As Democratic Senator Elizabeth Warren (D-MA) cast her vote today for Stanley Fischer to serve as the number two position at the US Federal Reserve, she had reservations about the former Citigroup Inc (NYSE:C) senior manager.
Exercising a tight grip over the Democratic Party’s economic policymaking apparatus
“In recent years, Wall Street institutions have exerted extraordinary influence in Washington’s corridors of power, but Citigroup Inc (NYSE:C) has risen above the others in exercising a tight grip over the Democratic Party’s economic policymaking apparatus,” the Wall Street foe writes in an opinion piece in Politico. “There is danger anytime the key economic positions in our government fall under the control of a single tight-knit group. Old ideas can stay around long after they’re useful, and new ideas don’t get a fair hearing.”
Fischer joins former Citi alumni formerTreasury Secretary Robert Rubin and and current Treasury Secretary Jack Lew as well as directors of the National Economic Council and Office of Management and Budget, as well our current U.S. trade representative – all of which have strong ties to Citigroup, Warren noted.
“We learned about the harms of groupthink in economic policymaking the hard way – first with the deregulation of the banking industry in the 1980s and 1990s, followed by the no-strings-attached bank bailouts in the aftermath of the 2008 financial crisis, and most recently with the anemic efforts to help homeowners who were systematically cheated by financial giants,” Warren opines. “The power of a tight group of insiders can also echo through the government in subtle ways. Relationships matter, and anyone who doubts that Wall Street’s outsized influence in Washington has watered down our government’s approach toward still-too big-to-fail banks has their eyes deliberately closed.”
Warren is hitting on the key old boys’ network, the axis of evil from Washington DC to Wall Street. It doesn’t matter as much as if they are from Citigroup Inc (NYSE:C), the bottom line is they take care of big bank interests. Play ball with the clique and reap the rewards. Speak out and watch out. “Small, tight-knit groups consolidate their power through hiring. Too many people get jobs based on who they know – not what they know,” Warren wrote. “And in too many cases, the group in power is confident that not just insiders, but their insiders, are best for the key jobs.”
Sounding ever the populist presidential candidate, Warren hit her sweet spot. “For too long, the titans of Wall Street succeeded in pushing government policies that made the megabanks rich beyond imagination, while leaving working families to struggle from payday to payday,” she said, before entering testy waters. “Many Republicans openly acknowledge their ties to Wall Street, but Democrats have campaigned on an alternative approach focusing on expanding opportunities and leveling the playing field for the middle class. Democrats’ slogans have won some elections, but once in power, Democratic administrations have too often stacked top positions in government with people close to Wall Street,” she said, in what is likely the most accurate issue in the Obama White House and could be true with Hillary Clinton.
What’s the answer? Resist big bank pressure
What’s the answer to the problem? “Conflict-of-interest rules can help, but the administration needs to get serious about appointing top officials with a broader mix of career backgrounds, relationships and worldviews,” she writes. “That means resisting pressure to pick people with big bank ties for so many top economic positions when plenty of other companies and industries play critical roles in the economy as well.”