Five years ago today

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Five years ago today, I ran as fast as I could out of a Senate hearing, through the halls, down a stairway, and out onto the plaza behind the Senate. I looked around wildly, then Senator Dick Durbin waved me over to his car. I jumped in the back, and he yelled, “Hit it!” to his driver, and we shot off.

I had been testifying on behalf of the Congressional Oversight Panel about the TARP Wall Street bailout – a hearing that happened to be scheduled for the same time the President was signing the Dodd-Frank financial reform bill into law. The timing looked impossible (they lock the doors on Presidential events, so you can’t just slide into your seat a few minutes late). Senator Durbin said he’d get me there, but we needed to RUN! So the minute I finished testifying, that’s exactly what I did.

With seconds to spare, I was tucked into my assigned seat next to legendary former Federal Reserve chairman Paul Volcker, with Secretary of Commerce Gary Locke next to him. I’d never seen a President sign anything into law, but the ceremony wasn’t what I’d expected. Don’t get me wrong – the President gave a good speech, and both Chris Dodd and Barney Frank showed up, along with Speaker Pelosi, Leader Reid and lots of other folks, so it was plenty grand. But for me, it was all about the moment. One minute, there was no consumer agency, but when the President finished his signature – a new agency was born. And I’d seen it happen.

The new consumer agency was about leveling the playing field, about making sure that families didn’t get cheated in the fine print on mortgages and credit cards and checking accounts and all other kinds of financial dealings.  

The financial industry had fought us every inch of the way, spending more than a million dollars a day for over a year. Many times, they declared the agency dead. We didn’t have that kind of money to spend on lobbyists and PR firms – heck, we had hardly any money in comparison – but we didn’t give up. We built an organization from the ground up, and we pulled in allies and grassroots activists from all over the country. It was David-versus-Goliath all the way, and in the fight for the consumer agency, David pulled it off.

And the fight was worth it. The agency went operational four years ago today, and it has handled 650,000 complaints since it opened its doors – some with money back and some with an apology. Mortgages have gotten clearer and easier to read. Work on credit cards, student loans, checking accounts, small-dollar loans, and other products is headed in the right direction. And in that four years, the consumer agency has forced the biggest banks in this country to return more than $10 billion directly to people they cheated.

The CFPB has helped level the playing field, and it has given consumers a tough watchdog who is on their side.

Right now, the Republicans are trying to hamstring the CFPB by slashing its funding, reducing its jurisdiction, and restricting its enforcement authority – steps that would undermine the market by taking financial cops off the beat. Republican presidential candidates have said they would repeal it outright. With no cops, big banks could make more money not by offering better products, but by cheating their customers.  

Sure, the big banks and their Republican friends hate it. But the consumer agency is government that works – and it is government worth fighting for.

We got here with your help, and we’ll protect this agency with your help – because together we can build a better future. In fact, we’ve already started.

Let's get real

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Seven years ago, Wall Street’s high-risk bets brought our economy to its knees.

We’ve made progress since then. The Dodd-Frank Act was the strongest financial reform law in three generations, and it gave regulators a number of common-sense tools to prevent future crises.

But let’s get real: Dodd-Frank did not end the “too big to fail” problem – the problem posed by financial institutions that are so large that their failure would threaten the whole economy. Last summer, both the Fed and FDIC reported publicly that eleven of the big banks were still so risky that if any one of them started to fail, they would need a government bailout or they would risk taking down the American economy – again.

That’s not a statistic that should make anyone sleep well tonight.

That’s why I’ve partnered with Senators John McCain, Maria Cantwell, and Angus King to reintroduce the 21st Century Glass-Steagall Act, a bill to reduce taxpayers’ risk in the financial system and decrease the likelihood of future financial crises. Sign up now to show your support.

Four years after the 1929 Wall Street crash, Congress passed the original Glass-Steagall Act to build a wall between boring, commercial banking – savings and checking accounts – and riskier investment banking.

