Why Elizabeth Warren is absolutely right

In a fiery speech on the Senate floor Friday, Sen. Elizabeth Warren condemned a sweetheart deal smuggled into last week’s must-pass budget bill. That provision, which will soon become law, allows Wall Street banks to once again use government-guaranteed deposits in highly risky, and highly profitable, derivatives trading of the sort that helped bring about the 2008 financial meltdown.

Elizabeth Warren“Democrats don’t like Wall Street bailouts,” Warren said. “Republicans don’t like Wall Street bailouts. The American people are disgusted by Wall Street bailouts. And yet here we are five years after Dodd-Frank, with Congress on the verge of ramming through a provision that would do nothing for the middle class, do nothing for community banks, do nothing but raise the risk that taxpayers will have to bail out the biggest banks once again.”

As Warren pointed out, the core language in the provision had literally been written by lobbyists for CitiGroup, which she accurately described as “the biggest recipient of bailout money in the history of this country.”

“During the financial crisis … Citi received nearly half a trillion dollars in bailouts,” she pointed out. “That’s half a trillion, with a ‘T’.  That’s almost $140 billion more than the next biggest bank got.” (The specific figure, including loan guarantees, etc., was $472.6 billion.)

Now CitiGroup is back, once again eager to put the taxpayer back on the hook. In that light, it’s also important to consider some of the other headlines the company has made in 2014 alone:

— In April, CitiGroup agreed to pay $1.13 billion to major investors to whom it had sold mortgage securities, and to whom it had lied by claiming that the securities were secure investments when the company knew otherwise.

— In July, CitiGroup agreed to pay $7 billion to settle a federal investigation into its mortgage security business, agreeing in a “statement of facts” that it had told investors that the mortgages, were solid, well-documented loans to borrowers with good credit ratings when in fact CitiGroup knew otherwise, and in some cases had altered findings to hide that fact.

— In November, CitiGroup agreed to pay $1.02 billion in fines to British and American regulators for taking part in a large, multi-bank conspiracy to rig foreign-exchange markets to rip off its customers for its own benefit. As a result, Citi was forced to restate its third-quarter profit from $3.2 billion to a paltry $2.6 billion.

According to investigators, foreign exchange (FX) traders had created private chat rooms where they had “disclosed confidential customer order information and trading positions, altered trading positions to accommodate the interests of the collective group, and agreed on trading strategies as part of an effort by the group to attempt to manipulate certain FX benchmark rates.” That conspiracy was carried out even as CitiGroup and other top banks were dealing with a separate investigation into whether they illegally manipulated international interest rates.

“The market only works if people have confidence that the process of setting these benchmarks is fair, not corrupted by manipulation by some of the biggest banks in the world,” said Aitan Goelman, enforcement director for the Commodity Futures Trading Commission.

— In December, CitiGroup was one of 10 banks fined a total of $43.5 million for using its supposedly unbiased research analysts to help win business from Toys “R” Us in its initial public offering. In hopes of winning favor from Toys R Us, the banks influenced their analysts to give a falsely rosy assessment of the company’s prospects.

— Last week, CitiGroup announced that it would have to set aside another $2.7 billion to pay additional fines, legal and settlement costs in the fourth quarter of 2014.

It’s amazing and quite instructive that even with extensive record of wilfull malfeasance, Citigroup had the juice to get special-interest legislation into a bill whose failure would otherwise have forced a government shutdown. “Think about that kind of power,” Warren said. “If a financial institution has become so big and so powerful that it can hold the entire country hostage, that alone is reason enough to break them up. Enough is enough.”

That’s the thing, though: On Wall Street, enough is never enough.

 

Reader Comments 0

512 comments
BigTimeJacketFan
BigTimeJacketFan

I guess we will be hearing a lot from Fauxcahontas in the coming months as she gears up.  A debate between her and Hillary should be pure entertainment. 

hamiltonAZ
hamiltonAZ

Michael Lewis' "The Big Short" is a must read for anyone who wants to have even a shallow understanding of the effect of such legislation.

When Bush III is inaugurated in 2017, one can only hope he understands.

Michael B
Michael B

The financial crisis caused by deregulation is scheduled for 8 years after the act. Therefore, the next crisis will peak in 1920-22. The bailout will exceed $1 trillion.

Michael B
Michael B

The financial crisis caused by deregulation begins 6-8 years after the act. The next crisis will begin in about 2020. The president taking office in 2017 will inherit the crisis.

Numbers_R_Us
Numbers_R_Us

Our Republican bloggers are happy with letting banks gamble with FDIC insured holdings and even with the fed bailing them out with tax dollars because Republicans clearly have no stake in it.  They have no FDIC insured holdings and they pay no federal income tax.

