Salon spoke with Sen. Elizabeth Warren for a profile on the senator's first seven months in office. Below is a transcript of our conversation on Tuesday.
Hello Senator, where are you today?
I’m headed to Hanscom Air Force Base to talk about cybersecurity, and no, you can’t know about it! Seriously, this is something in the military budget, one of the areas where we should spend more money not less, and this is why the sequester drives me crazy because across the board cutting is mindless. On the military budget, instead of thinking about whether there should be cuts where needs are not so great, and investing in things like cybersecurity, we're just cutting across the board. It’s crazy.
So what do you want to talk about?
I thought we’d talk about banking. Obviously you’re in a different role in the Senate than when you ran the Congressional Oversight Panel or were standing up the Consumer Financial Protection Bureau. How have you been able to use your perch in the Senate to advance your agenda? How have you adapted?
It’s all about learning to use new tools. In the Senate, there are more tools in the toolbox than are obvious. That's what I like about this. For example, there’s a lot that banking regulators could do to make the system safer. They could make the system a lot stronger without Congress passing any new law. But only if they do their jobs. The Banking Committee has oversight over those agencies. And so I think encouraging the regulators to do their jobs is a way to have an important impact on the banking system.
Yes, I’ve noticed your role is as much about badgering regulators as badgering banks.
I beg your pardon! I would use words like “encourage.”
But you know, it's about accountability in both directions. The largest financial institutions should be held accountable, and so should the regulators. They are not there to serve the banks, they’re there to serve the public. I’m reminded of that when we have public hearings. I try to ask questions that the public wants to hear.
And do you feel like you’ve been successful in, shall we say, encouraging the banks to be more forceful in their regulatory oversight? It seems that the SEC has changed some of their policies as a result of your encouragement.
Well, I am very optimistic about the direction Mary Jo White is taking the SEC. She has come in and made it clear that it's a new day in town. She expects her agency to take an aggressive stance against those who break the law, and against those who don't cooperate in investigations. This is part of what gave me more hope, Commissioner White didn't make a generalized "we're going to get tough" statement. She identified a class of cases in which the SEC would take a different position. And she made it clear in that announcement that companies that don't cooperate with SEC will face different consequences. In other words, there will be harsher consequences if the SEC uncovers wrongdoing. So now, there's a price, not only for doing wrong but for hiding it. I’m very glad to see that. Commissioner White is showing some real spirit.
Indeed, just yesterday the SEC forced Philip Falcone to admit wrongdoing, but he did not admit liability for a specific rule or law. Is that satisfactory to you?
It’s another step in the right direction. The SEC is a watchdog that's starting to show its teeth.
That’s good, but I don’t think I could begin to list all the criminality revealed in the financial industry just since you came into office. Is this industry at some level just too big to regulate or even detail to the public? And how do you create new structures for regulation to make meaningful oversight possible?
I want to be careful, because there are two separate points to make. By saying that I don't have to change law to make impact, I don't mean there aren't laws that could be changed. Because there are. The point is that we should be using every tool in the toolbox. The answer to your more specific question is yes and no. Changes in the structure would definitely make the financial system safer and make regulation easier, my bill on restoring Glass-Steagall is the perfect example. If commercial banks are split off from non-banking activity, the whole banking system would be safer. But also, regulators could specialize in what they do best. They wouldn’t have to develop expertise in multiple lines of business. The SEC can oversee the non-bank institutions. If they're systemically important financial institutions, there are other mechanisms for oversight. But bank regulators could focus on the safety of banks. And that’s simpler and more effective.
You say legislation is another tool. You’ve been active on the Banking Committee, in fact your office tells me you have the best attendance record there. But is the fact that there have only been two markups in eight months, does that show any reticence on the part of the committee to significant reforms?
I don't think so. Statutory change takes some lead time to get people talking about the idea, working on specific legislation. There are a lot of pieces to it. A couple big pieces we know are coming up. GSE [government-sponsored entities Fannie Mae and Freddie Mac] reform, FHA. Those are pressing problems. So it’s not as if the committee is not dealing with significant issues, they are. But it’s important to keep pushing. That's why Sen. McCain and I pushed forward on Glass-Steagall now, to get it back into the conversation. Sen. McCain wanted to be part of it, he and Sen. Cantwell tried to push this a few years ago. On Glass-Steagall, with Sen. King and myself, you have two freshmen, and with Sens. McCain and Cantwell, two members not on the Banking Committee. The four of us got together to make it a more urgent issue. We’re trying to work together to move it up on the agenda.
How do you like working on the committee?
I like it. You mentioned attendance; not only do I go to the banking hearings, I stay. I'm very interested in the questions other senators ask. They often ask smart and thoughtful questions. I learn a lot from those hearings. I try to talk with senators afterwards, to ask follow-ups or get more information. And I often change what I'm going to ask because someone else has asked it. I feel good about the way it works in that committee. People there are interested in the issues. It shows up in questions they ask, the conversations we have in the hallways. It’s a good group. Not everyone is engaged. But there’s a core really engaged in issues and really driving. Sherrod Brown, for example, doing a hearing on commodities and what's happening around bank holding companies having powerful influence on the price of aluminum. What it means to the economy. I was very impressed by his work on that. Jeff Merkley, always very thoughtful. Sen. Corker, I’ve been talking to him about GSE reform since before I became a senator. So a lot of people on the committee are smart, they dig into the issues, and they care.
And any comment on the 2016 buzz for you?