Elizabeth Warren is Serious. That is why The Senator is THE presidential candidate who terrifies the capitalist markets, the banking industry in particular.
Wall Street Journal 1.29.2019
Elizabeth Warren’s presidential bid will be driven by her populist assault on big banks that helped her rise to prominence during the financial crisis and in her successful 2012 Massachusetts Senate race.
Although the economy has recovered and new, stricter regulations remain largely in place, Ms. Warren sees cause for further vigilance, and many on Wall Street dread another round of criticism on an even bigger national stage—the Democratic presidential primary race.
“Banks exercise too much power in Washington,” Ms. Warren said in a recent interview. “One of the main things I’ve done is grass-roots organizing to wave the flag and point out what’s going on here and get some political pushback. Otherwise Congress and the administration will just continue to work for the big banks.”
U.S. banks are approaching Ms. Warren’s candidacy with trepidation. “The banking industry is a lot different than it was in 2008,” said Richard Hunt, president and chief executive of the Consumer Bankers Association. “Most people know that but she still seems to be living in 2008-land.”
As president, Ms. Warren would represent a striking change to the Trump administration’s deregulatory approach. Bank officials worry she would take a more adversarial tack than the Obama administration, which put the financial sector under tougher scrutiny after the 2008 crisis.
Her campaign policy proposals include breaking up the biggest U.S. banks by reviving a modern version of the Depression-era Glass-Steagall Act, which had separated commercial and investment banking before it was repealed in 1999. She backs a mandate that workers elect at least 40% of corporate boards, holding Wall Street executives liable for criminal misconduct at their firms and tougher federal oversight of the credit-reporting industry in the wake of the hack of Equifax Inc.
If elected, she would likely appoint regulatorswho would push for companies to disclose their spending on political activities as well as complete a raft of unfinished curbs to compensation for financial firms from the 2010 Dodd-Frank financial overhaul, measures that supporters say will damp excessive risk taking.
An indirect threat to the industry may be the reception Ms. Warren’s ideas receive with primary voters. Their response, if energetic, could nudge other Democratic presidential hopefuls to embrace the proposals as well. After the 2016 presidential primary, Vermont Sen. Bernie Sanders’s popular call for free college tuition found its way into the platforms of other liberal Democrats.
“She has this sort of applause line that we are all crooks, which is scary that you may hear that for a year and a half,” said a large U.S. bank executive who asked to remain anonymous for fear of a Warren backlash.
“They’re right to be scared because the public’s anger with the big banks remains raw,” said Robert Weissman, president of Public Citizen, a consumer-advocacy group. “I think they will respond to presidential candidates who give voice to that feeling.”
Ms. Warren’s signature accomplishment before she was elected was helping the Obama administration launch the Consumer Financial Protection Bureau, an idea she floated in a 2007 article. Since then, the 69-year-old former Harvard Law School professor has become a formidable obstacle to both Republicans seeking to ease the postcrisis financial rulebook she helped craft and Democrats she viewed as too cozy with the financial industry.