The idea was simple: If banks want access to government-provided deposit insurance, they should be limited to boring banking. If the banks want to engage in high-risk trading, they can go for it – but they can’t get access to insured deposits and put the taxpayer on the hook for some of the risk.

The Glass-Steagall Act laid the groundwork for a half century of financial stability that helped create a robust and thriving middle class. But the commercial banks wanted higher profits and the investment banks wanted access to all that cash in checking accounts, so they starting lobbying Washington to end Glass-Steagall. Finally, in the 1980s, regulators began buckling under pressure from the banks and began poking holes in the wall between investment and commercial banking. In 1999, after 12 separate attempts, Congress repealed most of Glass-Steagall. And in 2008, "too big to fail" was born.

The bill we’re reintroducing this week will rebuild the wall between commercial banks and investment banks – with new protections to fill some of the holes punched in the original bill and to cover products that didn’t exist in 1933. It won’t end “too big to fail” all by itself, but it will reduce risk in the system and make financial institutions smaller and safer.

Sign up now to show your support for the bipartisan 21st Century Glass-Steagall Act. Let’s make banks choose: Take big risks using investors’ money or be very careful using depositors’ money – but no more mixing the two.

The big banks and their executives have recovered handsomely from the crisis they helped create, while too many other Americans are still scraping to get by.

We weren’t sent to Washington to work for the big banks. It’s time for a banking system that serves the best interests of the American people.

Without rules, financial markets don't work

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For too long, the opponents of financial reform have cast the debate as an argument between the pro-regulation camp and the pro-market camp. They generally put Democrats in the first camp and Republicans in the second.  

But that so-called “choice” gets it all wrong.  

Rules are not the enemy of markets. Without some basic rules and accountability, financial markets don’t work. People get ripped off, risk-taking skyrockets, and markets fall apart. Rolling back the rules or firing the cops can be profoundly anti-market.

Republicans claim – loudly and repeatedly – that they support competitive markets, but their approach to financial regulation is pure crony capitalism. It helps the rich and the powerful protect and expand their wealth and their power – and leaves everyone else behind.  

This week, I gave a big policy speech where I presented ways we can promote competition, innovation, and safety in financial markets. The speech was long and wonky, but it really boils down to two principles:

  • First, financial institutions shouldn’t be allowed to cheat people. Markets work only if people can see and understand the products they are buying, only if people can reasonably compare one product to another, only if people can’t get fooled into taking on far more risk than they realize just so that some fly-by-night company can turn a quick profit and move on. That’s true for families buying mortgages and for pension plans buying complex financial instruments.
  • Second, financial institutions shouldn’t be allowed to get the taxpayers to pick up their risks. That’s true for using insured deposits for high-risk trading, and it’s true for letting Too-Big-to-Fail banks get a wink-and-a-nod guarantee of a government bailout.

We know what changes we need to make financial markets work better. Strengthen the rules to prevent cheating. Make the cops do their jobs. Cut the banks down to size.  Change the tax code to promote more long-term investment. Tackle shadow-banking done by non-bank firms and subsidiaries.  

Changes like these can make a real difference. They can help protect hard-working families from cheats and liars. They can help rein in the lawless practices that are still too common on Wall Street. They can end Too Big to Fail.

The secret to better markets isn’t turning loose the biggest banks to do whatever they want. The secret is smarter, more structural regulation that forces everyone to play by the same rules and doesn’t let anyone put the entire economy at risk.

The key steps aren’t hard. It just takes political courage – and a strong demand from people like you – to complete the unfinished business of financial reform.

Wall Street isn’t happy with us

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In 2008, the financial sector collapsed and nearly brought down our whole economy. What were the ingredients behind that crash? Recklessness on Wall Street and a willingness in Washington to play along with whatever the big banks wanted.  

