Elizabeth Warren: Not Ready for Presidential Prime Time

Is there a huge public demand for a populist crusade for financial reform—or is that just liberal wonks' pipe dream?

J. Scott Applewhite/Associated Press

Gutsy, smart, and hyper-articulate, Elizabeth Warren is quickly becoming the voice of progressivism in Washington. Along with departing regulator Gary Gensler, Warren probably did more than anyone in Washington to bulk up Dodd-Frank from its rather flimsy beginnings and turn it into a financial-reform law with some weight. She also speaks out eloquently for the beleaguered middle class and on the deeper problem of income inequality.

But the idea that somehow this growing reputation translates into a competitive bid for the 2016 presidential nomination—The New Republic recently suggested on its cover that Warren represents the "soul" of the Democratic Party more than Hillary Clinton—is pretty over the top.

Here's why. As impressive and quotable as she is as a senator—"I'm really concerned 'too big to fail' has become 'too big for trial,'" Warren memorably declared at her very first Banking Committee hearing—she is basically a one-issue political figure. And that doesn't get you into the White House in this era. (OK, fine, Barack Obama first came to national attention by declaring Iraq a "dumb" war, but more on that later.) Warren's punditocratic boosters, like Jonathan Chait of New York, have tried to compensate for her one-issueness by suggesting that the issue that Warren became famous for is still, as Chait put it, "the most potent, untapped issue in American politics."

And what might Chait be talking about? Get ready: financial reform. That's right. An issue almost no one talks about anymore and far fewer people understand. I ought to know because I've spent tens of thousands of words trying to get people to talk about it since I published a 2010 book called Capital Offense: How Washington's Wise Men Turned America's Future Over to Wall Street. I fully agree that Obama failed miserably to exploit a potential populist issue that, once upon a time, might have made him the second coming of FDR. "Surveys show that both Left and Right, liberals and conservatives, were united in wanting to see fundamental change to Wall Street and big finance," I wrote in 2011. "Yet rather than seizing the chance at the kind of leadership that might have unified a good part of the country, Obama threw himself into an issue that divided Left and Right as never before, and which was not directly related to the historic crisis at hand—health care."

But that moment has long passed. Warren has consistently been a powerful, positive voice on financial reform, and it got her the party nomination in Massachusetts. But that's Massachusetts. A Harvard Law professor who became an expert in mortgage fraud and bankruptcy and later conceived of one of Dodd-Frank's most significant reforms, the Consumer Financial Protection Bureau, she's never done much of anything else in public life, other than chair the TARP oversight committee. And her "issue" has faded in popular imagination. Remember the Occupy Wall Street movement? You're forgiven if you don't. It petered out without a trace (while the Tea Party movement doesn't seem to go away, demonstrating that you can have a successful movement these days; OWS just wasn't it).

And with each passing year the causal connection between Wall Street's unprosecuted perpetrators and the terrible recession and national PTSD they set in motion has grown more distant, draining the issue of its populist potential. In 2012 when Mitt Romney promised, and then failed, to propose an alternative to Dodd-Frank, almost no one cared. Polls consistently show that while the U.S. public is still mainly concerned about the economy (although the numbers have been steadily falling), Wall Street is way down the list, behind health care, immigration, education, guns, and a host of social issues. By the time the 2016 race rolls around, nearly eight years will have passed since the financial crisis.

But that's not even the main point. Chait finds it "odd" that financial reform hasn't become a bigger issue despite surveys showing that large numbers of people are still angry about Wall Street (when they're asked about it: big difference). Here's why: It's booorrring. And incredibly esoteric. Yes, the banks are huger than ever and over-the-counter derivatives are being traded again in the hundreds of trillions—one reason why Gensler, the outgoing head of the Commodity Futures Trading Commission, may be one of the great unsung heroes in Washington thanks to his lonely fight to regulate derivatives internationally. But only a handful of people in the entire world truly understand derivatives regulation. "Bash the Bankers" works as a slogan, but when you get down to what really must be done about them you would have to talk about capital and liquidity ratios on the stump.

"Too big to fail?" Again, it's a vital issue. But it comes down to the scintillating debate over whether "resolution authority" will really work to liquidate (rather than bail out) a bank in trouble, or whether, as progressive Federal Reserve Governor Dan Tarullo has argued, "a set of complementary policy measures" is needed to go with Dodd-Frank that would limit banks' sources of short-term funding.

Never heard of Dan Tarullo? That's my point.

OK, though, let's say for the sake of argument that the issue does play. Recall that Hillary entirely sat out the Dodd-Frank debate, and with good reason: She was secretary of State. She can basically write her own platform, make it as progressive as she wants, without worrying much about baggage. If Warren gets the big cheers at AFL-CIO rallies, Hillary can move left in a way she could never do on Iraq, where Obama easily outflanked her on an issue that had become truly toxic by the time 2008 rolled around and her vote for the Iraq War resolution looked very unpresidential. I mean, if even Larry Summers, the Great Deregulator, can reinvent himself as a champion of the middle class, Hillary Clinton can make a better case. Remember, she was pushing Hillarycare on the national agenda back when Warren was still teaching in obscurity in Cambridge, Mass. Other potential Democratic big names, like Governors Andrew Cuomo and Martin O'Malley, are also pretty credentialed up.

And now let's get to the heart of the question: What is the soul of the Democratic Party? Is it really that leftward and progressive, or is that simply an agenda that old warriors like John Lewis talk about with nostalgia? The last two Democratic presidents both had populist inclinations but went straight to the center in order to win two terms. For both Bill Clinton and Barack Obama, that apparently also meant going easy on Wall Street. And Bill Clinton, at least, later publicly expressed regret for permitting the Alan Greenspanization of his views on financial reform. No doubt his wife has taken that particular lesson on board.