Wall Street has a new foe in Washington. Or more precisely, an old foe in a new role.
Elizabeth Warren, the Harvard professor who has fought to put stricter controls on banking, was elected to the Senate on Tuesday. In her new job, she will have a greater ability to influence financial regulation.
Ms. Warren, the architect of the Consumer Financial Protection Bureau, will have the opportunity to weigh in on a number of the issues that are making Wall Street nervous, as regulators work to implement the Dodd-Frank financial overhaul law.
For example, Ms. Warren has supported a simpler, stronger Volcker Rule, the regulation that bars big banks from betting with their own money. She has also pushed for a new version of the Glass-Steagall Act, the now-repealed law that kept commercial banks out of securities businesses. And she may be sympathetic to arguments to break up big banks.
Still, being just one senator of 100, Wall Street might be able to keep h er power at bay. Opposition from Republicans led President Obama to withdraw her name from consideration to head up the consumer agency. (Richard Cordray ultimately was named the first director of the agency).
“It's still better from the industry's point of view to have her in the Senate than to have her regulating them,†said Douglas J. Elliott, a former investment banker at JPMorgan Chase who is now a fellow at the Brookings Institution.
Ms. Warren, a Democrat from Massachusetts, is also likely to defend the regulatory agencies against budget cuts. She says on her Web site: “We should put real cops on the financial beat in the Commodities Futures Trading Commission and the Securities and Exchange Commission, cops with the resources they need to patrol for fraud and sustain tough prosecutions.â€
And she would likely throw her support behind investigations of potential wrongdoing.
“We need to demand that the Justice Department, our state atto rneys general, and federal regulators do more to push back on the big banks and their lobbyists. We need to demand that they investigate those whose illegal actions have broken the economy and, when the evidence warrants it, that they bring public prosecutions,†she writes on her site.
Beyond the specific issues, Ms. Warren is prone to producing memorable sound bites. The industry was stung by President Obama's “fat cat bankers†line - but Ms. Warren has hurled some choice words of her own. Some greatest hits are below:
“Wall Street C.E.O.'s - 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 in her speech at the Democratic National Convention in September.
“The people on Wall Street broke this country, and they did it one lousy mortgage at a time. It happened more than three years ago, and there has been no r eal accountability, and there has been no real effort to fix it,†she said in a debate last year.
On the Occupy Wall Street movement, she told The Daily Beast last year that she “created much of the intellectual foundation for what they do.â€
She once claimed to have supporters in the financial industry:
“Every now and again, I meet with someone who's been very successful on Wall Street, who says, ‘I want to support your campaign because I believe you will save capitalism. I believe in capitalism, and I understand there have to be rules. And they have to be consistently enforced,' †she told The National Journal this summer.
(She later said she should not have repeated that remark.)
