As for the Obama team’s arguments that the financial rescue was a success—the bank bailouts ultimately made a profit, a depression was averted, and GDP growth resumed faster than the aftermath of most financial crises—Warren considers them obscene self-congratulation.
“Sure, the banks are more profitable than ever, they are bigger than ever, the stock market is through the roof,” she says. “But across this country, there are people who still pay the price for a financial crisis that they didn’t cause and that they never had a chance to survive. … That’s not a success.”
The Obama administration felt more urgency to save the large financial firms than to prevent home foreclosures.
“When I raised it with Tim, he reassured me that they’d done the calculations and it was all going to work out. And what he meant was the survival of the banks,” Warren says, recalling a meeting in the Treasury building in the fall of 2009. “He says, ‘We’ve foamed the runway—enough that the big banks can land.’ And the fact that millions of families were losing their homes, that millions of people lost their jobs, you know, savings, just wasn’t part of that calculation.”
Some White House officials also brought concerns about foreclosures to Geithner, and his perspective was that saving the financial system was the necessary first step. Stabilizing the housing market was like bringing down unemployment in that “it will trail,” Geithner said, according to Axelrod’s memoir, Believer.
“Yeah, exactly,” Warren says now, scoffing. “That’s how they thought of it.”
Summers bristles at the attack on him and Geithner.
“Everyone had the same objective of preventing a Depression,” Summers told POLITICO in a statement. “Without saving the financial system we did not think that was possible. The one time when the no bailouts strategy was tried—with respect to Lehman [Brothers]—it was a catastrophe.”
Despite attempts to gloss over past disputes by focusing on areas of mutual agreement, such as the CFPB, simmering bitterness remains between Warren and large swathes of Obama administration veterans. In interviews, many former White House and Treasury officials say they consider Warren a self-serving grandstander who cast them as villains while they were trying to save the global economy from catastrophe—a job they think they did pretty well, all things considered.