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February 17, 2013 12:40 PM Sen. Warren comes out swinging

By Samuel Knight

In case you missed it, Elizabeth Warren made quite the splash at her first Senate Banking Committee hearing on Thursday.

In front of a panel entitled “Wall Street Reform: Oversight of Financial Stability and Consumer and Investor Protections,” Warren berated regulators for failing to prosecute a single Wall Street criminal in recent years, and for not letting institutional suspicions arise due to the fact that banks are trading at below-book value.

This, as you can imagine, did not sit well with banking executives.

According to POLITICO’s Ben White, they went apoplectic:

“We have been through more tests and thorough exams than any college student over the past four years, including many conducted by the CFPB,” said Richard Hunt, president and chief executive of the Consumer Bankers Association.
“While Sen. Warren had every right to ask pointed questions at [Thursday’s] Senate Banking Committee hearing, her claim that ‘nobody believes’ that bank books are honest is just plain wrong,” [another anonymous] executive said in an email. “As Federal Reserve Gov. [Daniel] Tarullo explained in response to her question, the low valuations are more likely due to continued economic uncertainty and concerns on the part of investors regarding the impact on banks’ profitability due to the hundreds of new regulations.”

White, however, left out key pieces of background here. The first is that Wall Street banks are performing like they were in 2006, and that their moaning about profitability rings hollow. The second is that to say the industry has a credibility problem would be the understatement of the decade: according to the Wall Street Journal and a trade publication called CFA Magazine, “one out of every ten people working on Wall Street are psychopaths.”

Not wanting to disappoint, the executive evidenced a delusional mendacity again in White’s article, when he said that “Elizabeth warren and [Texas Republican Senator] Ted Cruz are dueling for the title of ‘most extreme fringe freshman senator.’”

To this empty suit, it’s not just as if the financial crisis never happened. It’s as if Wall Street firms haven’t been mired in scandal after scandal since: foreclosure fraud, LIBOR, JP Morgan London Whale, FHA loan fraud, and MF Global to name a few. According to our faceless executive, wanting regulators to hold these well groomed pickpockets to account — for both crimes and reckless legal practices — is equal to slandering Chuck Hagel for having fictitious ties to North Korea or a blatantly made-up Hamas linked booster group (and certain publications continue to push this false equivalency in their fact-free devil-may-care attempts to be “objective” stenographers).

Fortunately for Wall Street, Warren might not have done herself any favors through her line of questioning. As Yves Smith, author of the the indispensable blog “Naked Capitalism” pointed out, the freshman Senator could have played a more subtle cat-and-mouse game to “tease out” information she claimed to have wanted - about why regulators never take cases to trial, namely, or why the fines they issue amount to a paltry “cost of doing business” amount. I suspect, however, that Warren was just trying to make a point - that whether regulators are scared of losing cases, or not wanting to find themselves shunned by Wall Street when they decide that they’ve had enough of Washington, they haven’t been doing the public any favors through inaction.

What’s important about this exchange, though, is that Warren demonstrated why she was elected. She might, thus far, be known as a one-issue kind of expert, but that issue is of massive importance to her constituents (and the American people). Her banking committee membership, I suspect, will be significantly more valuable the next time financier psychopaths pay a visit to one of the Senate office buildings to testify.

Samuel Knight is a freelance journalist living in DC and a former intern at the Washington Monthly.

Comments

  • iyoumeweus on February 17, 2013 1:36 PM:

    HOW “WE THE PEOPLE” ARE RIPPED OFF BY BIG WALL STREET BANKS
    Bank of America, Morgan-Chase, Goldman-Sacks, CitiGroup and Morgan Stanley together have assets which total one quarter of the nation’s economy. They form an oligopoly controlling the banking and financial markets with the ability to boost profits and bonuses while gouging their customers and consumers. These, tax supported Federal Reserve favored private corporations are in many ways like the old East and West India Companies, two other oligopolies, which dominated trade and the economy of the 1st British Empire at the time of the American Revolution. Our revolt was just as much a revolt against their monopolist dominance as it was against King and Parliament.
    Here is how they tax us today without representation, consent or knowledge:
    They control and keep artificially high interest rates on loans, credit cards and mortgages. They are the principle buyers of debt originated by smaller community banks, loan companies, mortgage firms and small financial institutions. These large oligopoly banks, the big Five, are making historically large profits on their investments by taking interest rates far higher than in the past. When the number and the competition among big banks decrease; the cost to the consumer/customer increases. This excess profit can be views as a corporate taxation without representation. Indeed, it is a rip off!
    The Big Five banks using their Hedge Fund partners engage in high speed trading using ultra-fast large computers they have the ability to execute millions of stock trades per second. When banks can trade in nanoseconds while you are trading in minuets, the nanosecond trader has a large advantage because they ‘see’ your trade buy the stock you are interested in and sells it to you making 1, 2 or 3 cents profit. Do this, once you make a penny; do this 10 million times and you are ripping off the system! This is taxation without representation on our pensions, our mutual funds, our IRA’s and our 401K’s, and we never even knew it occurred! Another, rip off!!
    All to often, Big bank money managers make trades based upon insider information not available to outsiders not in the know. Such trades are illegal but difficult to catch and harder to bring before a judge. If you do not get the upside; you are stuck with the downside. All too often the large profits of hedge funds and proprietary trading firms controlled by the too-big-too-fail banks come from such illegal insider knowledge. This is another example of corporate taxation without representation. Again we lose, our pensions, mutual funds, IRA’S and 401K’s all ripped off!!!
    The Big Five Wall Street banks and the Big Three credit raters, Standards & Poor’s, Fitch and Moody’s conspired in a pay-to-play shake down in which the raters would give undesirable ‘trash’ securities any rating the big banks selling said ‘garbage’ desired provided the assessed fees were high. Both the big banks and the credit raters profited, and an unsuspecting public, as well as, local governments, small not-for-profit corporations, pension funds and other sorts of investments were victims of criminally incompetent ‘gatekeepers’ and their worthless information. Corporate taxation without representation flourished while “We the People” got ripped off!!!!

