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Warren writes: "People on Wall Street angle for key economic policymaking jobs, and people in key economic policymaking jobs angle for jobs on Wall Street."

Democratic candidate for the US Senate Elizabeth Warren speaks to reporters during a news conference, 05/02/12. (photo: Steven Senne/AP)
Democratic candidate for the US Senate Elizabeth Warren speaks to reporters during a news conference, 05/02/12. (photo: Steven Senne/AP)

Peril in This Wall Street Shuffle

By Elizabeth Warren, Politico

28 January 13


t's that time again when jobs open up across Washington and the big shuffle starts: People on Wall Street angle for key economic policymaking jobs, and people in key economic policymaking jobs angle for jobs on Wall Street.

This isn't necessarily a bad thing. People with Washington experience bring expertise to Wall Street - often a sense of public service - and people with Wall Street experience bring expertise to government.

When I worked to set up the Consumer Financial Protection Bureau, we hired a number of people with industry experience. We built a team that had diverse expertise and different worldviews because that meant smarter, more effective policies. It's pretty clear that you can't write good rules or effectively enforce the law if you don't know how the game is played.

But as past experiences have shown, there is also real peril in this Wall Street shuffle. Big business orthodoxy against rules and regulations can seep into the bones, including the bones of new policymakers who are charged with protecting consumers and strengthening markets. Industry groupthink and overconfidence can prevent clear and evenhanded analysis of problems. The result can be a group of decision makers who are self-confident in the extreme and who end up clearing the path toward the sort of recklessness and excessive greed that have already broken the economy once.

As jobs open up and the shuffle continues, policymakers in Washington ought to think seriously about some key indicators when considering people with industry experience:

1. Who do they listen to and who do they trust?

Not all the expertise and good ideas are on Wall Street. Small banks, credit unions, academics, consumer groups, regional Federal Reserve banks and foreign financial commentators often have important insights. If potential appointees coming from industry don't show a real willingness - and even eagerness - to listen to smart people outside of the industry, that's a real problem. If they aren't already having serious conversations with people who are not from Wall Street, the blinders may have grown too big to remove. It matters who they talk to and who they will rely on for advice.

2. Where do they disagree with industry and lobbyist orthodoxy?

No one is perfect; they should be able to see some areas for improvement. If a potential appointee can't give thoughtful examples of where the lobbyists and the industry have gotten it wrong over the past generation and give specific examples of where they have it wrong now, then they aren't right for the job.

3. Do they recognize the advocacy imbalance in Washington?

Industry lobbyists are highly specialized, well-funded and enormous in number. That means they can provide important information, but it also means they so outnumber advocates for the public interest that the playing field is badly tilted in their favor. If a potential appointee doesn't recognize that imbalance and have a thoughtful view about how to address it, that person shouldn't be under consideration.

4. What their real intention is for getting into government?

Many people get involved because they made money from the industry but know that greed and recklessness in some quarters have given everyone else a bad name - and they want to see real reforms and changes. Some may have ideas about how to make government work more efficiently. On the other hand, others are just looking to advance their careers and put themselves in line for promotions in the industry. Intentions matter.

5. Are they attuned to the diversity of institutions and actors?

Big banks and small banks operate very differently. Some companies engage in deceptive practices to cheat consumers, but many add enormous value to the financial system. Some create business models that create private benefits and public risks, while others are responsible for both risks and rewards. If a potential appointee isn't willing to differentiate the virtuous from the villains - and treat them differently - then they will make mistakes by over-regulating those who don't need it and by not cracking down on the real scofflaws.

Transition is afoot in Washington, and if the right people go back and forth, the country will develop smarter, stronger rules. But if the wrong people make the shuffle, then Washington will be rigged even more for Wall Street - and every middle-class family will pay the consequences. your social media marketing partner


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+122 # MainStreetMentor 2013-01-28 13:51
Go get'em, Senator Warren! Your open directness is refreshing, and mindful of the stances of Senator Bernie Sanders, (I-VT). I will work to see your assessments and warnings are widely distributed!
+106 # mdhome 2013-01-28 14:20
We know Elizabeth will protect the public and have all the best wishes for her to make things better. Good luck and much love for your term in the senate.
+40 # fettenberg 2013-01-28 14:57
My question is: is Jacob Lew as
T. Geithner's successor to be trusted? I thought he was quite reckless if not deceptive and opaque when he worked on Wall Street.
0 # RLF 2013-01-29 07:38
Jacob Lew was right in the middle of Clinton getting rid of Glass-Steagal and deregulating the banks. Jacob Lew to Geithner is out of the frying pan and into the fire. Obama...the gift that just keeps on giving!
+40 # BobboMax 2013-01-28 15:21
I wish Ms. Warren had addressed the issue of Mary Jo White's potential appointment to head the SEC.
+5 # lbarnett 2013-01-28 15:39
Quoting BobboMax:
I wish Ms. Warren had addressed the issue of Mary Jo White's potential appointment to head the SEC.

