Sen. Elizabeth Warren (D., Mass.) said the Obama administration's Wall Street bailout was not a success in a new interview, saying banks thrived and it paved the way for a populist like Donald Trump to win in 2016.
In a Politico Magazine feature on the fraught relationship between Warren and Obama's team over its handling of the financial crisis, the 2020 presidential hopeful blanched at the assertion that the bailout of large banks was a triumph.
"Sure, the banks are more profitable than ever, they are bigger than ever, the stock market is through the roof," Warren said. "But across this country, there are people who still pay the price for a financial crisis that they didn't cause and that they never had a chance to survive. … That's not a success."
While Democratic frontrunner Joe Biden often touts he and Barack Obama rescued the economy, Warren said the top-down approach from people like Treasury Secretary Timothy Geithner and National Economic Council President Lawrence Summers only benefitted the rich.
"I believe the recovery should have been from the ground up, and people with Geithner’s and Summers’ background would never see the world that way—they just don't see it that way," Warren said. "America works great for the wealthy and the well-connected—that was demonstrated big time during the financial crisis. … Donald Trump stepped into that and said, ‘If your life isn't working great, blame them.’ His version of ‘them’ is anyone who doesn’t look like you."
Summers shot back that Warren's notion of bottom-up recovery was foolhardy, recalling the disaster of not providing a bailout to Lehman Brothers. Geithner didn't speak to Politico but recounted in a memoir that Warren was more focused on personal attacks than workable solutions for the economy:
Geithner, who declined to comment for this story, wrote in his memoir Stress Test that he felt Warren "was better at impugning our choices—as well as our integrity and our competence—than identifying feasible alternatives." He added, "Her criticisms of the financial rescue, if well-intentioned, were mostly unjustified."
Summers also accused Warren of falsely suggesting he threatened her in 2009 not to criticize powerful Obama administration members.
She wrote in her 2014 memoir A Fighting Chance that he had suggested she lay off her sharp criticism of the Obama team's handling of the financial crisis recovery.
Warren, at the time, was the chairman of a congressionally appointed panel on the bank bailout and known for her sharp attacks on Wall Street:
Larry leaned back in his chair and offered me some advice. … He teed it up this way: I had a choice. I could be an insider or I could be an outsider. Outsiders can say whatever they want. But people on the inside don’t listen to them. Insiders, however, get lots of access and a chance to push their ideas. People — powerful people — listen to what they have to say. But insiders also understand one unbreakable rule. They don’t criticize other insiders.
I had been warned.
Summers told Politico the conversation went differently:
"I guess recollections differ," Summers said. "I’ve never before been accused of being biased towards going along to get along, and I don’t think that was my advice. My recollection is that Elizabeth asked how her commission could have greater impact. I responded that if they sometimes praised something that was done they would have more impact than always excoriating policymakers."
Politico quoted multiple Obama administration members excoriating Warren as a grandstanding pest who was wrongly critical of the Wall Street bailout. Among the insults were "professional critic," "sanctimonious," and a "condescending narcissist." A former Treasury aide complained she was "pissing in our face" even though they were politically on the same team.
Warren annoyed Obama enough, according to former senior adviser David Axelrod, that Obama said she should "keep her mouth shut" in 2010 about her desire to run the Consumer Financial Protection Bureau. Warren championed the creation of the government agency but was ultimately passed over to be its first chief in favor of Richard Cordray.