Elizabeth Warren challenges Obama: Break up Wall Street ‘behemoths’
Amid speculation that she might run against Hillary Clinton in 2016, firebrand senator attacks regulators for multiple failings
Senator Elizabeth Warren cemented her growing reputation as a darling of the political left on Tuesday with a wide-ranging speech challenging the Obama administration to take on Wall Street and break up its biggest banks.
Amid renewed speculation that she might challenge Hillary Clinton for the 2016 Democratic nomination, Warren appeared at a congressional event to attack regulators for failing to tackle the problem of financial institutions that are “too big to fail”.
“We have got to get back to running this country for American families, not for its largest financial institutions,” said Warren, who said the issue was an indictment of how little had changed since the 2008 banking crash.
The four biggest Wall Street banks are 30% larger than before the financial crisis, she said, while the five biggest institutions hold more than half the bank assets in the country.
Warren claimed this amounted to an $83bn-a-year taxpayer subsidy for some Wall Street institutions, because they were so large that they could safely rely on a government bailout in the event of a future crisis, and were therefore able to take bigger risks than rivals. She also cited research suggesting the crash had cost up to $14tn, or $120,000 for each American household.
The first-term senator from Massachusetts, who led the congressional taskforce overseeing the bank bailout, has repeatedly denied she has presidential ambitions, but growing talk of her potential candidacy has ensured that even is she doesn’t run, she will act as a counter-weight to Wall Street financial backing for Clinton.
In her speech to the Roosevelt Institute and Americans for Financial Reform, Warren did not mention wider political ambitions but focused on proposed legislation launched over the summer with Republican John McCain to break up large banks and build on the 2010 Dodd-Frank reforms.
“Where are we in making sure behemoth institutions on Wall Street can’t bring down the economy again? And make wild gambles that suck up all the profits in the good times? And stick the taxpayer with the bill when it goes wrong?” she demanded.
“Three years since Dodd-Frank was passed, the biggest banks are bigger than ever, the risks to the system have grown and the market distortions continue.”
She said current regulators do not give “much reason for confidence” and added: “It is time to act: the last thing we should do is wait for another crisis.”
Warren’s remarks came as the White House confirmed that a relatively unknown Treasury official Timothy Massad would replace former Goldman Sachs banker Gary Gensler as chair of Wall Street derivatives regulator, the Commodities and Futures Trading Commission.
Announcing the appointment, President Obama defended what he called “historic Wall Streets reforms” that had already “put in place smarter, tougher common sense rules of the road.”
“The markets have hit record highs and there is no doubt our financial system is more stable,” said Obama.
“Tim’s a guy that doesn’t seek the spotlight,” he added.
Watch Warren’s speech, as aired by C-SPAN on Tuesday, below.