What's that issue, BM
+4 # Vegan_Girl 2013-01-28 20:47
+9 # Jude 2013-01-28 15:59
Quoting BobboMax:
I wish Ms. Warren had addressed the issue of Mary Jo White's potential appointment to head the SEC.

I think she just did!
+4 # Scotty44 2013-01-29 03:47
How? She didn't mention her. Elliot Spitzer thinks we should keep an open mind, just as Ms. Warren allows. But he didn't mention if he was considering Matt Tabbi's point that she used her SEC connections to kill prosecution of a client. Rachael Maddow didn't ask him that question when interviewing him about White. Matt didn't nail down why the command came down from the top to drop the charges. If good reasons were given to the investigator, than the influence was proper. If not, then it was dirty. I don't remember the reasons being mentioned, or collaborated by a disinterested third party, in Matt's piece, and I haven't seen documentation elsewhere. I'm not sure that the investigator winning damages in a wrongful termination suit addresses that point, or might have been determined on other basis.
+10 # Donna Fritz 2013-01-28 15:25
So... what are you saying, Liz? Who do you think are the right people? The wrong people? How about naming some names? Matt Taibbi wrote that Mary Jo White would be a "fox in charge of the henhouse". Agree? Disagree?
+29 # ljslotnick 2013-01-28 15:48
The facts are the facts. Just look at the actions that both Jack Lew and Mary Jo White have taken during their time on Wall Street or corporate law (for Wall Street) and you (and every Senator) will understand their true intentions. For all the details, just search on Matt Taibbi's articles about either of them, and you'll be promptly disgusted...and shaking your head about what Obama's true intentions are (when it comes to holding Wall Street accountable.) I like MANY things about President Obama, but, his Wall Street "cronyism" (if that's the appropriate word) is really beyond belief.
+26 # ghostperson 2013-01-28 16:21
Summers, Paulson and Geitner, any questions?

Government for Big Money, by Big Money and of Big Money.

It's time to abolish withholding of income tax from wages.

Let the Bigs fund themselves. We are being rained on in big yellow drops and it has to stop.

Calling the U.S. a democracy or democratic republic is a joke--on us.

In 2012, Treasury approved excessive compensation for several corporations who were bailed out.

On what planet does an employee get to destroy or allow his or her company to be destroyed while taking down the world economy and remain employed, much less get excess compensation? Oh, Planet Wall Street.

That one-fingered salute to heaven you see is aimed as us.
+12 # walt 2013-01-28 16:29
Elizabeth Warren seems OK with the pathway between Wall Street and Washington. We are all supposed to believe that we all gain from their experiences in either place. Really?

When a senior senator like Bernie Sanders publicly states that Wall Street controls Congress, please don't even suggest that the people gain anything from the flip-flops, Sen. Warren.

And a question please? When you were not appointed to the position as head of the Consumer Financial Protection Bureau as President Obama wanted, he appointed Richard Cordray with all assurances that he was eminently qualified. While that may be true, has anyone seen or heard him speak or act to date? I sure haven't.

And today we learned via Bernie Sanders's newsletter that generous pay packages are still being given to bailed out companies while homeowners are still being foreclosed.
+2 # grouchy 2013-01-28 16:56
+8 # cafetomo 2013-01-28 18:05
The point is that "Big business orthodoxy against rules and regulations" have been dissembling financial mechanisms to allow economic plundering by corporate entities "too big to fail" for years. The how and whether of re-engineering morality into the system so that it no longer makes us little more than debt slaves is more up for grabs than usual, but the most likely outcome is not in our favor. Ms Warren is a hero for taking up the gauntlet, but the moneyed interests arrayed against her are impossibly large. Without a groundswell of both popular and professional support, she will not get far.
+4 # oprichniki 2013-01-28 18:46
Of Big Business, by Big Business, and for Big Business!
+18 # lin96 2013-01-28 18:50
Elizabeth Warren's honesty is refreshing. People are hungry for the truth and some Justice For Everybody That Harms Nobody. She's just the person to deliver it. Go Elizabeth!
+6 # mogliman 2013-01-28 19:09
Bravo Elizabeth Warren,

An issue that needs our clear thinking and intelligence. This to offer. Is the model institutional collusion, at the expense of our greater protection and welfare? Is this why Catholic bishops protect priests who are child abusers, and Industry and government officials fall short of considering the greater welfare or protection? Is bipartisan government built on the same model?

