NOW with Alex Wagner | February 19, 2013
>>> in washington that incoming freshman members of congress should be seen but not heard. elizabeth warren is taking the nation's capitol by storm. last thursday may have been valentine's day, but senator warren showed no love for wall street at her first hearing as a member of the senate banking committee where she pushed bank regulators to answer the simple question. when was the last time you took a wall street bank to trial?
>> tell me a little bit about the last few times you've taken the biggest financial institutions on wall street all the way to a trial. anybody? i appreciate that you say you don't have to bring them to trial. my question is when did you bring them to trial?
>> we have not had to do it as a practical matter to achieve our supervisory goals.
>> can you identify when you last took the wall street banks to trial?
>> i will have to get back to you with the specific information.
>> while the video has become a youtube sensation with over one million hits in under a week, the banking community is less than thrilled. according to politico, one top wall street executive called warren 's performance at the hearing shameless grandstanding, while others on wall street took issue with warren 's claim that nobody believes that bank books are honest. that does not stop senator warren . even though the senate is in recess, warren is taking her message home to massachusetts where this weekend she told constituents in the bay state you can't come into people's neighborhood and just tear them up. you can't sell terrible mortgage products that cause people to lose their homes. you can't come into our economy and just wreck it, cost people jobs, cost people their savings, cost people their retirmts and then say at the end we're too big to touch. if warren 's performance isn't sitting well with wall street , it seems to be resonating with the rest of america. years after the largest financial crisis in u.s. history warren raises an important question. why haven't banks been held accountable? ryan, the huffington post has seen some traffic, shall we say, on this, and you have been covering it. a lot of people didn't know what to expect from elizabeth warren when she came into the senate, but she is doing it yosemite sam style.
>> this is something that is fine within the senate culture because, you know, she waited her turn at the hearing for a freshman, and she asked very simple questions. she wasn't asking about collateralized debt obligations or any other thing. just when was the last time you took a bank to trial? that's it. and the simplicity of it is what i think has pushed it well past the million views, and you'll notice that at the hearing it also allows some of the other democrats to be a little bit more aggressive in their question than they might have been because now you have warren over here who is talking about taking banks to trial. it allows some other democrats to ask a little bit tougher questions also so they don't look weak next to --
>> the banks are as big as they have. 12 banking institutions , or .2% of all banks hold nearly 70% of all banking assets in the u.s. why hasn't there been a bigger push to break up these big banks ? simon johnson writes a true conservative agenda should be to take government out of banking by making all financial institutions small enough and simple enough to fail.
>> look, i'm of the view that our banking system is too big to fail. it's too big to fail squared in terms of post-crisis. the question is do we, therefore, break up the banks and does that solve the problem, and i'm not sure it does, in fairness and in truth, or do you decide that we're just going to have big banks and live with them? the only reason i say that is you look at australia and canada and you look at other places where they have a concentrated banking system , and it's worked quite well. having said that there will, therefore, be an implicit back step. maybe we have to live with that, but if we're going to live with it, we then have to manage the risk around the banks . we have to manage the compensation around the banks . we have to manage all of that. so the question is which path are we willing to take? at the moment politically whatever you want to decide, it seems we have decided that we prefer to keep the banks the way they are, given the way the economy is and all these other issues. he talk about the sequester. you bring in the banks , and i promise that creates a whole other level of uncertainty. i'm not say you shouldn't or should. the issues are much more complicated than the often sort of knee jerk response, which is just break them up.
>> what about elizabeth warren 's question, which is, harold, you know, should -- when was the last time -- when was the last time a wall street bank went to trial, and, you know, she actually made a very fair point, which is that -- there are d.a.'s and u.s. attorneys out there every day squeezing ordinary citizens on sometimes very thin grounds taking them to trial in order to make an example, as they put it. it goes on to make the case for why we haven't done the same --
>> it's a great question for regulators to ask. i would hope that we would also look at the accountsability of these institutions and the new standards that are being held to whether or not the new rules or regulations that have been written or working. put it in context, the big banks that received tarp loans have all paid them back. the government made a profit on it. admittedly, an unusual way to make a profit for the federal government and taxpayers, but a profit was made. indeed, they invested in aig. just put it all in context. going forward i think what andrew said is spot on. you have to put a regime and protocol in place that insures that risk is managed better and that rules are followed more closely and that punishment is meated out in a quicker way. one of the tragedies over the last five or six years.
