It was not totally unexpected that freshly-elected Sen. Elizabeth Warren, a proven consumer advocate, would take the U.S. bank regulators to task over the lack of criminal prosecutions against big banks for their roles in the housing meltdown and foreclosure crisis.
Nonetheless, it was compelling to hear Warren, D-Mass., formerly a Harvard Law School professor specializing in bankruptcy law who is well-versed on the mortgage industry and the multi-billion dollar settlements.
She led the toughest questioning at her first Senate hearing this week, facing the regulators that are suppose to protect consumers from the abuses of the biggest banks and Wall Street firms.
The topic of Thursday’s hearing was: “Wall Street Reform: Oversight of Financial Stability and Consumer and Investor Protections.”
Warren didn’t waste any time in asking her question, citing the financial firms’ big profits, the recent settlements to compensate wronged homeowners who were taken through devastating foreclosures, and the lack of incentives these same firms have to correct these wrongs.
“If they can break the law and drag in billions in profits, and then turnaround and settle, paying out of those profits. They don’t have enough incentive to follow the law.
“It means that every time we have a settlement and not a trial, we didn’t have the days and days and days of testimony about what those financial institutions had been up to. The question I really want to ask is about how tough you are and how much leverage you really have in these settlements.
“Tell me about the last few times you have taken the biggest financial institutions on Wall Street all the way to trial. Anybody?”
The responses were similar. The regulators said they have done that best they can do within their scope of authority. Still, it is compelling to watch. See the exchange on video below:
Here is the list of speakers:
- Mary Miller, Under Secretary for Domestic Finance, U.S. Department of the Treasury;
- Daniel Tarullo, Governor, Board of Governors of the Federal Reserve System (FRB);
- Martin Gruenberg, Chairman, Federal Deposit Insurance Corporation (FDIC);
- Tom Curry, Comptroller of the Currency, Office of the Comptroller of the Currency (OCC);
- Richard Cordray, Director, Consumer Financial Protection Bureau (CFPB);
- Elisse Walter, Chairman, U.S. Securities and Exchange Commission (SEC); and
- Gary Gensler, Chairman, U.S. Commodity Futures Trading Commission (CFTC)..