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.
More from Forbes:
VIDEO ON MSN MONEY
Screw the big banks! They screwed millions of Americans, and lured them into their Ponzi scheme. Then our tax dollars bailed them out, while those millions of people fell into financial ruin. Most got NO help from the banks in renegotiating their mortgages.
Now the banks are crying crocodile tears at the prospect of Elizabeth Warren? What a joke!
SHE LIED ABOUT BEING A NATIVE AMERICAN! SHE TOOK GOVT FUNDS SHE DIDN'T QUALIFY FOR!
WHAT IS WRONG WITH YOU DEMOS AND LIBERALS? OBAMA AND HIS STAFF LIED ABOUT THE ECONOMY,
STIMULUS, BAILOUTS, TAXES, MEDICARE CUTS, OBAMA DEATHCARE, FAST N FURIOUS AND LIBYA ALONG
WITH THE LEFT WING MEDIA! DO YOU HAVE NO MORALS NO STANDARDS? THEY LIED. THEY CONTINUE TO LIE.
THIS WOMAN IS A PIECE OF SOCIALIST LYING CRAP!
Now that Robme lost how are Crooked bankers supposed to make money off the middle class?
Next thing some liberal looney will want to re-instate Glass-Seagal, OMG!!! The humanity of it all!!!
All those millions spent on buying the presidency and it was all for nothing, almost the equivalent of one hedge fund managers yearly salary (1Billion) spent and this nasty lady and Obamer still get elected, there just aint no justice in this world no more!!!
It is a sad day for the criminal class, a sad day...hang your heads boys hang your heads in lament, but maybe if you act fast enough you can steal a nice billion dollar bonus or three before the Grinch steals your Xmas.
Sure, crack down on Wall St, sic the attack dogs on them! After all who wants companies to make profits right? It's not like companies' pensions and people's 401ks rely on these company profits to gain in value or anything, heck we can always put our retirement funds into things like cds and interest-bearing bank accounts. Sure, that half a percent annual interest is really going to grow those retirement funds. Sigh..It's OK, there's always Social Security right?......
To all you defending credit defualt swaps and derivitives as a legitimate way to make money as free enterprize let me offer you something you may not have thought of. They produce nothing of value.
They are only of popular to those who generate them because of commission sales. And of course those hedge funds that short the market by the manipulation of commodities and fear.
Where are all the conservatives who can support these activities and give us a legitimate reason why? There is also the laundering of drug money many so called banks participate in. So if we can trust them for this I am sure we can trust them to make great decisions on the derivitive markets right?
If any corporation needs to be looked after these banks are it! Break them up!!!
What the heck is wrong with wall street?Historically, wall street has done much better with a
Dem in the WH.The market is up 60% with Obama and corporate profits are up 78%.I gues
the far right has bought them out.
That group of outlaws were dealt with and so will this group.
Copyright © 2014 Microsoft. All rights reserved.
Fundamental company data and historical chart data provided by Morningstar Inc. Real-time index quotes and delayed quotes supplied by Morningstar Inc. Quotes delayed by up to 15 minutes, except where indicated otherwise. Fund summary, fund performance and dividend data provided by Morningstar Inc. Analyst recommendations provided by Zacks Investment Research. StockScouter data provided by Verus Analytics. IPO data provided by Hoover's Inc. Index membership data provided by Morningstar Inc.
[BRIEFING.COM] The major averages finished the Tuesday session near their lows with the Russell 2000 (-1.0%) leading the slide. The S&P 500 lost 0.5% with nine sectors ending in the red.
Equities indices started the day with modest gains and spent the first two hours of action in the neighborhood of their flat lines. Although the early trade lacked clear sector leadership, that could have been overlooked due to the strength among heavily-weighted sectors like health care (-0.3%), ... More
More Market News
|There’s a problem getting this information right now. Please try again later.|