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Wall St. Is Winning: Elizabeth Warren "Speechless" About Record Bonuses

Posted Oct 16, 2009 10:58am EDT by Aaron Task in Newsmakers, Banking
Elizabeth Warren, chair of the Congressional Oversight Panel, is the rare public official who doesn't mince words.

But Warren admits to being "speechless" at reports of record bonuses on Wall Street.

"I do not understand how financial institutions could think they could take taxpayer money and turn around and act like it's business as usual," Warren says. "I don't understand how they can't see that the world has changed in a fundamental way - it's not business as usual. All I can say right now is they seem to be winning this argument."

In the accompanying video, taped at The Economist's Buttonwood Gathering at Pace University, I asked Warren about Treasury Secretary's claim at the same event that the government has been "remarkably effective" in combating the financial crisis.

"It is not the case people go to bed wondering if there will be an economy in the morning," she quips, but "we still have lot of serious problems."

Comparing the situation today vs. a year ago, Warren observes:

  • Even Too Bigger to Fail: A year ago the big concern was systemic risk and how to deal with 'too big to fail' firms, she recalls. Now "the big are bigger, we wiped out a lot of small folks and there's more concentration" in the banking system.
  • Still Toxic: TARP was created explicitly to remove toxic assets from bank balance sheets. "They're still there by and large."
  • Stress Test Failure: Unemployment has "blown through" the worst-case scenario in the stress test from February, Warren notes. But "we haven't repeated the stress test, or revealed any more information about what's going on inside these financial institutions."

In sum, "all the things going on [a year ago] that were serious, serious problems for the financial institutions seem to me are still serious, serious problems," she says.

Finally, Warren pulls no punches when it comes to her criticism of former Treasury Secretary Hank Paulson for his failure to put any restrictions on or monitoring of the initial TARP funds, and for using the money for something other than "toxic asset relief," as originally intended.

"I have a real problem when we describe to taxpayers their money will be taken and used one way and in fact it's used another way," she declares.

So in the end, Warren did find her voice and spoke quite candidly, a very rare trait among public officials.

(Editor's note: Stay tuned for additional clips from this exclusive interview.)

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367 Comments

taopraxis
taopraxis - Friday October 16, 2009 11:02AM EDT

The excesses of the "super-rich" are just another sell signal. Keep your eye on the macro situation. Plunging GE revenues, as with state tax revenues, tell the real story. One of two things must happen: Either the government must shrink by about half or there will be a massive inflation followed by a currency crisis. There is *no way* we're going to grow out of this, as GE's results make crystal clear. It is mathematically impossible. Eventually, the comforting illusions fomented by bankers trading stock index futures back and forth are going to hit the hard wall of the economy and monetary reality.

san
san - Friday October 16, 2009 11:07AM EDT

Government should have never got into bed with the market. Buy their property for 50c on the dollar and rent them as social housing but don't buy their stocks! LOL :D

Terry
Terry - Friday October 16, 2009 11:11AM EDT

I would seriously consider voting for Ms Warren for President in 2012.

donfurio
donfurio - Friday October 16, 2009 11:12AM EDT

they paid back the tarp money of which the govt made a profit, quit your whining and go back to being a prof, nobody likes you

Charlie
Charlie - Friday October 16, 2009 11:14AM EDT

Ms. Warren is the voice of the common citizen and common sense. Thank you so much not giving our country to Wall St. like everyone else in government.

Yahoo! Finance User
Yahoo! Finance User - Friday October 16, 2009 11:15AM EDT

The banquest is over and the food WAS tainted. Glad I didn't eat. Once the vomitting is over, I will INVEST again and show those gambling Day Traders how to make real money!

Rey
Rey - Friday October 16, 2009 11:18AM EDT

That is what the government gets for bailing all these companies out Hey we have the tax payers money let's spread the money // Let me see you get 20 million dollars as a bonus // Oh Joe Blow has a higher position he deserves a 40 million bonus // ans so on...... Let Them fail and when they do they will be out of a job // they will never change they are all thieves

__A_YAHOO_USER__
__A_YAHOO_USER__ - Friday October 16, 2009 11:18AM EDT

And, now that she has seen the truth behind it all, what is Elizabeth Warren goin to do about it? Or, shall this be treated as business as usual and move on with it? The President does not seem to mind.

Terry
Terry - Friday October 16, 2009 11:18AM EDT

donfurio - Friday October 16, 2009 11:12AM EDT they paid back the tarp money of which the govt made a profit, quit your whining and go back to being a prof, nobody likes you ///////////////////////////////////////////////////////////////////////////////////////////////////////////////////// Don- Get real the TARP has not been fully repaid and much of it (AIG) will never be repaid. I guess you didn't get the memo from Paulson. We YFUs are an intelligent group so think B4 you post please...

lorrie
lorrie - Friday October 16, 2009 11:19AM EDT

OMG!!! Ms Warren should have been appointed Treasury Sec'y, but, alas, she's far too honest and speaks the truth!! Watch out Ms Warren, you'll probably be getting a phone call from the White House and be told to zip it.

taopraxis
taopraxis - Friday October 16, 2009 11:21AM EDT

Talk is just that...talk. It is meaningless. Change is coming, but the wealthy political class is going to fight it every step of the way. They're going to lose that fight, though, because the tide is going out and they're swimming against it.

