Nov
26
2014
NYT Columnist's Faulty Attack on Elizabeth Warren's 'Rage'
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New York Times columnist Andrew Ross Sorkin has earned a reputation over the years for being friendly with the Wall Street giants he covers. If you read his bizarre rant against Senator Elizabeth Warren, it's not hard to see why.
Elizabeth Warren (cc photo: New America Foundation)
Warren, who has spent years loudly criticizing the failure to properly regulate and punish finance industry wrongdoing, wrote a piece for the Huffington Post (11/19/14) to say she disagreed with the White House's nomination of Antonio Weiss as undersecretary for domestic finance at the Treasury Department.
What's the problem? Weiss has "spent the last 20 years of his career " at a giant financial firm Lazard, "most of it advising on international mergers and acquisitions." To Warren, that makes him the wrong kind of person for the job:
Neither his background nor his professional experience makes him qualified to oversee consumer protection and domestic regulatory functions at the Treasury…. There are a lot of people who have spent their careers focused on these issues, and Weiss isn't one of them.
She goes on to argue that this is part of the "larger, more general issue of Wall Street executives dominating the Obama administration, as well as the Democratic Party's, overall economic policymaking apparatus."
Andrew Ross Sorkin (cc photo: David A. Grogan)
So what's wrong with the idea that the White House hasn't been tough enough on Wall Street? Lots, according to Sorkin. Under the headline "Senator Elizabeth Warren's Misplaced Rage at Obama’s Treasury Nominee" (11/24/14), he uses words like "furious," "wrath" and "ferocious" to describe her "rage." And it's not just that she's mad–she's "misinformed."
What did Warren get wrong, exactly? Sorkin tells readers that Weiss "works at Lazard, not Citigroup." Yes; no one said otherwise. He adds that Weiss
is hardly the prototypical banker. He is a protégé of the writer and editor George Plimpton and is the publisher of the Paris Review, the literary magazine, giving it financial support it for years to keep it alive.
He's helped support the Paris Review. Well, this changes everything!
He goes on to point out that Weiss was "a staunch supporter–and campaign donation bundler–for President Obama and is considered relatively progressive, especially by Wall Street standards." Sorkin even mentions that Weiss "is one of the few people within financial circles who might have been friends with Ms. Warren."
That Warren is critical of someone she might be friendly with is, if anything, a sign that Warren is taking a principled stance.
The real problem, for Sorkin, is that Warren misunderstands the Tim Hortons/Burger King merger–the "so-called inversion deal on which she bases much of her opposition."
Antonio Weiss on CNBC
But things aren't nearly as clear as Sorkin would like them to be. Warren writes that a corporate inversion is a tax avoidance strategy "that allows them to maintain their operations in America but claim foreign citizenship and cut their US taxes even more." Weiss's firm worked for Burger King on the deal–and has done similar work on other inversions.
Not so fast, says Sorkin–this is no normal inversion: "While the merger is technically an inversion, it isn't comparable to so many of the cynically constructed deals that were done this year simply to reduce taxes."
That's what Burger King says–though Stephen Shay (Reuters, 9/2/14), an expert on corporate taxation from Harvard Law School, says, "I would be surprised if in five years' time, their tax rate does not come down reasonably dramatically."
In any case, Warren used the Burger King merger as a high-profile example of the kind of corporate tax dodging that Weiss's firm works on routinely. As she put it, Lazard "has helped put together three of the last four major corporate inversions that have been announced in the US." She also notes that Lazard itself has engaged in the same kind of maneuvering, moving its corporate home address to Bermuda "to take advantage of a particularly slimy tax loophole."
This is the crux of Sorkin's argument that Warren "is, to put it politely, mistaken." She calls this a tax inversion, and it's not–or actually it is, since it's "technically an inversion." Is that clear enough for you?
Near the end of his piece, Sorkin admits that Warren could have had a better argument if she wasn't so blinded by her rage:
It is true that Mr. Weiss doesn't have a lot of experience in the regulatory arena, and at least part of the role he is nominated for involves carrying out the remaining parts of the Dodd/Frank overhaul law. It is also true that Mr. Weiss, if confirmed, will be the beneficiary of a policy at Lazard that vests his unvested shares–some $20 million in stock and deferred compensation–by taking a government job. That creates its own conflicts.Ms. Warren might be more persuasive if she focused on those issues.
Good point: Warren should have focused on his lack of regulatory experience.
Oh wait, she did. Right there in the fourth paragraph:
That raises the first issue. Weiss has spent most of his career working on international transactions–from 2001 to 2009 he lived and worked in Paris–and now he's being asked to run domestic finance at Treasury. Neither his background nor his professional experience makes him qualified to oversee consumer protection and domestic regulatory functions at the Treasury.
Free tip for Andrew Ross Sorkin: Don't say someone should have emphasized a point they in fact raised as "the first issue." It makes it seem like you didn't read the article you're critiquing.
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