Massachusetts Senator Elizabeth Warren at a Senate hearing last week ripped into bank and securities regulators for their failure to prosecute Wall Street honchos for their rampant crookedness in the years before the credit crisis.
Her message was simple: when malfeasance surfaces, regulators reflexively rush to settle with banks instead of forcing them to trial. That does not sit well with the newly elected Senator, and readers of this blog well know this does not sit well with us, either.
Warren’s message continues to resonate with the public. Her performance during that Senate banking hearing has been posted on Youtube, where its various versions have been viewed more than a million times. That’s a staggering number of people to watch a new Senator aggressively question bureaucrats including the heads of the Securities and Exchange Commission and the Office of the Comptroller of the Currency.
Warren understands what the American public also comprehends. The lack of criminal prosecutions against Wall Street fat cats who created toxic, mortgage-backed securities and sold them to investors such as pension funds simply defies common sense.
Main Street mom-and-pop investors recognize that, and so does Senator Warren. If Wall Street banks “can break the law and drag in billions in profits, and then turn around and settle, paying out of those profits, they don’t have much incentive to follow the law,” Warren said. “The question I really want to ask is about how tough you are.”
She asked the regulators to recount the last time any one of them had taken a major bank to trial. Each stuttered in response. They looked as sheepish as the kid caught with his hand in the cookie jar.
“I’m really concerned that too big to fail has become too big for trial,” Warren said. “That just seems wrong to me.”
In a terrific blog post about Warren’s grilling of the regulators, New York Magazine writer Kevin Roose notes: “Even though Wall Street bankers weren’t the target of Warren’s interrogation – the regulators who oversee them were – the financial industry is apparently freaking out about the hearing, on the theory that it augurs a tough road for them ahead in dealing with Warren as a senator.”
The financial industry apparently fears that it might actually be subjected to rigorous oversight and enforcement, if Senator Warren gets her way. They’re probably right. Warren was elected to the Senate because of her hard line approach to Wall Street, Roose writes.
This is why the people of Massachusetts voted for her.
And this is why every American should keep an eye on her future dealings with Wall Street.
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