On RealClearMarkets.com

"Batting 8th Today . . ."

To a blogger, making RealClearMarkets.com is a bit like a novelist being mentioned on Oprah's book list: it delivers an instant, nationwide "pop" in your traffic (actually, international -- RealClearMarkets.com reaches readers in dozens of countries, not to mention senior policy makers in Washington, Wall Street-types, etc.).

So, it's nice to be on today's lineup -- along with people like Paul Krugman (NY Times), Robert Samuelson (Washington Post), and Fareed Zakaria (Newsweek).

As befits this blog's tiny profile, my post appears further down, in a section called "Off the Street."

Titled "The Wall Street Journal Whiffs on Warren," it discusses why Elizabeth Warren seemed liked a defensible choice to head the watchdog agency . . . she proposed creating, and why the Journal's attack on her appointment falls apart on closer (OK, not so close) scrutiny.

To someone who's been reading the Journal for 40 years (since I was 10), it's both sad and dismaying to see it now stumble so badly under Rupert Murdoch's ownership -- sort of like witnessing a visiting baseball slugger who's eviscerated your home team for years start to lose a couple steps.

The Journal I grew up with never used to be such an easy, broad target . . .

The Wall Street Journal Whiffs on Warren

Protecting Consumers From Banks

It turns out that Harvard Professor Elizabeth Warren will head the new Consumer Protection Financial Bureau, after all.

The Bureau, which Warren proposed creating, is charged with ensuring that "consumers are protected from unfair, deceptive, or abusive acts and practices and from discrimination."

Seeing as how millions of consumers are routinely deceived, abused, and dealt with unfairly by the nation's biggest banks, that would seem to be a good start.

So, what exactly is the Wall Street Journal up in arms about ("Elizabeth III")?

Here is their case against her, followed by my rebuttals in italics:

WSJ: [Senate leaders] have warned the White House that Warren probably isn't confirmable. A President with more political and Constitutional scruple would have nominated someone else.

Ross Kaplan: Most of the Senate's senior leaders depend on Wall Street cash to fund their election campaigns. The surprise would be if someone hostile to Wall Street's interests was confirmable.

WSJ: Ms. Warren was a vociferous opponent of allowing regulators charged with maintaining the safety and soundness of banks to control this new bureau.

Ross Kaplan: Regulators just presided over the biggest financial debacle since The Great Depression, and did nothing to stop it -- in fact, they facilitated it. Why should Warren answer to them??

WSJ: The new bureau [is] destined to be a bureaucratic rogue, inside an agency (the Fed) that it doesn't report to, with a budget not subject to Congressional control.

Ross Kaplan: And exactly who are the too-big-to-fail banks accountable to? Yes, there are "rogues" running amok and threatening the Republic . . . but it's not Warren and her tiny, new federal agency.

In truth, installing Warren by Presidential appointment instead of Senate confirmation -- what the Journal is putatively upset about -- could very well be a tactical blunder.

That's because a Senate confirmation hearing would shine a huge, public spotlight on a dysfunctional U.S. Senate, and the interests it truly serves.

He's No Ferdinand Pecora: Phil Who?!?

Nine Better Choices to Investigate Wall Street

Do you know who's on the "Financial Crisis Inquiry Commission" ("FCIC"), the 10 member Congressional committee that's now investigating the (ongoing) financial crisis?

Neither do I -- and neither, I submit, do the vast majority of Americans. In fact, I'd be shocked if 5 in 100 knew that the FCIC existed. (If you're a fan of Jay Leno's "Jay Walking" segment, apparently there are plenty of people who don't know who George Washington or Abraham Lincoln are -- let alone Joe Biden or Nancy Pelosi.)

The FCIC, of course, is the heir to the infamous (Ferdinand) Pecora Commission, which laid bare Wall Street abuses leading up to the 1929 stock market crash, and set the stage for overhauling this country's financial regulations.

Regulations such as Glass-Steagall, the Securities Act of 1933, and the Securities Exchange Act of 1934 -- regulations that were highly effective, and worked as intended for almost 70 years (the financial - regulatory equivalent of getting 300,000 miles on your last car).

Deafening Silence

In fact, the FCIC has been meeting since Summer, and is headed by Phil Angelides, the former Treasurer of California (Phil who?!?)

With the exception of Brooksley Born, former CFTC Commissioner (and famous would-be regulator of credit derivatives) . . . I can't name, or even recognize, a single other commissioner.

Which is a double shame, for two reasons: 1) today's financial crash calls for the most serious kind of inquiry, conducted by the wisest, most experienced people available; and 2) we're blessed with many such people, presumably ready, willing, and able to serve -- if only asked.

All-Star Lineup

In that vein, here's a short list of political and business luminaries who should have been chosen for the committee, in addition to Born (I'd then let the panelists choose their own chair).

Paul Volcker. "Tall Paul." Who knew that a public servant overseeing Wall Street could be wise, scrupulously independent, and, well, public-spirited? If there were a financial Mount Rushmore . . he'd be on it.

John Bogle. One-time mutual fund pioneer, now full-time thorn in the industry's side (they deserve it).

Jeremy Grantham. Legendary investor, scathing (and correct) Wall Street critic.

Bernie Madoff. Yeah, he's still going to burn in Hell, but using his knowledge to repair the system he defrauded might buy him a little redemption.

Marcy Kaptur. Ohio Congresswoman (and MIT grad) who had the courage to call out Goldman Sachs. Longest-serving woman in the House of Representatives.

Elizabeth Warren. Harvard Prof. who's in line to head the Consumer Financial Protection Agency -- if it's ever created.

Nell Minow. The conscience of corporate America (not an oxymoron). Longtime shareholder activist (with Bob Monks) at the Lens Fund; co-founder of The Corporate Library. World-class expert on corporate governance, executive compensation.

Simon Johnson. Former chief economist of the International Monetary Fund. Who knew that all his experience helping Third World, "Banana Republics" clean up their finances would prove so relevant to the U.S. today?

Ross Kaplan. As a Minneapolis-based Realtor, has great insight into housing market; plus, brings a "non-Beltway" perspective to the financial mess. Other credentials: former corporate attorney and CPA; Stanford econ degree; widely published and quoted blogger. Founded Bulletin Boardroom, Inc. in 1992 to harness corporate governance to then-emerging technologies.

(Regarding that last choice: hey, it worked for Dick Cheney! If you don't recall, George Bush picked Cheney to vet his VP choices in 2000 -- and Cheney picked himself.)

Just to make clear that the Committee has a broad mandate: make sure that it has sweeping subpoena power, an unrushed timetable -- and no less than than 20% of the budget Ken Starr got.

P.S.: Every good team has a deep bench. Here are some honorable mention picks: Joseph Stiglitz, Floyd Norris, and Thomas L. Friedman.