Troubled Asset Relief Program overseer Elizabeth Warren warned on Wednesday that the Obama administration's approach toward resuscitating the financial sector lacked proper transparency and accountability, resembling the Japan model for economic recovery that dragged on for nearly a decade.
Appearing on MSNBC's Morning Joe, Warren acknowledged a double standard in how the White House has approached the banking and auto industries, and said that the president would do well to show the former the tough love he's offered the latter.
"I fear right now that we are much closer to the Japan end of the scale," she said, when asked whether the economic recovery resembled the accountability seen in Sweden's efforts or the lack thereof in Japan's. "And that's particularly with the banks. I'm not the first person to observe that the banks and auto companies are being treated differently from each other in this sense. We have clearly moved with the auto companies towards at least more accountability and less with the financial institutions, for the people running the financial institutions.
"Again, I'm not going to stand here and say I think that they should be fired, that is not the position of... the oversight panel," she added. "But you have got to have these options on the table. if you take the option of getting rid of management off the table, then you not only change the relationship between the government and the financial institution that is getting taxpayer money, you have change the relationship with a taxpayer. Because the taxpayer says, 'let me get this straight. In my little business, if it goes down, I lose my job.'"
Hitting the same notes of caution earlier in the program, Warren cheered the administration for finally agreeing to release information on the stress tests that they are applying to beleaguered banks. But she wasn't entirely placated. Noting that any bank -- however troubled its solvency situation may be -- could pass a stress test that was easy enough, she made the case for the Treasury department to release data on the test itself.
"I want to look at the stress test itself. I want to make sure it is not a two-mile-an-hour walk on a treadmill," she said. "What I want to do, what I want our panel to do, is an independent evaluation of the stress test. That's what we are looking for... And look, ultimately I hope I come back to you and say 'hey, guys, fabulous stress test.'"
"I think there is no reason we shouldn't able to [get this information]," Warren added. "And I hope that that is the point of view that ultimately prevails."
A Harvard Law professor, Warren was appointed to chair the five-person congressional oversight panel for the TARP back in mid-December. Since taking over the post, she has criticized the Treasury on a host of fronts: from a failure to cooperate with her panel, a lack of transparency in its bank-relief program, and not doing enough to stabilize the mortgage market.