Massachusetts Senator Elizabeth Warren gave the keynote address at a Roosevelt Institute – Americans for Financial Reform event. In her keynote she called on Congress to solve the ‘too big to fail’ banking fiasco. She said that the financial crisis cost Americans north of 14 trillion dollars, $120,000 for every American household. She said the crash of 2008 changed lives forever.
Elizabeth Warren said banks are 30% larger than they were just five years ago. She said five banks own more than half the total banking assets of the country. The10 biggest banks in effect get a taxpayer subsidy of over $83 Billion.
Elizabeth Warren scoffed at those who want to wait for all regulations to be written. She excoriates Congress for not acting and using the failure of regulators missing deadlines as a pretext. She said oversight is the responsibility of Congress. Had they done their jobs in 2008, the financial collapse could have been avoided.
Elizabeth Warren said that while the Consumer Agency has met every statutory deadline, the other regulators have not. That does not provide any degree of confidence. She said the last thing that should be done is to wait for another crisis, another London Whale, or another Libor disgrace, or another robo-signing scandal before Congress takes action.
Elizabeth Warren then stated that she is taking action. She has partnered with Senators John McCain, Maria Cantwell, and Angus King to create the 21st Century Glass Steagall Act.
Elizabeth Warren stated that the 1933 Glass Steagall Act separated traditional depositary institutions from riskier financial institutions. That made the system stable for over 50 years. She said throughout the 1980s and 1990s all the controls were eroded Congress. This encouraged the growth of the mega banks. That in turn increased systemic risk.
Elizabeth Warren said that the lobbyist from Wall Street said the sky would fall if they cannot use deposits in checking accounts to perform their high risk activities. She said they also said that in the 1930s. “They were wrong then and they are wrong now. The Glass Steagall act will restore the stability of the financial system that began to disappear in the 1980s and 1990s”, she said.