Senator Elizabeth Warren asks the right question
Since the financial crash of 2008, both parties have tried to claim they are the party who can prevent the next crash.
For example, there has been a lot of talk among Republicans about getting the federal government at least partially out of the housing business. Naturally, all of this talk has led to nothing happening. To be fair, Republicans don’t have the power to enact more free market policies through the normal order of things in Congress.
Also since the crash, Democrats have talked about holding banks accountable. Dodd-Frank was passed, which helps some of the big financial players gain advantages over competitors while micro-managing parts of the financial markets and housing markets.
But, as is typical of Washington, one of the most important ways future crashes can be prevented is by holding corrupt executives responsible. Yet this has not been done, creating a massive gulf of trust between Washington and the American people.
Sen. Elizabeth Warren (D-Mass.) raised the stakes of her quest to find out why a single Wall Street bank has not been prosecuted in the aftermath of the financial crisis Tuesday, sending a letter to the heads of three federal agencies.
Warren, a member of the Senate Committee on Banking, Housing & Urban Affairs asked Attorney General Eric Holder, current Securities and Exchange Commission Chairwoman Mary Jo White and Federal Reserve Chairman Ben Bernanke whether they had done any cost-benefit research into prosecuting a bank versus settling with one, which is equivalent to a slap on the wrist for a profitable financial institution.
“Have you conducted any internal research or analysis on trade-offs to the public between settling an enforcement action without admission of guilt and going forward with litigation as necessary to obtain such admission and, if so, can you provide that analysis to my office?” Warren said in the letter.
In the past, various federal officials have argued the potential economic harm of bringing a bank fully to heel through the court system outweighs the benefits. Senator Warren’s excellent question as to whether a formal analysis of the cost-benefit analysis of settling vs. prosecution is long overdue. The answer should prove enlightening.