November 12, 2013

American Banker: Warren: 'It's Time to Act' on Too Big to Fail

By: Victoria Finkle
November 12, 2013

WASHINGTON - Sen. Elizabeth Warren rallied supporters on Tuesday to help end "too big to fail" and back her bill to separate commercial banking from riskier activities, in a fiery speech before consumer advocates.

The Massachusetts Democrat, a longtime critic of Wall Street, expressed frustration that three years after the Dodd-Frank Act the biggest banks continue to grow, regulators keep missing their statutory deadlines and the problem of "too big to fail" remains.

"I add that up, and it's clear to me: it's time to act," she said at a Wall Street reform event hosted by Americans for Financial Reform and the Roosevelt Institute in Washington, DC. "Since when does Congress set deadlines, watch regulators miss most of them, and then take that failure as a reason not to act? I thought that if the regulators failed, it was time for Congress to step in. That's what oversight means. And that's certainly a principle that would have served our country well prior to the crisis."

She pointed to her legislation with Sens. John McCain, R-Ariz., Angus King, I-Maine, and Maria Cantwell, D-Wash., to bring back the Depression-era Glass-Steagall Act to "wall off" depository institutions from other businesses like swaps dealing and investment banking, in an effort to bring stability back into the market.

"In other words, the new Glass-Steagall Act would attack both 'too big' and 'to fail.' It would reduce failures of the big banks by making banking boring, protecting deposits and providing stability to the system even in bad times," she said. "And it would reduce 'too big' by dismantling the behemoths, so that big banks would still be big - but not too big to fail or, for that matter, too big to manage, too big to regulate, too big for trial, or too big for jail."

She contrasted the success of the industry and its lobbying power with the struggles of average families, arguing that the country needs "a system that recognizes we don't grow this country from the financial sector; we grow this country from the middle class."

Read the full story here.