Peachs
Peachs

Monopoly is not a part of capitalism and failure is a huge part the Darwin evolution that spins out American ingenuity. This country mutates into the wealthiest country in the world by youth and immigration bringing the energy and hunger it takes to fight through the decay and push for better health, communication, entertainment and cutting edge product. The establishment of the right is like an actor or athlete refusing to leave the stage after his prime, paying the open palms to make them relevant while they are past their prime. Banks are particularly this way, hogging the stage, taking the risk thinking they are smarter, and refusing to accept the results but believing they are entitled, using any spin or twist they have at their disposal to hide the naked truth, including but not exclusive of blaming their crashes on other people who don’t have their moral makeup, or so it goes. It is eaten up by their groupies who see this as America, Lawrence Welk, and Champaign music well into the 21st century. These are Republicans.

Peachs
Peachs

The Republicans, for people who claim to be of faith, live dead in the moment and have absolutely no conviction that the preparation of the future or the lessons of the past have any connection to their lives. Since they refuse academics like Muslin does pork, they have no accounting of events and aggravate that with myths of Greek proportions, of make-believe drama and dark room voices. The one thing that gets through this frozen fear, and complete blindness to the real picture, is greed.The one thing the right does better than anyone in the world is look like fat gorged royalty, at a banquet table entertained by country western music, gladiator sports and half nude women.How do they pay for this celebration, while offering nothing in return, they are the bag men of corporate America.The expense account is the drug that keeps a sober thought of the future or who was I with last night off their minds.

skruorangeclown
skruorangeclown

When the banks crash again due to risky derivatives, just remember who sponsored the rollback of Dodd-Frank. It was not Obama or the Democrats.

Peachs
Peachs

@lvg the best trick of the devil was to convince people he didn't exist.

JamVet
JamVet

THAT was your quote from her, retiree? That was your evidence?

Damn son, not only do you have zero credibility, you ain't very bright...

Retired2x
Retired2x

Warren wants to close the 50 largest U.S. banks and have them cancel all credit cards and mortgage loans, then close all FDIC-insured deposits and send the money back to the depositors.  The 50 largest banks should refuse to hold U.S. debt and refuse to act as fiduciary agent for any state, county, or municipal government.  Start by cancelling all debit cards and credit cards the week before Christmas. 

JamVet
JamVet

@Retired2x 

Warren wants to close the 50 largest U.S. banks 

Sounds like something made up out of thin air.

A quote from her would beperfect right about now, retiree...

Retired2x
Retired2x

@KUTGF @Retired2x  Your position only has merits if Warren keeps the big banks open just to sue them for billions to fund all the attorneys Obama has hired to run the government.  Warren absolutely hates the idea of big banks and wants to destroy them in the name of Socialism - that's the Cherokee way.

Retired2x
Retired2x

@JamVet @Retired2x  Just keep following Warren as she goes on the Warpath against banks in her run-up to the scalping of Hillary in 2016.

KUTGF
KUTGF

@Retired2x  Got proof?  Or just "not intended to be a factual statement"? 

Fly-On-The-Wall
Fly-On-The-Wall

@Retired2x @JamVet So retired2x, that means you ain't got nothing.  You're just living in fear, some fear that a wrong wing radio/TV person told you about.  

Warren wants nothing like you claim but I do know she'd like to break up the 4 or 5 largest banks because those are the ones that are the biggest threat to the economic health of this country and probably the world. 

Why is it that the RWers hated the bank bailouts yet when it comes to putting limits on those same risky investments that caused the whole reason for the bailouts your side screams 'Socialism'?

barkingfrog
barkingfrog

Cosby says..

Ho Ho Ho Ho Ho Ho Ho Ho Ho Ho Ho Ho Ho Ho Ho Ho Ho Ho Ho Ho Ho Ho Ho Ho Ho Ho..

Legion of Doom
Legion of Doom

Uh ohs! Just the facts please. Just the facts!


While the professional Left trashes Wall Street, they might want to consider how their current President got elected.  The Sunlight Foundation reports that Barack Obama didn’t just win the Wall Street sweepstakes in 2008 over John McCain — he’s done better at getting Wall Street cash than any other President in the last 20 years:


Despite his rhetorical attacks on Wall Street, a study by the Sunlight Foundation’s Influence Project shows that President Barack Obama has received more money from Wall Street than any other politician over the past 20 years, including former President George W. Bush.


