WASHINGTON, December 30, 2014 – Senator Al Franken first announced his opposition to President Obama’s nominee for Treasury Department undersecretary for domestic finance on December 10. He wrote then that he was troubled by Antonio Weiss’s work on corporate inversions and international mergers, adding, “Wall Street’s perspective is already well-represented in the Administration.”
The Minnesota Democrat restated his opposition on Sunday, sending supporters an email with a link to a petition asking Obama to withdraw Weiss’s nomination. “More than six years after the crash, the American economy is still recovering,” Franken wrote. “We got into that mess because we were willing to let Wall Street police itself. Foxes make poor guards of henhouses. We know that through bitter experience, and I’m not willing to let it happen again.”
Franken joins Massachusetts Democrat Elizabeth Warren in opposing Weiss. A Warren adviser said in mid-November that Warren “is a no on Weiss.” Like Franken, Warren considers Weiss’s work on corporate inversions a disqualification, as is his insider status on Wall Street.
Warren wrote in the Huffington Post, “The White House and Treasury have strongly denounced inversions, and rightly so. But they undercut their own position by advancing Mr. Weiss. Already Senator Grassley has denounced the move as hypocritical, and Senator Durbin has expressed his opposition to the nomination over the inversion issue.”
According to Warren, “The over-representation of Wall Street banks in senior government positions sends a bad message.” At the same time, business groups have been concerned that there have been almost no corporate executives or financiers in top Treasury posts.
Weiss is head of global investing at Lazard, and at 32 he became a partner there. His nomination for the undersecretary job drew warm praise from Wall Street. Supporters say that Weiss will bring a clear understanding of market operations to the administration. He coauthored a report with the Center for American Progress on reforming the tax system to help the middle class, and has drawn praise from people within the progressive movement.
His politics are liberal-progressive, but that doesn’t impress Warren. Critics like Warren and Franken have cast their opposition partly in terms of experience. Warren observed that Weiss’s background is largely in Europe and in mergers and acquisitions, while the domestic finance job oversees domestic policy and the implementation of regulations like Dodd-Frank.
In fact, it appears that Warren’s opposition to Weiss is part of a general distrust of anyone with practical financial expertise. Her background is law, and it appears that during her stint at Treasury, she never developed an appreciation or understanding for finance and economics.
Warren has made a name for herself as a critic of Wall Street, but has opposed others who got that expertise elsewhere than on Wall Street. Former Treasury Secretary Timothy Geithner was a Warren target for his work on the Troubled Asset Relief Program, which she believed would be a huge giveaway to banks. When a first round of “stress tests” on U.S. banks showed that TARP had been effective, Warren demanded that Geithner redo the tests.
Former Treasury undersecretary, Harvard president and chief World Bank economist Lawrence Summers also worked on TARP. In spite of his outstanding qualifications as an economist, an academic and as a public policy expert, Warren was relentless in her opposition to his nomination to the chairmanship of the Fed. She cared only about TARP.
The Obama Administration left the nomination hanging until Summers withdrew his name, and in the process seemed to repudiate one of its most important policies to deal with the 2008 market crash.
Warren and Franken have come out on the Weiss nomination not as liberals, but as populists. Like Tea Partyers, they believe that government economic policies favor Wall Street, and they distrust anyone who has the experience to change those policies in a way that helps the middle class. They are joined by other liberals like New Hampshire’s Jeanne Shaheen, Dick Durbin of Illinois, and independent Bernie Sanders from Vermont.
Aside from the populism, Warren and Frank probably opposed Weiss in an attempt to derail the budget resolution that was passed earlier this month. The “CRomnibus” bill contained language that loosened some provisions of Dodd-Frank, and the role of Citigroup lobbyists in inserting those provisions explains the Warren’s focus on them in her “enough is enough” speech from the Senate floor in which she denounced the Weiss nomination.
If Obama decides to hold firm in his support for Weiss – a very big if – he sets up an interesting battle within the Democratic Party. It is a battle that right now sees most Republicans undecided but probably favorable to Weiss, but with some, like Iowa’s Charles Grassley, prepared to side with Warren and Franken.
Warren was able to scare Obama into diffidence on Summers, but her opposition might help Weiss, a man who appears clearly qualified to serve as Treasury Undersecretary for Domestic Finance.