11/8/2012 8:30 PM ET|
Warren win has Wall Street worried
After campaigning on a vow to 'hold the big guys accountable,' Elizabeth Warren heads to Washington as Massachusetts' first female senator.
One of Wall Street's worst nightmares has come true. No, not the re-election of President Barack Obama. What has the financial community exasperated is Elizabeth Warren's victory in Massachusetts. In toppling incumbent Republican Scott Brown, Warren recaptured for the Democrats the seat that until 2010 had been held for more than four decades by Ted Kennedy.
Warren is a former Harvard Law School professor and former special adviser to the secretary of the Treasury, where she helped create the Consumer Financial Protection Bureau.
In doing so, Warren had plenty of adversaries, particularly within the Republican Party, which tends to view the CFPB as a burdensome regulator of Wall Street.
Executives at Wall Street's biggest banks likely haven't forgotten a suggestion Warren made in September 2011, when the newly created CFPB produced a seven-page report for the 50 state attorneys general investigating improper foreclosure procedures by Bank of America (BAC), JPMorgan Chase (JPM), Wells Fargo (WFC), Citigroup (C) and Ally Financial. In the report, the CFPB said banks dodged more than $20 billion in expenses between 2007 and 2010 by taking shortcuts in servicing troubled home loans.
The report was presented as the banks and the states were engaged in settlement talks, and there was speculation that the financial firms would cough up somewhere between $5 billion and $30 billion to put the issue behind them.
But Warren balked at the $5 billion figure, saying it "would seem too low" considering that "rough estimates suggest the largest servicers may have saved more than $20 billion through under-investment in proper servicing during the crisis."
In the end, banks ended up settling for a whopping $25 billion.
Oh, and don't forget Warren's calls for a breakup of big banks by reinstating a modern version of the Glass-Steagall Act, a Depression-era law that separated investment and commercial banks. That's not winning her any love from the big banks, either.
Now, just a year later, Warren claims victory over a moderate Republican in a hard-fought Senate race. She's likely to get a seat on the Banking Committee.
As the Los Angeles Times points out, with Rep. Barney Frank, D-Mass., retiring, Warren becomes Capitol Hill's chief defender of the Wall Street reforms passed during Obama's first term.
"At exactly the time that big banks don't want more oversight -- or another potentially activist regulator -- that's what they're getting," says hedge fund manager Shah Gilani. "Not only will Momma be protective and nurturing with her offspring, she will champion a much harder stare-down and, most frighteningly to the banks, a possible breakup frontal assault on them while their underbelly is being further exposed."
How's that going to sit with banks?
JPMorgan Chase CEO Jamie Dimon may be particularly interested in watching Warren's moves. Warren called for Dimon's resignation as a director at the Federal Reserve Bank of New York after his bank's embarrassing $6 billion trading loss earlier this year.
Dimon, of course, didn't take her up on the suggestion, but that hasn't stopped the senator-elect from continuing her crusade against Dimon and Wall Street. After Dimon appeared before the Senate Banking Committee over the trading loss, Warren issued a statement saying, "If there is one thing we learned at the hearing, it's that Wall Street still doesn't get it. Jamie Dimon and his defenders have spent millions lobbying for delays, loopholes and exceptions to block any real accountability on Wall Street -- and they're still at it."
Notes Gilani, "The ascent of Elizabeth Warren spells further declines for big banks. From her new, lofty perch she will be able to feather the nest of her offspring, the CFPB."
Wall Street's problems don't end with Warren, though. Dennis M. Kelleher, the president and CEO of Better Markets, a nonprofit that focuses on financial markets, says the industry has been dealt a crushing defeat.
"Wall Street put hundreds of millions of dollars into defeating Warren, Obama and financial reform. They went all in. Today they have a much bigger problem," Kelleher says.
