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Warren, Wall Street and Antonio Weiss: The Battle for True Financial Reform

In the wake of the 2008 housing market collapse and economic meltdown that followed, it became clear that real change would have to be effected on Wall Street if we hoped to avoid a similar scenario down the road.

In many respects, Sen. Elizabeth Warren (D-Mass.) has made that her mission. The Washington Post recently characterized her efforts as a “jihad against Wall Street.” Warren has worked hard to battle financial and corporate giants that bend or break the law for their own benefit, often protecting the masses from getting the short end of the stick.

The latest target of her efforts is Antonio Weiss. He is President Barack Obama’s nominee for the Treasury undersecretary for domestic finance. Warren notes Weiss’s resume includes toiling as an investment banker for Lazard and working to secure international merger deals in that role and others. Some of the bigger of those deals involve an $11 billion merger of Burger King with a coffee-and-doughnut manufacturer based in Canada.

In that particular case, proponents of the deal say it was nothing more than a simple merger between two large corporations. However, critics see something more sinister: A type of inversion deal intended to shift the burger chain’s corporate headquarters across the northern border, which would in turn significantly reduce its tax burden.

It’s worth noting the parent company of Burger King is a Brazilian-based corporation that is keen on reducing all kinds of costs – particularly on the labor end. This is the same company that in the last handful of years, laid off 5,400 people from the Pittsburgh-based Heinz (including an entire factory staff in Idaho), 1,400 workers from Anheuser-Bush and hundreds more from Burger King. Other deals included consolidations of Coca-Cola plans, GlaxoSmithKline’s biotech operations and Motorola’s consumer electronics division. Each of these resulted in thousands of layoffs.

The mergers preceded these layoffs, and in turn, company sales dropped slightly. Many, many lost their jobs. But private equity firms, CEOs and investment bankers like Weiss all made hefty profits and bonuses.

So while Warren has had her share of detractors on the confirmation of Weiss, the problem she has is one in which we should all take note: Weiss consistently and routinely organized mergers and deals that served to reward top-tier executives, while everyday workers were cast to the side.

There is another problem with these large-scale mergers, and that is they defeat the purpose of capitalism, which is fierce competition, which serves to keep prices reasonable for consumers. The opposite is happening, which is part of why we see the price of so many goods soaring (even while incomes have remained stagnant). Take, for example, the 2007 Weiss-brokered deal to merge Nestle, Gerber and Novartis Medical Nutrition. That consolidation resulted in the creation of a firm that now sells more than 80 percent of the country’s baby food.

This is a clear form of financial engineering, in which important decisions are made to benefit those who want immediate returns and profits, as opposed to those who are trying to fulfill a long-term goal of building better quality businesses that serve consumer needs at reasonable prices.

So before everyone jumps on the “Attack Elizabeth Warren” bandwagon over the issue of Weiss’s confirmation, our Miami foreclosure lawyers wonder if perhaps we should be asking not only whether he’s qualified, but whether his leadership will take us in the direction we need to go.

If you’re battling debt collection in Miami or the surrounding areas contact Jacobs Legal for a confidential appointment to discuss your rights. Call (305) 358-7991. Also, don’t miss Miami Foreclosure Attorney Bruce Jacobs on 880AM/the Biz, every Wednesday from 5 p.m. to 6 p.m. on “Debt Warriors with Bruce Jacobs,” discussing foreclosure topics that matter to YOU.

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