TARP overseer: The banks 'will own all of us' without reform

The head of the Congressional Oversight Panel created in 2008 to oversee the TARP bank bailout says that President Obama's proposal on Thursday to limit both the size of the major banks and the risks in which they can engage is "very important."

Harvard law professor Elizabeth Warren told MSNBC's Rachel Maddow, "I head him say, 'We're going to break apart 'too-big-to-fail,' and we're going to have an answer so that every financial institution, if it makes big enough mistakes, if it takes big enough risks and loses, every one of them can, in the end, die.'"

"The financial institutions have pushed him hard," Warren said of the president. "They've pushed Congress hard. He's pushing right back. ... What I see is that the president is now going to go straight to the people, and he's not going to let deals be cut in the back room. ... The time is upon us. Either you vote for the banks, and you do it in a big public way, or you vote for the people."

Warren emphasized that even though TARP is winding down, the bailout has left us with "the reminder that 'You know, when it comes right down to it with these very large financial institutions, we will throw as many taxpayers under the bus as it takes to save them.'" She insisted, however, that Obama's reform proposals amount to a statement that "we just can't afford to do that any more."

"Without that," Warren remarked, "quite frankly, our economy just can't function. Those big banks really will own all of us."

"How are you feeling about the politics here?" Maddow asked, citing resistance from Wall Street.

"I'm a teacher, I'm not a politician," Warren replied. "But I feel better than I've felt in a long time."

This video is from MSNBC's The Rachel Maddow Show, broadcast Jan. 21, 2010.

Download video via RawReplay.com