I like Elizabeth Warren, chair of the congressional oversight panel for TARP. She’s smart, tough, passionate and opinionated. I met her years ago on the radio airwaves, when I interviewed her after she and her daughter co-authored “The Two Income Trap“.
But this morning, Ms. Warren fell off the pedestal on which I had placed her. Harry Smith interviewed her on The CBS Early Show, ostensibly to discuss her comments yesterday on CNBC about conducting a second round of stress tests. Unfortunately, Warren seemed more concerned with trashing former Treasury Secretary Henry Paulson, than talking about stress tests, part deux or even the repayment of TARP funds by ten of the nation’s largest banks.
While I understand the need to look back to learn from mistakes, I thought that this interview could have been a great opportunity for Warren to look forward and to emphasize where progress had been made, to warn of the potential dangers that still lie ahead and to explain how more testing might identify problems before they become critical.
There are three good reasons that the government should continue applying stress tests on the banks:
- The original variables probably undershot the depth of the recession
- With the framework now in place, on-going testing should not be so onerous
- Even when coronary patients heal, they undergo testing forever…why should this patient be any different?
Maybe Warren had an off day, but I think that she’s already won the fight with Paulson. Time to let that one go and forge ahead to tackle new challenges. For example, can you explain in simple English the “fair market value” of those bank warrants?
