Sen. Elizabeth Warren renewed her call for breaking up big banks and cracking down on financial misdeeds Wednesday, saying that the new Wall Street rules imposed in the wake of the financial crisis do not go far enough.
The Massachusetts senator has often engaged in sweeping anti-Wall Street rhetoric, but her comments Wednesday contained new policy proposals for reforming finance and specific criticisms of agencies she argued are not doing enough to curb risks.
Warren’s speech also amounted to a financial regulation agenda, one submitted as Hillary Clinton begins her official campaign for the Democratic Party’s presidential nomination. Many liberals would prefer to see Warren fill that role, but Warren has said she will not run, preferring instead to see other candidates pick up her liberal agenda.
The former Harvard law professor said that the problem of banks too big to fail without forcing the government to bail them out had not been solved.
“Let’s get real: Dodd-Frank did not end too-big-to-fail,” Warren said.
The solution, she stated, is to “break up the biggest banks.”
Speaking at a regulatory conference in Washington and broadcasting her remarks on social media, Warren said that rules do not ruin finance, but that “rules are a necessary ingredient for healthy markets.”
To break up megabanks, Warren called for support for legislation she has backed restoring the Great Depression-era Glass-Steagall law separating investment and commercial banking. She also recommended as an alternative simply capping the size of banks.
Among the laundry list of items she recommended were passing a law to further limit the Federal Reserve’s ability to bail out banks and changing the tax code to lessen the incentives for banks to rely on debt, rather than on equity.
She also called for regulators to step up enforcement or for Congress to force their hands with legislation, saying that “when cops don’t do their job, cheaters prosper and honest businesses lose out.”
The Department of Justice has failed to prosecute financial executives involved in financial wrongdoing, Warren has long argued. She also faulted the Securities and Exchange Commission for lax oversight, and suggested that Congress pass a law on an executive pay rule that the SEC hasn’t finalized.
Warren also recommended that agencies extend supervision in the “shadow banking” sector, which includes non-banks such as mutual funds and insurance companies. More specifically, she said that the Consumer Financial Protection Bureau should be given the authority by Congress to oversee auto finance.
Republicans were not spared from her criticisms. She said the party’s approach for financial regulation was “pure crony capitalism.”