When are we going to stop fighting, recognize our constitutional and shared objectives, and start looking for and believing in solutions?
+6 # Allen 23 2013-01-28 19:44
It's worth posing the question: if the CEO of Goldman Sachs had been appointed US president in November 2008, how would his policies have differed from Obama's? Or if Obama himself pledged to simply carry out instructions from the
Business Round Table, how would things be different? It would be hard to think of a single thing that would be different.

The Democrats are not the vehicle for changing this country around. All those who ignore this reality and tell us that these hacks are the only realistic way to go about looking for defeating the rich reactionaries that currently control both corporate parties are the ones who are thoroughly unrealistic. At this point that degree of naivete' is inexcusable.
+2 # Douglas Jack 2013-01-28 22:15
Ms Warren, Although you are elected at the federal level, its a mistake to developing policy which is implemented only from the top-down. I appreciate your honesty however the fact is that unless people organize economically from the 'tree-roots' in concerted practice, then we know that corporate money will eventually take control even of a Consumer F. Protection B.

You may be interested to know that; 1st Nations here & all humanity's worldwide 'indigenous' (Latin = 'self-generatin g') constitutions (still the only legal authority) such as the Great Law of Peace are based upon assurance for local human empowerment in systems.

The Great Law's 2 main components are:
1) Multihome living with private space for individuals & families but as well common areas for female-male, intergeneration al interaction in proximity & intimacy. Indigenous multihome design brought critical numbers of individuals into collaborative effort & mutual-aid.
2) Inclusive welcoming economy through time-based human-resource accounting & universal progressive ownership in specialized Production Societies.

70% of Americans presently live in apartments (average 32 dwellings), townhouses & village clustered housing. Organizing this vast majority into critical mass corporate domestic 'economy' (Greek 'oikos' = 'home') from the tree-roots empowers the justice you are seeking.
-2 # Dale 2013-01-29 10:51
The D.C./Wall Street shuffle not a bad thing????? I thought she had more smarts than that. Plutocraciy rules and gets the best government money can buy.
+2 # treadlightly 2013-01-29 12:55
Is there a cure for avarice?
People who aspire to positions of power are generally more interested in personal aggrandizement and wealth than they are in contributing to society as a whole.
Think of all the models of success that we are bombarded with daily. Who do we generally have more respect for, Mother Teresa, or wealthy people.
Self promotion in the form of mass media is an institution and a very effective propaganda tool.
I like Ms.Warrens idea of a litmus test for determining the mindset of potential public servants.
Sit every prospect down and wire them up to a lie detector and ask them what their primary purpose is in attaining the position they seek. If the needle stays steady when asked if their primary motivation is wealth and fame and they respond in the negative then move them on to the next test. A low level position where they are directly serving the general population for one year.
It's called earning it. That's what most of us have to do, and it's the reason we appreciate what we have.
We have earned it.
+1 # dkonstruction 2013-01-29 15:01
"if the right people go back and forth, the country will develop smarter, stronger rules. But if the wrong people make the shuffle, then Washington will be rigged even more for Wall Street - and every middle-class family will pay the consequences."

From what i have seen and heard from Elizabeth Warren she seems like here heart is in the right place and i will, for now, give her the benefit of the doubt but the above quote is precisely the type of wishy-washy liberal/technoc ratic thinking that perpetuates the mess we are in. Right people? Wrong people? And, who decides and by what criteria? She doesn't even call for any kind of substantive "waiting period" (i.e., someone who was a lobbyist or industry exec should hav to wait 5 years -- or more? -- before they can go into gov't and have power over policies for the very industries from whence they came? this makes no sense to me and i think it is simply fantasy to believe that without something like this we can simple sprinkle fairy dust or whatever in the hopes that the "right people" take advantage of the ongoing revolving door between industry and government.
+2 # Dave45 2013-01-30 22:14
Though I have, for the most part, been encouraged by Ms. Warren's rise in national prominence and election to the Senate, these are not the most encouraging words I could have hoped to hear from her. Her remarks are already sounding too much akin to the standard (for Washington), well-worn post-election offer of the olive-branch to one's staunchest opponents, an offer which usually results in pressure being taken off the opponents and a subsequent slide by the Democratic victor into the swamp of D.C. plutocratic politics (compare Nancy Pelosi (re GWB) following her rise to the position of House Speaker and Barack Obama (re all Republicans) after his first inauguration). I hope my cynical fears will turn out to have been unjustified; however, in the last 30 years we have been down this road too many times not to see red flags arisin'.

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