WASHINGTON — Elizabeth Warren rose to national prominence as an outspoken consumer advocate decrying Wall Street abuses and became the progressive movement's darling candidate in last fall's Senate elections. Like most freshman lawmakers, the Massachusetts Democrat and Oklahoma native has maintained a low profile during her first few months in office. That's starting to change.
Warren, who was born in Oklahoma City, championed the creation of the new Consumer Financial Protection Board after the mortgage-led financial meltdown five years ago. She is beginning to use her Senate Banking Committee perch to push regulators for tougher actions against errant banks.
Treasury gets grilled
Warren questioned senior Treasury Department officials Thursday about why there was no criminal prosecution for alleged money laundering by British bank HSBC and no effort to shut it down. HSBC agreed last December to pay a forfeiture and penalties totaling $1.9 billion to settle charges it helped Mexican drug traffickers, Iran and Libya move money around the world.
“What does it take, how many billions of dollars do you have to launder from drug lords and how many economic sanctions do you have to violate before someone will consider shutting down a financial institution?” she asked at a Banking Committee hearing on money laundering. The Treasury officials punted, saying criminal prosecutions are up to the Justice Department, not them.
Last month, Warren won rave reviews from liberals and in the social media after grilling banking regulators on why they agree to settlements with big banks accused of major wrongdoing instead of taking them to trial.
“Can you identify when you last took (one of) the Wall Street banks to trial?” she asked the regulators.
During her campaign, Warren vowed to be a champion for what she characterized as a besieged middle class preyed upon by big banks, Wall Street CEOs, predatory lenders and other well-heeled special interests.
“She is as advertised,” said James Ballentine, chief lobbyist for the American Bankers Association. “She came in and concentrated on being a strong advocate for consumers, and has certainly done that and a little more.”
During her Senate bid last year, the U.S. Chamber of Commerce warned that “no other candidate in 2012 represents a greater threat to free enterprise” than Warren.
Jim Nuzzo, a Boston-based Republican political analyst, said Warren as a senator has tempered the brash style she had as a consumer activist. “The Senate has show horses and war horses,” he said. “She's made a very smart decision that she's going to play the war horse.”
Warren also has been wise to shun much of the national press after her election, Nuzzo said, and instead use banking hearings to deliver her message and avoid accusations that she's showboating.
The financial collapse in 2008 and subsequent federal bailout plus a string of hearings on the lax oversight and high-risk investment practices that led to it stoked public anger. Liberal groups flocked to Warren's Senate campaign for the late Sen. Edward M. Kennedy's old seat.
The HSBC settlement was the largest penalty ever imposed on a bank. But the U.S. stopped short of charging executives, citing the bank's immediate, full cooperation and the damage that an assault on the giant company might cause on economies and people, including thousands who would lose jobs if the bank collapsed.
Critics like Warren see the settlement as evidence that a doctrine of “too big to fail” or at least “too big to prosecute” is still operating long after the 2008 financial crisis.