Years have passed since the crisis and the bailout, but the big banks still swagger around town. And when Citigroup and the others don’t quite get their way or Washington doesn’t feel quite cozy enough, they quickly move to loud, public threats. Their latest move is a stunner. According to Reuters:

Big Wall Street banks are so upset with U.S. Democratic Senator Elizabeth Warren's call for them to be broken up that some have discussed withholding campaign donations to Senate Democrats in symbolic protest, sources familiar with the discussions said.

Citigroup has decided to withhold donations for now to the Democratic Senatorial Campaign Committee over concerns that Senate Democrats could give Warren and lawmakers who share her views more power, sources inside the bank told Reuters.

JPMorgan representatives have met Democratic Party officials to emphasize the connection between its annual contribution and the need for a friendlier attitude toward the banks, a source familiar with JPMorgan's donations said.

That’s right, the biggest banks on Wall Street have made it clear that they expect a return on their investment in Washington. Forget making the markets safer (where they can still make plenty of money) and forget the $700 billion taxpayer bailout that saved them and forget the need to build a strong economy for all Americans. Forget it all. The big banks want a Washington that works only for them and that puts their interests first – and they would like to get a little public fanny-kissing for their money too.

Well forget it. They can threaten or bully or say whatever they want, but we aren’t going to change our game plan. We do, however, need to respond.

According to this breaking news, our 2016 Democratic Senate candidates could lose at least $30,000 because of this decision. Can you help us raise $30,000 to match Wall Street’s money right now – and keep fighting for a Democratic Senate that will work for people instead of big banks?

Now let’s be clear: $30,000 is a drop in the bucket to JPMorgan and Citigroup. Heck, JPMorgan CEO Jamie Dimon makes more than $30,000 in just a few hours.

The big banks have thrown around money for years, spending more than a $1 million a day to hold off Dodd-Frank and the consumer agency. But they are moving out of the shadows. They have reached a new level of brazenness, demanding that Senate Democrats grovel before them.  

That kind of swagger is a warning shot. They want a showy way to tell Democrats across the country to be scared of speaking out, to be timid about standing up, and to stay away from fighting for what’s right.

Ok, they have taken their shot, but it will not work.

I’m not going to stop talking about the unprecedented grasp that Citigroup has on our government’s economic policymaking apparatus. I’m not going to stop talking about the settlement agreements that JPMorgan makes with our Justice Department that are so weak, the bank celebrates by giving their executives a raise. And I’m not going to pretend the work of financial reform is done, when the so-called “too big to fail” banks are even bigger now than they were in 2008.

The big banks have issued a threat, and it’s up to us to fight back. It’s up to us to fight back against a financial system that allows those who broke our economy to emerge from a crisis in record-setting shape while ordinary Americans continue to struggle. It’s up to us to fight back against a regulatory system that is so besieged by lobbyists – and their friends in Congress – that our regulators forget who they’re working for.

Let’s send the biggest banks on Wall Street our own message: We’re going to keep fighting, and your swagger and your threats won’t stop us. Help us match their $30,000 right now.

It worked

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Not long ago, I was at a McDonald's when a man came over, held out his hand and said he had been having trouble with a fee his bank had charged. It wasn't huge, but he said the bank should not have charged him. He called and argued, talked with customer relations, asked to speak to a manager -- and he got a big, fat zero.

Then he said he remembered about the new Consumer Financial Protection Bureau and told the bank he would file a complaint. They put him on hold and then came back and said they would reverse the fee. The agency worked.

Today is the fourth anniversary of Dodd-Frank, the law that established the Consumer Financial Protection Bureau -- and the third anniversary of the date the CFPB became an independent agency. And in those three years, the agency has done a lot to help level the playing field:

  • The CFPB has forced big financial companies to return more than $4 billion dollars to consumers they cheated.
  • The CFPB has put in place rules to protect consumers from a whole host of dangerous financial products and to make sure that companies can't issue the kinds of deceptive mortgages that contributed to millions of foreclosures.
  • The CFPB has helped tens of thousands of consumers resolve complaints against financial institutions that cheated them. 

