If Elizabeth Warren ran for president, a key part of her campaign—if not the centerpiece—would likely involve how to restructure the financial sector in a less dangerous and more productive way. Dodd-Frank was by many accounts a good start, but it’s clear the economy is still over-financialized and too-big-to-fail banks continue to pose an existential threat.
Warren isn’t running for president, but she unveiled that exact agenda in a sweeping speech Wednesday in a conference at the Levy Institute in Washington. It advocated an array of specific, often ambitious policy proposals, many of which have circulated in Washington for years and that Warren, at various times, has already called for.
But tied together in one place, and packaged as a clear call for structural and not just technocratic changes, a blueprint emerged for how Warren thinks Democrats should attack continued financial reform. Whether purposeful or not, the speech was timed exactly to start of Hillary Clinton’s 2016 presidential campaign.
Her ideas fit into four basic categories: first, getting tougher on bad financial actors, particularly big banks, and presenting them with actual legal accountability for malfeasance. Second, Warren outlined how to change the basic structure of the country’s largest financial institutions so their very existence doesn’t threaten the economy nor taxpayer money via inevitable bailouts. Third, she outlined how to change tax policies that incentivize financial risk-taking and instability. And finally, Warren called for tougher regulations on the shadow-banking sector that was a huge contributor to the 2008 crash and which remained largely untouched by Dodd-Frank.
Under no conceivable set of circumstances could most of this happen in the current political climate. Rather, it’s a world Warren wants to see—“She has outlined what a functional Congress and a willing president could do,” Bartlett Naylor, the financial policy advocate for Public Citizen, told The Nation.
Warren openly criticized the Obama administration’s lack of criminal prosecutions related to the 2008 crisis, declaring that “the Department of Justice doesn’t take big financial institutions to trial—ever—even when financial institutions engage in blatantly criminal activity.” She pointed to the overuse of deferred prosecution agreements, in which big banks get a sometimes-large financial penalty but don’t face any further repercussions, nor even admit guilt.
Use of deferred prosecution agreements for large corporations has spiked dramatically under Obama and Attorney General Eric Holder, with the same corporations sometimes receiving several such agreements. Justice entered into 27 such agreements in 2013, compared with eight in 2004. Warren said “no firm should be allowed to enter into a deferred prosecution or non-prosecution agreement if it is already operating under such an agreement—period.” She also said any agreements with financial firms going forward should have “mandatory minimum” fines equal to “at least every dime of profit generated by their illegal activity.”