Fresh off a victory defeating the nomination of Antonio Weiss to a top Treasury Department post, Massachusetts Sen. Elizabeth Warren and her progressive allies are setting their sights on a new powerful financial regulator seen as too friendly to Wall Street.
On Tuesday, Warren grilled Federal Reserve Chairman Janet Yellen on the bank’s top lawyer, General Counsel Scott Alvarez, whom she accused of doing favors for the financial industry. The grilling sparked chatter that Warren had identified her “next target,” and set off flurry of phone calls and emails among liberal circles as outside allies discussed how they could help.
CREDO Action, the liberal group that helped lead the fight against Weiss, is now making it their mission to get Alvarez to resign. “The Federal Reserve’s top lawyer is a Greenspan appointee who has been undermining regulations behind the scenes since the Bush administration. But now, Scott Alvarez may have met his match: Senator Elizabeth Warren, and you,” CREDO political Director, Becky Bond, says in email shared with msnbc that will be sent to supporters Friday.
The group, which has 3.5 million members, is asking supporters to sign a petition telling “the Federal Reserve Board of Governors: Retire Scott Alvarez.” CREDO, whose offices happen to be on the seventh floor of the Federal Reserve’s building in San Francisco, secured over 200,000 signatures on a petition to oppose Weiss, whom Obama appointed to the number-three position at the Department of the Treasury.
Warren tipped off the fight against Weiss by making the obscure Lazard banker famous, and her allies then provided the grassroots lobbying muscle that helped succeed in getting him to withdraw his nomination in January. (Even so, Treasury Secretary Jack Lew appointed to him a different top position that does not require Senate confirmation.)
Previously, a similar coalition worked to stop Obama from appointing former Harvard President Larry Summers as Fed Chairman. They succeeded there too, when Obama instead appointed Yellen, the former governor of the San Francisco branch of the central bank.
Those campaigning against Weiss saw his career in banking as a red flag, and worried he would undermine the Dodd-Frank Wall Street reform law. But more importantly, they wanted to make an example of him and prevent more people with financial industry backgrounds from becoming financial regulators.
Now, they’re ready to do it again.
On Tuesday, Warren used precious time during a hearing with Yellen to put Alvarez on notice. At issue was the fact that the Fed's top lawyer told a conference of bank attorneys late last year that he wanted to overhaul two key provisions of Dodd-Frank, including the popular Volcker Rule and the "swaps push-out" measure, which Warren took a high-profile stand against during a government funding fight in December.
The New York Times has called Alvarez the “eighth governor” of the seven-member Federal Reserve Board of Governors, and wrote that on matters of financial regulation, he’s “just as powerful, maybe even more” than Yellen.
"Do you think that it is appropriate that Mr. Alvarez took public positions that do not evidently reflect the public position of the Fed’s board, especially before an audience that has a direct financial interest in how the Fed enforces its rules?" Warren asked Yellen during the hearing. Yellen demurred.
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It’s unclear exactly what Warren intends to do with Alvarez, or how far she plans to push, as getting a powerful veteran official fired is vastly more difficult than preventing an appointee from getting Senate confirmation. The Senate has little official power over Fed staffing. A Warren spokesperson declined to comment for the record.
But her progressive allies aren’t waiting for Warren's next move, even if her cue tipped off the fight. They're eager to add another scalp to their collection.
“Alvarez’s outdated ideas put all of us at risk of more bank meltdowns, economic crashes, and too-big-to-fail bailouts. It is time for the Fed to appoint a new lawyer who will be committed to reining in Wall Street,” Bond wrote.