Senator Elizabeth Warren asks the same question five times.

Via Waylon Lewis
on Feb 16, 2013
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 "Too Big to Fail has become Too Big for Trial"

“Too Big to Fail has become Too Big for Trial.”

“Senator Elizabeth Warren asks federal bank regulators why no banks were taken to trial in the aftermath of the financial crisis.”

Wall Street knowingly broke laws, tanked the economy, and directly harmed millions of ordinary Americans while reaping huge profits, and paying small penalties out of those profits—leaving greed little motivation to change its ways.

“There are district attorneys and United States attorneys out there every day squeezing ordinary citizens on sometimes very thin grounds and taking them to trial in order to make an example, as they put it. I’m really concerned that ‘too big to fail’ has become ‘too big for trial.'”


About Waylon Lewis

Waylon Lewis, founder of elephant magazine, now & host of Walk the Talk Show with Waylon Lewis, is a 1st generation American Buddhist “Dharma Brat." Voted #1 in U.S. on twitter for #green two years running, Changemaker & Eco Ambassador by Treehugger, Green Hero by Discovery’s Planet Green, Best (!) Shameless Self-Promoter at Westword's Web Awards, Prominent Buddhist by Shambhala Sun, & 100 Most Influential People in Health & Fitness 2011 by "Greatist", Waylon is a mediocre climber, lazy yogi, 365-day bicycle commuter & best friend to Redford (his rescue hound). His aim: to bring the good news re: "the mindful life" beyond the choir & to all those who didn't know they gave a care. | His first book, Things I would like to do with You, is now available.


15 Responses to “Senator Elizabeth Warren asks the same question five times.”

  1. Mark Ledbetter says:

    Very impressive! Not necessarily correct, but impressive. Sen. Warren is a fantastic lawyer. (I don't know if she is actually a lawyer. But here, she puts on a wonderful demonstration of lawyerly rhetorical technique.)

    Like many lawyers, ie politicians, she does know the law and she does know human motivation but she doesn't know economics. And like liberal lawyers, she's naive about the realities of political power.

    She's right to mention incentive. But she's wrong in honing in on penalties and trials as the meaningful incentives. A meaningful incentive would result from this: go back to the separation of economy and state (it wasn't just separation of church and state, all three power centers – church, economy, state – were meant to be separate). If you did that, there would be no "too big to fail." There would, by definition, be no business-govt collusion. In other words, there would be neither means nor incentive for politicians to help bankers, which is the incentive Ms. Quixote here is fruitlessly sparing with.

    The article says:

    "Wall Street knowingly broke laws, tanked the economy, and directly harmed millions of ordinary Americans while reaping huge profits, and paying small penalties out of those profits—leaving greed little motivation to change its ways."

    No, millions of Americans were not harmed by Wall Street breaking laws. They were harmed because Washington rescinded economic incentives by making sub-prime and super cheap loans safe for banks to make, and even pushed them to make the loans. Any fool with a modicum of economic understanding could easily predict from that a housing boom built on castles of sand which would have to collapse.

    In economics, market incentives are called "moral hazard." Moral hazard, ie the threat of failure in the marketplace, keeps you very careful. When there is no threat of failure, and you are given newly printed money to boot, you will see happy millionaires sprouting on Wall Street like daisies, fomenting booms which have to bust. This WILL happen, no matter what laws you pass or how many Warrens you can send to congress. Those who are in bed with government (in this case financial institutions) will not be the ones to suffer from the bust. Sen. Warren, great lawyer though she is, doesn't seem to understand that.

    She's right about the greed and motivation. But wrong about where to harness it. The threat of your company going bust combined with your greedy desire for profits is a huge incentive to be careful about your loans. The threat of laws and trials put on by your co-conspirators in government are just about no incentive at all. They are all just part of the circus designed to keep the masses happy.

  2. neil says:

    Great reply Mark. The government is the one which is too big to fail as well as too big to go to trial. They make the laws so they can't go to trial. The government needs to stay out of the way and let businesses do what they do best – make money. The only thing the government knows is how to take money and give it away. This tactic doesn't work in a capitalistic society where hard work, planning, and perseverance is required.

  3. Meghan says:

    Mark, so excellent. Change comes with identifying the problem. We are so deluded and distracted that we don't even see what is right before our eyes while continuing to watch the government and the banks go on with impunity. If and when the masses actually awaken to what the problem is, the anger and the motivation to stop the insanity will be so great that hopefully whole institutions and systems will crumble. The people have the power. They just have to stand up.

  4. Susan Weaver says:

    Lest we not forget, all of us are one and united. Both dems and repiblicans alike are all in this eeriment called the USA. It is time we put our differences aside and work together. Thank God for our great big wonderful gov. May it long endure. As the philosher once said, “I don’t agree with a thimg you have to say, but I will defend to the death your right to say it.” ThankGod for Elizabeth Warren.”

  5. elen fantaine says:

    The philosopher was Voltaire.
    Interesting how so many Elephant readers have somewhat libertarian leanings.
    I think we should just let the banks run things.
    It is my version of ahimsa. See, they really want to runs things, it would make them happy to run things, so we should just let them. Then they can be happy and we can be nonviolent in a peaceful utopia run by the government and the banks. Everyone wins.