>> there are punishment. sdmroog over the last five or six years, we have seen a new set of rules and regulations , and some of the things these guys did were not against the law, so the fact that rules and laws have changed, i think, is a positive thing.
>> heather, today we have word from the justice department that's now going to be shifting its prosecution strategy so that they're pushing now for guilty pleas rather than -- which seems to be a fairly big deal , and it's something that attorney general like eric snyderman who have been at the forefront on this issue have been pushing for for a long time.
>> yeah. it was a great piece, actually, by ben in the "new york times" today actually connecting these two issues about how it is that banks are too big to fail and how that means they've become too big to jail. too zoom out more context, even, harold, than you gave, yes, aig has been paid back. the treasury department is in the black on it. the american people and taxpayers and businesses lost $13 trillion. that will never be paid back. people lost their homes. businesses are still not recovered from an entirely preventible financial crisis that did involve incredible levels of fraud, that simply have not been able to be prosecuted because of the conventional wisdom that is the currency on wall street , that what you do to the banks , you do to the american people and you do to the economy overall. the idea that you can't touch the banks because it's going to hurt the economy means that they've basically had a get out of jail free card, and it's really hard to regulate even for regulato regulators. regulators to do something that says, okay, this is going to cost a little bit more in terms of transaction costs. this is going to lower the profits and the bonuses at these banks if we have this regulation, but it will be good for risk. all of that wall street essentially has to say is, yeah, but, if you lower our earnings, look what we're going to do to the economy, and that's why we are.
>> this happens in even cases where it's sort of blatant criminalality. hsbc got a slap on the wrist effectively for laundering money to mex mexican drug cartels .
>> one of the biggest problems we have is the too big to fail, too big to jail issue. because there is a real view -- i'm not sure it's a wrong view, but it's a view that if you were to decide that jp morgan should be indicted tomorrow, and i'm not saying they should or should be for whatever reason, you have a problem on your hands because not only are you going to have, you know, i don't know, 25,000, 50,000 people who will lose their jobs tomorrow, but in addition to that, the sort of domino effect of almost this sort of failure of a lehman-like bankruptcy. there are real issues. therefore, the question is how do you regulate institutions like that. can you go after individuals more forcefully than they have? this goes back to the issue of we have not gone after individuals? why is that? there are things that could be done that i think in fairness to warren , you know, she's raising a lot of important points in that respect. the question is whether that's more show or whether it's actually going to create a real dialogue.
>> let me -- let's close out with this question. there are comparisons being made, ryan, to elizabeth warren and ted cruise as far as grandstanders and people who don't know their place in congress. a lot of people said you've got to be kidding. this is elizabeth warren 's baileywick, what she ran on. it's no surprise she's taking this issue to the fore. you think she could open the doorway up enough for democrats or republicans to be more aggressive in their pursuit of reform in wall street ?
>> ted cruise was asking whether or not chuck hagel was some secret jihady or getting paid by the iranian government .
>> that's not something he ran on, i don't believe.
>> i don't think so.
>> whereas, elizabeth warren is asking a simple question about when these banks have lost --
>> it could be an unfair comparison.
>> it's classic media attempt to, like, find an equivalent on each side.
>> her goal was to get the clip, right? i mean, her goal was to -- snoo her goal was to get the clip and raise the conversation. i'm not sure her goal was to change the dynamic so that she created --
>> for a clip?
>> no. absolutely. it's a real live issue.
>> you want banks to be tried?
>> i think she does. i think -- i'm not saying she was grandstanding per se . i'm just saying that you get into this kind of position. ultimately you have -- there's a practical element, which is you want to go to washington and get stuff done. the question is what does this accomplish beyond this segment that we're having?
>> the thing she holds is not -- she succeeded the great ted kennedy who arguably was one of the most productive senators. arguing blue bipartisan and idealogical. he understood that the senate and politics was about getting things done, and invoking the word that seems to be almost profane in washington now, compromising with the most conservative of senators, including orrin hatch and many others, who he he was able to broker deals with and change the course of public policy in the country. that's what i hope senator warren is focused on, and i imagine that she is based on how passionate she was in campaigning on these issues back in massachusetts.
>> it's something that's been bandied about in the discussion of ted cruise. you know you've arrived in washington when you can not only get the press -- i'm really pair phrasing here. get the press, but also cut a deal. certainly both of them have gotten the press. you'll see about the deal. coming up, it is comparable to the narcotics trade and gun trafficking. the underground ivory market and rise of elephant poach issing threatening the species with extinction. we will talk blood ivory with actress kristen davis and national geographic 's brian christy ahead