In 2008, Wall Street’s largesse accounted for 20 percent of Obama’s total take, according to Reuters. …

By the end of Barack Obama’s 2008 campaign, executives and others connected with Wall Street firms, such as Goldman Sachs, Bank of America, Citigroup, UBS AG, JPMorgan Chase, and Morgan Stanley, poured nearly $15.8 million into his coffers.



Goldman Sachs contributed slightly over $1 million to Obama’s 2008 presidential campaign, compared with a little over $394,600 to the 2004 Bush campaign. Citigroup gave $736,771 to Obama in 2008, compared with $320,820 to Bush in 2004

JamVet
JamVet

CitiGroup.

What an abomination to this country and capitalism.

Money launderers since the days of Reagan.

And those poor Mets fan; walking into a stadium with that disgusting name all over it...

Legion of Doom
Legion of Doom

The bill was passed with bi-partisan support. I'm not sure what there is about that which the kooks don't understand. 

LilBarryBailout
LilBarryBailout

@ThulsaDoom

They don't understand why they didn't get exactly what they wanted, exactly when they wanted it.  They are irrational children throwing a tantrum.

PinkoNeoConLibertarian
PinkoNeoConLibertarian

@ThulsaDoom And I don't see where in the article it states anything against either party. Maybe your problem with understanding comes from your lack of reading for comprehension ability?

KUTGF
KUTGF

School spokeswoman Amy Hamaoui said police are trying to determine who hanged the effigies that were found at two prominent campus locations Saturday morning. The spokeswoman said the effigies appear to be connected to a noon-time demonstration nearby planned to coincide with a national protest against police brutality dubbed "#blacklivesmatters." The effigies appear to be life-size photos of lynching victims. Two depicted men and third was a photograph of a female victim.

The effigies had names of lynching victims and the dates of their death. At least one effigy had "I Can't Breathe" printed on the front. Hamaoui said it's unclear who hanged the effigies

________________


Oh when will our RWers like LBB and 53 speak out against the racists who did this!  They still have not spoken out against the protestors who want to lynch Obama. 

LilBarryBailout
LilBarryBailout

@KUTGF

You're an idiot.  Did you not consider that protesters might have put the posters up to help make their point?

fiftythreepercenter
fiftythreepercenter

@KUTGF I believe the people who hung the "I can't breathe" banners would be liberals supporting the "black lives matter" demonstration, so that would be your friends and family there Keep.  Might want to have a chat with your own there.


And for the record, I do think it's tasteless and uncalled for, so the racist liberals who did it should be ashamed.

KUTGF
KUTGF

@LilBarryBailout @KUTGF  LOL....  I see.  And the video of the guys in front of the WH calling for Obama to be lynched....  faked I guess.  But hey them chants could never be people paid by someone to chant them. 


You might want to apply your idiot label to yourself. 

LilBarryBailout
LilBarryBailout

I'm going for a colonoscopy tomorrow and with all the laxatives I've started taking, I'm about to do what American voters did to Democrats last month.

JamVet
JamVet

@LilBarryBailout 

Maybe they'll find D!ck Cheney up there!

Seriously, hope it all turns out good, Lil...

RandroidWillBoy
RandroidWillBoy

Most libreals hate this but Obamacare created a whole new class of too-big-to-fail....insurance companies.

bastetsmom
bastetsmom

The American people still hold the power of the pursestrings.  Don't use Citibank or Citibank products.  If you have shares in a mutual fund, make sure they don't hold Citibank.  Post on Facebook, tell your friends, write letters. Naturally our Congressmen won't help, but you can.

Doggone_GA
Doggone_GA

@bastetsmom Easier said than done.  My mortgage has been sold 6 times in the last 15 years...last time was to Citibank.

RandroidWillBoy
RandroidWillBoy

I agree with Warren however she may possess perverse incentives to act on such. Her net worth is in  excess of 14 million and much of her campaign cash from Wall Street lawyers.

josef
josef

Et tu, Brute? 


I always said there'd come the day when the liberal-left turned on Obama and it would't be pretty.  Ugly skies.

barkingfrog
barkingfrog

@josef Moderate Presidents often lean right and left during the course

of their time in office and usually criticized by both sides at different times.

Hedley_Lammar
Hedley_Lammar

@josef Comparing this to anything that goes on with the GOP establishment and the tea party nuts is pretty ridiculous.


The GOP cant even take a vote on immigration they are so fragmented. 

LilBarryBailout
LilBarryBailout

@barkingfrog @josef

Yeah, that's exactly what happened here.  <rolls eyes>

Obozo leans extreme left and batshyte left.  One day he's annoying the communists, and the next the liberal fascists.  And Americans just hate him every day.