Elizabeth Warren: "Until We Have A Credible Liquidation Threat, We Don't Have Capitalism In America" (VIDEO)

TARP watchog Elizabeth Warren has been critical of how the bank bailouts have been handled, but in an interview with MSNBC's Dylan Ratigan Monday morning she praised Treasury Secretary Tim Geithner for some of his recent testimony before Congress:

The question of regulatory reform is really on the table now. He was saying, in effect, if we don't change the rules going forward... we're not going to be able to get ourselves out of this crisis without some risk of falling right back into it. That was a very strong and very different message from the one he delivered last time we were talking.

Warren was not pleased with his answer regarding why AIG was treated so much more gently than the manufacturing industry, calling Geithner's answer "distressing." She also remains concerned that the toxic assets that TARP was supposed to rid the banks of remain on their books a year after the financial crisis began.

She concluded with three things she would like to see implemented:

1) a consumer financial protection agency.

2) regulation of the credit rating agencies.

3) new laws that protect the system from banks that are "too big to fail."

Warren told Ratigan: "Until we have a credible liquidation threat, we don't have capitalism in America. It just doesn't work without that."

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Comments

[timbonotes]

Elizabeth needs to replace that moon beamer L Summers ASAP!

[Bearangaria]

Elizabeth Warren Rocks! She is fabulous!
She a clear voice of integrity in a storm of massive skullduggery.
Gotta love Elizabeth!!!!!!

[Nonpartay]

Me too, and I just wrote to all my representatives including the president and made the demands she suggested.

[olympus6]

Timmie was there from very beginning. It was 'his' idea that the government to cover all the 'toxic' assets, before it even happened.

[LHB58]

Elizabeth Warren takes some undeserved criticism below in my opinion. She has no authority in the policymaking process apart from the forcefulness of her ideas and their presentation, and in that regard she's one of the best "public intellectuals" around in the area of financial markets and institutions and consumer protection law. I teach Money, Banking and Finance to undergraduate students at a medium sized liberal arts college and find that her arguments are usually very intellectually appealing to both my conservative and liberal students, and they're pretty smart for the most part.

[verycold]

You are absolutely right. She appeals to just common decency and well thought out logical thinking. She is the ONLY representative of this administration that I think has a true handle on the crisis. The rest are just spinning their own POV, getting media attention, etc. She is believable. I trust her which for me is the root cause of my anger.

The idea that Geithner allowed sick, big banks, to couple with other sick, big banks makes no sense whatsoever. What I see every week now with the bank failures is the smaller banks that weren't helped losing out.

[arktig]

Sorry Elizabeth, your proposals are ineffective. There is no need for new regulation or new watchdogs. The "dogs" we have now are crippled by deregulation, misguided regulation and corruption. More of the same is not the answer. The answer is to return to the New Deal. Why is the Democratic party ignoring the single, best achieving Democratic president? After Roosevelt enacted the the New Deal, this country enjoyed a long and unprecedented period of prosperity. Things turned sour only after Carter started repealing parts of that legislation around 1980. Here are the steps back to the real New Deal:

1) Repeal Gramm-Leach-Bliley (Financial Services Modernization Act) signed by Clinton in 1999 and return to the Glass-Steagall act of 1933
2) Repeal the Commodity Futures Modernization Act, signed by Clinton in 2000.
3) Repeal the Depository Institution Deregulation and Monetary Control Act of 1980 - Carter
4) Repeal the Riegle–Neal Interstate Banking and Branching Efficiency Act of 1994 - Clinton

That's it. It's been done before, no need to reinvent the wheel.

[Sean 6399]

You must be another victim of U.S. public education.

FDR and the "new deal" was an authoritarian, collectivist disaster. Not only did it not reduce the effects of the depression, it exacerbated them. And it left us a legacy of a bunch of stupid people who demand a meddling government involved in every aspect of our lives.

Did you know that FDR outlawed the private possession of gold? That's right. All those people who saved there money as a real tangible asset with lasting value, were forced at gunpoint to trade their real wealth for pretty slips of paper. Land of the free, indeed. This draconian policy was implemented partly by requiring an IRS agent be present whenever a person accessed a safe deposit box at a bank. Then of course there's FDR's pro-freedom agenda of locking up Americans who looked Japanese in concentration camps and depriving them of their property and wealth.

Yeah, FDR is a real role model for modern progressives. Totalitarianism and warmongering on stilts.

