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Banking's Scourge on Charm Offensive
http://online.wsj.com/article/SB1000...974842034.html
By VICTORIA MCGRANE And MAYA JACKSON RANDALL
Elizabeth Warren has earned a reputation as the scourge of the financial industry.
Banks used "tricks and traps" to carry out a "massive looting from middle-class families," the Harvard professor and consumer advocate has said. She slammed Wall Street chiefs after the financial crisis as the "people who drove the car over the cliff" and then "demanded a bailout."
[why i like this lady, for a harvard type, she's downright upright/refreshing]
Now, Ms. Warren is setting up the federal government's new Consumer Financial Protection Bureau, a longtime dream of hers that the 2010 financial overhaul established. And her tone has changed.
She wants to "make sure that there is a robust, diversified financial-services industry," Ms. Warren told Texas community bankers in January. Earlier, meeting with American Express Co. Chief Executive Kenneth Chenault, she said she wanted to learn about the industry, asked him what he thought the bureau's priorities ought to be, and said she understood that financial firms need to be able to compete, according to people familiar with their talk.
The meetings are part of a charm offensive Ms. Warren is waging aimed at critics of the new consumer agency, which many financial executives and free-market advocates assail as big-government overreach.
She has crisscrossed the country to meet with small-town bankers, some of whom are receptive to her message, as well as with leaders of big banks, who remain suspicious.
Some industry officials say they distrust positive statements they hear from Ms. Warren, in part because of her involvement in current Obama administration efforts to reach a settlement of the foreclosure mess with big banks that service mortgages.
She has reached out to some of her harshest critics in Washington and put former bankers and financial regulators on her staff, including at least one appointment that irked her liberal allies.
The outcome will go a long way to determine whether the fledgling consumer bureau establishes itself as a powerful regulator. Historians of government say agencies need to make a strong start or they are likely to have long-term credibility problems.
A wall map of the U.S. in the new bureau's offices tracks Ms. Warren's methodical campaign with colored push-pins. Each blue pin records an "in-person meeting w/[Elizabeth Warren], while a red pin means a "one-on-one EW call" and a white pin a "group meeting w/EW." The map has 47 pins so far.
It's clear some bankers, especially at the smaller institutions known as community banks, are warming to her. These banks, which can be found in every congressional district, wield clout in Washington disproportionate to their size.
A few Republican legislators also have tempered their critiques. And Mr. Chenault of American Express was left with the impression that her interest in learning from the industry was real and that she is a straight-shooter, said a person familiar with his thinking.
But her road is a long one. Just last month, the Republican-led House approved a bill that would cut the new bureau's funding this year nearly in half.
Ms. Warren has spent as much effort on large banks as on small ones, having courted numerous top bank chiefs including those at J.P. Morgan Chase & Co., Citigroup Inc. and UBS AG's U.S. division. Officials of most big banks decline to speak on the record about their meetings with her.
Bank officials say they have been told that in talks among regulators Ms. Warren is pushing for harsh terms the banks strongly oppose, including reducing the principal on many loans and absorbing billions of dollars in costs.
Ms. Warren acknowledged that her agency has no statutory authority in the matter but said, "We've been invited by the federal agencies and the state attorneys general to provide advice and assistance."
According to Jaret Seiberg, a Washington analyst with MF Global, "There's still tremendous distrust between much of the financial sector and Elizabeth Warren. She has been talking of moderation, but there's a lot of fear...that once the CFPB is up and running and it has a director, that the agency is going to be able to use its unprecedented powers with almost no checks and balances to fundamentally alter the consumer banking business."
Many Republican lawmakers who fought creation of the bureau remain unhappy that President Barack Obama last September named Ms. Warren a special adviser in charge of setting up the agency and hiring its staff, sidestepping Senate confirmation. The bureau is supposed to get its full powers in July and have a Senate-confirmed director by then.
Asked if her campaign among bankers is aimed at improving her chances of being nominated as director, Ms. Warren said, "I am working 14 hours a day to set up this agency. I'm just focused on my job." A White House spokeswoman declined to comment "on whether specific individuals are under consideration."
Ms. Warren launched her outreach even before the announcement of her administration job, calling several big-bank CEOs to let them know the news was coming.
Days after starting work, she addressed the industry that had lobbied so aggressively against the bureau. She told the Financial Services Roundtable, which represents the nation's 100 largest financial-services firms, that she believes in markets and thinks consumers bear some responsibility for the purchases they made.
She also endorsed an idea from the Roundtable, saying the new agency should focus on developing a set of general principles for financial firms to operate under, not on producing "a regulatory thicket" of "thou shalt not" rules that simply drive up compliance costs for lenders and do little to help consumers.
