Elizabeth Warren Pushes Obama to Crack Down on Big Banks with Fed Nominations

Sen. Elizabeth Warren has long been critical of Wall Street — the Democrat has made cracking down on big banks a main facet of her career.

Sen. Elizabeth Warren has long been critical of Wall Street — the Democrat has made cracking down on big banks a main facet of her career. With two open seats on the Federal Reserve board, Warren and Sen. Jeff Merkley took the opportunity to push for those seats to be filled with progressive candidates. In a letter to President Obama, the senators write:

The management of the nation’s monetary policy is one of the most important duties of the Board, but missteps on financial stability can overwhelm the careful work that the Federal Reserve engages in on monetary policy and bring about devastating harm to the economy ... Financial regulation and oversight obligations must be front and central to the Board’s work now and going forward, which should be reflected in the new makeup of the Board.

The two did not name specific candidates that they'd like to see Obama nominate. Overall, Warren argues the Fed could use its authority to enact more serious punishments on misbehaving banks, and that the board itself has more power than it's using. As Erica Eichelberger at Mother Jones notes, "Of the close to 1,000 formal enforcement actions taken by the [Fed] over the past decade, only 11 were voted on by the board itself. The rest were delegated to Fed staff, sometimes mid-level employees." Warren wrote a letter to the Fed in February criticizing this kind of delegation, because she thinks it's resulted in more lenient punishments. 

The president nominated former Treasury official Lael Brainard to the board already this year. He also nominated former Bank of Israel Governor Stanley Fischer to be vice chair. Both seem likely to take activists roles to prevent future crises.