Skip to content Skip to footer

Elizabeth Warren: Remarks on Citigroup and its Bailout Provision in the Cromnibus Bill

Citigroup has a lot of money, it spends a lot of money, and it uses that money to grow and consolidate a lot of power.

That’s the stuff to give the troops!

The transcript (via WaPo):

Mr. President, I’m back on the floor to talk about a dangerous provision that was slipped into a must-pass spending bill at the last minute to benefit Wall Street. This provision would repeal a rule called, and I’m quoting the title of the rule, “PROHIBITION AGAINST FEDERAL GOVERNMENT BAILOUTS OF SWAPS ENTITIES.”

On Wednesday, I came to the floor to talk to Democrats, asking them to strip this provision out of the omnibus bill and protect taxpayers.

On Thursday, I came to the floor to talk to Republicans. Republicans say they don’t like bailouts either. So I asked them to vote the way they talk. If they don’t like bailouts, then they could take out this provision that puts taxpayers right back on the hook for bailing out big banks.

Today, I’m coming to the floor not to talk about Democrats or Republicans, but about a third group that also wields tremendous power in Washington: Citigroup.

Mr. President, in recent years, many Wall Street institutions have exerted extraordinary influence in Washington’s corridors of power, but Citigroup has risen above the others. Its grip over economic policymaking in the executive branch is unprecedented. Consider a few examples:

  • Three of the last four Treasury Secretaries under Democratic presidents have had close Citigroup ties. The fourth was offered the CEO position at Citigroup, but turned it down.
  • The Vice Chair of the Federal Reserve system is a Citigroup alum.
  • The Undersecretary for International Affairs at Treasury is a Citigroup alum.
  • The US Trade Representative and the person nominated to be his deputy – who is currently an assistant secretary at Treasury – are Citigroup alums.
  • A recent chairman of the National Economic Council at the White House was a Citigroup alum.
  • Another recent Chairman of the Office of Management and Budget went to Citigroup immediately after leaving the White House.
  • Another recent Chairman of the Office of Management of Budget and Management is also a Citi alum — but I’m double counting here because now he’s the Secretary of the Treasury.

That’s a lot of powerful people, all from one bank. But they aren’t Citigroup’s only source of power. Over the years, the company has spent millions of dollars on lobbying Congress and funding the political campaigns of its friends in the House and the Senate.

Citigroup has also spent millions trying to influence the political process in ways that are far more subtle—and hidden from public view. Last year, I wrote Citigroup and other big banks a letter asking them to disclose the amount of shareholder money they have been diverting to think tanks to influence public policy. Citigroup’s response to my letter? Stonewalling. A year has gone by, and Citigroup didn’t even acknowledge receiving the letter.

Citigroup has a lot of money, it spends a lot of money, and it uses that money to grow and consolidate a lot of power. And it pays off. Consider a couple facts.

Fact one: During the financial crisis, when all the support through TARP and from the FDIC and the Fed is added up, Citi received nearly half a trillion dollars in bailouts. That’s half a trillion with a “t.” That’s almost $140 billion more than the next biggest bank got.

Fact two: During Dodd-Frank, there was an amendment introduced by my colleague Senator Brown and Senator Kaufman that would have broken up Citigroup and the nation’s other largest banks. That amendment had bipartisan support, and it might have passed, but it ran into powerful opposition from an alliance between Wall Streeters on Wall Street and Wall Streeters who held powerful government jobs. They teamed up and blocked the move to break up the banks—and now Citi is bigger than ever.

The role that senior officials working in the Treasury department played in killing the amendment was not subtle: A senior Treasury official acknowledged it at the time in a background interview with New York Magazine. The official from Treasury said, and I’m quoting here, “If we’d been for it, it probably would have happened. But we weren’t, so it didn’t.” That’s power.

Mr. President, Democrats don’t like Wall Street bailouts. Republicans don’t like Wall Street bailouts. The American people are disgusted by Wall Street bailouts. And yet here we are — five years after Dodd-Frank – with Congress on the verge of ramming through a provision that would do nothing for middle class, do nothing for community banks – do nothing but raise the risk that taxpayers will have to bail out the biggest banks once again.

There’s a lot of talk lately about how the Dodd-Frank Act isn’t perfect. There’s a lot of talk coming from Citigroup about how the Dodd-Frank Act isn’t perfect.

So let me say this to anyone who is listening at Citi: I agree with you. Dodd-Frank isn’t perfect.

It should have broken you into pieces.

If this Congress is going to open up Dodd-Frank in the months ahead, let’s open it up to get tougher—not to create more bailout opportunities .

If we are going to open up Dodd-Frank, let’s open it up so that, once and for all, we end Too Big to Fail. And I mean let’s really end it – not just say we did.

