Senator Elizabeth Warren (D-MA) holds the banks accountable
In 2010 and 2011, Elizabeth Warren was picked by President Obama to run the Consumer Financial Protection Bureau created under Dodd-Frank. Her nomination never went through, so she ran for the Senate and beat then-Senator Scott Brown (R-MA) in 2012, and was subsequently placed on the Senate Banking Committee to help oversee bank reforms. Now, she’s tearing up the banks, regulators in the Treasury Department, and the Justice Department in no uncertain terms. From Huffington Post:
During a Senate Banking Committee hearing about money laundering, Warren (D-Mass.) grilled officials from the Treasury Department, Federal Reserve and Office of the Comptroller of the Currency about why HSBC, which recently paid $1.9 billion to settle money laundering charges, wasn’t criminally prosecuted and shut down in the U.S. Nor were any individuals from HSBC charged with any crimes, despite the bank confessing to laundering billions of dollars for Mexican drug cartels and rogue regimes like Iran and Libya over several years.
Defenders of the Justice Department say that a criminal conviction could have been a death penalty for the bank, causing widespread damage to the economy. Warren wanted to know why the death penalty wasn’t warranted in this case.
“They did it over and over and over again across a period of years. And they were caught doing it, warned not to do it and kept right on doing it, and evidently making profits doing it,” Warren said of HSBC. “How many billions of dollars do you have to launder for drug lords and how many economic sanctions do you have to violate before someone will consider shutting down a financial institution like this?”
It has long been known that Too Big To Fail is official policy of the United States’ federal government, and the HBC corruption is not new to public scrutiny. As former TARP Inspector General Neil Barofsky noted in The New Republic late last year (emphasis added):
The enduring presumption of bailouts in our banking system already drives the largest banks to take on too much risk with too little disclosure and too much leverage, a toxic cocktail that will inevitably lead to another financial crisis. Yesterday’s action now spikes the punch with a new toxin, confirmation that criminal penalties are off the table, leaving a worst-case scenario of a fine totaling far less than even a single quarter’s earnings. Given the potential profits of criminal behavior and the unlikelihood of personal consequences for the executives directing it, the message is clear: Crime pays. This will inevitably lead to more reckless risk-taking that will further undermine systemic stability and lead to an even greater financial meltdown down the road.
As Senator Warren continues her time in the Senate, it is clear that Tea Party activists will find themselves opposed to her expressed beliefs on taxes and so-called economic fairness. Additionally, she is a full-throated supporter of Dodd-Frank, something Patriots have opposed for both its expansive government reach and how its regulations actually strengthen the big banks against competition.
In the meantime, however, Senator Warren is exactly right with her disgust over the collusion between the federal government and the big banks. Let’s hope her actions bring awareness to the American people that – 4.5 years after TARP – too many banks and their executives have gotten away with crimes for which the rest of us would be locked away.