Elizabeth Warren, the chair of the Congressional Oversight Panel created to oversee the U.S. banking bailout, formally known as the Troubled Assets Relief Program [TARP], shares her views in this interview with Charlie Rose on financial reform, the powers of a new consumer protection agency, the sovereign debt situation and on a variety of other issues.
Warren points out during her interview things like credit card agreements: 1980 – 1 page! ; 2010 – 30 pages! She also talks about commercial real estate and “the hollowing out of the middle class”.
Here are a few excerpts form last night’s (March 4) interview.
Warren’s views on Greece:
Charlie Rose: We are now looking at the situation in Greece where there is risk of default on debt. And what’s come into play are private equity firms looking at how they can engage and also betting on the Euro and credit default swaps have risen their presence again.
Elizabeth Warren: And the whole notion of bookkeeping, in effect.
Charlie Rose: Whether certain firms…the charge is certain firms help them cover up the amount of debt they had.
Elizabeth Warren: Enron taught us a few years back…in fact that the books are dirty, that there is one set of books that’s put out in front for everyone to see. But there are all these effectively off the book transactions that nobody can see that reflect the real risks that your enterprise has taken ; and we’ve gone straight from Enron to Greece with lots of stops in between for large financial institutions.
But what it really goes back to is how much honesty, how much transparency are we going to insist on in the financial system. You know, everyone wants to make this stuff really hard. It’s about credit default swaps and, you know, derivative squares and so on. No, it really is about things like transparency and honesty…
On ‘too big too fail’ [TBTF]:
Charlie Rose: What else do you want to see in regulatory – in a bill that’s supposedly looks at how we got where we are in the economic crises and the recession that we experienced and to make new rules and regulations that will prevent it from happening again?
Elizabeth Warren: It’s about the other end of the spectrum. We started at families. The other end is [TBTF].
Until we build a chapter 11 system – a resolution authority system, whatever we want to call this, until we build the part of the legal structure that permits us as a people to say with real credibility behind it ; CREDIBILITY is the underlying word here — I don’t care what your business is. I don’t care how big you are. I don’t care how intertwined you are. If you make bad enough decisions – you can be liquidated. It’s over.
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