Thursday, February 28, 2013

Dave Bing: Governor Rick Snyder To Announce Whether Detroit Will Get Emergency Manager Friday

Dave Bing: Governor Rick Snyder To Announce Whether Detroit Will Get Emergency Manager Friday:
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Dave Bing: Governor Rick Snyder To Announce Whether Detroit Will Get Emergency Manager Friday

Posted: 02/28/2013 2:57 pm EST | Updated: 02/28/2013 4:35 pm EST

Dave Bing Emergency Manager Detroit

Detroit Mayor Dave Bings listens to a question during an interview with the Associated Press in Detroit, Thursday, June 14, 2012. Bing said Thursday, Feb. 28, 2013 that Gov. Rick Snyder will make an announcement about Detroit's future Friday. (AP Photo/Paul Sancya)

Michigan Gov. Rick Snyder (R) will make an announcement about the future of Detroit at noon on Friday, according to Mayor Dave Bing.

The decision is widely regarded to be an appointment of a emergency manager for the city, which is coming on the heels of the state's financial review team found a "severe financial problem" in the city last week. The new manager would have the power to abrogate contracts, make new laws, fire elected officials and impose new taxes.

When speaking to reporters at a policy conference on Thursday, Bing hinted at but did not reveal the substance of Snyder's forthcoming announcement.

“I’d like to lie to you and say no,” Bing said after he was asked whether he had communicated with Snyder. “But the Governor and I spoke this morning ... on the phone.”

“I’ve got to let him make the announcement," he said. "I think everybody has a good idea about what the announcement will be. I shouldn’t make the announcement.”

Last week's findings by the state review team showed the city had more than $14 billion in long-term liabilities, including underfunded pensions. Bing said Thursday he was willing to continue working with the state.

“I think we have to learn to make the best out of a bad situation. The only way you do that, I believe, is working together," he said. "The state and the city will have to work together to get us out of this.”

Bing has a 10-day window to request a hearing, after which Snyder could revoke his decision or appoint an emergency manager. Detroit's mayor indicated on Thursday that City Council might challenge the decision, though he said that he had not yet seen their proposal. Council has already instructed the Law Department to research the possibility of suing the state of Michigan over PA 436, the law that allows Snyder to appoint an EM.

“I’ve never been one who thought like that," he said. "I never fought help, I never pushed back. I’m a team player.”

Bing said he didn’t expect Snyder to immediately name an individual to the post.

“Whether it’s an EM or whether it’s my administration, there’s things that we have to do to fix the city. Public safety is number one.”

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Elizabeth Warren, Champion of Consumer Financial Protection - Businessweek

Elizabeth Warren, Champion of Consumer Financial Protection - Businessweek:
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Cover Story

Elizabeth Warren, Champion of Consumer Financial Protection

By Drake Bennett on July 07, 2011

Elizabeth Warren’s admirers often refer to her as a grandmother from Oklahoma. This is technically true. It’s also what you might call posturing. Warren, 62, is a Harvard professor and perhaps the country’s top expert on bankruptcy law. Over the past four years she has managed to stoke a fervent debate over the government’s role in protecting American consumers from what she sees as the predatory practices of financial institutions, and she has positioned herself as the person to oversee a new federal agency to rewrite the rules of lending. Warren is a grandma from Oklahoma in roughly the same way Ralph Nader is a pensioner with a thing about cars.

If the grandmother perception is plausible, it’s largely because Warren has a gift for parables and for placing herself in the middle of them as the embodiment of moral force. Thus, her account of the precise moment she realized that changing the way banks lend was going to require a new federal bureaucracy—and that it was up to her to create it.

Warren begins her tale in the spring of 2007, before the housing crash and the financial crisis. She was on a plane back to Boston after a series of discouraging meetings with credit-card company executives. She had tried to sell them on an idea called the “clean card” that grew out of her academic work and her side gig as a guest on such shows as Dr. Phil, where she dispensed empathy and advice to audience members who were one bad check away from losing everything. The concept was simple: Offer the equivalent of a Good Housekeeping Seal of Approval to any credit-card company that disclosed all of its costs and fees up front, no fine print.

