Liberal activists who helped elected Elizabeth Warren to the Senate are on cloud nine after an aggressive performance from the former professor in her debut on the Banking Committee.
For the senator’s backers, who spent millions helping elect her to the Senate, it was all they had hoped for and more.
“We spent a year rallying voters and activists to her side, and moments like this make it all worth it,” said Stephanie Taylor, co-founder of the Progressive Change Campaign Committee.
Many in Washington had wondered whether Warren would dial down her combative rhetoric in the Senate and adopt the low-key approach that is favored by freshman senators.
But Warren showed she’d be anything but a shrinking violet in the upper chamber, raising hopes on the left that she will rally support on Capitol Hill for more aggressive prosecution of financial misdeeds.
“The question I want to ask if how tough you are,” Warren told regulators at the hearing on the implementation of the Dodd-Frank financial law. “I’m really concerned that ‘too big to fail’ has become too big for trial.”
The officials on hand described their efforts to enforce the financial sector, but Warren would not let the subject drop. Regulator eventually conceded they could not recall the last time they went to trial.
Elisse Walter, the chairwoman of the Securities and Exchange Commission, pushed back against Warren after the hearing was over.
“You have to use your resources effectively, and I think Sen. Warren was suggesting that we should take big Wall Street banks to trial even when we’re getting all the relief we could get at trial through a settlement,” she told reporters. “I don’t think that’s an efficient use of our resources. I understand that point of view, but I don’t agree with it.”
Activists hope the dust-up with regulators is only the beginning.
“These bank regulators need to hold Wall Street accountable on behalf of consumers, and Elizabeth Warren is making sure that happens,” Taylor said.
Since the financial crisis, federal regulators and prosecutors have racked up settlements worth hundreds of millions of dollars from a range of institutions, including some of the biggest names on Wall Street.
But many in Congress say those penalties are insufficient and want the Obama administration to put wrongdoers on trial.
Warren brought the spotlight to that notion, joining a number of lawmakers who feel Wall Street has gotten off easy after committing high crimes against the economy.
Sens. Sherrod Brown (D-Ohio) and Chuck Grassley (R-Iowa) sent a letter in January to Attorney General Eric Holder, asking if large financial institutions, due to their outsized role in markets, have effectively become “too big to jail.”
And earlier this month, Rep. Maxine Waters (D-Calif.), the ranking member of the House Financial Services Committee, told Attorney General Eric Holder in a letter that she was “concerned” federal prosecutors had come up short in the hunt for Wall Street malfeasance.
"In the absence of any indictments in cases involving 'egregious' misconduct the negative incentives that encourage and reward rule breaking will remain unchecked," she wrote.
The Obama administration, including the president himself, have previously defended themselves against critiques by arguing that while mistakes were obviously made, not everything that happened leading up to the crisis broke the law.
And some Republicans contend that it is not up to Congress to determine what should and should not be prosecuted.
House Financial Services Committee Chairman Jeb Hensarling (R-Texas) said Friday that plenty of bankers made mistakes, but it's not up to Congress to put them on trial.
"I'm Article 1 of the Constitution, I'm not represented in Article 3," he said, referring to the sections of the nation's founding document establishing the legislative and judiciary branches, respectively.
"Frankly, a lot of regulators made mistakes, a lot of bankers made mistakes, and it's up to our Justice Department and the judiciary to figure what's a mistake and, frankly, what's criminal fraud," he added.