Yahoo! Finance User
Yahoo! Finance User - Friday October 16, 2009 11:22AM EDT

A surge in the gold price cometh, perhaps imminently. In the next several weeks, the gold price might jump quickly to the $1500 level. A contact with excellent access to gold transaction information and developments has shared that the sharp price rise could come very soon "due to certain transactions that are being consummated at this very moment. Even if the Boyz try to hold own or depress the price, it will do them no good. The pressure that has been built up is uncontrollable. We shall see some big banks hit the wall very soon (weeks/months). The market will take over in very short order from here on forward." A phase has begun to remove illicit corrupt controls on the gold & silver market, from demand of physical bullion. The same source told a story about events at the London Bullion Market Assn. That market is to London what the COMEX is to the United States, both deep in corruption and government interference, where grossly inadequate metal inventory exists to maintain their charades of markets, each dominated by paper pricing. They manage paper markets for syndicates in total illegal operations. Several large gold futures contract holders are demanding physical delivery in London. The LBMA does not have the metal in inventory. The officials have offered the futures contract holders cash plus 25% dividend for settlement without gold delivery. The contract holders refused. They want their fuchn gold (using a French term by the source, my unique palatable spelling)!!! There was very high volume involved in the contracts. The standoff is not settled. It could go to court. The London authorities are trying desperately to keep the story from hitting the press. It helps to have the syndicate in control of the press networks. The Bank of England and one other European member central bank are working feverishly to fill the contract order, but unfortunately they are using very old gold bars that are reportedly only 90% gold. That invites a new potential challenge. The gold market could soon explode and possibly work toward a convergent fair market. My hint is that it is Germans and Swiss with other Europeans are working diligently and pointedly to kill off the US-UK bank nazis. A LBMA and COMEX bust and default is visible on the horizon. See the Jackass article entitled "Hitman Contracts to Bust Comex" (CLICK HERE) dated in May 27. It would include big bank ruin and legal prosecution. The same source hinted that the ruin of commodity exchanges could coincide with the bust of JPMorgan. So, based upon the London incident, gold has a real price of near $1300.

Terry
Terry - Friday October 16, 2009 11:22AM EDT

Elizabeth Warren seems like an honest person. I would consider voting for her for President in 2112.

Yahoo! Finance User
Yahoo! Finance User - Friday October 16, 2009 11:26AM EDT

Oh please! You know what would have prevented the bonuses... Letting those POS companies fail as they should have. The outrage should be with the past President, current Federal Reserve Chairman, Congress, and the current President (who voted for all of this crap as a Senator). Get real! If you don't bail out corrupt people with taxpayer dollars, they can't pay bonuses to people who don't deserve them.

Yahoo! Finance User
Yahoo! Finance User - Friday October 16, 2009 11:26AM EDT

Yahoo! Finance User - Friday October 16, 2009 11:15AM EDT The banquest is over and the food WAS tainted. Glad I didn't eat. Once the vomitting is over, I will INVEST again and show those gambling Day Traders how to make real money!____________________Yeah, and something stinks, and the giant rumbling sound coming up is the resulting giant FART so RUN!!!!

Yahoo! Finance User
Yahoo! Finance User - Friday October 16, 2009 11:26AM EDT

PLEASE DO NOT PANIC AND CONTINUE AS YOU WOULD ANY OTHER DAY. WE ARE JUST SHAKING OUT THE WEAK-KNEED INVESTORS AND WILL HAVE THE MARKET BACK UP IN POSITIVE TERRITORY BY 14:00 ET TODAY. PLEASE DO NOT PANIC. ALL IS WELL.

Dorkass
Dorkass - Friday October 16, 2009 11:29AM EDT

Call me a conspiracy nut, but there is a vid on youtube where a democrat congresswoman states the US Govt will OWN big oil next year so the oil companies will no longer get to profit - - a massive BOA-type failure may be the excuse to do it, if not through a short set of chain reactions - - look at the BOA structure worldwide and you will see a LOT of oil exploration and big construction backers in the list...

Yahoo! Finance User
Yahoo! Finance User - Friday October 16, 2009 11:29AM EDT

Who is our bigger enemy? Folks in Afghanistan or companies like Goldman??

Anthony
Anthony - Friday October 16, 2009 11:29AM EDT

I have gold and silver. When the dollar fails, which it ultimately will, I'm in like flynn. Pay of my mortgage with a couple ounces of gold baby!!! WWW.USDEBTCLOCK.ORG Look for yourself, the dollar doesn't stand a chance.

Ryan
Ryan - Friday October 16, 2009 11:30AM EDT

THEN WHY DID YOU GIVE THEM THE MONEY YOU MORON!!! THEY WOULD HAVE FAILED IF YOU HADN'T GIVEN THEM THE MONEY!!!

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