–my best friend is moving out of her foreclosed condo today after a lifetime of working as a health exec and consultant, day in, day out, week in, week out, year in, year out, working–now the only thing she wanted and worked for is gone. She will live with her cousin–yes, a nice house and yes a roof, but these are real people with real dreams and real gumption that are being wiped out!

      • Has that woman with her lefty dinner parties, her big office, her finagled appointment, her tenure, ever traded a camera for a month of day care? Even tasted Kraft Dinner? Had all her clients–her known livelihood–go belly up and have people chirp at her that her profession was dumb and it was her fault? Lost her home? Had a collector call? Not gone to a doctor even with Medicare because the copay was ridiculous. Well, if the radiation comes, we are all in this together. I like to tell people to get a real problem. Well, we will all share one!

  3. The interpretation of MsWarren’s manifesto that she wants the banking industry to sign and endorse is “redistribution of wealth”.
    “Social justice” in Dayton Ohio is enforced by the DOJ forcing the police and firefighter boards to lower the hiring threshold because too few minorities passed the written tests. Implying that the written tests were formed to be racially excusive and prevented Blacks and Latinos from meeting requirements for new hires, the NAACP lauded the DOJ’s order.

    We, the people, can’t do a dang thing to make things better until the next election. The Czars can do whatever they want, regulate any business into bankruptcy because Congress isn’t doing anything to stop them. The Prez can declare an existing law “unconstitutional” as if he were the decider of such things and Congress does nothing.

    MsWarren is an illegal appointee, creating illegal legislation and Congress is silent.

    • It’s going to be funny when Obaam gets sued over these rules and the courts rule them invalid. The Dodd-Frank bill specifically gives regulatory authority to the Director of the CFPB. Warren is not the Director. And until there is a Director, nobody can be delegated the authority to act as the Director.

      Of course, they are all doing a huge end run around all of it by forcing the banks into a settlement with the state AGs, which will become the “de facto” national rules. One of the triggers of the subprime meltdown was a horrible settlement forced on Ameriquest by a bunch of state AGs. But THIS time they will get it right, I’m sure!!!

    • Everytime I read the words “social justice” it is a link away from something Socialist or Communist. Back when I was an Episcopalian, our “Social Justice Committee” was led by a member of the Socialist Party in Seattle with one Communist, a “Christian anarchist” and three members of the “Free Palestine Movement” (all rabid anti-Semites).

      Social Justice is now the catch phrase for any left-wing experiment that seeks to take away your freedom and impose its will on you.

  4. Liz is the best! She is a staunch advocate for the consumer, and doesn’t give a damn about corporate priorities. Good woman. Good czarina!

    • I am a consumer–at least with the money I have left–and I sure don’t feel like this woman is looking out for me! She is an academic trying her hand with some power.