A friend who was a student of Elizabeth Warren at the University of Pennsylvania Law School assures me that back then she was a Republican. So she has some history of political mobility. But even by Washington standards, her latest flip (or is it a flop?) is pretty astounding.
Back when Senator Rand Paul introduced his “Audit the Fed” bill — a mischaracterization, since the real significance of his proposal was the removal of a prohibition against the Government Accountability Office critiquing the monetary policy of the Federal Reserve — Senator Warren denounced it, telling the Huffington Post: “I oppose … this bill because it promotes congressional meddling in the Fed’s monetary policy decisions, which risks politicizing those decisions and may have dangerous implications for financial stability and the health of the global economy.”
These concerns have not prevented Senator Warren from teaming up with Senator Vitter to introduce the “Bailout Prevention Act,” which would — wait for it — subject Federal Reserve emergency lending facilities to Congressional scrutiny. The purpose of Warren-Vitter is to discourage (but not prevent) the Fed from undertaking emergency lending in a financial crisis which is available to fewer than five companies and which does not charge punitive interest rates.
Senator Warren’s trope for the past several years has been that she is all about saving taxpayer money by preventing bank bailouts. So her new legislation would prevent the Fed from bailing out an institution which is insolvent, thereby forcing it into bankruptcy. Continue Reading