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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The visions of Adams, Franklin, Jefferson, and Washington have been all but lost! School children will be taught that they were evil Capitalists, and it took the "Great Obama" to set things straight!
I "hope" that the people who voted for Obama enjoy themselves when our society becomes a mix of the former Red China and Soviet Union, plus the current day Cuba and N. Korea, with some Orwellian "1984" thrown in! It's funny how they rail about those evil CEO's and banksters, but will have no problem living a life of poverty with zero voice in how they are governed, while Obama and his Marxist leadership lives in luxury .............................................
Banks must serve the nation's needs. They are there not for robbing the citizens.
The abolition of the regulations to oversee them first initiated by Mr. Clinton and later strengthened by Mr. G.W.Bush led to the world's biggest swindling by banks that finally led to the intense misery of the middle class from2007 onward.
"Warren win has Wall Street worried "
Good. Couldn't happen to a better bunch of people.
Wake up wall street! You've had your run with your bullying tactics and legalized stealing. The game is now over. Bet you never imagined that one person, a woman to boot, could stop you in your tracks.
I'm going to enjoy "Mom" watching over and protecting us. It finally feels like the America we once knew that allowed fairness for those willing to work hard for opportunities.
We stand strong behind you Elizabeth! You go girl :)
I see the Republicans are still crying about the election.You lost fair and square.Man up
and admit you were wrong.Most Repubs didn`t like Romney from the begining.A high %
of people just voted for Romney because he`s white.If Obama was white he would have
won 49 states.Alaska is hopeless and so are some redneck states.
Happy days are here again!Now that the market make it`s correction it`s time for buying.I
just bought a ton of stock.If you don`t buy now you`re a fool.In a few weeks the Dow
will be at a al-time high.This is the gift we`ve been looking for.Thanks WALL STREET.
Instead of letting a politican try to fix the banking system, why don't you take your own action.
Tired of your bank charging fees for everything? Find a new bank.
Unable to qualify for a loan? Save more money and put down a bigger down payment in a year.
Credt card interest rate too high? Make a payment the same day that the charge appears on the card.
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