Update, Monday, January 12, 2015: On Monday, Antonio Weiss asked that the White House withdraw his nomination for Treasury undersecretary for domestic finance, according to Politico.
Last year, liberal darling Sen. Elizabeth Warren helped doom President Barack Obama's effort to nominate former Treasury Secretary Larry Summers to head the Federal Reserve. Now the Democratic senator from Massachusetts is leading the charge to derail another Wall Street-friendly Obama nominee: investment banker Antonio Weiss. Last month, the president tapped Weiss to become the Treasury Department's undersecretary for domestic finance, a position with immense power over big banks. If confirmed, consumer advocates fear, Weiss may not go to bat for average Americans while helping craft banking rules and battling Republican-led efforts to gut financial reform.
Weiss' job at Treasury would include overseeing the implementation of Wall Street reforms and consumer protection measures. He would help shape banking rules that the Treasury Department and other financial regulators must finalize over the next two years. And he would be in the room with congressional leaders and administration officials negotiating over GOP proposals that would water down financial reforms.
Weiss has spent the past 20 years at Lazard, an asset management firm that advises companies on mergers and acquisitions. He is now the firm's head of investment banking. Warren contends that Weiss is not the right man for the job because he has no experience in banking regulation and is too cozy with the financial sector. And she is leading the effort to take him down. In November, Warren vowed to vote against Weiss' confirmation, and her political operation blasted out an email ginning up opposition to him. In an op-ed in the Huffington Post last month, she said the Weiss nomination "tells people that whatever goes wrong in this economy, the Wall Street banks will be protected first."
Warren contends that Weiss is not the right man for the job because he has no experience in banking regulation and is too cozy with the financial sector.
A source familiar with the administration's thinking says that Weiss' background does not determine what policy positions he may take if confirmed. But since he has little regulatory experience and most of his relationships are with people in finance, a Democratic aide tells Mother Jones, those are the people he will likely listen to.
A White House spokeswoman declined to comment on how Weiss' connections to Wall Street might conflict with his mandate to protect consumers, noting only that "Antonio Weiss is a highly qualified nominee and we look forward to the Senate's consideration of his nomination and swift confirmation." Weiss did not respond to a request for comment.
Weiss will have a long to-do list if he's confirmed. Not only would he weigh in on banking rules, he would also advise the president on whether to compromise with Republican efforts to modify the Dodd-Frank Wall Street reform bill. (Obama will veto any all-out attack on Dodd-Frank, but Republicans could slip smaller measures to water it down into larger pieces of legislation that must get passed.) Here are some of the issues that could come across Weiss' desk:
One of the bills that might pass the Republican-controlled Congress in the next two years would gutnew restrictions on private equity fund advisers. Weiss' current firm, Lazard, runs two private equity funds. The administration source counters that this area of the company's business is separate from the investment banking work Weiss does.
Another bill that has already passed the House would weaken a section of Dodd-Frank that requires more oversight of derivatives trading. (Derivatives are financial products whose value is based on things like currency exchange rates and crop prices.)
The Financial Stability Oversight Council, chaired by Treasury Secretary Jack Lew, is looking into whether asset management firms like Lazard should be subject to tighter regulations. Weiss would serve in an advisory role on this matter.
The administration source says that Weiss' résumé does not mean that he would work to weaken rules on the financial industry. The source adds that if Weiss is confirmed, he would no longer have ties to his former employer; ethics rules require that he divest his holdings or put his investments in a blind trust.
Weiss' defenders—including Gene Sperling, a former senior economic policy maker in both the Obama and Clinton White Houses, and Neera Tanden, the president of the liberal Center for American Progress—say that his policy stances largely line up with Warren's positions. He has called for higher taxes on the rich and a more progressive tax code. Treasury Secretary Lew told the New York Times last month that Weiss opposes US companies moving overseas to avoid domestic taxation—even though his firm has helped companies do just that.
That hasn't mollified Warren and the crew of progressives she has lined up behind her. Sens. Dick Durbin (D-Ill.) and Bernie Sanders (I-Vt.) have also formally declared their opposition to Weiss.
Warren's anti-Weiss broadside is just the latest in her battle to push the Democratic party to the left. "This is not at all about Antonio Weiss," Steve Rattner, an investment banker who worked on the 2009 auto industry bailout, told Politico on Wednesday. "It is part of a much broader narrative of the fight for the soul of the Democratic Party and whether so-called progressives are going to capture that or whether more mainstream Democrats…are going to retain it."
Weiss' confirmation process likely won't get going until after Republicans take control of the Senate in January. He may be able to win confirmation with largely Republican votes.
Update, Wednesday, January 7, 2015: On Tuesday, the House implemented dynamic scoring. The Senate is expected to follow suit.
When Republicans took control of both houses of Congress earlier this month, they won an important new power: They can change how Congress does math.