[ChuckDarwin]

Gee, FDR outlawed private possession of gold. Wow. Why? Because the US was still on the gold standard, with the dollar pegged to gold at $35 an ounce. Everyone else in the world had dumped the gold standard, hence you could buy it at $35 an ounce in the US and sell for $100 or more in London. There was a massive outflow of gold that would have bankrupted the US economy within days or weeks. So FDR banned gold sales. That was the correct step to take given the decision to remain on the gold standard. Later we went off, too.

arktig offers a typical wingnut talking points version of history. Find something that sounds outrageous and use it to illustrate how the evil libruls tried to take away all our freedom, sprinkle in a couple of outright lies (New Deal didn't reduce effects of depression), claim it proves modern progressives want totalitarinanism. I call BS.

[ElodieStClair]

Paranoia deep destroyer.

[Sean 6399]

FDR's gold confiscation executive order:

http://www.the-privateer.com/1933-gold-confiscation.html

land of the free... right...

[arktig]

"Did you know that FDR outlawed the private possession of gold?"

Yes I knew. It was not part of the New Deal. It happened before that, when he was fishing around for solutions. The New Deal is a packet of bills and it WORKED FABULOUSLY even with the mistake of gold confiscation. Which only shows that gold is not that important for the economy anyway - but that's another story.

[petef59]

You must be another victim of the greedy, MBA, financial industry, self-defined elite holders of all truth.

[arktig]

Yeah, I forgot. What is "credible liquidation threat"? It's the law now and it always has been. The problem is, bipartisan congress choses to enforce it only against some of the market participants. The bailouts already poisoned the environment. We have the incompetent an corrupt banks driving out of business the competent and honest ones.

Then what is "new laws that protect the system from banks that are "too big to fail""? The government bails out and protects these banks and now the rest of the market is supposed to beg the government for protection from its own creation? Isn't that the definition of "protection racket"?

[SewaneeLeftist]

Good points, arktg, and the gov. should do all those things. Regardless of the right wing revisionism on this thread, and acknowledging that his aims were to save capitalism more than anything else, the New Deal saved us then, and New New Deal is what we need now. Of course, I would go much farther, to at least a mixed economy, but then we'd have a shooting civil war with jihad from the right.

[Sean 6399]

"but then we'd have a shooting civil war "

You got that much right at least.

[LHB58]

Definitely 1) and 4) and strengthen the resurrected Glass-Steagall to completely isolate commercial banking from all other financial services.

[Dingoangst]

Ms. Warren should be Sec. of Treasury, however, my disagreement with her analysis is in her last sentence. She states that "the lobbyists will own this place", they already do. Look at the health care debate. It's too late, baby.

[verycold]

Yes, you are right about that. 1100 lobbyists wrote the house health care bill. Did anybody really think those that represent us penned all that nonsense? Anybody read it? Yikes. It is no wonder when asked specifics that the reps just get defensive and keep repeating the same thing believing if they say it enough times it will be so.

Why are we still tolerating the lobbyists? Why are we still keeping investment and commercial lending under the same roof?

[motu]

xox

[stereolabb]

Per Ms. Warren, emails, phoe-calls yes but A French-style revolution may not be to far in the offing either at the rate things are going.

[peacebro]

I love Elizabeth Warren!

She is so refreshing and candid every time I see her on the talkies.

[rf-hawaii]

She's a breath of fresh air.

[Doug Flight]

Straight-up...I can barely hope to even keep up with all the current financial policy reform discussion, but I am glad Elizabeth Warren is involved and "Wonking" away for what I perceive as reality based solutions.
I'm with you both...peacebro and rf-hawaii.
She seems "level headed"...I want to see more of her in the "Consumer Financial Protection Agency" battlefield.

Luv'Ya' Lizbeth ☜

[BobBrown]

Elizabeth Warren is very charitable to the history and potential of capitalism. Capitalism may have a great potential, but its history is mixed with a strong tilt to the "Funnel Law". Historically the barons of yesteryear and of most recent times have always had the strong support of the govermrnt to the detriment of the rest of the people. That is a lesson Glen Beck will never understand, and he will only see and condemn the vices of communismn and socialism but not those of unrestrained capitalism. The fact of the matter is that capitalism has only worked well when appropriately regulated by the government.

[cwestx]

Government regulated capitalism is not, by definition, capitalism. The regulations that we currently have are geared toward large businesses and capitalist (or to use the old term, "Barons of Industry) to the detriment, as you wrote, of the vast majority of the population. So, I would argue that even regulated capitalism, as you would call it, hasn't worked and more regulation that, supposedly, insures that corporations don't go bankrupt will be even more detrimental.

I propose this: corporations are owned by individuals, i.e. stockholders (even Mutual Funds or Investment Funds are, ultimately, individuals who own stock which is invested by these Funds); Boards of Directors (BofD's) are elected/approved by the stockholders, ergo, the BofD's are the true representatives of the "owners" and it is or should be their job to determine what is best for the "owners", not the executives and certainly not the BofD's, just as our Representatives and Senators are, supposedly, representing our best interests (laughs and guffaws are appropriate at this). IF stronger regulations are to be placed on corporations, these regulations should be directed more toward the BofD's and the possibility of legal (civil and criminal) reprocussions for decisions they make for bonuses, contracts, and executive pay.

