Elizabeth Warren: TARP Repayment, More Stress Tests and a Fall off the Pedestal

I like Elizabeth Warren, chair of the congressional oversight panel for TARP. She's smart, tough, passionate and opinionated. I met her years ago on the radio airwaves, when I interviewed her after she and her daughter co-authored "The Two Income Trap".

But this morning, Ms. Warren fell off the pedestal on which I had placed her. Harry Smith interviewed her on The CBS Early Show, ostensibly to discuss her comments yesterday on CNBC about conducting a second round of stress tests. Unfortunately, Warren seemed more concerned with trashing former Treasury Secretary Henry Paulson, than talking about stress tests, part deux or even the repayment of TARP funds by ten of the nation's largest banks.

Watch CBS Videos Online

While I understand the need to look back to learn from mistakes, I thought that this interview could have been a great opportunity for Warren to look forward and to emphasize where progress had been made, to warn of the potential dangers that still lie ahead and to explain how more testing might identify problems before they become critical.

Continue on moneywatch.com

Follow Jill Schlesinger on Twitter: www.twitter.com/jillonmoney

Comments

[bobwalters]

Insiders don't like Dr. Warren not because of any lack of competence on her part, but primarily because they FEAR her competence. Dr. Warren is one bright spot in the whole cruddy field, which includes all too many "financial commentators" whose role up to now has largely been to cheerlead the criminals who have been stealing the Treasury blind, to say nothing of the investing public. And there's VERY LITTLE genuine "progress" on Main Street. Ordinary citizens and small businesses are still getting screwed to the wall with ever rising interest rates and increasingly odious loan terms. Geithner's and Summers' reputations deserve intensive scrutiny because of their history of association with Robert Rubin and his advocacy of -- and personal benefit from -- deregulation of financial markets and operators. Like Paulson, they're shills for Wall Street banksters, hedge funders and other thieves and brigands.

[trimom]

What I heard Dr. Warren say was this: We are not taking a long-term focus on the health of the banks. We stuffed money into failing banks and we, wrongly, have decided that they are healthier based on unrealistic assumptions. If we want to avoid making the same mistakes again - pumping money into failing banks - we should retest them using stronger criteria.

Don't forget, Citibank may still fail and the bank has received billions of taxpayers funds.

Warren's worries reflect my own. We are handing over cash to banks and we cannot trace what has happened to it.

I think that your overemphasis of the Paulson thing is dismissing the importance of what she was saying.

[castlerider]

Jill, how is it you're not getting the important point here?
There is only so much Ms. Warren can do, and you know it. Still, she has stood up strongly, as vocally and unequivocally about everything that has been in her important line of sight.

The synopsis of what she's saying here is that we still have a hell of a lot of work to do, a hell of a lot more billions to get rankled back in our taxpayer's Treasury systems, and that the transparency AND HONESTY needed is ONLY BEGINNING to really show itself for the benefit of a strong foundation for our economy.
Now how in the world are you missing that important point? And why is it that that's not good enough for you?

.

[Jill Schlesinger - Huffpost Blogger]

I really thought that she was dwelling on Paulson--so much so that when I asked a CBS producer about the segment, he said, "we didn't think it would so much Paulson...­" I would prefer that Ms. Warren talk less about him and more about what she believes the appropriate parameters of a second round of stress tests might include, or even the mechanics of how new numbers might change the results. Do you see where I'm going with this?

[RoloTomassi]

She is diminished by trashing PAULSON? Are you kidding me?

Paulson is about as well regarded as the bubonic plague these days, and only the most dire Wall St. sycophants are lame-brained enough to trash Warren, as to many [myself included] she is the only sound voice of reason even marginally attached to recovery efforts in regards to this financial travesty.

You might want to think twice before returning to this mode, and most assuredly you'd want to have something of more substance to complain about.

[sonofsamphm1c]

She had nothing to do with the decision to do the stress testing. Initially she contributed to undermining public confidence in doing the stress test.

