Lies and Denial: the 2012 GOP Strategy

The last 24 hours have witnessed some remarkable historical revisionism on financial regulation coming out of the GOP.

First, we had one of the most bizarre and simply untrue attack ads I've ever seen, courtesy of Karl Rove's Crossroads GPS outfit. The ad calumnies Elizabeth Warren, claiming that first she was responsible for the TARP bailout and then set out to butter up bankers. Is this man on drugs? Rove seems to be confusing Elizabeth Warren with George W. Bush. 

Let's set the record straight.  Elizabeth Warren involvement with TARP was as chair of the Congressional Oversight Panel.  That was a body created by Congress to monitor and report on the effectiveness of TARP bailout.  The Oversight Panel did not create the bailout.  Congress did at the urging of the Bush Administration. The Oversight Panel had absolutely no authority to direct the use of the bailout. Its sole authority was to act as a watchdog.

And what a watchdog it was! It was Elizabeth Warren's trenchant criticism of the bailout that catapulted her to the national stage. The reason she started being invited to appear on the Daily Show and the like was because there was no better and more articulate critic of the bailout than Elizabeth Warren. The Oversight Panel could easily have been a sleepy, impotent backwater. Elizabeth Warren turned it into a ferocious bully pulpit for the interests of middle class Americans who were confused and angry over what was happening to their country. To blame Elizabeth Warren for the bailout is like calling Larry Bird the greatest New York Knick ever. It's so ridiculous that it's insulting. (And fighting words in Boston.) 

Then there's a hooter of a claim that Elizabeth Warren was courting bankers. Let's put that in some context to show how silly the charge is.  Elizabeth Warren left the Oversight Panel to help push for the creation of the Consumer Financial Protection Bureau, and for a long time it was thought that she would be nominated as the Bureau's Director. One reason she wasn't nominated was because the banks took an "over our dead [but now rescusitated via bailouts thank you very much] bodies" approach to Warren, claiming that she was "anti-bank."

Now, some might think that's a compliment, but Warren tried to show that she's not anti-bank. She just wants fair, transparent markets.  (Apparently, that's a problem for banks.  Heck, apparently, if you want market to be fair, and transparent and work as they are supposed to that makes one anti-bank, a socialist, a communist, or worse.  Capitalism, it turns out has nothing to do with markets.) To show that she wasn't anti-bank, Warren took great pains to reach out to banks and to show them that she's open-minded and willing to listen to their concerns, especially the concerns of small community banks and credit unions.  So now Elizabeth Warren is being damned for having been gracious and fair and open-minded. 

For more commentary on this lunacy, see here and here. 

The second bit of revisionism came with the Senate GOP's filibuster of Richard Cordray's CFPB nomination. So now we have a manque agency. It exists on paper, has a staff, and has authority to enforce the existing federal consumer financial protection laws. In theory, it could do rulemakings under those existing laws (but that would require the Treasury Secretary to exercise his authority as acting CFPB Director). The agency can't use any of the new powers given to it by Dodd-Frank. This is a situation only a banker could love: there's a consumer agency, and it can't do very much. That's the best of all worlds. One might be forgiven for thinking that we aren't in the midst of the worst foreclosure crisis in US history or that predatory mortgage lending wasn't a major contributor to the financial crisis.  

What worries me about all of this is that I don't think these are isolated incidents. Instead, I think there is a very willful type of revisionism at play here. (Perhaps this should not be surprising given that the 2012 GOP Presidential nominee might be the author of historical fiction books based on the premise that the Confederacy prevailed in the Civil War.) I experienced this know-nothing revisionism myself last month at a House Financial Services Committee hearing.  Some GOP backbencher harrangued me for five minutes about how I had no right to be concerned about a bill that would authorize voodoo accounting and encourage foreclosures because I was personally responsible for the TARP bailout. Yeah, this guy thought that I had been the architect of the whole damn bailout.  Perhaps I should have been flattered. 

OK, I admit it.  I TARPed. It was all my fault.  WTF?!  I finally had to explain to this gentleman that I had merely been a lawyer working for the Congressional Oversight Panel and that it was Congress--including lots of GOP Representatives and Senators, who approved the TARP bailout. The Oversight Panel was just a monitoring body. (If I had been a little quicker on my feet, I might have added that surely the gentleman was not also accusing his GOP colleague Rep. Jeb Hensarling, who served on the Congressional Oversight Panel, of being responsible for the bailout.)

Karl Rove's ad is hoping to play off of voters' stupidity. But maybe his impression of the Massachusetts electorate has formed from spending too much time with the likes of my Congressional interlocutor.