The hero of the country’s liberal movement launched a surprise attack Tuesday against Washington’s most revered Democratic-leaning think tanks — and drew blood.
Sen. Elizabeth Warren, stepping up her crusade against the power of wealthy interests, accused a Brookings Institution scholar of writing a research paper to benefit his corporate patrons.
Warren’s charge prompted a swift response, with Brookings seeking and receiving the resignation of the economist, Robert Litan, whose report criticized a Warren-backed consumer-protection rule targeting the financial services industry.
The episode underscored the growing clout of Warren (D-Mass.), who has resisted calls for a presidential run but is positioning herself as a leading critic of corporate interests and their power over the Washington establishment.
And it marked the most dramatic response yet from Brookings, an icon of that establishment, amid criticism and internal debate over the influence of corporate sponsors.
“I learned there was discomfort with the Warren letter, and I did not want to add to it,” Litan said in an interview. “I said, ‘If it will make Brookings more comfortable, I’ll resign.’ ”
Litan rejected Warren’s criticism, saying that the company that sponsored his research, the Capital Group, a leading mutual fund manager, had no influence over his findings. But Litan, an unpaid “non-resident scholar,” acknowledged that he had violated a new think-tank rule prohibiting researchers with such status from citing their Brookings affiliation when testifying before Congress.
Brookings President Strobe Talbott said Tuesday that Litan “made a mistake in not following Brookings regulations designed to uphold the independence of the institution.” A Brookings spokesman added that Litan’s work on the rule came “in his private capacity, not connected with Brookings in any way.”
Warren leveled her criticisms in letters sent Tuesday to Brookings leaders and the Obama administration, citing the $85,000 combined fee that Litan and a co-author received from the investment firm.
Warren called the report “highly compensated and editorially compromised work on behalf of an industry player seeking a specific conclusion.”
Her complaint pointed to a relatively new form of influence peddling in the nation’s capital, with industry groups and even foreign governments paying think tanks and scholars for research papers that support lobbying goals.
Brookings over the past decade has embarked on aggressive fundraising drives to pay for major expansions. Investigations last year by The Washington Post, the New York Times and others found that donors had gained the ability to influence Brookings’s events and research agenda.
In resigning Tuesday, Litan said that he had not been aware of Brookings’s new rules put in place following the Post and Times reports. Litan, who was a senior official in the Bill Clinton administration, once led Brookings’s economic studies division and has been affiliated with the think tank for four decades.
He said that he repeatedly disclosed his funding sources in both the original study of the proposed consumer protection rule and when he appeared on Capitol Hill for July 21 testimony.
“I think it’s unfortunate that, even when I disclosed the funding, people spent their time discussing who funded my work rather than discussing the merits of it,” he said.
Tom Joyce, a spokesman for the Capital Group, said his company was following standard practice. “It is typical for organizations to sponsor academic studies,” Joyce said, noting that in this case, “no preconditions or predetermined conclusions were imposed.”
Brookings’s action Tuesday could have implications for industry lobbyists who advise clients to fund think-tank research to influence policymakers.
Scholars have opened private consultancies, attracting fees from corporate sponsors at least in part because their studies could enjoy the Brookings imprimatur.
Litan, for instance, works with a firm called Economists Incorporated, where his bio describes him as a “non-resident senior fellow” at Brookings.
For Warren, Litan’s departure represents a small victory in her quest to rein in big banks.
The proposed rule, written by the Labor Department, would prohibit retirement plan brokers from receiving enticements from big investment houses that can distract them from the best interests of consumers. Litan concluded that the rule, while well-intentioned, would be too costly.
“Some advisers and brokers recommend investments based on the free vacations, cars, bonuses, fees and other kickbacks that the adviser can earn from selling a lousy product,” Warren wrote.
Correction: This article has been updated to reflect that Litan was a non-resident scholar at Brookings, not a resident scholar as noted in a previous version.