Warren: Big Banks Lobbying Heavily To Keep Status Quo

James Donahue

It didn’t make headlines after she said it, but federal TARP watcher Elizabeth Warren, appearing on a recent Real Time show with Bill Maher, put her finger on the ineptitude occurring these days in Washington.

Warren said efforts by President Barack Obama and Democratic Congressional leaders to put the brakes on dangerous spending practices by big banks and lending institutions, stimulate the economy and put people back to work, and launch real health care reform has been stymied by a flood of lobbyists now sweeping the halls of Congress.

Warren, who heads the Congressional Oversight Panel for TARP, said banks and their lobbyists are “hammering Congress” and fighting against efforts to bring about badly needed financial reform.

In spite of the big financial crisis the banks created by toxic investment and lending practices, Warren said they have not changed their ways and Congress appears unwilling to take steps to put controls on them. Instead of monthly or weekly visits to Washington, she said she is now seeing lobbyists representing the banking institutions arriving at the Capital daily, sometimes up to four at a time.

It is obvious that a lot of money is being secretly passed between these lobbyists and our elected legislators to buy their unwillingness to do the job they were elected to do.

Warren concluded her remarks by noting that “the problems are obvious and the solutions are too.” She implied that because of bank interference, “we can’t seem to get the two together.”

Indeed, President Obama needs to start taking matters into his own hands and stop attempting to get the two houses to cooperate in efforts to resolve the critical issues facing this nation. There are many things he can do by executive order and there are old programs still on the books that helped bail America out of trouble during the years of the Great Depression. Mr. Obama does not need to wait on Congress to act before he starts cleaning house.

One such tool would be the Home Owners’ Loan Corporation (HOLC), put in place in June, 1933 under the Roosevelt Administration. This agency purchased distressed mortgages from banks and negotiated for new, lower interest mortgage plans with homeowners so they could avoid foreclosure. It also offered leniency when homeowners missed regular payments. This agency purchased more than a million mortgages, averted the collapse of the real estate market and made it possible for thousands of Americans to keep their homes. By the time it ceased operations in 1951, the HOLC even turned a small profit.

By contrast, the Obama foreclosure prevention plan, or Home Affordable Modification Program, has failed because it has approached the problem from the wrong end.

A home buyer facing a mortgage debt higher than the cash value of the home lacks the incentive to try to save the home even if the payment is lowered. As one analyst noted: “A homeowner with equity to protect will find a way to pay the mortgage. In contrast, for underwater homeowners a mortgage payment is just expensive rent.” 

The so-called Health Care Summit, which drew full-time television coverage by both CNN and Fox News, and succeeded in taking the spotlight over the Olympic games in Vancouver for at least a day, was no more than a futile political drama carried out by people already committed to block significant health care reform.

The summit proved to be a complete waste of everybody’s time, and a well publicized example of how deeply entrenched into the pockets of Congress the insurance companies and Big Pharma have become. The arguments against changing the system to offer desperately needed care for millions of Americans made no sense. And they were muttered by people who are provided the finest health care benefits money can buy . . . just because they hold the keys to the kingdom.

Strangely, President Obama’s decision to call and televise the summit gave the public a first-hand look at just why efforts to get the Republicans to work with the Democrats to fix the health care mess are hitting a dead end.

During the discussion among Warren and the other guests on that Real Time show with Maher, someone noted that the only way left to correct this problem would be to toss everybody out of Washington during the next round of elections. But then, someone else quipped, that would not get rid of the lobbyists and their deep pocketbooks, which has been the real problem all along.

In the end we would just be electing a new batch of scoundrels to carry on the graft and corruption we have endured for too long already.