Elizabeth Warren: The Woman Who Knew Too Much

http://www.vanityfair.com/politics/features/2011/11/elizabeth-warren-201111

According to Barofsky, however, “Treasury’s descriptions of what was happening were very skewed towards the positive and often incomprehensible. There was this reluctance towards transparency,” and Warren’s work on the oversight panel “helped bring light in a lot of dark areas.” As Treasury sought to cosset the banks, never requiring them, for example, as Barofsky points out, to explain what they were doing with their billions in TARP bailout money, Warren persisted. She went on television shows to criticize the government’s secrecy, the huge bank bonuses, the fact that even after the bailout the banks had escaped disciplinary measures. Obama’s top economic advisers, according to a former administration official, thought Warren was “a pain in the ass.” On Wall Street, Warren was regarded, says one bank vice-chairman, as “the Devil incarnate,” and, according to another executive, a “showboater,” who didn’t really know what she was talking about.

But her sin was actually quite the opposite: she knew what she was talking about. Wall Street’s power in Washington, says a former congressional staffer who worked on the Dodd-Frank bill, has been built partly on the fact that few people outside Wall Street understand the esoterica of finance—the intricacies of C.D.O.’s and the labyrinthian structures of credit-default swaps. And that knowledge is used to control and confuse. But Warren did understand. Says Carolyn Maloney, a New York Democratic representative, “She understands the information as well as the top players in the business.” She knew the secret handshake, the secret language—and she used it against “that tight little group,” as Warren would refer to Wall Street C.E.O.’s and Washington officials who basically controlled the terms of the bailout.

In early spring, several weeks before Obama’s April announcement that he was running for re-election, 24 Wall Street executives gathered in the Blue Room of the White House for a meeting with the president. According to the New York Times account of the meeting, Obama spent more than an hour listening to the financiers’ thoughts on the economy, the deficit, and financial regulation. After the meeting, Obama would follow up with phone calls to the executives who had not been able to attend. The event, the Times wrote, was organized by the Democratic National Committee and “kicked off an aggressive push by Mr. Obama to win back the allegiance of one of his most vital sources of campaign cash.” The financial industry contributed $43 million to Obama’s 2008 presidential campaign, a record haul. But his relations with Wall Street had soured—remarkably many of them were enraged over his criticism of their bonuses in late 2009, which is also when he called them “fat cat bankers.”

By April, however, Warren’s standing in the White House was shaky. Three months earlier, in what was seen as an attempt to “repair” his relationship with his Wall Street donors, Obama had brought in William Daley as his new chief of staff. A former banker at JPMorgan Chase, Daley came into the administration just as senior Obama adviser David Axelrod left. But while Axelrod and another top adviser, Valerie Jarrett, were perceived as strong Warren supporters, Daley had reportedly opposed the creation of the C.F.P.B. A spokesperson for the White House said that, although Daley was “not recused from” discussions about the C.F.P.B., he chose “not to participate in the process of selecting a nominee for C.F.P.B. director.” Which is possible. But with Daley and Geithner—one of Obama’s closest advisers—sharing center stage, the balance of power in the debate over Warren shifted. Geithner would never criticize Warren publicly—and indeed, as a Treasury spokesperson says, he “has expressed his support and admiration for Professor Warren many times”—but few people in Washington doubted that he remained opposed to her candidacy. To at least one person who saw them in meetings together it appeared that “he looked down on her for no apparent or justifiable reason.” As for Warren, if one mentions the video “Elizabeth Warren Makes Timmy Geithner Squirm,” she says nothing, but an impish smile crosses her face.