If my proposal is flawed, please inform me.

[LHB58]

A good idea in theory, but would be very difficult to implement, since the whole point of the American limited liability corporation is to limit the liability of a corporation's owners to the amount of their initial investment. Which is why Professor Warren's idea of "a credible threat of liquidation" would be a potent "stick" to persuade BoD's to act in a way that's consistent with the public interest, because it would protect their own interest in the company. I don't like to use the term "capitalism" but I have always argued that the true test of a "free market" economy is the extent to which it let's the losers lose.

[verycold]

It depends on what you mean by "working well". So really is it a sign of something gone wrong when we periodically have recessions? The last recession recovered without jobs. I should also mention that when you look at the stock market since after the depression up until the 80s it reacted to world news, events, weather events, etc. After the 80s it just seemed to ignore any sort of event and recessions. It was like the market was on steroids and nothing was going to stop it. I can see why many thought it would only go up.

IMO, our public education system is the root cause of stupidity in this country. Kids are being taught nothing in school. They barely know history because it isn't taught with any depth, and let's face it math and science has been weak for many years. So is it any wonder that so many can't even balance their checkbook?

[aprilinheaven]

This is an issue where I think myself - a very strong, but not blindly so, Obama supporter - and the tea bagging crowd can find some common ground.

It's an odd spot for me, because I don't support Obama on everything policy wise, but I supoprt him ideal wise - as in "I'm not asking for you to believe in my ability to change Washington, I'm asking you to believe in yours" - and I do. Believe that is. He fires me up to take civic responsibility seriously and to get off my couch and hit the street, or hit the phones, to voice my opinion. But because I say I support Obama, some Obama rivals would immediately make assumptions about who I am and not want to talk to me - or get hung up on trying to convince me why I shouldn't support this President.

I say, let's not let another President divide this country. Reform is needed, in so many areas, can we continue to deny it??? The time for bickering is over. My door is open. How about yours?

[stressfreeliving]

This global economic crisis was created on purpose. Many banking and government entities took part in this to lead us where we are today. Hopefully individuals will realize this soon and start spreading the word. Once and when this happens, we can see real change. http://yourwikipediarevolution.blogspot.com

[aprilinheaven]

I've already taken my lumps...mortgage servicing fraud led to foreclosure - or should I say we cried "UNCLE!" and gave them back the house via bankruptcy. We've paid student loans and our car payment every month since. Rebuilding our credit one step at a time, I have one $300 credit card, which was paid in full every month until we were forced to move again a couple months ago because the house we were renting the owner went bankrupt and gave the house back to the bank. When that happened, we said "this is too dangerous!" and we did something a little radical. We cashed in my husband's IRA and bought a house, with cash - and guess what, we live within our means. Live in a very modest home, drive modest cars. Nothing flashy about our lives at all! I just saved my pennies and bought a distributorship in a company. No loan. No credit. I will build my business as I can afford to.

There are days I think I might actually be turning into a Republican! lol

But, we weren't living it up before the bankruptcy either. No, we really did get screwed. The only difference between our lifestyle now and our lifestyle then is that we no longer trust anyone but ourselves to make sure we're going to be ok.

[verycold]

Of the Obama supporters, there aren't many like you. That is the problem. I venture to say that if each issue was discussed we all would have more in common than not, but when the tone from the WH is "my way of the highway", it just shuts down any out of the box discussions. This is what is so nice about Elizabeth. She sticks to the issue and leaves out blaming others and offering up solutions based on feelings only. I think she is looking for solutions that win long-term, not plug a hole short term.

[ladyvader]

If we can get rid of bribing of elected officials, oh, I mean lobbying, then our Government will work for the people again and not for special interest.

Until that happens, we are in a rough spot.

[Jim Marusak]

too bad we didn't have national referendums like some states do. or the first one that should be done would be to make it that you can say what you want to a politican about policy. but as soon as one dollar changes hands (whether it be dinner, a junket, or a donation to the campaign), it becomes a felony equivalent to murder or most of the federal drug charges. and not allow for the justice department to weasel out the enforcement of the law either.

[joeperc]

Elizabeth Warren for President! Or chairman of the Fed or the Treasury or SOMETHING!!!

[bluesmann]

Only sane person in the financial room..

[dam1r]

BRILLIANT! And very enlightening indeed.

No other person does speak so clearly and openly about the ongoing biggest theft in history.