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Elizabeth Warren Asks Jack Lew If He, Unlike Geithner, Would Support A Proposal To Break Up the Banks

Elizabeth Warren Jack Lew

Elizabeth Warren giving Lew a look that says, “Are you serious?”

This morning Elizabeth Warren questioned Treasury Secretary Jack Lew about whether he’d support a proposal to break up the banks. Leading up to her question, Warren showed that one of the main reasons such proposals have consistently failed in the past is that the previous Treasury Secretary (Tim Geithner) opposed them.

Therefore Warren wanted to know whether Lew would follow Geithner’s steps on this issue.

Lew initially started to say that he’s committed to ending “too big to fail,” but Warren cut him off, saying that her question isn’t about whether Treasury wants to end “too big to fail” in theory, but whether they’d support a specific proposal that actually do it.

“It was an amendment that nearly passed,” Warren said. “It had bipartisan support. The Treasury opposed it, and according to the Treasury’s own folks, it was the Treasury’s opposition that killed off breaking up the big banks. And I want to know if Treasury’s changed its position.”

Lew then responds evasively, saying that he’s only focused on Dodd-Frank right now, and that he will consider other proposals to fix TBTF only after all the rules for Dodd-Frank have been written.

The problem is that Dodd-Frank was passed in July 2010, and the process of writing the rules for the act is barely more than halfway done nearly 3 years later. We can’t wait another 2-3 years to start thinking about ending “too big to fail.” After all, as Senator Warren said in her lead-up to her question, the 4 biggest banks have grown 30% larger since 2008 when they were considered “too big to fail.”

To put it simply: We have to end “too big to fail” before we have another bubble economy.

Here’s the link to the full hearing.

And here’s Warren’s clip:

Elizabeth Warren Asks If Federal Departments Even Know the Costs/Benefits of Prosecuting Wall Street

Elizabeth Warren bankers jail
This morning Senator Warren sent a letter
 to the Fed, the Department of Justice, and the SEC in which she asked them the same question she asked the OCC in February: Have they done any formal analysis to understand the costs and benefits to the public of prosecuting Wall Street?

It’s a smart question, considering that Federal departments have already decided against prosecution. That is, Elizabeth Warren is trying to figure out whether the Feds have any data—solid evidence—that prosecuting Wall Street would be bad for the public.

Since the OCC said no, they didn’t have any analysis along those lines, Warren is now asking her question more widely.

Criminals on Wall Street shouldn’t be immune to the law, especially for unsubstantiated reasons. After all, as Elizabeth Warren explains in her letter, ”if large financial institutions can break the law and accumulate millions in profits and, if they get caught, settle by paying out of those profits, they do not have much incentive to follow the law.”

To put it most simply: We want equal justice for all.

Read Senator Warren’s letter here. Here’s an excerpt:

There is no question that settlements, fines, consent orders, and cease and desist orders are important enforcement tools, and that trials are expensive…But I believe strongly that if a regulator reveals itself to be unwilling to take large financial institutions all the way to trial…the regulator has a lot less leverage in settlement negotiations and will be forced to settle on terms that are much more favorable to the wrongdoer…If large financial institutions can break the law and accumulate million in profits, and if they get caught, settle by paying out of those profits, they do not have much incentive to follow the law.

Elizabeth Warren’s first stand-alone bill as Senator is awesome and provocative

Elizabeth Warren student loan bill
Senator Warren announced today that she’s proposing a bill that will make it so students going to college can borrow at the same rate that Wall Street does.

“In other words, the federal government’s going to charge interest rates nine times higher than the rates they charge the biggest banks—the same banks that destroyed millions of jobs and nearly broke the economy,” Senator Warren said in the bill’s introduction.

It’s a bill that calls attention to the wild disparity between how Wall Street is treated and how the rest of us are, and Senator Warren’s proposal is wild enough—0.75% for student loans!—to wake up the politicians who want to keep the status quo.

Here’s the thing: Even if the bill doesn’t pass, by playing such a strong hand right at the outset Elizabeth Warren has already changed the discussion that’s sure to ensue when student loan rates jump to 6.8% on July 1st. After Elizabeth Warren’s call today, 6.8% seems totally unacceptable. That is how to lead. Go strong from the outset.

