Progressives fell in love with Elizabeth Warren because they saw in her a fighter — someone who would break from Washington’s longstanding tradition of cozying up to big banks and instead hold them accountable for bad behavior.
She hasn’t disappointed.
Just two months into her new job as Massachusetts senator, the former consumer advocate has used her perch to publicize and rail against shady practices by financial institutions and what she views as leniency from the regulators tasked with overseeing them.
The latest example came last Thursday during a Banking Committee hearing, when Warren demanded answers from a panel of federal regulators as to why the multinational bank HSBC got off with a fine for money laundering for Mexican drug cartels — along with violating international sanctions against several countries, including Iran and Libya — when people caught with drugs go to jail for life.
“No one individual went to trial, no individual was banned from banking and there was no hearing to consider shutting down HSBC’s activities here in the United States,” Warren said. “So … what does it take? How many billions of dollars do you have to launder for drug lords and how many economic sanctions do you have to violate before someone will consider shutting down a financial institution like this?”
When her questions were repeatedly dodged by Treasury’s overseer of financial crimes David Cohen and Federal Reserve governor Jerome Powell, it set her off.
“If you’re caught with an ounce of cocaine, the chances are good you’re going to go to jail. If it happens repeatedly, you may go to jail for the rest of your life,” Warren said. “But evidently, if you launder nearly a billion dollars for drug cartels and violate international sanctions, your company pays a fine and you go home and sleep in your own bed at night — every single individual associated with this. I just — I think that’s fundamentally wrong.”
HSBC declined to comment on Warren or the hearing, but said it is carrying out the $1.9 billion settlement it reached with the federal government last December.
“We continue to implement the December 2012 agreement with the US government, and since 2011, we have taken extensive actions to put in place the highest standards to protect against current and emerging threats from financial crime,” HSBC spokesman Rob Sherman told TPM. “To do our part in the long-term fight against financial crime, we also will continue to work closely with governments and regulators around the world.”
That hearing followed an exchange in mid-February when Warren caught a panel of half a dozen senior bank regulators flat-footed by asking them, simply: “Can you identify when you last took [one of] the Wall Street banks to trial?”
“We do not have to bring people to trial,” said Thomas Curry, who leads the Office of the Comptroller of the Currency. She retorted, “I appreciate that you say you don’t have to bring them to trial. My question is when did you bring them to trial?”
None of the regulators could answer, responding with a series of dodges and non sequiturs. Warren had made her point — and she didn’t hesitate to drive it home.
“There are district attorneys and United States attorneys out there every day squeezing ordinary citizens on sometimes very thin grounds and taking them to trial in order to make an example, as they put it,” the freshman senator said. “I’m really concerned that ‘too big to fail’ has become ‘too big for trial.’”
Prior to her Senate run, Warren helped craft and initially lead the Consumer Financial Protection Bureau until Republican filibusters forced her out. During her campaign against former Sen. Scott Brown (R-MA), she promised to fight for consumers and take on errant financial practices widely seen as having incubated the collapse of 2008-2009.
Big business suspected Warren would make life uncomfortable for them. The U.S. Chamber of Commerce warned during the campaign that “no other candidate in 2012 represents a greater threat to free enterprise than Professor Warren” — a reference to her time as a Harvard Law School professor.
The Progressive Change Campaign Committee, a liberal activist group which helped elect Warren, is thrilled with her so far, sending their members videos of her exchanges with regulators. An email last weekend solicits donations to “mobilize support for Warren’s agenda.”
“Bank regulators need to hold Wall Street accountable and Elizabeth Warren is doing her best to make sure that happens,” said Matt Wall, a PCCC spokesman. “We couldn’t be more proud.”
This article was updated at 1:48 P.M. EST to include a late comment from HSBC.
Sahil Kapur is a congressional reporter for TPM. He previously covered politics and public policy for numerous publications including The Guardian and The Huffington Post. He can be reached at sahil [at] talkingpointsmemo.com.