Sure, there is a lot of financial reform work left undone. The big banks today are dramatically bigger than they were in 2008 and they are taking on new risks, and I think that means we need a 21st Century Glass-Steagall law to break them up. But I celebrate the progress we've had so far: When big banks have to listen to their customers a little more, the playing field starts to level out just a little bit more.    

The big banks spent more than a million dollars a day lobbying against financial reforms, and top lobbyists said that killing off the consumer agency was their number one priority.  Even now, the Republicans continue the attack, introducing bills that would take the legs out from under the agency.

We didn't have the lobbying muscle or the money that the big banks had. But we got that agency because we fought for it. We joined forces online and through groups, and we made our voices heard. And now, after three years, it's starting to work.

I smiled at the guy who said he got his money back. I smiled because I love to hear how the CFPB works. But mostly I smiled because it reminded me of what we can do when we fight.  

Happy anniversary!

Elizabeth Warren takes on Paul Ryan and Ted Cruz

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Elizabeth went to Minnesota last weekend to support Senator Al Franken at the 2014 Humphrey-Mondale Dinner.

It was her first time speaking at one of those big Democratic Party events – and Elizabeth didn't waste any time taking on Paul Ryan, Ted Cruz, the Tea Party and the national GOP.

The event wasn't televised, but we just got the video clip of Elizabeth's speech. Trust me, you're going to want to see this for yourself:

When you're done watching Elizabeth shred the Republicans' vision for America, don't forget to share it with your friends on Facebook and Twitter. Everyone should see this clip.

We don't run this country for corporations

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Hobby Lobby doesn't want to cover its employees' birth control on company insurance plans. In fact, they're so outraged about women having access to birth control that they've taken the issue all the way to the Supreme Court.

I cannot believe that we live in a world where we would even consider letting some big corporation deny the women who work for it access to the basic medical tests, treatments or prescriptions that they need based on vague moral objections.

But here's the scary thing: With the judges we've got on the Supreme Court, Hobby Lobby might actually win.

The current Supreme Court has headed in a very scary direction.

Recently, three well-respected legal scholars examined almost 2,000 Supreme Court cases from the last 65 years. They found that the five conservative justices currently sitting on the Supreme Court are in the top 10 most pro-corporate justices in more than half a century.

And Justices Samuel Alito and John Roberts? They were number one and number two.

Take a look at the win rate of the national Chamber of Commerce cases before the Supreme Court. According to the Constitutional Accountability Center, the Chamber was winning 43% of the cases in participated in during the later years of the Burger Court, but that shifted to a 56% win-rate under the Rehnquist Court, and then a 70% win-rate with the Roberts Court.

Follow these pro-corporate trends to their logical conclusion, and pretty soon you'll have a Supreme Court that is a wholly owned subsidiary of big business.

Birth control is at risk in today's case, but we also need to worry about a lot more.

In Citizens United, the Supreme Court unleashed a wave of corporate spending to game the political system and drown the voices of middle class families.

And right now, the Supreme Court is considering McCutcheon v. FEC, a case that could mean the end of campaign contribution limits – allowing the big guys to buy even more influence in Washington.

Republicans may prefer a rigged court that gives their corporate friends and their armies of lawyers and lobbyists every advantage. But that's not the job of judges. Judges don't sit on the bench to hand out favors to their political friends.

On days like today, it matters who is sitting on the Supreme Court. It matters that we have a President who appoints fair and impartial judges to our courts, and it matters that we have a Senate who approves them.

We're in this fight because we believe that we don't run this country for corporations – we run it for people.

My new bill to stop the back-room deals

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Almost a year ago, during my first banking committee hearing, I asked several federal regulators a simple question: When was the last time you took a Wall Street bank all the way to a trial for breaking the law?

The regulators were stumped. After some hemming and hawing, they said they didn't need to take the biggest banks to trial for breaking the law because settlement agreements were tough enough to enforce the law.  

I was little skeptical.  

