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A Bisl Kissel or Why the Kissel Kerfuffle Misses the Point

posted by Adam Levitin

The gloves have really come off between the Wall Street Journal Editorial Page and the CFPB and its defenders. Zach Carter blogged on HuffPo about how the WSJ's attacks on Elizabeth Warren and the CFPB were authored by Mary Kissel, who worked for a few years at Goldman Sachs before joining the WSJ. The implication here was that Kissel is carrying water for Goldman's regulatory agenda because of her past association. (Full disclosure: I was vaguely acquainted with Kissel in college, but the only thing I recall about her was that she played the marimba quite well.) The WSJ spluttered back at this "ad hominem attack," calling it a smear job because it was anonymously sourced. 

Clearly this struck a nerve with the WSJ; I guess their editorial writers aren't used to being called to account. Ultimately, Kissel and her background are at best irrelevant to the story.  It doesn't really matter what motivates Kissel; the WSJ would have found another soldier to carry out the hit. At worst, though the Kissel Kerfuffle is a distraction from the real issue--that the WSJ's editorial page coverage of Elizabeth Warren and the CFPB have been substantively misleading. 

Consider this.  The Journal wrote that:

the bureau will not have to incorporate the views of other banking regulators into its rules when it comes, for instance, to issues of safety and soundness. While the IRS Commissioner and Comptroller of the Currency report to the Treasury Secretary, Ms. Warren and her successors can tell him to crush rocks.

There are three errors in this statement.  First, the CFPB's rules are subject to veto by the Financial Stability Oversight Council, which is chaired by the Treasury Secretary.  Section 1023 of the Dodd-Frank Act provides that

On the petition of a member agency of the [Financial Stability Oversight] Council, the Council may set aside a final regulation prescribed by the [Consumer Financial Protection] Bureau, or any provision thereof, if the Council decides, in accordance with subsection (c), that the regulation or provision would put the safety and soundness of the United States banking system or the stability of the financial system of the United States at risk.

To the best of my knowledge, the CFPB is the only federal agency that is subject to a veto by other agencies. Conflicts between other agencies' policy agendas are worked out in the White House not through a council of agencies where bank regulators have multiple votes.  

Second, the Office of Comptroller of the Currency is heavily insultated from Treasury supervision. (I haven't been able to find anything about this for the IRS, but it might just be buried somewhere in the US Code.) Treasury Secretary is forbidden by statute from "delay[ing] or prevent[ing] the issuance of any rule or the promulgation of any regulation by the Comptroller of the Currency."

Third, why on earth would the Journal think that CFPB would ever be answerable to the Treasury Secretary? CFPB is part of the Federal Reserve, not the US Treasury. That's why it has a claim on a share of the Fed's budget. Not a dollar amount, note, but a percentage of the budget. No part of the Federal Reserve answers to the Treasury Secretary. The Fed is an independent agency, a concept that the courts have signed off on repeatedly for over a century. Fed governors, like the CFBP Director can be removed from office by the President for cause: "inefficiency, neglect of duty, or malfeasance in office." (Dodd-Frank, Section 1011(c)(3).)

The WSJ writes in defense of Kissel's Goldman Sachs background that:

"We do demand that our writers know something about the subjects they write about, so in our view having worked in finance is a useful credential for writing about finance."

Newsflash: Ms. Kissel isn't writing about finance. She's writing about regulation (i.e., law), and neither she nor anyone else on the WSJ editorial board seems to have done their homework on the topic. But why let facts stand in the way of ideology?  The Journal's failure to mention these points makes its coverage of the CFPB substantively misleading and frankly dishonest.

Beyond this, however, the WSJ's display of indignation displays some pretty flimsy intellectual work that speaks to the extent of its animus against Elizabeth Warren and the CFPB: 

(1) If there's nothing wrong with Mary Kissel having worked at Goldman Sachs, what's the big deal?  Why is this a smear job unless there's a taint to having been employed by Goldman? Why on earth is the Journal being so sensitive about this? It almost makes me think that there's something there. 

(2) The WSJ is furious about anonymous sourcing, but Kissel's name didn't appear on any of the editorials.  That looks like an anonymous hatchet job as much as Carter's source. 

(3) The WSJ refers to Kissel as a "journalist."  But writing editorial attack pieces isn't exactly journalism. It's politics, and when you play in that neighborhood, different rules apply. The manner in which the editorial treated Dan Geldon's off-the-record comments shows that it is not adhering to well-established journalistic norms, even while hiding behind a patina of journalism. 

(4) If Kissel is acting as a journalist, don't journalists have conflict of interest rules? If the WSJ found out that a former tort lawyer were authoring NYT editorials arguing for stricter medical malpractice rules, wouldn't the WSJ be raising a storm? 

(5) Why is the WSJ assuming that Zach Carter's source is someone on the CFPB staff or in the Obama Adminsitration? ("Perhaps Ms. Warren—or some adult in the Obama Administration—should ask who on her staff thinks it's cute to smear journalists on the taxpayer's dime.")

There are lots of possible sources "close to Warren" who aren't in CFPB. For example, several of the bloggers on this site (yours truly included) could fairly be described in these terms. As the WSJ notes, it's not like Kissel's background is a state secret. The WSJ's assumption that the source was a government one just shows that the WSJ's got a particular animus against the CFPB and will let that stand in the way of verified fact or reason.  

But as I said, this is all ultimately all of this is a distraction from the real issue: the WSJ's attacks on Elizabeth Warren and the CFPB are substantively misleading and Zach Carter and other journalists are right to call the Journal to task for it. 


WSJ is Fox News in print. All you need to know.

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