Elizabeth Warren Goes on an Amazing Rant After Terrifying Report on Big Banks

Elizabeth Warren Goes on an Amazing Rant After Terrifying Report on Big Banks
Source: Getty Images
Source: Getty Images

Elizabeth Warren is at it again.

After Bloomberg News reported on Wednesday that five of the biggest banks in the nation failed a major test of whether they could undergo bankruptcy without having a disruptive effect on the entire financial system, the senator from Massachusetts is once again sounding the alarm about the scourge of too-big-to-fail banks.

The Federal Reserve and the Federal Deposit Insurance Corp. said that the banks' "living wills" — or blueprints for how they would go about shutting themselves down if driven to bankruptcy — didn't meet their standards for preventing another crisis of the kind that wrecked the financial sector and helped trigger a global recession after the collapse of Lehman Brothers in 2008.

Read more: Top Federal Reserve Official Agrees With Bernie Sanders: Break Up the Banks

Warren took to Facebook to remind the public of the gravity of the news, and to lambast politicians and economists who have argued that cutting down the size of major banks shouldn't be a priority when it comes to reining in the financial sector. 

"This announcement is a very big deal. It's scary. And it means that, unless these banks promptly address the concerns identified by the regulators, the government must push these banks to get smaller and less complex," Warren wrote.

Warren's post took aim at people who have downplayed the importance of size in determining the best way to prevent another financial crisis, at one point talking of "revisionist history" that seems to be, as the Huffington Post's Zach Carter pointed out, a subtle swipe at liberal economist Paul Krugman. 

"There's been a lot of revisionist history floating around lately that the Too Big to Fail banks weren't really responsible for the financial crisis. That talk isn't new. Wall Street lobbyists have tried to deflect blame for years. But the claim is absolutely untrue," Warren wrote.

The firebrand senator explained how the size of the banks was inextricable from the risk they posed to the economy during the financial crisis. 

"There would have been no crisis without these giant banks. They encouraged reckless mortgage lending both by gobbling up an endless stream of mortgages to securitize and by funding the slimy subprime lenders who peddled their miserable products to millions of American families," Warren wrote. "The giant banks spread that risk throughout the financial system by misleading investors about the quality of the mortgages in the securities they were offering."

Calling the Federal Reserve and the Federal Deposit Insurance Corp.'s rejection of the banks' living wills a "giant, flashing" warning sign, Warren called on Congress and regulators to resist Wall Street lobbying seeking to protect the status quo. 

Warren has refrained from making any endorsements in the presidential race this year, and while she's praised elements of both Hillary Clinton and Bernie Sanders' Wall Street reform proposals, her zeal for breaking up the big banks makes it clear that on the issue of breaking up the banks, she's in Sanders' corner.

How much do you trust the information in this article?

Zeeshan Aleem

Zeeshan is a senior staff writer at Mic, covering public policy and national politics. He is based in New York and can be reached at zeeshan@mic.com.

MORE FROM

The 5 major people Donald Trump fired since taking office

Reince Priebus is just the latest high-profile person to be fired by Trump.

How brands battle for creativity and authenticity

In the age of call-out culture and brand boycotts, how can brands get it right the first time?

While You Weren’t Looking: 5 stories free from “skinny repeals” and the Mooch’s “colorful language”

Five stories you may have missed while trying to keep up with a chaotic news week.

In the shadow of Brooklyn’s luxury apartments, “canners” form a tight-knit community

For many lower income people in New York City, canning can be a safe and legal way to earn a living.

A Steve Bannon propagandist is turning the alt-right’s antihero Based Stick Man into a comic book

"We’re never going to change the culture from Washington. We’re going to do it from comics, from movies.”

NBC News chief wanted to dial back MSNBC's liberal identity. Then Trump got elected.

Some insiders say MSNBC is having an identity crisis — but the channel is having its best ratings year ever.

The 5 major people Donald Trump fired since taking office

Reince Priebus is just the latest high-profile person to be fired by Trump.

How brands battle for creativity and authenticity

In the age of call-out culture and brand boycotts, how can brands get it right the first time?

While You Weren’t Looking: 5 stories free from “skinny repeals” and the Mooch’s “colorful language”

Five stories you may have missed while trying to keep up with a chaotic news week.

In the shadow of Brooklyn’s luxury apartments, “canners” form a tight-knit community

For many lower income people in New York City, canning can be a safe and legal way to earn a living.

A Steve Bannon propagandist is turning the alt-right’s antihero Based Stick Man into a comic book

"We’re never going to change the culture from Washington. We’re going to do it from comics, from movies.”

NBC News chief wanted to dial back MSNBC's liberal identity. Then Trump got elected.

Some insiders say MSNBC is having an identity crisis — but the channel is having its best ratings year ever.