Last year liberals found a small handful of state Attorneys General to elevate as heroes for their efforts to investigate robosigning and hold banks accountable for committing foreclosure fraud. That cohort, which eventually acquiesced to the Obama administration and got on board a very weak settlement deal with the nation’s five largest banks, included New York AG Eric Schneiderman, NV AG Catherine Cortez Masto, and DE AG Beau Biden, among others. Schneiderman’s status as a liberal hero is now seriously being called to question by people who had previously put a lot of faith in him, myself included. Part of my takeaway from the last year is that while elected officials and candidates should be leading on these issues, words aren’t enough. Actions are what will determine whether or not these people are worthy of inspiring hope.
With that as a preface, Elizabeth Warren is on something of a tear going after the failures of recent regulatory reform and ostensible accountability efforts to adequately rein in Wall Street recklessness and criminality. She told Politico that Jamie Dimon should be removed from the New York Federal Reserve’s Board and sees the JP Morgan Fail Whale trade as a complete failure of regulatory reform:
“The argument for Glass-Steagall is that banking should be boring. Risk-taking should be separated from ordinary consumer banking. Banks are different from every other kind of company. They hold our money in trust and they get government guarantees. That fundamentally changes the game. The trade-off is they agree to engage in only low-risk activities. JPMorgan just showed that is not what they are doing.”
“I find it very interesting that at first the defenders [of JPM] said ‘Well, even if the Volcker Rule were in place this would not have violated it.’ First of all, I think people would be surprised [Volcker is] not in place. And it’s not in place because of this guerilla war banks have fought against it. … But the correct response is not that [the JPM trader is] OK because it wouldn’t violate the Volcker rule. The correct response is that the Volcker Rule isn’t strong enough and we need Glass-Steagall.”
While these are good sentiments and in line with what Warren has been saying for a while, they’re not that far outside what has become standard discourse by liberal Democrats since the announcement of JP Morgan’s $3 billion and growing trading loss.
However in an interview with David Dayen of FDL News Warren makes incredibly strong statements on the failure of the Obama administration and the mortgage fraud task force to hold Wall Street bankers accountable for the financial crisis.
FDL News: Can all of these issues with regulation and oversight of Wall Street ever be successful without them involving handcuffs in some manner? The efforts to hold the banks and their executives accountable have all resulted in slap-on-the-wrist fines and settlements. We’re four years on from a financial crisis that wrecked the US economy, one rooted in multiple levels of fraud, and no top executive has gone to jail for it.
Warren: And that is disgraceful. No one has been held accountable. Americans know that all the way down to their gut. The financial crisis has been treated as if it were a tsunami or a snowstorm, or a natural act for which no human being had any direct participation. The people who broke the economy should be held accountable. It’s as simple as that. And that means criminal investigations, civil investigations. Without that, it’s not possible to clean the system and rebuild it.
FDL News: Are you confident that the current set of investigations, including this task force co-chaired by Eric Schneiderman looking into mortgage abuses – there’s been a lot of controversy about it, about staffing and resources – are you confident that the investigations in place today will actually lead to the necessary accountability for Wall Street for their role in the crisis?
Warren: I am not confident. No. And that’s the answer to your question. The American people are pushing for more accountability. They need to keep on pushing until it happens.
It is significant for a top targeted Democratic Senate candidate to be saying she has no confidence in what was hyped as a major investigation by the President in the State of the Union and by AG Schneiderman when he assumed a role within it. Dayen notes that it “is extremely damaging to the attempt to pass off the RMBS working group as something legitimate” for Warren to say this.
As I wrote yesterday, President Obama is unlikely to convince independent swing voters in key swing states who think he hasn’t done enough to hold Wall Street accountable unless and until the handcuffs come out. Warren is saying that this is unlikely as things currently stand.
Hopefully the pressure from the polls and key Democratic candidates like Warren serves to light a fire under the administration and the mortgage task force. There is clearly no ingrained desire within the Obama administration to uphold the rule of law when it comes to bank criminality; one can only hope public political embarrassment will be a motivating factor. Handcuffs for banksters as part of a cynical election year ploy is far preferable to continued inaction.