Elizabeth Warren's Call to Destroy "Too Big to Fail"

Reporting on Politics and Policy.
Nov. 12 2013 3:15 PM

Elizabeth Warren's Call to Destroy "Too Big to Fail"

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Too determined to fail?

Photo by Win McNamee/Getty Images

Say this for Noam Scheiber's profile of Elizabeth Warren: It drummed up more attention than there might have otherwise been for the senator's speech to the Roosevelt Institute today. The speech, available online, is largely a pitch for Warren's Glass-Steagall II bill, with a setup about how the financial industry won't be regulated without it. "Since when does Congress set deadlines, watch regulators miss most of them, and then take that failure as a reason not to act?" asked Warren. "I thought that if the regulators failed, it was time for Congress to step in. That’s what oversight means."

Her bill

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... would reduce “too big” by dismantling the behemoths, so that big banks would still be big – but not too big to fail or, for that matter, too big to manage, too big to regulate, too big for trial, or too big for jail. 
 Big banks would once again have understandable balance sheets, and with that would come greater market discipline. Now sure, the lobbyists for Wall Street say the sky will fall if they  can’t use deposits in checking accounts to fund their high-risk activities. But they said that in the 1930’s too. They were wrong then, and they are wrong now. The Glass-Steagall Act would restore the stability to the financial system that began to disappear in the 1980’s and 1990’s.

Warren's issue, as David Dayen explains, is that the financial industry is generating a lot of wealth for itself and keeping regulators at arm's length, and that Democrats should be able to fix that. "I am confident David can beat Goliath on Too Big to Fail," said Warren. "We just have to pick up the slingshot again."

Here I should add to my previous skepticism of the "Warren for president????" mania gripping our fair Capitol. If Warren wants to popularize the legislation, then, yes, in 2014, it's good for her to have to fend off questions about whether she wants to be president. The media naturally spends more resources covering people who might be president than people who won't. (This was a reason why Herman Cain's rise came as a shock—Cain showed up at umpteen conservative cattle calls, but reporters who were watching more serious potential candidates like Mike Pence or Haley Barbour used Cain's time onstage to check out and file their stories.)*

But come 2015, whatever the makeup of the Senate, is Warren's time better spent in Iowa or in D.C.? Can the media cover a financial reform bill without the hook of a presidential race? The press is ready to read everything into the polling margins for Hillary in Iowa and New Hampshire—if you take the Warren hype seriously, you have to ask whether that's the best way for this to get covered.

*Correction, Nov. 12, 2013: This post originally misidentified Haley Barbour as Harry Barbour.

David Weigel is a Slate political reporter. You can reach him at daveweigel@gmail.com, or tweet at him @daveweigel.