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Elizabeth Warren wins battle against Obama Treasury nominee, but the war goes on

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  • Antonio Weiss has asked the Obama administration to drop his nomination as undersecretary of treasury for domestic finance, according to Ben White at Politico.
  • This is a significant victory for Elizabeth Warren, who opposed his confirmation and raised a stink about it.
  • Weiss will serve in the Treasury Department as a "counselor," a position for which he does not need Senate confirmation.

The idea that the Obama administration would pick a finance veteran for a position that, among other things, regulates the financial industry infuriated Warren. She's been joined by other Senate Democrats, including Dick Durbin and New Hampshire Senate Jeanne Shaheen. Joe Manchin, who normally breaks with Obama from the right rather than the left, is also now on the bandwagon.

The White House took the challenge quite seriously, and pushed allies who know Weiss to speak up in his defense. At the end of the day, though, Republicans weren't eager to bail Obama out of trouble with his own party and the Senate Democratic leadership didn't want to expend political capital over it, so Weiss withdrew. But it's the Warren-led opposition to him in the Democratic caucus that's most interesting, because it was never really about Antonio Weiss at all — it's about the direction the Democratic Party will take in the post-Obama era.

1) Who is Antonio Weiss?

Antonio Weiss is a veteran financial services professional at the smallish investment bank and asset management firm Lazard. For eight years, he lived in Paris, running European investment banking and then global mergers and acquisitions for the company, and more recently he's been back in the United States, running Lazard's overall investment banking operation. His main line of work is advising clients on dealmaking around corporate mergers.

He's also a philanthropist involved with The Frick Collection art museum, the Paris Review literary journal, and the French-American Foundation. And he's a Democratic donor who's given to Mark Warner, Cory Booker, Michelle Nunn, Maria Cantwell, the DNC, and various state parties, as well as bundling for Obama.

Last but by no means least, Barack Obama thought he should be America's next under secretary for domestic finance until he pulled out.

2) What is the Undersecretary for Domestic Finance?

One flashpoint in the Weiss controversy is how exactly to characterize the Domestic Finance role. Weiss' critics tend to focus on the department's role as a regulator of American financial institutions, one for which Weiss does not have obvious expertise and where his background as a banker raises red flags. Al Franken, one of the senators who's come out against Weiss, also says he's troubled by his "work on so-called inversion deals that allow corporations to change their address and avoid their US tax responsibilities."

His proponents tend to focus on the department's role as the practical manager of the American national debt. That part of the job is a little bit more like serving as investment banker for the United States of America, and clearly suggests hands-on practical experience with financial markets as a relevant qualification. As Jared Bernstein, a former White House economist who's now a fellow with the Center on Budget and Policy Priorities, wrote:

[Weiss will] spend his time working with investors, dealers in Treasury securities, and the Treasury Borrowing Advisory Committee to assess investor demand and make sure our auctions of Treasury securities most efficiently meet the demand. He’ll be busy creating 12-month forecasts of cash flows and debt levels for the U.S. government. And if Congressional renegades get jiggy with the debt ceiling, it’s on him to manage the available borrowing room under the debt limit so as to avoid default, while massaging the jangled nerves of our investors (Yo, Weiss: careful what you wish for!).

It is thus essential to have a person in that position who has hands-on experience in global finance. I don’t know the long history of this position but at least since I’ve been paying attention, it’s typically been filled by someone with precisely the market experience that Weiss brings to the table.

In either case, though, it's not an appointment to run an independent agency who'd be making policy on his own the way an SEC, CFTC, FDIC, or Federal Reserve nominee would. The undersecretary is going to do what Treasury Secretary Jack Lew and the President and his team in the White House want.

3) What's the problem with Antonio Weiss?

The bill of particulars against Weiss centers on the idea that his industry ties make him suspect. If he gets the job, for example, Lazard will offer him a up to $21 million as a special "parting payment." Companies don't normally pay people bonuses for quitting, but it's become common for financial firms to offer these payments in the specific event that an employee leaves to go work for the government. It gives the impression that firms believe they'll get special treatment if the government is packed with their alumni.

