Monday February 25, 2013

Alden Graves

Even as the rescue ship, Carpathia, was steaming back to New York with 705 Titanic survivors on board, there were plans being hatched to exploit the loss of the world's largest ship for personal and political gain. An American conglomerate owned the Titanic, but it was run by a British steamship line and subject to British maritime laws. England always had what might politely be called a superior attitude about ruling the seas, so lawmakers in the United States saw the sinking as a good opportunity to show them a thing or two.

Congress immediately formed a committee to investigate the disaster. It was distinguished by the fact that no one serving upon it had any particular knowledge of either maritime law or the type of sailing that didn't involve two oars. Small matter that the hearings were presided over by a crew of landlocked congressmen when the prospect of a good wind was at hand. It was a priceless opportunity for fortunate members to get their names in all the newspapers.

Subpoenas were issued to detain Titanic's soggy and shell-shocked crew before they could slip aboard another ship and head back to England, presumably to a warmer reception. The inquiries, held at the Waldorf Astoria, the namesake of which had been lost in the disaster, and in Washington, produced the requisite thousand page volumes of testimony, but one question in particular summons up the expertise of the men wielding the questions.


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"What," asked the honorable senior senator from Michigan, "is an iceberg made of?"

One can only imagine that the officer to whom the question was directed suspected some kind of trap; that if he divulged to Senator Smith the component of an iceberg, the fair name of England would be besmirched, the blame would be laid squarely at the doorstep of the White Star Line, and, among other serious consequences, he would be out of a job.

Still, the poor man was trapped. There was no way around it. He reached down into the same wellspring of courage that had carried him through that terrible night in April of 1912 and said, "Ice, I suppose."

I know what you are probably thinking. In the century that has passed, not much has changed. That is certainly more true than not, but there have been a few oasis of intelligence from the interrogators. One was in evidence very recently.

No name since John Dillinger was cut down outside Chicago's Biograph Theater in 1934 has struck so much fear into the dark heart of the banking industry as that of Elizabeth Warren, a soft-spoken academic in wire-rimmed glasses, who once had the audacity to propose that American consumers needed protection against, among other things, predatory lending institutions.

The official spin that the big banks like to put on the implosion of the housing bubble, the primary cause of the worst financial crisis since the Great Depression of the 1930s, is that the government bullied them into making the risky loans to aspiring homeowners. They were as much victims of the dangerously irresponsible policies as the poor souls who thought they were making a down payment on a dream and ended up on the sidewalk.

And who would dare question the integrity of guys in thousand dollar suits, who can recite reams of slick, self-serving rationalizations like school kids doing the "Pledge of Allegiance" and who, perish the thought, "never broke any laws" wreaking their incalculable havoc.

Elizabeth Warren dared and, in doing so, positioned herself in roughly the same position with the banking industry that Michael Bloomberg has assumed with the NRA. An army of lobbyists was recruited to derail her nomination as head of the Consumer Financial Protection Bureau and, with the help of congressional Republicans, who felt that Warren would too zealously (read conscientiously) perform her duties, they succeeded.

It was a classic example of winning a battle and losing the war because an undaunted and unintimidated Warren decided to run for a seat in the United States Senate instead. Her victory was a clear indication that voters in this country were becoming less and less enchanted with the meticulously woven fables being offered by guys in thousand dollar suits. 

More bad news for the expensive suits followed. Senate Majority Leader Harry Reid appointed her to the Banking Commission. All of the sudden the prospect of not breaking any laws became a little harder to get away with.

Ms. Warren was in good form questioning banking regulators about their failure to bring Wall Street banks to trial at her first meeting on Feb. 14. Her point, which seemed generally lost on the succession of officials who stumbled and stammered through a litany of excuses, was that it is a minimal deterrent to fine a bank millions of dollars for wrongdoing that has netted them billions. It also relieves the banks from the necessity of an unwelcome airing of their particularly dirty laundry by settling outside of the public forum of a courtroom, frequently without even the admission of wrongdoing.

Warren would not be put off by the regulators' practiced side-step of the issue. "How many banks have you brought to trail since the financial crisis began in 2008?" she repeatedly asked.

The answer was as chilling as any mention of ice by a Titanic sailor. "None," one of them finally admitted, but at least he had the good sense to offer the word sheepishly.

Alden Graves is a Banner columnist and reviewer.