Zywicki Comments on Warren Involvement in Banks Lawsuit

A class-action lawsuit against some of the biggest U.S. banks in which Elizabeth Warren was paid to be an expert witness is "a very big issue for the credit cards networks and issuers and there is a lot of money at stake," says Professor Todd Zywicki.

Warren, named by President Obama to set up the new consumer finance agency, was head of the Congressional Oversight Panel monitoring the bank bailout at the time she did the work. She was retained by a law firm that represents retailers suing credit card networks and major banks for alleged antitrust violations in setting card processing rates. She was paid a total of $90,000 for her work on the case, which Warren says she cleared with the panel's ethics counsel prior to undertaking it.

Zywicki takes issue with Warren's dual involvement, saying, "Considering the way she used her chairmanship to browbeat the financial services industry in a very high-profile manner, the appearance here seems especially troubling."

Warren Worked on Banks Lawsuit While Heading TARP Panel, Bloomberg, September 28, 2010. By Robert Schmidt.

"In an interview, Warren said that she first discussed being an expert witness before joining the oversight panel in November 2008. She said she cleared the outside work with the panel’s ethics counsel. The two reports she wrote, which she said she can’t discuss because they are filed under seal in a New York federal court, contain 'nothing that I haven’t said in print, on TV and in published academic articles.'”

"As an appointee to a part-time government post, Warren was permitted to continue doing outside work under the rules governing such positions. Some ethics attorneys said her work created at least the appearance of a conflict of interest given her leverage over banks as head of the watchdog group.

“'She should have had the judgment to say no,' said Richard Painter, a University of Minnesota law professor who was chief ethics lawyer in the White House counsel’s office under President George W. Bush and last year published a scholarly work on government ethics. 'It’s highly inappropriate in a position that has this much power.'”