But here's the deal -- if the regulatory agencies are so confident that settlements are a good deal for the taxpayers they represent, then you would think they would be willing to publicly disclose the key terms and conditions of those agreements -- hang it right out there so everyone can see what a great job they did on behalf of the American people. But too many times, that isn't what they do.

Instead of making all the terms public, they announce a big "sticker price" for the settlement, then hide the details in fine print or fail to disclose that the company will get a big tax deduction or -- worst of all -- declare all the terms of the deal "confidential."

Senator Tom Coburn and I have introduced the bipartisan Truth in Settlements Act to require accessible, detailed disclosures about these agreements so the public can hold regulators accountable for these deals.

Sign up now to show your support for the Truth in Settlements Act.

These hidden details can make all the difference. When you dig below the surface, settlements that seem tough and fair can end up looking like sweetheart deals.

Last year, federal regulators cut a deal with thirteen mortgage servicers accused of illegal foreclosure activities. The sticker price was $8.5 billion -- which is a great headline.  But a loophole in the way that credits are calculated could end up cutting that value by more than half.

Wells Fargo settled a case involving the sale of fraudulent mortgage securities for a fraction of what JP Morgan had to pay in a similar case -- but since the Wells Fargo agreement is confidential, we have no idea why they got such a better deal.

And the list goes on.  

Our bill takes several steps to fix these problems:
  • It requires federal agencies to explain in written public statements that reference a settlement amount whether any portion of that "sticker price" is potentially tax-deductible or includes the cost of "credits."
  • It requires federal agencies to post basic information about settlements over $1 million on their websites.
  • It requires companies that settle with enforcement agencies to state in their SEC filings whether they have claimed a tax deduction for settlement payments.
  • It requires federal agencies to explain their reasoning publicly any time they deem a settlement confidential.
  • And it requires federal agencies to report annual aggregate statistics on confidential settlements.Increased transparency will help ensure that Congress, citizens and watchdog groups – people like you and me -- can hold regulatory agencies accountable for strong and effective enforcement.  
The job of the regulators is to make certain that no one is above the law no matter how powerful or well-connected they are. The Truth in Settlements Act is one way to keep their feet to the fire to see that promise through.

Sign up now to show your support for the Truth in Settlements Act.

Government agencies work for us, not for the companies they regulate. That means agencies should not be able to cut bad deals and then hide the embarrassing details. The public deserves to know what's going on.

The day the market crashed

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We all remember the darkest days of the financial crisis five years ago.

Credit dried up. The stock market cratered. Millions of people lost their jobs. Billions of dollars in retirement savings disappeared.

There were legitimate fears that the dominos of our financial system would never stop falling, and we were heading into another Great Depression.

On many of these fronts, we've made real progress. The Dodd-Frank Act was the strongest financial reform law in three generations. If I had been in the Senate three years ago, I would have voted for it proudly.

Dodd-Frank put in place the new Consumer Financial Protection Bureau, which has made serious strides toward leveling the playing field for families and increasing transparency in the marketplace. Thanks to the CFPB, I don't think there will ever again be so many lousy mortgages to threaten our families and our economy.

But no law is perfect -- and our work isn't done.

Most importantly, where are we now on the "Too Big to Fail" problem?" Where are we on making sure the giant financial institutions on Wall Street can't bring down the whole economy with a wild gamble?

After the 2008 crisis, we widely recognized that Too Big to Fail had distorted the marketplace. The largest financial institutions have lower borrowing costs and competitive advantages because of their free, unwritten, government-guaranteed insurance policy.

There was a lot of talk, but look what happened: The four biggest banks are 30% larger today than they were five years ago. Too Big to Fail status is giving the 10 biggest US banks an annual taxpayer subsidy of $83 billion.  
 
So what are we doing about it? More delays. Many say Congress should wait to act further because the agencies still have to issue many of the rules required by Dodd-Frank.

It's true many rules are not yet written, but that's because the agencies have missed more than 60% of Dodd-Frank's deadlines.
 