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Outside Wall Sstreet, the Washington Beltway lies the prosperity that fuels the $ that flows through these big banks. Manufacturing, commerce and industry generate the capital that Wall Street and Washington plays loose and fast with. Compromise and a balance between competing interests may be difficult but hopefully doable. Any money from Washington that flows through Wall street is printed or borrowed- and unsustainable.
That is one problem but I think a much more ominous situation that may ultimately do us in is the payback to unions the admin is gearing up for. Unions contributed $500 million to Obamas campaign, put 400,000 workers on the street as campaign workers. WHY?
Revival of card check, unionization of a huge number of new health care workers and increased difficulty of getting government contracts for non union compamies even if at lower costs.
Increased labor and benefits costs due to union pressure will accelerate the flight of key industries
to foreign countries resulting in even greater job losses.
I am a supporter of unionization where needed. I worked in Employee Relations for over 18 years and know 1st hand the thuggery and pressure involved in union leadership to gain concessions that eventually put businesses under as well as local government entities.
Often it comes down to not the rank and file and their needs, but high paid union leaders trying to hold their own status. Recent history indicates the willingness to concede to layoffs rather than compromise by the union.
Union exemptions from Obama Care and the NLRB treatment of Boeing trying to open a plant in SC should be obvious clues to whats in store.
Collectively, union members should have the greatest concern about losing jobs.
My previous post got away any from E Warren Comment. Sorry.
From all accounts she is a lifelong chronic liar feeding at the public trough her whole career. She wont suddenly acquire integrity or wisdom just because she was elected. Her election reinforces her dishonesty and lack of integrity. Dishonesy and lying seems to have become a prerequsite to hold office in modern america, Rep, Dem, Independent, or any other affiliation.
Anyone that thinks any additional legislation/regulations will cure the Wall Street excesses is wishful thinking. Until the existing agencies, SEC, FINRA, etc are able to regulate and enforce EXISTING rules, not much will change. It may not be CDS or derivatives but history tells us that Madoff, Stanford, Enron,HealthSouth etc will continue. The incompetence of these watchdog agencies will continue and handing them an additional rulebook will only confuse the regulators more. By the time they figure it out, the financiers will have already figured out a way around it. They are SMARTER than the watchdogs.
The real problem is with politicians and agency employees corrupt relationship with lobbyist and insiders on Wall Street. Treasury and the fed have been ruled by Wall Street Alumni for decades.
Neal Barofskys book, BAILOUT, is a great insiders view of how corrupt Washington is and it is across all party lines and all branches of government including regulatory agencies.
Until the american people get fed up enough and quit returning incumbents to offfice, establish term limits, and become informed and active in their own destiny, nothing will change.
Unfortunately, most americans world view is being shaped by 20 second news spins, video games and politicians lies. God forbid they read a book and examine issues in depth.
It is PAST TIME for those that allow these actions to take place to face criminal charges for their actions and be sent to a non-country club federal facility to live out the rest of their lives, some where such as Ft, Leavenworth, Kansas
I hope the nails them to the wall
If you hate America so bad, find another country and get the f*ck out.
Cap ALL profits from government contracts between govt and private contractors at 20% max profit.
Those who windfall profit from govt contracts should get life in prison.
Windfall profiteers = Privatized Military Industrial Complex.
The WARPIGS that fatten their wallets off of pushing death upon the people.
These same warpigs have bankrupted America.
NATIONALIZE defense contracting. BAN private weapon manufacturing.
Your criminality will be punished by law.
Lock them up and toss the key.
This **** was the first one to yell "YOU DIDN'T BUILD THAT!"
The ONLY thing she ever built was a fake **** family tree in which she could manipulate her way to the top!
Just because your great grandma sucked off an indian, does not mean you are part Cherokee! All the WHORES back then screwed whomever had the coin!
America just committed suicide with this election.
Obamacare will destroy the health care system, Warren and her flying monkeys will destroy the banking system and sequestration will destroy our military!
Our enemies are throwing an Obama Won party as we speak!
Glad I am prepared, are you?
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