Elizabeth Warren: Finally Someone With a Clue How to Handle the Financial Crisis

Elizabeth Warren's the chief watchdog for the 700 billion TARP fund. Unfortunately, she has no real power, but it's still nice to see a government official say not just some of the right things, but almost all of the right things. Talk of how the US is following Japan's path is finally everywhere (myself and a few others have been talking about it for years, and started really beating the drums last year). Here's Elizabeth:

Warren, a Harvard law professor and chair of the congressional oversight committee monitoring the government's Troubled Asset Relief Program (Tarp), is also set to call for shareholders in those institutions to be "wiped out". "It is crucial for these things to happen," she said. "Japan tried to avoid them and just offered subsidy with little or no consequences for management or equity investors, and this is why Japan suffered a lost decade."...

... Warren also believes there are "dangers inherent" in the approach taken by treasury secretary Tim Geithner, who she says has offered "open-ended subsidies" to some of the world's biggest financial institutions without adequately weighing potential pitfalls. "We want to ensure that the treasury gives the public an alternative approach," she said, adding that she was worried that banks would not recover while they were being fed subsidies. "When are they going to say, enough?" she said.

She also calls for the resignation of the CEOs of the worst firms.

One thing I'm tired of hearing though is the phrase "lost decade." Japan didn't just lose a decade, it has never really recovered. The good times have never come back.

I also think that bondholders need to take a haircut as well, not just shareholders, though they may not need to be wiped out in all cases. However, if the value of a company if it was liquidated is less than zero, then yes, non-secured bondholders (those whose bonds aren't attached to specific assets with value) should be wiped out.

I don't have much hope any of this will occur. Warren's not part of the boys club of Summers, Geithner, Bernanke and Obama who's making the decisions. But one can hope...

Comments

[taylorbad]

I have a profound and deep respect for Elizabeth Warren. I like her brains, her ability to communicate in a way that is understandable and the fact that the only dog she has in the fight about TARP is looking out for the American citizens. We need to continually give her our support and encouragement because the men in power--and sadly, they are mostly men--will do whatever they can to silence and diminish her. She is an intelligent, thoughtful woman and the weak, corrupt apologists for a terrible financial system fear her. As they should.

[artgurrl]

Obama should fire Geithner and Summers and then hire Elizabeth Warren and the rest of the oversight committee. At least we wouldn't be getting the same old Goldman Sachs/Wall Street insiders. The Taxpayer would then at least have someone who actually represents us in the Treasury.

[beaupritchard]

I like Warren ... she's straight forward honest and smart (huge hint for moving her up ... foot kick under table ... elbow nudge )

[Veri]

She has no real power. All going according to plan. She's window dressing, people. To make the ignorant masses feel better. And not much else.

[sonofsamphm1c]

The CEOs of C and AIG have already been replaced. How many times does she think they need to be replaced?

I suspect the article makes several distortions of what Warren actually said.

[paixa3]

""""""How many times does she think they need to be replaced?""""" A very simple answer: UNTIL someone gets it right.

[Carolab]

It's being reported in the U.K.

US watchdog calls for bank executives to be sacked

http://www.guardian.co.uk/business/2009/apr/05/useconomy-regulators

[PhilipTaylor]

Put Warren over Geithner and Summers and give her the Power to make All Decisions!

Must See Video!

The SCAMS of the Banksters. This investigator of the Savings&Loan Scandal wrote a book on this Banking Crisis:

William K. Black said on Bill Moyers (paraphrase), "The reason the Executives have not been fired is that would SHOW LIGHT on the Corruption and the entire Banking System will be exposed!"

So they keep the scope of the Crime under cover because they think Americans could stand the TRUTH!

http://www.pbs.org/moyers/journal/04032009/profile.html

[truthynesslover]

Warren is looking out for Us.Why isnt she getting the cooperation she needs?Geithner and Summers?

[paixa3]

Yes, plus Obama, Bernanke and Paulson....this is just a ""starter list""

[andymajumder]

All her points are absolutely valid. She is the overseer of the TARP money. Yet I hardly she any coverage of her report in mainstrem media. Its like the entire media has become cheer leaders for wall street banks.

The guys who have been responsible for creating this whole mess, the bank ceos failed regulators like Gietner, Paulson and others are in charge of the entire treasury and distributing bailout money. Larry Summers has received millions of dollars from Wall street hedge funds, investment banks just in the last one year yet they are in charge of solving this problem. DOES ANYBODY IN MM NOT SEE THE CONFLICT IN INTEREST HERE. Do they think american people are so dumb.

Why do people like ELizabeth Warren, Paul Volcker not have a greater role in the Obama administra­tiontreasu­ry ?

Read James Keller's scathing review of Gietner's plan here
http://online.barrons.com/article/SB123879893288588249.html?page=sp
James Keller, former head of structured products at UBS and definetely knows how the game is played.

[steelwheels]

When will we get on with the INTERVENTION! Enablers; Congress/L­obbyists..­. Addicts; Wall Street/CEO's... Affected/Main Street Families. It's TIME for them to go to Rehab/Jail...

[Samalabear]

I've been watching Warren from when she was first appointed. She's absolutely terrific and I feel right on. Even if you know little about economics what she says makes common sense. On the other hand, that boys' club is really getting on my nerves.

[little old lady]

Ditto! She's really mad about what's been allowed to happen, too. Powerful woman! Cheering her on...