When Congress sets deadlines and regulators miss most of them, it's time for Congress to step in. Congress is responsible for oversight -- and that's what oversight means.
 
For that reason, I partnered with Senators John McCain, Maria Cantwell, and Angus King to offer up one potential way to address the Too Big to Fail problem:  the 21st Century Glass-Steagall Act. It's time to separate boring commercial banking from risky investment banking once again.

There are many other approaches for ending Too Big to Fail, and there is no single answer for preventing future crisis.  

But we should not accept a financial system that allows the biggest banks to emerge from a crisis in record-setting shape while ordinary Americans continue to struggle.  

We should not accept a regulatory system that is so besieged by lobbyists for the big banks that it takes years to deliver rules that are too often watered-down and ineffective.
 
We should never forget the consequences of letting financial behemoths hold our economy hostage. We managed to avoid that grim fate, but our economy still suffered a staggering body-blow.  

There were many powerful interests that that have fought against financial reform, and they will fight future reform efforts too.
 
But David beat Goliath with the passage of Dodd-Frank. David beat Goliath when we fought for and established a strong consumer agency.  

I am confident David can also beat Goliath on Too Big to Fail. Five years after the financial crisis, we just have to pick up the slingshot again.

The 21st Century Glass Steagall Act

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When I learned last winter that I would have a seat on the Senate Banking Committee, I was very happy because I knew it would give me the opportunity to ask tough questions and push for some accountability from Wall Street and its regulators.  In the last six months, that’s exactly what I’ve tried to do.

Again and again, I’ve been making a simple point to anyone who will listen: we need to learn from the financial crisis of 2008 and, moving forward, to prevent the kinds of high-risk activities that made a few people rich but nearly destroyed our economy.

Now it’s time to launch the next push. I joined forces with Senators John McCain, Angus King, and Maria Cantwell to introduce the 21st Century Glass-Steagall Act of 2013 to reinstate and modernize core banking protections.

Banking needs to return to the basics. Sign up now to show your support for the 21st Century Glass Steagall Act.

Banking should be boring. Savings accounts, checking accounts -- the things that you and I rely on every day -- should be safe from the sort of high-risk activities that broke our economy.

The way our system works, the FDIC insures our traditional banks to keep your money safe. That way when you want to withdraw money from your checking account, you know the money will be there. That’s what keeps our banking system safe and dependable.

But the government should NOT be insuring hedge funds, swaps dealing, and other risky investment banking services. When the same institutions that take huge risks are also the ones that control your savings account, the entire banking system is riskier.

Coming out of the Great Depression, Congress passed the Glass Steagall Act to separate risky investment banking from ordinary commercial banking. And for half a century, the banking system was stable and our middle class grew stronger. As our economy grew, the memory of the regular financial crises we experienced before Glass-Steagall faded away.

But in the 1980s, the federal regulators started reinterpreting the laws to break down the divide between regular banking and Wall Street risk-taking, and in 1999, Congress repealed Glass Steagall altogether. Wall Street had spent 66 years and millions of dollars lobbying for repeal, and, eventually, the big banks won.

Our new 21st Century Glass Steagall Act once again separates traditional banks from riskier financial services. And since banking has become much more complicated since the first bill was written in 1933, we’ve updated the law to include new activities and leave no room for regulatory interpretations that water down the rules.

The bill will give a five year transition period for financial institutions to split their business practices into distinct entities -- shrinking their size, taking an important step toward ending “Too Big to Fail” once and for all, and minimizing the risk of future bailouts.

This is an important bill that will learn from the 2008 crisis and make sure we hold Wall accountable. Show your support for the new 21st Century Glass Steagall Act now.

When people like you and me work together, we can stand up to even the most powerful interests. That’s how we got the Consumer Financial Protection Bureau in 2010. That’s how we won our election in 2012. And that’s how we’ll pass the 21st Century Glass Steagall Act.

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