Seriously. Republicans, led by Rep. Paul Ryan (R-Wis.), their budget guru, are considering altering the way Congress calculates the costs of tax cuts—a move that could make big tax cuts for the rich appear less costly than they really are.
Here's how it would work. In January, Republicans will be in charge of Congress. And that includes the Joint Committee on Taxation, which calculates how tax laws affect revenue, and the Congressional Budget Office, which produces official budget projections. Right now, when the CBO and the JCT calculate the impact of tax laws on government income, they consider how Americans might alter their behavior in response to tax rate changes. But these tax-math bodies do not evaluate how tax legislation could affect economic growth—largely because those sorts of impacts are hard to predict. Republicans have long claimed that tax cuts lead to greater economic activity that inexorably yields more tax revenues—a point much disputed. But Ryan, who in January will head up the House Ways and Means committee (which has jurisdiction over tax reform), and his fellow GOPers are looking to enshrine this Republican belief into the hard and fast calculations of Capitol Hill's number-crunchers.
Last week, in an interview with the Washington Post, Ryan said he will push to make sure that the two congressional budget scorekeepers use this accounting method—known as "dynamic scoring"—when evaluating GOP tax reform legislation. Sen. Orrin Hatch (R-Utah), who will chair the Senate finance committee starting in January, said last week that he was open to implementing the change.
Ryan and Hatch can implement dynamic scoring by simply ordering the two budget scorekeepers to accept this budgeting method. Not only that, Republicans can require the CBO and JCT to use very optimistic assumptions about how tax cuts affect the economy—that is, how tax cuts influence people's motivation to work, the moves of the Federal Reserve, and household and business decisions on savings and investment. Budget analysts then can plug those assumptions into several models estimating economic growth, and GOPers will be able to cherry-pick the model that produces the best numbers for them. "The risk is that a Congress that is politically motivated takes the most unrealistic models and plugs in highly rosy assumptions," says Chye-Ching Huang, a budget expert at the left-leaning Center on Budget and Policy Priorities.
If Republican legislators don't want to intervene directly in the JCT's and CBO's calculations, they have another option: They can install directors at the CBO and JCT who will use the kind of assumptions the GOP favors. Neither congressional Dems nor President Barack Obama can prevent that.
Republicans have pushed for this budget-math readjustment since the Reagan days. And for years, policy wonks have debated the merits of dynamic scoring. Kenneth Kies, a GOP-nominated former director of the JCT, told the Washington Examiner last week that this accounting device falls "somewhere between pure mathematics and theology." Because this arcane tweak can make tax cuts for the wealthy appear to cost the government less than they actually do, it is extremely appealing to Republicans. If they make this change, they could argue that new tax cuts for the well-to-do would partly pay for themselves—and wave the JCT-CBO seal of approval to justify their claim. Democrats contend that dynamic scoring is a gimmick designed to allow Republicans to chop taxes for the rich without paying the political cost.
Ryan's office did not respond to a request for comment.
On Thursday evening, President Barack Obama announced his hotly anticipated executive action on immigration, which will keep nearly 5 million undocumented residents from being deported. Even though the sweeping measure has elicited threats of retaliation from congressional Republicans, Obama said he moved forward because comprehensive immigration reform is unlikely to go anywhere in the GOP-dominated Congress next year.
"I know some of the critics of this action call it amnesty," the president said in his speech. "Well, it's not. Amnesty is the immigration system we have today—millions of people who live here without paying their taxes or playing by the rules, while politicians use the issue to scare people and whip up votes at election time. That's the real amnesty—leaving this broken system the way it is."
A year and a half ago, a bipartisan immigration bill passed in the Senate but died in the House. The bill likely had enough Republican and Democratic votes to pass in the House, but Speaker John Boehner, catering to his tea partiers, refused to bring the measure to the floor. If signed into law, the legislation would have provided legal status to about 11 million undocumented immigrants. Here's a look at who benefits most from Obama's executive action—and who has lost out, thanks in part to GOP obstructionism.
Winners Undocumented parents of children who are US citizens or permanent residents: "Undocumented immigrants…see little option but to remain in the shadows, or risk their families being torn apart," the president said. "It's been this way for decades. And for decades, we haven't done much about it." His executive action will offer temporary legal status to the undocumented parents of children who are US citizens or permanent residents and allow them to apply for work permits—as long as they have lived in the United States for at least five years, pass a background check, and pay taxes.
DREAMers: The president's move will broaden the 2012 Deferred Action for Childhood Arrivals (DACA) program, which had temporarily protected from deportation some 1.2 million young people who were brought into the country illegally as children—as long as they entered the country before June 15, 2007. Now, children who came to the United States before January 1, 2010, will be eligible to apply for deferred-action status. The so-called DREAMers (named after the proposed Development, Relief, and Education for Alien Minors Act)can apply for employment visas, though there is no direct path for them to lawful permanent residence or citizenship. To the dismay of immigration activists, the executive action does not extend benefits to the hundreds of thousands of parents of DREAMers.
