Last night presented an interesting contrast of different Democratic approaches to regulating Wall Street. Bill Clinton brought the house down at the Democratic National Convention with a brilliant stem-winder packed with policy details—but, naturally, some policy he didn’t mention was the massive financial sector deregulation that took place under his watch. When Clinton signed the Gramm-Leach-Bliley Act in 1999, he allowed commercial banks to run wild in the stock markets and helped pave the way for the financial collapse less than a decade later.
But if Clinton was the ugly deregulatory past of the party, perhaps the woman who preceded him is the promising future. Elizabeth Warren, now a Senate candidate in Massachusetts, conceived the Consumer Financial Protection Bureau and helped shepherd it through the tough early days, when Republicans attacked the bureau relentlessly and called Warren a liar to her face. Last night, Warren had tough words for the financial sector: “Wall Street CEOs—the same ones who wrecked our economy and destroyed millions of jobs—still strut around Congress, no shame, demanding favors, and acting like we should thank them,” she said.
Where President Obama stands on getting tough on bad actors in the financial sector is the source of some progressive consternation. Early on, he hired many old Clinton hands known for friendliness to Wall Street, but then got Dodd-Frank passed—a significant achievement, though one that has been substantially hollowed out by financial industry lobbyists.
One man at the center of this question about Obama’s backbone for battling Wall Street is New York Attorney General Eric Schneiderman. He is a co-chair of the Residential Mortgage-Backed Securities working group, an investigation into Wall Street malfeasance leading up to the financial collapse that was celebrated by progressives when Obama announced its formation during this year’s State of the Union address. But the reformers have since protested a lack of action from the working group, and noted its comparatively low staffing levels. This week, Phil Angelides, who headed the federal inquiry into the financial collapse, wrote that “the jury is still out on whether the investigation will bring Wall Street CEOs to justice and deter future wrongdoing.”
I caught up with Schneiderman in Charlotte on Thursday and asked him about the anxiety that his working group won’t produce results—and he hinted that some movement is imminent.
Right after the working group was created, on January 30, Schneiderman appeared on Up w/ Chris Hayes and said he would be “very disappointed” if there weren’t major announcements within six to eight months. Even at the high end of that timeline, we’re about to hit it.
I asked Schneiderman about that projection. “I think I’m still good with that timeline,” he said with a smile. He wouldn’t give any further predictions, but a staffer told me to “stay tuned.”
Of course, they have said this before, which Schneiderman acknowledged along with the anxiety about the pacing—but said “I think that the question will be answered at the end of the day when we see what the results are.”
Schneiderman did express concern, however, that a Romney victory in November could derail future RMBS progress. “It obviously would raise a question about whether or not there’s continued support, resulting in a change of personnel. I guess I would be the only co-chair whose job would be secure,” he said. (The other four co-chairs are federal appointees). “So yes, I think that anyone who is concerned about regulating or enforcing laws regarding financial services should be concerned about the direction the Romney-Ryan ticket would take the country.”
Beyond the RMBS action, Schneiderman has several other high-wattage investigations underway—into potential tax fraud at the US Chamber of Commerce, the questionable tax status of nonprofits that pump dark money into election, and whether Bain Capital and other private equity firms are avoiding federal taxes.
An obvious theme here is targeting the undue influence of the financial sector, whether it’s influencing elections or manipulating the tax code. Schneiderman acknowledged this was a priority of his. “It’s something that I am very concerned about. The health of our democracy is so essential to all of the work we do, anything that threatens the vitality and the viability of our electoral process and our democratic process, has to be closely scrutinized,” he said. “And if there are improprieties in the way money is being spent to influence elections we have an obligation to take a look at it.”