Elizabeth Warren, TARP Queen

From The Big Money, on Harvard law professor Elizabeth Warren, who is reporting for Congress on the Treasury Department's spending of the TARP money:

Five years from now, when Tesla Sedans and Facebook and American Idol have miraculously powered America out of its second Great Depression, historians may share a belly laugh about the days—not that long ago!—when respected economists and policymakers spent trillions of borrowed dollars attempting to bail out "toxic" and "troubled" assets, as though they might rehabilitate a subprime mortgage gone bad with a solid hug, maybe a week at Promises for one of those nonperforming (but still chic) California jumbo mortgages. Problem solved! Of course these much-maligned assets were not really the problem, they will chortle. It was the people underlying these assets who were truly troubled; it was the institutions that overleveraged so many Americans so insidiously that were really toxic.

How could we have been so blind? they will wonder.

That the American financial system itself is irreparably broken is already obvious enough to a handful of public figures as diverse as the president of China, the most recent Nobel laureate in economics, and even Jay Leno, who last month personally chided the president for delegating our national nightmare to a banker, a Bush-era strategy that has proven disastrous for more than a year. But I'm convinced that no one grasps the true nature of our hard times better than Elizabeth Warren, the Harvard Law School professor who last month revealed that TARP, the original asset-bailout program that she oversees, had resulted in taxpayers subsidizing tens of billions in investor profits while producing no discernible uptick in bank lending.

Way back in 2003, Warren—a pretty, blue-eyed former Republican farm girl from Oklahoma who rose to become one of Harvard Law's rare female tenured professors—and her daughter published a groundbreaking study of Americans' financial woes titled The Two-Income Trap. The book arose from Warren's tenure as senior adviser to Bill Clinton's National Bankruptcy Review Commission, which might, like TARP, also have become a study in frustration. Handed the task of figuring out how bankruptcy rates could be higher than during the Great Depression—and rising—in prosperous times, Warren was denied the cooperation of the financial industry. So she decided to pore over thousands of pages of federal surveys of household spending patterns that had been ignored for decades. What she found was that modern American households are worse off than their counterparts of a generation ago, even with an additional breadwinner—hence, the title. Today's families literally cannot afford not to borrow, and unregulated financial products, with their limitless interest rates and myriad fees, are literally killing them. ...

Go read the rest here.