After a few meetings in which she was politely rebuffed, one executive walked Warren to the door and, with his arm around her, let her in on a trade secret: If he admitted that his card’s actual rate was 17 percent, while his competitors were still claiming theirs was only 2.9 percent, his customers would desert him for the seemingly cheaper option, seal of approval or not. No credit-card company would ever go along with a clean card unless all of them did. And the only way to get all of them to do it was to require it by law.

At this point, Warren says, the banker made a confession. “We recognize that we have an unsustainable model, and it cannot work forever,” she says he told her. “If we told people how much these things cost, they wouldn’t use them.”

Here she pauses for effect, and to take a sip of herbal tea. Warren is slight and kinetic, with wide, pale blue eyes behind rimless glasses. She punctuates her sentences with exclamations like “Holy guacamole!” It’s difficult to tell whether these are spontaneous or deliberately deployed to soften her imposing professorial mien. Warren, who grew up poor and went to college on a debate scholarship, understands the power of expression. When she wants to underline a point, she leans in to conspire with her listener; then her voice goes quiet, as it does when she says she knew instantly the condescending executive was right. Her clean card was a flop.

And so, on the flight home, Warren turned to the problem of how to push those credit-card companies into doing the right thing. By landing time, she says, she had her answer: a powerful new federal agency whose sole mission would be to protect consumers, not only from confusing credit cards but from what she calls the “tricks and traps” of all dangerous financial products. The same way the Consumer Product Safety Commission guards against dangerous household products or the Food and Drug Administration watches out for contaminated produce and quack medications. The way Warren tells it, she pulled a piece of paper out of her backpack and got to work right there on the plane. “I started sketching out the problem and what the agency should look like.”

It’s a good story, even if the timeline is a little off. Warren’s aides say she first pitched the idea of a consumer financial protection agency to then-Senator Barack Obama’s office months before her fateful meeting with the executive. Whatever the idea’s provenance, there’s no doubting its influence. In a summer 2007 article in the journal Democracy, Warren outlined what her guardian agency would look like. “It is impossible to buy a toaster that has a one-in-five chance of bursting into flames and burning down your house,” she wrote. “But it is possible to refinance an existing home with a mortgage that has the same one-in-five chance of putting the family out on the street—and the mortgage won’t even carry a disclosure of that fact to the homeowner.”

One was effectively regulated. The other was not.

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Bennett is a staff writer for Bloomberg Businessweek in New York.

Elizabeth Warren Paints JPMorgan as Purse Thieves - Businessweek

Elizabeth Warren Paints JPMorgan as Purse Thieves - Businessweek:
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Photo Illustration by 731; Photograph by Getty Images

Politics & Policy

Elizabeth Warren Paints JPMorgan as Purse Thieves

Posted by: Joshua Green on May 23, 2012

Elizabeth Warren JPMorgan Chase Massachusetts Senate race Scott Brown

Elizabeth Warren has had a rough go of it lately. Her challenge to Senator Scott Brown (R-Mass.) once looked like one of the Democrats’ best pickup opportunities this fall, with Warren raising boatloads of money and leading Brown in a handful of polls. Then she ran into trouble. Earlier this month, Brown’s campaign challenged her to produce evidence backing up her claim that she is descended from Cherokee Indians. So far, Warren has been unable to do so, and the past several weeks have featured a series of uncomfortable revelations related to her claim: Harvard Law School listed her as a Native American faculty member in the mid-1990s, and a genealogist withdrew his claim that he’d found evidence corroborating Warren’s heritage. (The Atlantic’s Garance Franke-Ruta has written the definitive account of the controversy here.)

With no resolution in sight, the controversy is damaging Warren’s candidacy and could conceivably cost her the race. Yesterday a Democratic poll found her tied with Brown. But a single partisan poll doesn’t prove much, and the respondents were surveyed two weeks ago. She’s probably in worse shape.

