I used to drink the Kool-Aid. I was in the banking industry for the early part of my career. I always thought that the restrictions that prevented investment banks and commercial banks from operating under the same roof were arcane and unnecessary. With the benefit of hindsight, I can see that I was wrong about that.
The Glass-Steagall Act was passed during the Great Depression (1933) with the intention of preventing government insured depository institutions (banks!) from taking too much risk at taxpayers’ expense. The elimination of Glass-Steagall approved by a Republican Congress with enough Democrats to provide a veto proof majority and signed by President Clinton in 1999 was, in the minds of many, on the critical path to the financial crisis in 2007.
The champion of re-implementing those safeguards was Elizabeth Warren who, in 2010, was Sen. Harry Reid’s appointee to the Congressional Oversight Panel on TARP. But, she was not alone. Sen. John McCain (R-AZ) co-sponsored legislation to restore those regulations as did the bi-partisan duo of Sherrod Brown (D-OH) and David Vitter (R-LA) in the House. In the end, we had to settle for the Volcker Rule that bans banks from using depositors’ funds for proprietary trading.
The Tea Party, a movement that has libertarianism roots, nevertheless agrees the restoration of the Glass-Steagall prohibitions would be productive. The Tea Party Tribune recently featured a banner headline on the subject that reads “Bring Back Glass-Steagall” and mirrors Warren’s opposition to the Too Big To Fail (TBTF) banks.
Now a US Senator from Massachusetts, Warren has attracted attention from the liberal wing of the Democratic Party, those who think of President Obama as a centrist.
How was a former professor and government bureaucrat able to leverage her limited experience into a Senate seat on her first run at political office?
She did so by tapping into the anger that Americans feel across the political spectrum.
|Sen. Elizabeth Warren (D-MA)|
There seems to be alignment between the origins of the support for both Sen. Warren (and what is now being called the “Warren Wing” of her party) and the Tea Party. They agree on who to be angry with – Wall St. and other corporate interests that have their way with our political system; and, politicians that seem to be in their thrall.
There’s even some alignment between the philosophical underpinnings of their respective platforms. Here’s a quiz for you. What is the source of this philosophy?
“Government … has three basic functions:
1. Provide for the national defense.
2. Put rules in place… that are fair and transparent.
3. Build the things together that none of us can build alone – roads, schools, power grids….”
Sounds simply and basic. Must be a libertarian, right?
Well, no. It’s from Sen. Warren’s blog.
I was trying to tantalize you with my headline and chose an issue where the far left and far right are aligned to back it up. But, it’s fair to say that when it comes to solutions, those two extremes are far apart.
Unlike the Tea Party, the Warren Wing of the Democratic Party, as it is now called, as well as Democrats more generally believe in government solutions.
I could go on about how and why I think their approach will lead to failure. Perhaps, that would be the subject of another post (or three). However, that’s not my focus here.
The Tea Party wing of the Republican Party has become an obstacle to progress. Lacking seniority in the House and seeking more clout, they prefer to stand on principle rather than seek compromise to find solutions to the major structural problems we now face – tax reform, unsustainable entitlement programs, an undereducated workforce and so on.
Will the Warren Wing act the same way? Will the rise of a hard left to counterbalance the hard right be nothing more than political intransigence positioned as unwillingness to compromise on values?
The common origins of our anger and frustration with Washington represent an opportunity to find common ground – even as it requires us to compromise some of our principles -- to address the big issues of the day.
We were promised a “grand bargain”. I’m still waiting.
WHO WILL LEAD?