The bureau will collect in one place many consumer-protection powers now spread among bank regulators. It will have jurisdiction over a wide array of firms, including mortgage brokers and check-cashing stores. But firms' financial well-being isn't part of its statutory mission, which is one reason banks fret about what rules it might impose.
Steve Bartlett, president of the Roundtable, says Ms. Warren has dispelled a good deal of concern that she is an antibank ideologue, but not the worry that burdensome regulations are forthcoming. "She's won a high level of respect from the industry. Having said that, these issues, if we get them wrong, are worth billions of dollars to our customers," Mr. Bartlett said.
Support from the smaller community banks could help blunt Republican opposition to the bureau, and Ms. Warren has taken care to understand the pressures these institutions face.
On her first day on the job in September, she met with some from her home state of Oklahoma. In the meeting, at the Willard Hotel near the White House, she said that traditional community banks weren't the source of the financial turmoil and that they and her bureau could be allies, according to an Oklahoma Bankers Association newsletter.
Roger Beverage, president of the Oklahoma association, was impressed—so much so that he says he would like Ms. Warren to be the bureau's director. "I think she still has a long way to go in terms of confirmability based on what I hear from other bank lobbyists and other bank professionals, but in Oklahoma most people here are over the hump and think she's someone who would be very, very helpful for community banks," Mr. Beverage says.
Ms. Warren's map got another blue pin in January when she traveled to San Antonio. Her first stop was a private room on the second level of the Bohanan, a steak and seafood restaurant overlooking the city's Majestic Theatre, where about a dozen community bankers, mostly men in suits, had assembled.
She told the group they weren't the bureau's main target. Instead, the biggest part of its budget will be used to police 80,000 nonbank firms that are involved in payday loans, student lending, debt collecting and the mortgage business, but that now largely escape regulation. She also said the agency would be more focused on supervision and enforcement than on writing new rules.
"Obviously, that's music to our ears, 'cause we already feel that our regulatory burden is nutty," says one of those present, J. David Williams, chairman of HCSB, a $360 million-asset bank with branches in the Texas panhandle and hill country. He says he was "somewhat relieved" and left thinking: "She's been listening to us, and we're not used to regulators listening to us."
The community banks "are worried, and I don't blame them for being worried," Ms. Warren says. "So I try to talk to them about the regulatory philosophy of the agency, whether we're an agency that's going to come in and try to say rule, rule, rule or an agency that says let's focus on what we're trying to accomplish by using more of a principles-based approach. We're trying to make these markets transparent, which makes it easier for community banks to compete both with large financial institutions and with their nonbank competitors."
Ms. Warren has been picking her staff with a politician's eye, adding people with financial-industry experience alongside consumer activists. To head the research, markets and regulations team, she named Raj Date, a former Deutsche Bank AG managing director who is her top aide. A former Morgan Stanley managing director, Elizabeth Vale, will be assistant director for community banks and credit unions.
Ms. Warren rattled liberal allies with her choice to head rule-writing, a Federal Reserve official whom consumer advocates associated with a Fed rule they opposed. Ms. Warren says bringing together people from different perspectives "prevents the kind of myopia that will lead us in the wrong direction."
She also hired Holly Petraeus, wife of the commanding general in Afghanistan, to lead an effort to protect service members and their families from predatory lending.
Ms. Warren is making far less progress with the largest banks. Wayne Abernathy, an executive vice president at the American Bankers Association, says, "I've been in some of those meetings. They never get into detail. It's pretty much the same story as 'don't you think we should all get along?' Sign me up for that. But what does that mean?"
The Republican-controlled House last month passed a spending bill that would block the White House from paying a salary for Ms. Warren's advisory position and for several other Obama advisers this fiscal year.
The bill, which stands little chance of Senate approval in its current form, also would restrict funding for the bureau. The agency gets a slice of the Fed's expense budget as its own funding, up to a certain limit. The House bill would lower the cap for this fiscal year by nearly half, to $80 million. Republicans also have proposed legislation to make the bureau's budget subject to congressional appropriation.
For all this, it's clear Ms. Warren's campaign has scored some gains.
Camden Fine, CEO of the Independent Community Bankers Association of America, says Ms. Warren "really has scored a lot of points with community bankers around the country. She has mitigated a great deal of the concern that bankers had about her personally...so if she got the appointment, [as the bureau's director] at least we'd know who we were talking to, and there's something to be said about that." He says some executives of state community-bank associations "are openly pondering whether to publicly endorse her for director."
Rep. Randy Neugebauer (R., Texas) opposed creating the new agency but says he was left "pleasantly surprised" by an hour-long meeting with Ms. Warren. Asked if he could support the famed bank critic as the bureau's director, he said: "I don't know whether she's my first choice, but she certainly wouldn't be my last choice."
he needs to read more of her work, see her movie, IF HE LIKES HIS JOB.
http://online.wsj.com/article/SB1000...974842034.html
By VICTORIA MCGRANE And MAYA JACKSON RANDALL
Elizabeth Warren has earned a reputation as the scourge of the financial industry.
