Panel has lots of questions for Treasury
The Congressional Oversight Panel for Economic Stabilization is set to question the Treasury Department's strategy for the $700 billion bailout. Elizabeth Warren, the panel's chair, discusses her views with Kai Ryssdal.
Harvard Professor Elizabeth Warren (Courtesy of Harvard Law website)
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TEXT OF INTERVIEW
KAI RYSSDAL: Two-and-a-half months after they gave Henry Paulson $700 billion, lawmakers made it clear today they're having second thoughts. The occasion was a hearing of the House Financial Services Committee. Members gave assistant Treasury Secretary Neel Kashkari, the guy who's running the TARP, as it's known, a once over. Then they heard from their own team, the Congressional Oversight Panel for Economic Stabilization, the board Congress set up when they passed the bailout.
Harvard law professor Elizabeth Warren chairs the panel. Good to have you with us.
ELIZABETH WARREN: Thank you. It's good to be here.
RYSSDAL: Generally speaking, how satisfied is your panel with what the Treasury Department has been doing?
WARREN: Not satisfied.
RYSSDAL: Well, what should they be doing better, then?
WARREN: Well, what we're going to start with is a lot of questions. We have questions about what's going on here. Does the Treasury really have a strategy? Is the strategy working? Is it helping reduce foreclosures? How's the taxpayer money being used? What's the Treasury doing to help American families and small businesses? Until we get some real answers we can't be satisfied. I mean, this is a lot of money.
RYSSDAL: What's the biggest problem, would you say?
WARREN: The biggest problem as I see it now is there's no coherent strategy. It's not possible to see Here's what we're going to do. Here's how we're going to get the economy back on its feet. Right now the strategy seems to be we'll stuff some money into banks and let the banks put it in their vaults, and that's somehow going to make the economy do OK. And I don't think that's right.
RYSSDAL: How big a deal do you think it is that the Secretary of the Treasury Henry Paulson has effectively changed his mind a couple of times about what he's going to do with this money?
WARREN: Well, given that Treasury told us the principle goal here was confidence, I have to say I don't think that was confidence inspiring. Particularly because there was no identification of either specific facts that had changed, nor was there any articulation of, Well, the reason we're not going over here and going over there is because we have this better idea.
RYSSDAL: Well, then, what should the Treasury Department be doing? If your panel could write the rules, what would you have them do?
WARREN: Right now what we would have them do is we'd just have them answer the questions that we've asked. And if Treasury starts by answering those questions then we'll be a lot further down the road, both to understanding what they have in mind and being able to evaluate whether or not the money is being spent in the right way.
RYSSDAL: How should this TARP be working?
WARREN: There has to be an overall notion that we're going to deal with the genuine economic problems in the United States right now. So, for example, we're having a problem -- a real, visible problem -- in the housing market right now. And we've got, potentially, $700 billion commitment of American dollars out there for which, right now, it's not being used. There's not even a hint that it's going to be used to address any part of that problem. That tells me there's not a coherent strategy here. You know, if the American family fails, then there won't be any banks to save. This isn't about saving banks individually. Ultimately, this is about saving our economy, saving our country. But most of all, saving our people.
RYSSDAL: Elizabeth Warren chairs the Congressional Oversight panel for the Treasury Department's TARP program. She's got a day job, too. She's a professor of law at Harvard University. Professor Warren, thanks so much for your time.
WARREN: Oh, thank you.
Comments
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From Ixonia, WI, 12/12/2008
The problem with many of the politicians that are knee deep in the financial mess is that they are blaming each other in a bipartisan manner. The one thing that they are forgetting is that Americans don't care who is to blame and who is. They just want a solution, and they want their Congress to work together as a team to find this solution.
From CO, 12/10/2008
Amazing.
Twice in the interview Kia rightly asked Warren what she’d do and both times she completely ducked the question.
The solder’s saying that plans change once the battle begins applies a million fold here. The financial melt down exploded faster worldwide than any flu pandemic could, mutating as it went. A whirlwind of immense scope and complexity.
With such an enemy and battle never before seen or fought, Treasury and Fed could only be expected to bob and weave to find solutions.
Warren’s hectoring about lack of strategy might have been less insulting had she her own plan to offer. She even had the enormous benefit of hindsight to hide behind. Instead she offered ignorance and arrogance.
From pensacola, FL, 12/10/2008
Ladies and Gentlemen,
It seems that Ms. Warren is expecting the Treasury department to come up with a national economic policy. Isn't that what our President should be doing?
It seems the incoming President-elect is more willing to do this than our Mr Bush.
Merry Bergeron
From New York City, NY, 12/10/2008
Frum's comments are disinformation. We have had colossal banks for years! The anti-trust rules were scrapped long ago, so open competition in many industries disappeared putting us into this 'too big to fail' mess. And, banks and auto companies are hardly 'nationalized' when the taxpayers have no voting rights for loans not common equity, nor have these 'boards' done too well by their shareholders lately either without any govt oversight! Don't let him on the show if he is going to do disinformation and re-framing in sound bytes...that old conservative strategy of late...
From N Chelmsford, MA, 12/10/2008
Cap markets are unstable. In the past there was no way to make them stable. But today we have computer power that can be used to make them stable. By using the greater computer power of today we can have a much higher turn over of cap in the cap market. This higher turnover will make the market harder to fix or control and the market will no longer have the unstable run ups or declines. Who can change or control the market when say 20% of the capital is trading each day. So now that we have the compute power to provide for all these transactions that will smooth out the market how to we force people to turn over at a rate of 20% a day? Easy, put a cap gains tax of 0% (zero) on all gains of 7 days or less and put a cap gains tax of 90% of all gains of 7 days or more. The likes of Yahoo Micosoft and/or Sun Micro Systems will give us the systems that will provide automated software agents to support turning over one's investments every 7 days (based on the specs you give the agent). A system like this will make the financial markets work as smoothly as the local fruit market.
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