The bill, called the Bank on Students Loan Fairness Act, aims to get the Fed to lend to students for one year at the discount window rate to fund Stafford loans.

“If those rates are good enough for banks, they’re good enough for students.”

Here’s the video of her introducing the bill:

An Open Letter to President Obama From the 99%

president obama Elizabeth Warren

Letter to President Obama

Dear President Obama,

There are a lot of us, and we don’t agree on everything. Republican, Democrat, Libertarian, Independent, whatever. Some of us have been foreclosed on, some have lost jobs, some can’t find jobs. But we all agree that our current political system is skewed in favor of a group of Wall Street and Washington insiders, and that it seems bent on hurting the rest of us—the 99%.

When you were re-elected, many of us wondered if you’d finally speak out forcefully for us. We wondered if you’d put an end to Wall Street favoritism, and if you’d reform corrupt lobbying practices. We wondered if you’d officially end insider trading in Congress, or at the very least end our two-tiered justice system, which prosecutes someone for stealing a soda from a gas station but does nothing to prosecute Wall Streeters who illegally foreclose on and ultimately steal the homes of their “customers.”

But those who hoped for these changes were disappointed.

And yet it didn’t have to be this way. You didn’t have to appoint Mary Jo White, a former client of Wall Street, to regulate Wall Street. You didn’t have to sign the bill yesterday repealing key aspects of the STOCK Act. You still could join a bipartisan group of Senators (3 Republicans and 3 Democrats) who want to officially end “too big to fail.” You still could fire Eric Holder, and replace him with someone who is serious about prosecuting Wall Street. Any number of options for defending the 99% are open to you.

If you want more support from us, you could start by treating Wall Street the way Elizabeth Warren treats Wall Street. Boldly and directly. You could reform corrupt lobbying practices that favor the 1% at the expense of the rest of us. You could immediately get to work on revoking your decision to let Congressional insider trading continue. In sum, if you want more support from us, you could start by ending the current two-tiered justice system, a corrupted system which offends every single one of us.

There’s still time for you to change, but that time is running out.

- The 99%

Elizabeth Warren On Justice

elizabeth warren quote justic

Elizabeth Warren ripped into federal regulators this morning in a hearing focused on HSBC’s massive money laundering scandal. She started out by questioning that if laundering nearly one billion dollars for drug cartels wasn’t enough to send someone to trial, what amount would be?

The regulators responded by saying that it wasn’t their role to prosecute—that’s the role of the Justice Department. Warren said that she knew that, but she was asking if these regulators (who interact closely with the Justice Department on these megabank cases) had an opinion on the matter, seeing as these regulators advise the Justice Department on these cases. What amount of money laundering is proper for actually sending someone to trial? The regulators hemmed around the question, refusing to answer directly.

Warren’s question deserves serious attention. These bank regulators who advise the Justice Department should have said without hesitation that their opinion is that any amount of criminal activity is grounds for trial and that they would firmly tell the Justice Department so. They should have said unequivocally that a two-tiered justice system isn’t a justice system at all. Instead, they said that it’s complicated, and that these problems aren’t their problems.

Elizabeth Warren followed up her question with a compelling statement about how unjust this system seems. She said, “If you’re caught with an ounce of cocaine, the chances are good you’re going to jail… Evidently, if you launder nearly a billion dollars for drug cartels and violate our international sanctions, your company pays a fine and you go home and sleep in your own bed at night.” It’s a very simple message, but one that accurately conveys the insanity of our current system.

The HSBC money laundering scandal went on for years and years and years, and when the Justice Department finally decided to do something about it, they fined HSBC what amounted to a tiny fraction of their income over these years. The point is that there had to be people on the front line—some managers or officers—who knew that thousands of dollars in cash were being pumped into their bank (sometimes daily) by drug cartels. You don’t launder nearly a billion dollars in drug money and have no one in the entire bank have any clue as to what’s going on. The answer is simple: People who break the law so egregiously shouldn’t just go home and sleep in their bed at night. They should be held accountable in order to effectively end a two-tier justice system.

One way to better ensure that we resolve these problems is to join the call to break up the banks. Another way is to make sure that you don’t support banks that get a pass from criminal activity simply because they’ve been deemed “too big to fail.” See why you should switch.

