Senator Elizabeth Warren pushes plan to break up big banks
U.S. Senator Elizabeth Warren on Wednesday called on lawmakers to break up big banks and change tax rules that benefit Wall Street, part of an ongoing effort to advance a more populist agenda.
The Massachusetts Democrat and longtime consumer advocate has sought this year to draw public attention to what she sees as the unfinished job of revamping Wall Street oversight after the 2007-2009 financial crisis.
“We know what changes we need to make financial markets work better,” Warren said in a speech at a Washington conference focused on the 2010 Dodd-Frank financial oversight law. “The key steps aren’t hard.”
Warren has pushed a more consumer-focused agenda for Democrats, calling for raising the federal minimum wage and cutting federal student loan rates.
Hillary Clinton, a top candidate for the Democratic nomination for president in 2016, recently slammed hefty paychecks some corporate executives receive as an example of unfair inequality. Observers saw that as evidence of Warren’s influence on the party.
Warren said on Wednesday that regulators including the U.S. Federal Reserve and Securities and Exchange Commission had fostered a “slap on the wrist” culture. She said they should get tougher on big banks.
She said lawmakers should crack down on banks by breaking them up and limiting the U.S. Federal Reserve’s ability to lend in a crisis so that big institutions cannot count on a bailout.
“When those banks are broken up and forced to bear the consequences of the risks they take on … regulatory oversight can be lighter and clearer as well,” Warren said.
Big banks oppose efforts to break them up, saying their size makes them more efficient. Many Republicans have different ideas about preventing bailouts and view government-mandated size limits as unfair intervention in financial markets.
Warren said Congress could make tax code changes to urge financial firms to drop risky or unfair practices.
She called for closing a loophole that encourages big banks to pay executives big bonuses, creating incentives for companies to seek equity funding rather than debt, and taxing financial transactions to reduce market volatility.
(Reporting by Emily Stephenson; Editing by Lisa Von Ahn)