By Simon Johnson

Karl Rove’s Crossroads GPS group has launched the first attack ad against Elizabeth Warren, presumably because she is now running hard for the Senate in Massachusetts. This ad is not a big surprise, but the line that Mr. Rove takes could well backfire.

The ad states, “we need jobs, not radical theories and protests,” so we can break the argument down into three separate parts.

First, who destroyed more than 8 million jobs in the United States – and plunged us into the deepest and longest lasting recession since the 1930s? Surely this was not Ms. Warren, who was just a law school professor, in the run-up to 2008.

Mr. Rove is opening the blame game and this is going to go badly for his presumed supporters – the largest banks on Wall Street that took excessive risks, paid their top people well, and then blew themselves up at great cost to the American taxpayer. By all means, let us have a conversation about jobs and the history of job losses in the United States; “too big to fail” banks do not look good in this context.

Second, what exactly is the radical theory here? Ms. Warren’s point has been that we regulate the safety of toasters but not financial products. Basic consumer protection is, of course, still resisted strongly by the less reputable parts of the financial sector. But honestly, what well-run and honest firm fears sensible product standards, which is exactly what the Consumer Financial Protection Bureau is working on establishing?

Ms. Warren proposed the CFPB and helped oversee its creation and early operation – this is a major contribution to financial stability in the United States. To be sure, some people in the financial sector feel that their track records are exemplary and perhaps they are right – but who was asleep at which switch when mortgage lending went off the ethical rails? The financial sector had plenty of opportunity to restrain is more dangerous participants; instead the misbehavior – or worse – was egregious and incredibly damaging to many Americans.

If there was a radical theory, it was the idea that big banks could manage their risks effectively and must be allowed to bulk up on the basis of large amounts of short-term debt funding, underpinned by only thin slivers of equity. This theory – completely at odds with any sensible reality – is at the heart of the job losses and our current difficulties.

Another radical theory, appearing here implicitly, is that if we let banks make loans now without any oversight, this would somehow give us back jobs. Again, if Mr. Rove wants to discuss crazy theories, let us have that conversation – perhaps with a topical focus on what is going so badly wrong in Europe, including its mad levels of bank debt.

If powerful people on Wall Street want to have the political fight, we should escalate to the main issue lurking here: Too big to fail is simply too big. This is a theme around which right, center, and left can all rally. Hopefully, this is exactly what the broader debate will increasingly focus on.

Third, what do the Occupy Wall Street protesters really want? According to Mike Konczal’s careful assessment of their published grievances, jobs are the number one issue. So again we should ask: Who caused the financial crisis that destroyed so many jobs?

The biggest financial firms have become even larger since the crisis. Their ability to take risk is essentially unfettered. Attempts to roll-back their power have largely been rebuffed. The European crisis now threatens to overcome some of the largest, precisely because they resisted efforts to make them build up larger buffers against losses (shareholder equity). How is this conducive to job creation in any sustained manner?

Elizabeth Warren cannot rein in the most dangerous elements of Wall Street by herself. But she can – and she will – try. We should expect dangerous parts of the financial sector – relatively small in numbers but with enormous financial resources – to push back with drama, disinformation, and perhaps even deceit.

At the end of the day, the voters of Massachusetts will decide. Do they believe in the radical – in fact, ludicrous and manifestly disproven – theory that “too big to fail” banks will generate good jobs for all? Or do they think that such banks, left to their own devices, will plunge us into another crisis, just as profound as what the Europeans are now going through?

If Mr. Rove directs their attention along these lines, that would be helpful.