Here’s the video:

Elizabeth Warren: “I’m concerned that too big to fail has become too big to take to trial.”

Elizabeth Warren quote

In an otherwise boring Senate Banking Committee hearing this morning (full of empty phrases like “let me get back you” and “I’ll have to check on that”), Elizabeth Warren asked a pointed question: How many of the officials there had actually taken a Wall Street firm to trial? The few people who responded to her question skirted it, until Warren pressed them harder on the issue to discover what we all knew was the case: zero.

Since trials force far more information to surface than settlements do, the public would better understand what’s going on in these Wall Street firms if the Wall Street firms went to trial. But because we haven’t had any trials, the info remains undisclosed.

Warren summed up her position by saying, “I’m concerned that too big to fail has become too big to take to trial.”

And that’s the problem, exactly. So long as Wall Street firms avoid trial simply because of their size, we have a two-tiered justice system. Until Congress and government officials feel the pressure to change the status quo, the best hope for reforming this unethical system is for citizens to proactively switch from a megabank to a local lender. Otherwise, the unethical behavior will continue and will eventually spill over and affect all of us once again in the form of another fiscal fiasco.

Here is the video, with the exact quote.

Okay, we’ve got multiple people here. Anyone else want to tell me about the last time you took a Wall Street bank to trial? [No response.] You know, I just want to note on this: There are district attorneys and US attorneys who are out there everyday squeezing ordinary citizens on sometimes very thin grounds and taking them to trial in order to “make an example,” as they put it. I’m really concerned that too big to fail has become too big for trial.

Here’s the transcript:

WARREN: I want to ask a question about supervising big banks when they break the law, including the mortgage foreclosures, but others as well. You know, we all understand why settlements are important, that trials are expensive and we can’t dedicate huge resources to them. But we also understand that if a party is unwilling to go to trial, either because they’re too timid, or because they lack resources, that the consequence is they have a lot less leverage in all of the settlements that occur.

Now, I know there have been some landmark settlements, but we face some very special issues with big financial institutions. If 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.

It’s also the case that every time there is a settlement and not a trial, it means that we didn’t have those days and days and days of testimony about what those financial institutions had been up to.

So the question I really want to ask is about how tough you are about how much leverage you really have in these settlements? And what I’d like to know is, tell me a little bit about the last few times you’ve taken the biggest financial institutions on Wall Street all the way to a trial?



Chairman Curry?

CURRY: To offer my perspective…


CURRY: … of a bank supervisor? We primarily view the tools that we have as mechanisms for correcting deficiencies. So the primary motive for our enforcement actions is really to identify the problem, and then demand a solution to it on an ongoing basis.

WARREN: That’s right. And then you set a price for that. I’m sorry to interrupt, but I just want to move this along.

It’s effectively a settlement. And what I’m asking is, when did you last take — and I know you haven’t been there forever, so I’m really asking about the OCC — a large financial institution, a Wall Street bank, to trial?

CURRY: Well, the institutions I supervise, national banks and federal thrifts, we’ve actually had a fairly fair number of consent orders. We do not have to bring people to trial or …

WARREN: Well, I appreciate that you say you don’t have to bring them to trial. My question is, when did you bring them to trial?

CURRY: We have not had to do it as a practical matter to achieve our supervisory goals.

WARREN: Ms. Walter?

WALTER: Thank you, Senator.

As you know, among our remedies are penalties, but the penalties we can get are limited. And we actually have asked for additional authority — my predecessor did — to raise penalties. But when we look at these issues — and we truly believe that we have a very vigorous enforcement program — we look at the distinction between what we could get if we go to trial, and what we could get if we don’t.

WARREN: I appreciate that. That’s what everybody does. And so, the really asking is, can you identify when you last took the Wall Street banks to trial?

WALTER: I will have to get back to you with the specific information, but we do litigate and we do have settlements that are either rejected by the commission, or not put forward for approval.

WARREN: OK. We’ve got multiple people here. Anyone else want to tell me about the last time you took a Wall Street bank to trial?

You know, I just want to note on this, there are district attorneys and U.S. attorneys who are out there every day squeezing ordinary citizens on sometimes very thin grounds, and taking them to trial in order to make an example, as they put it. I’m really concerned that Too Big Too Fail has become Too Big For Trial. That just seems wrong to me.

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