Elizabeth Warren Shows How It’s Done
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When she was considering running for Senate, the concern among some Democrats was that Elizabeth Warren, Harvard Professor and finanicial expert, would not be able to compete with the folksy Scott Brown on the campaign battle field. But Warren surprised most with her natural ability not only as a campaign speaker, but as a person who can relate to the average voter.
At her first hearing as the most junior member of the Senate Banking Committee, Warren showed why Wall Street financiers and their lobbyists worked hard to prevent her election to the upper chamber. Her question to the financial regulators was simple, but got at the heart of the problem with the government’s response to the financial crisis:
“Tell me a little bit about the last few times you’ve taken the biggest financial institutions on Wall Street all the way to trial.”
Warren, like any good prosecutor, already knew the answer to the question. They hadn’t in a long, long time. So long that the regulators couldn’t answer. Thomas Curry who is the Comptroller of the Currency, meaning the regulator of national banks, explained, “We have not had to do it as a practical matter to achieve our supervisory goals.” He explained that through settlments and consent orders, they have achieved the necessary punishments and changes.
SEC Chair Elisse Walter said that she would have to look up when the last time her agency actually took a financial institution to trial. She explained that the commissioners weigh the costs of a trial against the benefits of the agreements and concessions they negotiate with the offenders.
Warren was unconvinced. She remarked, “Every time we reach a settlement and not a trial, it means that we didn’t have those days and days and days of testimony about what these financial institutions have been up to.” The historical coziness between regulators and the banks they regulate is well-known and Warren’s observation was getting to the heart of that. “They 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.”
“I want to note that there are district attorneys and U.S. attorneys who are out there everyday squeezing ordinary citizens on sometimes very thin grounds and taking them to trial to ‘make an example,’ as they put it,” Her pithy conclusion was, “I’m really concerned that too big to fail has become too big for trial.”
The financial industry is no doubt concerned about Warren’s membership on the Banking Committee and most likely considered her questioning overly aggressive. But really her questions were simple and straight-forward and need to be asked. Even though she will often be the last member of the committee to question witnesses at hearings, Senator Warren will be the one most people will be waiting to hear from.--------------
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