Banks used "tricks and traps" to carry out a "massive looting from middle-class families," the Harvard professor and consumer advocate has said. She slammed Wall Street chiefs after the financial crisis as the "people who drove the car over the cliff" and then "demanded a bailout."
[why i like this lady, for a harvard type, she's downright upright/refreshing]
Now, Ms. Warren is setting up the federal government's new Consumer Financial Protection Bureau, a longtime dream of hers that the 2010 financial overhaul established. And her tone has changed.
She wants to "make sure that there is a robust, diversified financial-services industry," Ms. Warren told Texas community bankers in January. Earlier, meeting with American Express Co. Chief Executive Kenneth Chenault, she said she wanted to learn about the industry, asked him what he thought the bureau's priorities ought to be, and said she understood that financial firms need to be able to compete, according to people familiar with their talk.
The meetings are part of a charm offensive Ms. Warren is waging aimed at critics of the new consumer agency, which many financial executives and free-market advocates assail as big-government overreach.
She has crisscrossed the country to meet with small-town bankers, some of whom are receptive to her message, as well as with leaders of big banks, who remain suspicious.
Some industry officials say they distrust positive statements they hear from Ms. Warren, in part because of her involvement in current Obama administration efforts to reach a settlement of the foreclosure mess with big banks that service mortgages.
She has reached out to some of her harshest critics in Washington and put former bankers and financial regulators on her staff, including at least one appointment that irked her liberal allies.
The outcome will go a long way to determine whether the fledgling consumer bureau establishes itself as a powerful regulator. Historians of government say agencies need to make a strong start or they are likely to have long-term credibility problems.
A wall map of the U.S. in the new bureau's offices tracks Ms. Warren's methodical campaign with colored push-pins. Each blue pin records an "in-person meeting w/[Elizabeth Warren], while a red pin means a "one-on-one EW call" and a white pin a "group meeting w/EW." The map has 47 pins so far.
It's clear some bankers, especially at the smaller institutions known as community banks, are warming to her. These banks, which can be found in every congressional district, wield clout in Washington disproportionate to their size.
A few Republican legislators also have tempered their critiques. And Mr. Chenault of American Express was left with the impression that her interest in learning from the industry was real and that she is a straight-shooter, said a person familiar with his thinking.
But her road is a long one. Just last month, the Republican-led House approved a bill that would cut the new bureau's funding this year nearly in half.
Ms. Warren has spent as much effort on large banks as on small ones, having courted numerous top bank chiefs including those at J.P. Morgan Chase & Co., Citigroup Inc. and UBS AG's U.S. division. Officials of most big banks decline to speak on the record about their meetings with her.
Bank officials say they have been told that in talks among regulators Ms. Warren is pushing for harsh terms the banks strongly oppose, including reducing the principal on many loans and absorbing billions of dollars in costs.
Ms. Warren acknowledged that her agency has no statutory authority in the matter but said, "We've been invited by the federal agencies and the state attorneys general to provide advice and assistance."
According to Jaret Seiberg, a Washington analyst with MF Global, "There's still tremendous distrust between much of the financial sector and Elizabeth Warren. She has been talking of moderation, but there's a lot of fear...that once the CFPB is up and running and it has a director, that the agency is going to be able to use its unprecedented powers with almost no checks and balances to fundamentally alter the consumer banking business."
Many Republican lawmakers who fought creation of the bureau remain unhappy that President Barack Obama last September named Ms. Warren a special adviser in charge of setting up the agency and hiring its staff, sidestepping Senate confirmation. The bureau is supposed to get its full powers in July and have a Senate-confirmed director by then.
Asked if her campaign among bankers is aimed at improving her chances of being nominated as director, Ms. Warren said, "I am working 14 hours a day to set up this agency. I'm just focused on my job." A White House spokeswoman declined to comment "on whether specific individuals are under consideration."
Ms. Warren launched her outreach even before the announcement of her administration job, calling several big-bank CEOs to let them know the news was coming.
Days after starting work, she addressed the industry that had lobbied so aggressively against the bureau. She told the Financial Services Roundtable, which represents the nation's 100 largest financial-services firms, that she believes in markets and thinks consumers bear some responsibility for the purchases they made.
She also endorsed an idea from the Roundtable, saying the new agency should focus on developing a set of general principles for financial firms to operate under, not on producing "a regulatory thicket" of "thou shalt not" rules that simply drive up compliance costs for lenders and do little to help consumers.