Think back to all of derisive comments aimed at Geithner and his proposed stress tests - a great many of which were made by the worshippers of St. Elizabeth Warren. She had sort of indicated the Treasury Department was a bunch of obfuscating, lying, untrustworthy weasels, so people assumed she was talking about Geithner.

Can you deny that? Do you want me to copy and past 10,000 comments?

Now listen to her. She likes the stress tests in which she played a role in undermining initial public confidence. She likes the transparency the stress test she had nothing do with devising have brought to the table. Then she demands additional stress tests, and unlike Geithner, makes absolutely no case for how additional stress test would be beneficial.

An additional stress test with a worst case that includes a higher average unemployment for 2009 would raise the 75 billion to something like 90 billion. Immaterial given that 65 billion has already been raised from private sources - the alternative would have been the taxpayer - , and the 86 billion in repayments would have been reduced - less back to the taxpayer.

She has to make a case for why doing those two negative things is worth the risk of undermining the additional confidence the Geithner stress test yielded in the global markets.

[Inquisitr]

Progress has been made?

No it hasn't, that's her point. There has been no progress, we're putting Band aids on an amputated limb to keep it going a little bit longer.

The logner we keep lying to ourselves the more this hurts in the end.

[Jill Schlesinger - Huffpost Blogger]

Of course progress has been made--I'm a pessimist and even I can see that! The financial system is no longer on the verge of collapse and is functioning much better, spreads have narrowed and private capital raising is occurring. That does not mean that there aren't serious problems that lurk (hello Citi!), but even Warren has noted publicly that we are no longer in a crisis with regard to the financial system.

[RoloTomassi]

Sorry, but you are delusional on the progress issue; credit is NOT expanding to any notable degree, and most of these mega-banks are actually insolvent, and can only appear stable by drastically over-valuing the plethora of worthless detrivatives on their books, detrivatives that they won't accurate markdown or even sell for a minor discount.

Please, you are serving Wall St. Kool-aid, and not many around here have a taste for it.

[sonofsamphm1c]

Jill, on the Huffington Post you have just committed the equivalent of trashing St. Theresa.

While I have huge problems with Elizabeth Warren, she's borderline incompetent, her trashing of Hank Paulson ain't one of them. As far as I'm concerned, people can kick that old dead horse 'til the cows come home. It's just plain good fun.

Right now the average unemployment rate for 2009 is 8.38%. They tested for an annual average of 8.9%. That is likely to be exceeded. Say they test again for an average of 9.3%, and the 75 billion called for by the first test is bumped to 90 billion. Is there a benefit to doing that over what we already have?

No. She should have thought it through. And that is the problem. From the very start she has chased false leads down dry holes. Could doing another stress test do damage? Yes, it could. It could do a lot of damage.

[castlerider]

And you've done the equivalent of shouting out another Red Herring.

She's not kicking anything, damit, she's telling the truth. Neither you nor Jill are giving credit where it's due.
There is only so much Ms. Warren can do, and you know it. Still, she has stood up as vocally and unequivocally about everything that has been in her important line of sight.

The synopsis of what she's saying here is that we still have a hell of a lot of work to do, a hell of a lot more billions to get rankled back in our Treasury systems, and that the transparency AND HONESTY needed is ONLY BEGINNING to really show itself for our the benefit of a strong foundation for our economy.
Now how in the HELL are you both missing that important point?

.

[sonofsamphm1c]

What would be the benefit of doing a new stress test?

How does it help us to build 90 billion in new capital versus 75 billion? She has given no rational for any benefit for that.

Learn to read and listen. She likes what Geithner is doing. Did you get that? She likes what Geithner has done. She likes the stress test.

I was one of the very few people on this board who defended the stress testing. And now Elizabeth Warren agrees with me.

[Jill Schlesinger - Huffpost Blogger]

We get that she is honest and if you read my post, I praised her. Why is it that we can't be allowed to note when even one of the good guys/galls veers off track? She's not going to get everything 100% correct--that would be impossible, even for St. Elizabeth Warren.