  6. tough buddha says:

    What the fuck did you just fucking say about me, you little bitch? I’ll have you know I graduated top of my class in the Navy Seals, and I’ve been involved in numerous secret raids on Al-Quaeda, and I have over 300 confirmed kills. I am trained in gorilla warfare and I’m the top sniper in the entire US armed forces. You are nothing to me but just another target. I will wipe you the fuck out with precision the likes of which has never been seen before on this Earth, mark my fucking words. You think you can get away with saying that shit to me over the Internet? Think again, fucker. As we speak I am contacting my secret network of spies across the USA and your IP is being traced right now so you better prepare for the storm, maggot. The storm that wipes out the pathetic little thing you call your life. You’re fucking dead, kid. I can be anywhere, anytime, and I can kill you in over seven hundred ways, and that’s just with my bare hands. Not only am I extensively trained in unarmed combat, but I have access to the entire arsenal of the United States Marine Corps and I will use it to its full extent to wipe your miserable ass off the face of the continent, you little shit. If only you could have known what unholy retribution your little “clever” comment was about to bring down upon you, maybe you would have held your fucking tongue. But you couldn’t, you didn’t, and now you’re paying the price, you goddamn idiot. I will shit fury all over you and you will drown in it. You’re fucking dead, kiddo.

  7. kwanyinhealing says:

    Mark, your desire for the simplistic, so common in those needing to make this conservative vs. liberal, throws out history. Government and economics have been linked since before there was a U.S. government. Similarly your drive to find the one magical single cause. In this case, bundling mortgage derivatives, which hid the value of the investment, making sorting out the mess later impossible, caused the crisis of confidence in lending, and sensible/enforced regulation would have prevented that. It was fraud. From there, other factors contributed–shaky loans, cheap money from buying ourselves out of two recessions during the Bush administration with monetary policy, leaving interest rates with nowhere to go, while simultaneously increasing structural deficits with tax cuts and wars, left us in a precarious position. Could we have let the market handle it? Only at great cost economically–while recognizing that stimulus also comes at a cost (and could have been handled better). You're also naive about "newly printed money" and "happy Wall St. millionaires," as expanding the money supply lowers the value of money, hurting those who hold it. The problem now is that money is SO cheap that the incentive to spend and invest is extremely low, allowing banks and businesses to sit on it and wait.

  8. kwanyinhealing says:

    Like the glory days of the 1890s, Neil? Come on–history already shows us what's wrong with the magic market theory.

  9. […] the illusion being offered by our heroes is one that corruption, cheating and impulsiveness are not only expected, but acceptable and even deemed as necessary from big banks, the government […]

  10. Linda V. Lewis says:

    Good for the Senator and good for you, Waylon, spreading the news and the question! The US Senate actually has some credibility, unlike the Canadian one! As a Canadian I feel we should abolish the corrupt and expensive Canadian Senate.
    As an American, I'd like to see an article about the recent protest in Washington vs the "holy" XL Pipeline!
    Clue–it has a hole in it! I pray Obama is green on this!

  11. kmacku says:

    I've taken to not replying to posts I disagree with. However, you've said everything I wanted to in response to Mark's comment (and more intelligently, I might add), so thank you. I absolutely agree with everything you said.

  12. Mark Ledbetter says:

    Thanks for the reply, Kwanyin. Actually, I don't see this as conservative vs. liberal. I see both cons and libs in alliance on this pretty much for the last half century.

    And yes govt and economics have always been linked but there has been a huge difference in the degree of linkage. The percent of the economy made up by govt spending is a rough gage of the linkage and that's varied between, off the top of my head, 1 and 30 percent? More specifically, in the 19th c. you had occassional govt-business linkage of banks and canal-building. After the Civil War, stronger linkage with banks and much stronger with railroads. 20th century, much stronger again with banks and with all forms of transportation. Post WWII we've had growing linkage throughout the economy (wars always increase linkage, just as they often grow out of linkage).

    Then you provide a much more complete list than I do of causes:

    "bundling mortgage derivatives, which hid the value of the investment,"
    (I agree, though I don't see where significant derivatives would have come from without printed money and manipulated interest rates, something that can't happen in a market economy)

    "From there, other factors contributed–shaky loans, cheap money from buying ourselves out of two recessions during the Bush administration with monetary policy"
    (Absolutely! But hey, I thought you were arguing for rather than against Keynesian solutions?)

    "making sorting out the mess later impossible"
    (You speak the truth, bro.)

    "sensible/enforced regulation would have prevented that."
    (A couple of problems there. First, politicians don't normally do 'sensible,' or even know what it is. They do what will win votes or garner contributions. Second, 'sensible' is often only knowable after the fact. Third, without the printed money and artificial interest rates that come from govt manipulation, well, not such a big problem in the first place.)

    "while simultaneously increasing structural deficits with tax cuts and wars,"
    (You see? There's so much we agree about! Ever since Pres. Truman inaugurated presidential wars, we've had no end of them. And we've had no Pres (except Eisenhower to some degree) who has opposed the war machine and American empire. War and the war machine is one of the three big causes of structural deficits (the other two are soc sec and medical care). Both parties and all presidents have been in on it.

    And you say I'm naive about newly printed money and happy Wall Street millionaires, but then you explain that by saying the problem is making money so cheap. It sounds like we're roughly in agreement on that.

    G' day!

  13. Mark Ledbetter says:

    Kwan and Kmack. Thaks for reading. I've posted a response from my perspective down below.

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