    The largest tax burden Wall Street banks place upon us is the fact that as the banks grow larger our economic growth declines; thereby, killing jobs, tax revenue, opportunities while increasing debt and deficits. Andrew Holdane who has studied this phenomenon tells us, “There is a threshold at which private credit-to-GDP may begin to have a negative impact on GDP growth. That threshold is found to lie at a private credit-to-GDP ratio of around 80 to 100%.” Today the ratio is approaching 200%. As the financial sector grows larger and larger, the economic well being is sucked out of the nation. Inv

  • tulsatime on February 17, 2013 1:45 PM:

    I hope Sen Warren makes some bit of difference before she is marginalized. Perhaps she can help in the redesign after the next crash. Or the next ,or.....

  • Ron Byers on February 17, 2013 1:58 PM:

    What I love is the cozy relationship between the regulators and the regulated. Some Wall Street Bank swindles the American people out of several billion dollars. Some Regulator catches the swindle. The Bank signs a consent decree saying they won't swindle like that again. With a wink and a nod the bank pays a few million in fines but keeps the billions. Then the Regulator goes to work for a Wall Street Law Firm that represents the banking industry. He earns millions in fees from the big banks sometimes from the very bank he used to regulate. Thus is the way of American corruption.

  • c u n d gulag on February 17, 2013 2:10 PM:

    I think Senator Warren (writing that will never ever get old - just like writing 'President Obama') sent a message to the wolves and jackals, by going after the dog-catchers.

    'DON'T FECK WITH ME, BOYZ & GIRLZ!!!'

    She's now got them wondering, "If she's THIS tough with the regulators, imagine when she gets one of us 7-figure suit and Dolce & Gabbana shod Galtian Overlords up in front of that committee! ZOINKS!"

    As for Cruz's disgusting "Tailgunner" Joe imitation, when the showboating Canadian-born sh*tkicker impugned that Hagel was 'palling around with terrorists' in his BS claims, he might as well have attacked Hagel for loving hummus, and supporting the tabouli-ban.


    WARREN IN 2016!!!
    WHAT AN A-HOLE!!!

  • JackD on February 17, 2013 2:12 PM:

    A more cogent criticism of Senator Warren's questioning was the apparent fact that the regulators she was questioning had no jurisdiction over criminal charges and those questions should have been addressed to the Justice Department.

  • c u n d gulag on February 17, 2013 2:15 PM:

    OY!
    OY!!
    OY!!!

    I obviously meant Cruz when I wrote "WHAT AND A-HOLE!!!"

    I was so worried about the CRAPTCHA that I couldn't read, I didn't make sure my last sentence was in the right order.

    If you guys don't want to poop-out your CRAPTCHA, ken oui haz "Edit" pleez?

  • DJ on February 17, 2013 3:08 PM:

    Most of us get along fine with the irritating Captcha, Victor. It's a poor craftsman that blames his or her tools.

  • mad_nVT on February 17, 2013 3:19 PM:

    Senator Warren won't be marginalized.

    Sure, Wall Street and the inside-the-beltway-bozos didn't like what she had to say.

    But soon enough Main Street will be paying attention--- we don't like the too-big-to-litigate-banks, their monopolies and there ability to destroy our businesses.

    Senator Warren made big noise on Thursday. Now those Wall Street thieves and Beltway bozos will begin paying attention. So will regulators. So will investors. Bingo. Then those Big Banks will REALLY be paying attention.

  • JPS on February 17, 2013 4:15 PM:

    You go girl! You're the best thing to happen to Congress in memory.

  • MuddyLee on February 17, 2013 5:11 PM:

    Senator Warren is doing just what she ought to do. She is worthy of the support that liberals from all over the country gave her. I would love to trade Graham for Warren - it's impossible of course. I don't care that she's not from my state (SC) - she's my senator just like BHO is my president. Republicans: kiss my liberal redneck arse.

  • c u n d gulag on February 17, 2013 6:12 PM:

    Well, DJ, I'm guessing you might know a thing or two about being a... about tools.

  • Hugemons on February 17, 2013 11:02 PM:

    Well, although she didn't "tease out" information on why regulators don't take banks to trial, she did "tease out" that they don't have any ready information to give. She is doing good. Let all the other respectable legislators do the teasing, Warren should go for the throat, the way a cat really does with a mouse.

  • Bobby Goren on February 18, 2013 7:04 AM:

    There have been a bumper crop of "rise of the machines" stories the past few months in an attempt to explain at least part of our anemic jobs recovery. Well, financial regulation is one are where we need MORE MACHINES. Machines don't worry about whether they've jammed the revolving door.

    "That Terminator is out there. It can't be bargained with, it can't be reasoned with. It doesn't feel pity or remorse or fear and it absolutely will not stop, ever, until you are dead." (or arrested)

  • boatboy_srq on February 18, 2013 9:07 AM:

    Do these banking loons read even their own propaganda? There was a complete takedown of banks' bookkeeping in The Atlantic just last month: the writers took a good look at Wells Fargo's annual report (a usually-accurate telling of an historically cautious and responsible financial institution's condition) and scared themselves goldbuggy.

    Senator Warren has every right to call these thieves on the carpet, and the CBA has no right to complain about their treatment until they can explain their members' business activities in plain English without having to preface the documentation with invocations of the Fifth Amendment.