The bureau will collect in one place many consumer-protection powers now spread among bank regulators. It will have jurisdiction over a wide array of firms, including mortgage brokers and check-cashing stores. But firms' financial well-being isn't part of its statutory mission, which is one reason banks fret about what rules it might impose.
Steve Bartlett, president of the Roundtable, says Ms. Warren has dispelled a good deal of concern that she is an antibank ideologue, but not the worry that burdensome regulations are forthcoming. "She's won a high level of respect from the industry. Having said that, these issues, if we get them wrong, are worth billions of dollars to our customers," Mr. Bartlett said.
Support from the smaller community banks could help blunt Republican opposition to the bureau, and Ms. Warren has taken care to understand the pressures these institutions face.
On her first day on the job in September, she met with some from her home state of Oklahoma. In the meeting, at the Willard Hotel near the White House, she said that traditional community banks weren't the source of the financial turmoil and that they and her bureau could be allies, according to an Oklahoma Bankers Association newsletter.
Roger Beverage, president of the Oklahoma association, was impressed—so much so that he says he would like Ms. Warren to be the bureau's director. "I think she still has a long way to go in terms of confirmability based on what I hear from other bank lobbyists and other bank professionals, but in Oklahoma most people here are over the hump and think she's someone who would be very, very helpful for community banks," Mr. Beverage says.
Ms. Warren's map got another blue pin in January when she traveled to San Antonio. Her first stop was a private room on the second level of the Bohanan, a steak and seafood restaurant overlooking the city's Majestic Theatre, where about a dozen community bankers, mostly men in suits, had assembled.
She told the group they weren't the bureau's main target. Instead, the biggest part of its budget will be used to police 80,000 nonbank firms that are involved in payday loans, student lending, debt collecting and the mortgage business, but that now largely escape regulation. She also said the agency would be more focused on supervision and enforcement than on writing new rules.
"Obviously, that's music to our ears, 'cause we already feel that our regulatory burden is nutty," says one of those present, J. David Williams, chairman of HCSB, a $360 million-asset bank with branches in the Texas panhandle and hill country. He says he was "somewhat relieved" and left thinking: "She's been listening to us, and we're not used to regulators listening to us."
The community banks "are worried, and I don't blame them for being worried," Ms. Warren says. "So I try to talk to them about the regulatory philosophy of the agency, whether we're an agency that's going to come in and try to say rule, rule, rule or an agency that says let's focus on what we're trying to accomplish by using more of a principles-based approach. We're trying to make these markets transparent, which makes it easier for community banks to compete both with large financial institutions and with their nonbank competitors."
Ms. Warren has been picking her staff with a politician's eye, adding people with financial-industry experience alongside consumer activists. To head the research, markets and regulations team, she named Raj Date, a former Deutsche Bank AG managing director who is her top aide. A former Morgan Stanley managing director, Elizabeth Vale, will be assistant director for community banks and credit unions.
Ms. Warren rattled liberal allies with her choice to head rule-writing, a Federal Reserve official whom consumer advocates associated with a Fed rule they opposed. Ms. Warren says bringing together people from different perspectives "prevents the kind of myopia that will lead us in the wrong direction."
She also hired Holly Petraeus, wife of the commanding general in Afghanistan, to lead an effort to protect service members and their families from predatory lending.
Ms. Warren is making far less progress with the largest banks. Wayne Abernathy, an executive vice president at the American Bankers Association, says, "I've been in some of those meetings. They never get into detail. It's pretty much the same story as 'don't you think we should all get along?' Sign me up for that. But what does that mean?"
The Republican-controlled House last month passed a spending bill that would block the White House from paying a salary for Ms. Warren's advisory position and for several other Obama advisers this fiscal year.
The bill, which stands little chance of Senate approval in its current form, also would restrict funding for the bureau. The agency gets a slice of the Fed's expense budget as its own funding, up to a certain limit. The House bill would lower the cap for this fiscal year by nearly half, to $80 million. Republicans also have proposed legislation to make the bureau's budget subject to congressional appropriation.
For all this, it's clear Ms. Warren's campaign has scored some gains.
Camden Fine, CEO of the Independent Community Bankers Association of America, says Ms. Warren "really has scored a lot of points with community bankers around the country. She has mitigated a great deal of the concern that bankers had about her personally...so if she got the appointment, [as the bureau's director] at least we'd know who we were talking to, and there's something to be said about that." He says some executives of state community-bank associations "are openly pondering whether to publicly endorse her for director."
Rep. Randy Neugebauer (R., Texas) opposed creating the new agency but says he was left "pleasantly surprised" by an hour-long meeting with Ms. Warren. Asked if he could support the famed bank critic as the bureau's director, he said: "I don't know whether she's my first choice, but she certainly wouldn't be my last choice."
he needs to read more of her work, see her movie, IF HE LIKES HIS JOB.