Elizabeth Warren's big moment

>>> has been five years since the economic meltdown, and even i was mad at wall street . at this point, who can pinpoint who brought it down -- and yet, the maddow blazer wearing ezra klein holders are asking for bankers to go to jail, why can't they just let by-gone pensions be by-gones?

>> elizabeth warren 's big moment? democrats were excited when elizabeth warren was elected to the senate. she was smart, a fire brand, smart on consumer protection issues. i was excited because we had somebody in the senate who finally was truly a finance wonk, had expertise on the issue. then this was the whole question of whether the lobbyists would manage to keep her off the banking committee . they didn't manage to keep her off. they gave her a spot on the committee. the committee has oversight over wall street , looking at much of the crisis. and this is important, they're regulators. but then something unexpected happened. in her first month in washington she kept pretty quiet, so quiet that just two days ago, politico ran this headline, the article declared that taking office, warren kept the lowest of profiles when the senate banking committee meets for the first time, all eyes will be on her. if that is any indication, she will leave her megaphone at home. she brought it to work where it belongs. sure it was a day when most were focused on chuck hagel and a cruise ship and hagel and chocolate, but it was during to hearing with the very sexy name of wall street reform, and consumer protection , the witnesses were seven federal financial industry regulators from places like the securities exchange commission . because elizabeth warren was a junior member of the committee, it took about an hour and a half for her to question the witnesses. when she got her turn she made the most of it, asking a really, really good question, a question that has been lingering ever since financial crisis began.

>> i know there have been landmark settlements but we face very big issues with financial institutions . if they can break the law and drag in billions in profits, and then turn around and settle, paying out of thoseprofits, they don't have much incentive to follow the law. it is also the case that every time there is a settlement and not a trial it means that we didn't have those days and days and days of testimony about what those financial institutions had been up to. so the question i really want to ask is about how tough you are. about how much leverage you really have in the settlements and what i would like to know is tell me a little bit about the last few times you have taken the biggest financial institutions on wall street all the way to a trial.

>> when was the last time the federal government took a wall street bank to trial? that is a great mystery of the financial crisis and it has never really been answered to my satisfaction. why have there not been more prosecutions and trials? and yesterday, the federal regulators in attendance had to come up with an answer and do it under oath. here is what happened.

>> the institutions i supervise national banks , we've actually had a fair number of consent orders, we do not have to bring people to -- trial or --

>> well 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?

>> ms. walter?

>> i will have to get back to the with the specific information, but we do litigate and do have settlements that are either rejected by the commissioner not put forward.

>> okay, we have multiple people here, anyone else want to tell me the last time you took a wall street bank to trial?

>> no one did, no regulator could remember the last time they took a wall street bank to trial. biggest financial crisis in history, nobody had anything. and the answers they gave didn't seem like to good answers to me, or that great of answers to elizabeth warren either.

>> you know, i just want to note on this, there are district attorneys and u.s. attorneys who are out there every day squeezing ordinary citizens on sometimes very thin grounds. and taking them to trial in order to make an example, as they put it. i'm really concerned that too big to fail has become too big for trial. that just seems wrong to me.

>> joining me now is reporter and new york times columnist, winning on questionable causes on wall street , jesse, good to see you.

>> hi.

>> i want to start with the very basic question, could these regulators have taken more banks to trial? did they have the authority, the power, the cause?

>> of course, the sec can take banks to trial civilly, and they can refer cases criminally to the department of justice , now, that is really where the crux of this lies is the power here and the disappointment is mainly with the department of justice , why they haven't brought more cases against the banks, either civilly or criminally and why they haven't brought the ceos, major bankers to trial for their actions.

>> so now, let's go into that why. i know you asked people, why didn't they? why are there no examples as they were after the great depression? why are there so few examples of a serious trial, or anybody going to jail?

>> it is an appaling failure, one reason is that the securities and exchange commission is running scared. they don't have much trial experience, they have lost trials. they brought a mid-level citigroup banker to trial in a case and lost. that scares them. the eastern district of the department of justice brought a case against two low level bear stearns to trial. they lost, so losing really scares these guys. but the real question is, they have been afraid to indict companies because they believe it will put them out of business and cause systemic problems. or these things are complex, they don't necessarily understand them and worry the juries wouldn't understand them. and they think well, it is hard to prove that there were any crimes here.

>> so i have heard that, too, and particularly a few years ago, they didn't want to do what they like to call old testament justice, they worried about the markets, getting the credit back up. that was the main priority. the financial sector is stronger now, the profits look better, they're in significantly better shape. so is this just over, like maybe not the statute of limitations but a political limitation has run out? or is there still a possibility that there is new leadership at the sec, is there still a possibility that we'll see some of the trials going back wards?

>> i am deeply skeptical about it. i think the ship has sailed. and i think the reason is one statute of limitations, but that is not really a real issue, they have under statutes under which to bring these things. but i think the investigations have largely gone dry. lehman brothers has largely gone dry. aig has largely gone dry. now note, there was no systemic implications of prosecuting people, because aig was not out of business but the individuals had left. lehman was out of business. so that is a poor excuse. now whether we've -- seen the department of justice in los angeles just bring a case against standard and poors , the credit rating agency , for activities leading up to the crisis. so there may be activities trickling in, but there are going to be no major cases brought against j.p. morgan , merrill lynch , for any -- lehman, bear stearns , for any of their activities. and that leaves us with a big question on what led up to the financial crisis .

>> jesse eisinger, thank you.

>> thank you.

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