Instead of passing laws that create new bailout opportunities for Too-Big-To-Fail banks, let’s pass Brown-Kaufman. Let’s pass the bipartisan 21st Century Glass-Steagall Act – a bill I’ve sponsored with John McCain, Angus King, and Maria Cantwell. Let’s pass something – anything – that would help break up these giant banks.

A century ago, Teddy Roosevelt was America’s trustbuster. He went after the giant trusts and monopolies in this country, and a lot of people talk about how those trusts deserved to be broken up because they had too much economic power. But Teddy Roosevelt said we should break them up because they had too much political power. Teddy Roosevelt said break them up because all that concentrated power threatened the very foundations of our democratic system.

And now we’re watching as Congress passes yet another provision that was written by lobbyists for the biggest recipient of bailout money in the history of the country. And it’s attached to a bill that needs to pass or else the entire federal government will grind to a halt.

Think about this kind of power. A financial institution has become so big and so powerful that it can hold the entire country hostage. That alone is a reason enough for us break them up. Enough is enough.

Enough is enough with Wall Street insiders getting key position after key position and the kind of cronyism we have seen in the executive branch. Enough is enough with Citigroup passing 11th hour deregulatory provisions that nobody takes ownership over but that everybody comes to regret. Enough is enough.

Washington already works really well for the billionaires and big corporations and the lawyers and lobbyists. But what about the families who lost their homes or their jobs or their retirement savings the last time Citi bet big on derivatives and lost? What about the families who are living paycheck to paycheck and saw their tax dollars go to bail Citi out just six years ago? We were sent here to fight for those families, and it’s time – it’s past time – for Washington to start working for them.

* * *

As we now know, Warren’s speech was for naught, at least in terms of legislative impact. The Boston Globe, from Warren’s home state, had this reaction:

Washington — Before she became a senator, Elizabeth Warren came to Capitol Hill and promised “plenty of blood and teeth left on the floor” if she did not get meaningful reforms of Wall Street. This week, she showed what she meant.

The Massachusetts Democrat brought Congress to the brink of yet another government shutdown in her effort to kill a provision that she said would have once again put taxpayers at risk of bailing out big banks. The provision was inserted by Republicans in a huge spending bill.

She appears to have lost the policy fight, but won a political battle.

By Friday morning, more than 300 former Obama aides had signed a letter urging her to run for president, joining overtures made by an increasing number of liberal groups, some of which are unhappy with front-runner Hillary Clinton. Warren said again Friday that she will not run.

“It’s not about rifts. It’s not politics,” Warren said in an interview, as she reiterated her now familiar argument that middle-class families are losing out to the billionaire class. “It’s about putting the issues forward.”

Frankly, I’m not certain that the support of 300 Obama aides is a good thing, given their track record. That said, is Warren “catching fire”? Will we look back on the Citigroup bailout provision fight — which might as well never have happened, from a legislative standpoint — as the spark that flamed into a Warren candidacy?

Or is it all kayfabe, with the Democrats faking left — and not that much to the left, either — because all their Blue Dog Republicans lost to real Republicans, and they “have no place to go”? And could it be that some players — perhaps Warren — are breaking kayfabe? These are, after all, interesting times. Readers?

NOTE Warren’s reference to “corridors of power” is interesting. Corridors of Power is the title of one novel in C.P. Snow’s series Strangers and Brothers which, among other things, chronicles Britain’s inexorable post-World War I imperial collapse, as seen through the eyes of a young man from the provinces in London, as he climbs the career ladder as a lawyer, then at Oxbridge, and finally in Whitehall.

In Corridors of Power, the hero is an advisor to a Conservative, Roger Quaife, who hopes to parlay a brilliant speech on why Britain should divest itself of nuclear weapons — Suez had convinced him of the inanity of Britain’s strategic position — into party leadership, and thence to the Prime Ministership. Quaife is undone by pressure from the right in America, resistance from his own back bench, and finally by a sex scandal — though taking strength from that relationship he throws the dice one last time in the hopes that the humane nuclear policy he has come to believe in might win through, despite the whip count.

In the end, Quaife’s failure is worse than predicted, and he resigns and leaves politics. On to Maggie Thatcher! There are many resonances, as you see, with contemporary American politics, and one wonders which — if any — Warren and/or her speechwriter had in mind using the phrase (and not for the first time).

We have 2 days to raise $31,000 — we’re counting on your support!

For those who care about justice, liberation and even the very survival of our species, we must remember our power to take action.

We won’t pretend it’s the only thing you can or should do, but one small step is to pitch in to support Truthout — as one of the last remaining truly independent, nonprofit, reader-funded news platforms, your gift will help keep the facts flowing freely.