But as Warren made clear at a speech in Washington on Tuesday, Weiss is really caught in the crossfires of a larger dispute.

"Time after time in government, the Wall Street view prevails" she said, complaining that "conflicting views are crowded out."

In other words, Warren thinks that in general the Obama administration is too friendly to Wall Street perspectives. In part that's a specific issue of too many people with Wall Street ties staffing the government. But Warren famously had conflicts with Treasury Secretary Timothy Geithner, who hadn't worked in banking. Warren dislikes Weiss less because she thinks he's done anything uniquely terrible than simply because she thinks he represents continuity with Obama's longstanding approach of giving Wall Street veterans too much of a role in regulating Wall Street, and she doesn't like it.

4) What's the case for Antonio Weiss?

The case against the case against Antonio Weiss was made quite vigorously in late 2014. Andrew Ross Sorkin and William Cohan have both argued that Warren has chosen her target poorly. Ron Bloom, who's worked with Weiss at Lazard for the past several years but spent the vast majority of his career working for labor unions, spoke up on Weiss' behalf in Politico Magazine. Jared Bernstein, a former Obama official more aligned with the left wing of the Democratic Party, has also spoken up for Weiss.

These arguments tend to be a little hazy and impressionistic, as Weiss doesn't have an extensive track-record of public statements on policy issues. So they're more about Weiss being a good guy. Bloom, for instance, writes:

In my time at Lazard I have known Antonio as both our head of Global Investment Banking and, on his own time, as an outspoken voice on tax reform and other public policy issues. He is a man of complete integrity, who after an extremely successful career now wants to serve his country. He supports and believes in the President's policies and wants a chance to make a difference in the lives of his fellow Americans.

I also know this about him: in his new role he will have no interest in feathering any nest, least of all his own, nor would he ever represent any interest but that of the public. He is intellectually honest and utterly independent, unafraid to challenge authority or conventional wisdom.

But there's one place where Weiss has been involved in public policy. He was one of several co-authors — along with mostly better-known people or full-time DC policy professionals — of a 2012 Center for American Progress tax reform plan. The proposal called for substantially higher taxes on the rich, including some hikes in taxes on investment income and other things that tend not to be very popular among wealthy bankers. It went substantially beyond the tax hikes the Obama administration proposed.

These tax issues are not directly relevant to the Domestic Finance gig, but to his fans they speak to the underlying issues. Weiss is a person who went out of his way to call for higher taxes on himself. He is sincerely committed to the basic vision of the Democratic Party and has a non-transactional relationship to American politics. He's someone progressives can trust and who has relevant experience for the job.

5) Why was there a big fight about this? It doesn't sound important.

In Washington, there are often things that sound tedious and unimportant but are actually enormously significant. By contrast, a confirmation fight over the Undersecretary of Treasury for Domestic Finance sounds tedious largely because it is tedious. It's worth paying attention to, but not because whether or not Weiss gets the job is important.

The actually important thing here is the part that Obama and Warren agree about.

The White House sees Weiss as a perfectly standard-issue Democrat who Democrats should support. Warren sees the mainstream Democratic Party approach to finance issues — both as practiced by Bill Clinton in the 1990s and by Obama more recently — as misguided and worth rejecting. The White House thinks it's important to regulate the financial system to minimize the risk of a major new blowup. Warren thinks it's important to regulate the financial system to re-order the role of banks in the American economy and reverse a multi-generational trend toward finance-led capitalism.

This is a fundamental clash of ideological visions that's much bigger than disagreements about the role of the Undersecretary or the details of Weiss's biography. Indeed, in many ways there's nothing Weiss or his friends could possibly say or do to assuage Warren's concerns. He has the misfortune of being the right person at the right time to serve as a foil for Warren's larger project. But the fight isn't about him, and regardless of what happens with this nomination, the battle is going to continue. That's what makes the debate worth following.