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Regrets? Some Senators Have a Few

Watching Elizabeth Warren grill regulators has some Senators wishing they didn't oppose her appointment to the CFPB back in 2011.

A number of US Senators probably felt pretty good about themselves when they made it clear that there was no chance that they would support Elizabeth Warren's appointment to head the Consumer Financial Protection Bureau. As a result, President Obama declined to even nominate Warren to head the CFPB, saying that the administration was convinced she "could not overcome strong Republican opposition."

Careful what you wish for. Today, those senators are likely kicking themselves after they saw what happens when someone won't take no for an answer. Since Warren couldn't head the CFPB, she ran for the Senate, won and is on now the Senate Banking Committee. Awkward.

As the senior Senator from Massachusetts (John Kerry resigned to become Secretary of State), Warren gave everyone in the banking world an example of what life will be like now that she is a Senator.

Yesterday, she took the opportunity at her first Senate Banking Committee meeting to tear into the top regulators from the nation's financial service regulators (FDIC, SEC, OCC, CFPB, CFTC, Fed and Treasury). Remember, if she was allowed to be the head of the CFPB, she would have been on the other side of the room yesterday, answering softball questions from Senators who probably don't know the difference between a retail bank and an investment bank.

After a few pleasantries, Warren asks her very direct question: when was the last time regulators took a large bank to trial? Not to a settlement, where the bank admits no wrongdoing, but an actual trial where executives are forced to testify under oath?

The answers were not surprising. No one could recall the last time a large bank had been dragged in front of a court. A few regulators tried to dodge the question and explain to Warren why its better to settle with a bank for a fine than go to trial.

Take a look, it's very entertaining:

Warren wasn't buying it. She pointed out that if the banks know in advance that there is no chance they will be ever brought to trial because the regulator lacks the conviction or the resources to do so, the regulator will have less leverage during a settlement negotiation. "If they can break the law and drag in billions in profits and then turn around and settle, paying out of those profits, there is not much incentive to follow the law," Warren said during her opening comments.

She also notes that without trials and the days of testimony, the public never really ever knows what the banks did, since the settlements are behind closed doors.

When she didn't get an answer to her question, she asked it again. For instance, she asked Tom Curry, Comptroller of the Currency at the OCC, "What I am asking is … when did you last take a large financial institution, a Wall Street bank, to trial?"

Currey contended that the OCC gets "consent orders," or settlements, and doesn't have to bring banks to trial. Elisse Walter, chairman of the SEC, also tried to point out that the SEC has reached settlements, but was not able to tell the committee the last time the SEC brought a bank to an actual trial.

The entire interaction between Warren and the regulatators takes about four minutes and makes for great theater. You can even hear snickers and applause from the audience. If you are looking for evidence that some Senators actually know something about banking, here you go.

Visit CSPAN to view the full video of the Senate Banking Committee hearing (Warren's interrogation starts at 1:34:30). Greg MacSweeney is editorial director of InformationWeek Financial Services, whose brands include Wall Street & Technology, Bank Systems & Technology, Advanced Trading, and Insurance & Technology. View Full Bio

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lolana
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lolana,
User Rank: Apprentice
2/22/2013 | 2:37:05 AM
re: Regrets? Some Senators Have a Few
That's a great quote.
@befreeinfl
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@befreeinfl,
User Rank: Apprentice
2/19/2013 | 1:04:52 AM
re: Regrets? Some Senators Have a Few
Banksters are still too big to jail but with more people like Warren, they may be more careful.
Dan Pitrowiski
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Dan Pitrowiski,
User Rank: Apprentice
2/18/2013 | 11:55:00 PM
re: Regrets? Some Senators Have a Few
I love this woman!
Greg MacSweeney
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Greg MacSweeney,
User Rank: Apprentice
2/18/2013 | 11:36:30 PM
re: Regrets? Some Senators Have a Few
I'm just happy I have something that's genuinely "quotable" coming out of Washington. Usually the soundbites from inside the beltway are so run of the mill...
AntiTheist
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AntiTheist,
User Rank: Apprentice
2/18/2013 | 7:34:32 PM
re: Regrets? Some Senators Have a Few
Is that what it looks like when we have a lawmaker who actually represents her constituents rather than big-money lobbyists? Good God. What is the world coming to?
Jimothy Jones
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Jimothy Jones,
User Rank: Apprentice
2/18/2013 | 6:07:55 PM
re: Regrets? Some Senators Have a Few
It is crazy that so many didnt want her here in the first place. What's so wrong with standing up for amercians like this?
sriram
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sriram,
User Rank: Apprentice
2/18/2013 | 4:50:11 PM
re: Regrets? Some Senators Have a Few
Thank you Massachusetts!
H. Goodman
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H. Goodman,
User Rank: Apprentice
2/18/2013 | 3:52:35 PM
re: Regrets? Some Senators Have a Few
GET 'EM MS. WARREN GET 'EM!
dkliman
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dkliman,
User Rank: Apprentice
2/18/2013 | 1:41:23 PM
re: Regrets? Some Senators Have a Few
Yes. We need a senate full of Elizabeth Warrens. Then maybe we could go after the banksters under RICO, fine them 3X what they stole, and put them in jail, too. I like what the Icelandic government told the obama administration when they sent home FBI agents trying to investigate Assange and Wikileaks: "we arrest banksters, not activists--the opposite of what the United States does."
Melanie Rodier
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Melanie Rodier,
User Rank: Author
2/15/2013 | 11:17:53 PM
re: Regrets? Some Senators Have a Few
Wow, very interesting - and unusual! There should definitely be some more Elizabeth Warrens, particularly given that banks have never been held accountable for any wrong-doing at the root of the financial crisis. And Senator Warren is right, settlements behind closed doors do not offer the public any chance to understand what truly goes on.
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