At first hearing, Sen. Warren presses regulators to take firmer line with banks

Sen. Elizabeth Warren (D-Mass.) opened her first hearing on the Senate Banking Committee with a bang, pressuring regulators to take financial institutions found to have violated the law to trial. 

The new senator quickly reassumed her mantle as a fierce Wall Street critic, pushing regulators at a Thursday hearing on the Dodd-Frank financial reform law to acknowledge they could not remember the last time they had taken banks to trial for misbehavior.

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Critics of the regulators have argued they are too quick to settle with banks and other financial institutions that they allege have broken the law. Settlements often allow the accused to argue they did not do anything against the law.

"The question I want to ask is how tough you are," Warren said to witnesses testifying on Thursday. "Tell me a little bit about the last few times you've taken the biggest financial institutions on Wall Street all the way to trial."

Thomas Curry of the Office of the Comptroller of the Currency and Elisse Walter, chairman of the Securities and Exchange Commission (SEC), both touted the settlements and consent orders they have secured from financial institutions but could not name the last time they took a big bank to trial.

"We have not had to do it, as a practical matter, to achieve our supervisory goals," Curry said.

Walter said she would have to review her records to determine the last time the SEC took an institution it supervises to trial.

"I'm really concerned that 'too big to fail' has become too big for trial," Warren said, as some in the hearing audience broke into applause.

Warren contended that there are good reasons to seek settlements over taking banks to trial, such as the cost of litigation, but she also argued that making the threat of a trial so empty reduces the leverage regulators have in dealing with financial institutions. She said that gives them little reason not to violate the rules.

"They can break the law and drag in billions in profits, and then turn around and settle with a portion of those profits," she said.

Before laying into regulators, Warren opened with a sympathetic note, as she previously testified before the same committee when she was tapped by the president with setting up the Consumer Financial Protection Bureau. 

"It's harder than it looks," she joked.

Richard Cordray, a top deputy who replaced her as the bureau's first director, was testifying at the hearing. Warren did not ask him any questions.