Warren made her name in politics during the financial crisis as the most forceful and articulate critic of the big Wall Street banks. So it is somewhat odd, though serendipitous, that one of her old foes may inadvertently have thrown her campaign a lifeline. The revelation thatJPMorgan Chase (JPM) lost at least $2 billion in an ill-advised “hedge” gone horribly awry has revived anger at Wall Street and allowed Warren to reassume her old role as the scourge of greedy bankers and defender of the American middle class.

Last week brought news that Brown has received $50,000 in campaign contributions from JPMorgan employees. Now, Warren has taken to the airwaves seeking to capitalize on the new controversy and distract from the old one. In a tough new radio ad captured by Kantar Media’s Campaign Media Analysis Group, Warren likens the bank to a purse thief:

Wall Street isn’t going to change its ways until Washington gets serious about strong oversight and real accountability. No special deals. We need a tough cop on the beat to make sure that nobody steals your purse on Main Street or your pension on Wall Street.

To listen to the ad, click here. It would be a cosmic irony if JPMorgan’s reckless trading rescued Warren and delivered her to the U.S. Senate. Will it? We’ll have a better idea where things stand tonight at 11 p.m. when Suffolk University releases its well-regarded poll of the Massachusetts Senate race.

Green is senior national correspondent for Bloomberg Businessweek in Washington. Follow him on Twitter @JoshuaGreen.

Wednesday, February 27, 2013

Elizabeth Warren's Inadvertent Best Friends: Wall Street and Republicans - Businessweek

Elizabeth Warren's Inadvertent Best Friends: Wall Street and Republicans - Businessweek:
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Photograph by Mary F. Calvert/Zuma Press

2012 Campaign

Elizabeth Warren's Inadvertent Best Friends: Wall Street and Republicans

By Sheelah Kolhatkar on November 06, 2012

Special Report

(Updates with Warren winning Senate seat and Obama's re-election.)

(An earlier version of this story ran online.)

The Massachusetts Senate race was close right up until the end, with three major polls showing Elizabeth Warren pulling ahead and two newspaper polls showing close to a tie. Now that Warren has defeated Republican Senator Scott Brown, who was once seen as an easy bet for reelection, it’s likely to trigger one of the strongest cases of political regret in recent memory.

Congressional Republicans, Wall Street bankers, and business lobbyists now face the possibility that by driving Warren out of the Consumer Financial Protection Bureau (CFPB), which she helped establish, and which they agitated to keep her from heading, they created a far bigger and more threatening animal: a hugely ambitious senator with national star power, command of financial affairs, and the stature to influence President Obama.

“In a crisis, if she’s on the Senate Banking Committee, that’s where she can do some damage,” says Larry McDonald, a former Lehman Brothers trader, Brown fundraiser, and author of A Colossal Failure of Common Sense. “She’s probably going to be very effective at massaging legislation to fit her philosophical ideals … and media people will be just falling over themselves to give her airtime.”

Warren, a Harvard law professor and scholar of bankruptcy and the middle class, first suggested the idea of an agency that would protect consumers from exploitation by financial institutions in a 2007 article in the journal Democracy. She was recruited to head the Congressional Oversight Panel monitoring the government rescue of the financial system in 2008, and she pushed for the creation of the bureau.

Four years later, the Dodd-Frank financial reform bill made the CFPB a reality, and Warren spent the next yearworking to staff it, meeting with community bankers across the country, big-bank CEOs, and policymakers in Washington. Although she was seen as the obvious candidate to ultimately lead the agency, Senate Republicans, intent on weakening its power, indicated they would fight any attempt by President Obama to appoint Warren to the job. The idea of pursuing a Senate seat in Massachusetts was dangled in front of her like a shiny jewel, almost as a way to deflect her attention and get her out of Washington without an ugly partisan battle.

Warren now has a full six-year Senate term in which to create an agenda. And, depending on how that goes, who knows what else she could have in mind for the future? Her opponents may have handed her the perfect platform for launching an even more ambitious next act. “There’s a lot of irony in politics,” says David Paleologos, director of the Political Research Center at Boston’s Suffolk University. “And also a lot of symmetry.”

Kolhatkar is a features editor and national correspondent atBloomberg Businessweek. Follow her on Twitter @Sheelahk.