Elizabeth Warren's Comprehensive Wall Street Reform Agenda

[UCmeNdc]

Elizabeth Warren has given her fair share of great speeches, and has written some outstanding legislation on reforming Wall Street, but her speech on April 15 to the Hyman P. Minsky Conference was the best Wall Street policy speech I have ever heard her, or anyone, ever give. It was comprehensive without being a laundry list of in-the-weeds wonkiness. It laid out a strong philosophical rationale for why we need to do these reforms, and it was politically compelling as well. Her politically compelling argument laid out a strong philosophical rationale for why we need these reforms. Perhaps most importantly, she did all this while masterfully refuting the hackneyed attacks about her being anti-business, anti-growth, and anti-market forces.

Warren's series of proposed reforms would be a major and much needed boost to an economy still held down by the Wall Street abuses that brought on the collapse of the massive housing bubble, the 2008 financial collapse, and the hardest hitting economic slowdown since the Great Depression. Here is an outline of her proposals:


http://www.huffingtonpost.com/mike-lux/elizabeth-warrens-compreh_b_7087582.html?utm_hp_ref=business&ir=Business

[Thinkingabout]

1. I hope she can gain strength in the Senate for her bills and then get with some of the

Representatives for support in the House. This could be a good start on getting some bad stuff out and having the markets run smoothly.

[MannyGoldstein]

2. She'll need to be President to reform Wall Street.

She'll end the Clinton/Obama marriage between the White House and Citigroup.

[Thinkingabout]

3. Oh, yea, never heard of a president voting on a bill the VP but no the president.

[Angel Martin]

4. a mixed bag, but would on net increase the risk in the system

some of what Warren is proposing would reduce financial risk, some is more PR than real, and some is totally stupid and would increase the financial risk in the system.

the stupidest is the proposal that the Fed would be limited or restricted on emergency lending in a crisis. How on earth could Warren think this will reduce risk? Fed lending and other interventions in 2008-9 was the only thing that stopped a partial financial meltdown from turning into a complete and total meltdown of the entire financial system.

If you tell financial markets that the Fed won't provide emergency lending, in a crisis they are going to assume large financial institution failures, and act accordingly, and it becomes a self fulfilling prophecy !

I think a far more productive approach would be to follow the advice of Professor Perry Mehrling at Columbia. His proposal is that the Fed concentrate on maintaining continuity of markets, rather than bailing out systematically important firms. For example, in 2008 when the bailouts didn't work, and everyone was scared to lend, the interbank lending market collapsed and the Fed "became" the interbank lending market. The fed also become, to a substantial degree, the commercial paper market, the repo market, the MBS market, and intervened to support the interest rate swaps market and even the CDS market.

What Mehrling is saying is to be up front that the Fed will do these interventions if necessary. Once you do that, financial institutions won't worry about the impact of individual institutions failing. That is, with continuity of markets guaranteed, even the largest banks can be allowed to fail. TBTF no longer exists. !

the other proposals: penalties equal to profits earned, Glass Steagal, limitating bonuses, limiting financial institution size, financial transactions tax... etc ... are all good. They would work even better if Warren would adopt what Mehrling is proposing.

And Warren definitely needs to dump the idea of putting more restrictions on Fed action in a crisis.

[libdem4life]

5. She's on the Senate Committee that can push some of these most specific points. Without

her there, it would be nigh impossible. She'll be fighting this battle she knows so well for years to come, so I encourage her to keep it up. She'll have no problem staying on as the Senator from Mass either.

She knows that if she were to become president, that the Congressional boogey man team would neutralize her. Also, her family does not want it and she doesn't have or want to lobby the same folks she's taking to the woodshed for money.