Families: Often US citizens and legal permanent residents are separated for long stretches of time from family members who are awaiting legal permanent resident status. The executive action will expand a waiver program that will reduce the time these families spend apart.
Noncriminal undocumented immigrants: Obama's executive action shifts all of the Department of Homeland Security's enforcement resources toward deporting undocumented immigrants who are criminals—instead of deporting undocumented immigrants who pose no such threat. "We're going to keep focusing enforcement resources on actual threats to our security," Obama said. "Felons, not families." The president's order also guts an existing program called Secure Communities, which requires police to share arrestees' fingerprints with federal immigration officials, who can use the information to deport suspects who are here illegally, even if they turn out to be innocent. The program will be replaced with another devoted to deporting only those convicted of criminal offenses.
Highly skilled workers: Skilled workers who have had their legal permanent resident application approved often wait years to receive their visas. Obama's order will allow these people to move and change jobs more easily.
Immigrants with pending cases: As part of the president's executive action, the Justice Department will implement immigration court reforms to quickly process the massive backlog of cases.
Immigrant victims of crime: Obama is directing the Department of Labor to expand the number of visas available for victims of crimes and human trafficking.
The Border Patrol: Obama's executive action shifts resources to the border, though it doesn't specify how much more money will be flowing to Customs and Border Patrol agents and Immigration and Customs Enforcement along the southern border.(The Senate bill would have allotted some $30 billion over 10 years to hiring at least 19,200 extra border patrol agents.)
Entrepreneurs: The executive action will make it easier for foreign entrepreneurs—who show a potential to create jobs in the United States and attract investment—to immigrate to the US, though there was no mention how the administration will achieve this.
Losers Undocumented immigrants who have been here since 2011: The failed Senate immigration bill would have allowed immigrants without papers—and their children and spouses—to apply for provisional legal status, if they have been in the United States since the end of 2011. These immigrants could have eventually applied for citizenship.
Undocumented agricultural workers: Under the Senate bill, undocumented agricultural workers would have been eligible for legal immigrant status if they had worked at least 100 full days between 2010 and 2012. The bill would have created a path to citizenship for these farmworkers.
Ag workers with papers: The Senate bill would also have created a new temporary work visa called the W visa for farmworkers. The new program would have permitted these laborers to eventually apply for permanent resident status without an employer's sponsorship. Less-skilled non-farmworkers could have also applied for a W visa.
Other types of legal immigrants: The Senate bill would have set up a new system that would grant visas to up to 250,000 foreigners a year. Foreign nationals would have accumulated points based on their skill level, education, and employment background. The new system would have cleared the current backlog of applicants for family-based or work visas.
Foreigners attending American universities: More foreigners graduating from American universities in the fields of science, math, and technology would have been able to apply for permanent visas.
Immigrant detainees: If the Senate bill had okayed by the House, unaccompanied minors, mentally disabled immigrants, and other vulnerable people going through the detention and deportation process would have been granted free legal representation. The bill would have limited the use of solitary confinement in immigrant detention facilities.
Elizabeth Warren is off to a running start in her new leadership role with the Senate Democratic caucus. She called out Walmart for its terrible labor practices. She wrote an op-ed this week warning the president against appointing Wall Street insiders to the Federal Reserve. And Tuesday morning, she called on financial institutions to prove that they can protect customer data from cybercriminals.
Over the past year, cyber attackers have stolen roughly 500 million records from financial institutions, according to federal law enforcement officials. In a joint letter also signed by Rep. Elijah Cummings (D-Md.), Warren asked 16 firms—including Bank of America, Citigroup, Goldman Sachs, and Morgan Stanley—for detailed information about cyberattacks they experienced over the past year and how they plan to prevent future breaches.
"The increasing number of cyberattacks and data breaches is unprecedented and poses a clear and present danger to our nation’s economic security," the lawmakers wrote in the letter. "Each successive cyberattack and data breach not only results in hefty costs and liabilities for businesses, but exposes consumers to identity theft and other fraud, as well as a host of other cyber-crimes."
Warren and Cummings requested the firms provide information on the number of customers that may have been affected by breaches, data security measures the companies have taken in response, the value of the fraudulent transactions connected with the cyber attacks, and who is suspected to have carried them out. The letters also request that IT security officers at each firm brief the lawmakers on how they are protecting their data from cybervillains.
The lawmakers hope to use the information the firms provide to inform new federal cybersecurity legislation. Current cybersecurity law is unclear about when companies are required to notify the government about a data hack. Warren has previously called on Congress to give the Federal Trade Commission more power to regulate data breaches.
The American financial sector is one of the most targeted in the world, according to the FBI and Secret Service officials. The hackers who stole data from JPMorgan Chase earlier this year—compromising information from 76 million households—also targeted 13 other financial institutions, Bloombergreported last month.