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Will Elizabeth Warren Go to War Against Big Banks?

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As a member of the Senate's Banking Committee, Warren would have a hand in crafting new rules or closing perceived gaps in existing ones.

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Right about now, Republicans in Congress may be wishing that they had let President Barack Obama appoint Elizabeth Warren as the first head of the Consumer Financial Protection Bureau, the organization that is her brainchild. They won the battle – preventing her appointment to that job – but seem to have lost the war, as Warren won a Senate seat last month. Now, Senate Majority Leader Harry Reid (D-NV) is said to be intent on adding her to the roster of Democrats on the Senate's powerful Banking Committee.

Warren joins the Senate just as Barney Frank – another Massachusetts Democrat, one of the most influential members of the House Financial Services Committee and co-author of the much-hated Dodd-Frank bank reform legislation – leaves. But for Republicans and bankers, replacing Frank with Warren might be more than just replacing one ideological adversary with another.

Warren is a pragmatist and a lawyer, more reserved than Frank and more cautious (albeit less witty) in her public pronouncements. Odds are that centrist Republicans will find her collegial. That's one threat to those who remain vehemently opposed to further implementation of the Dodd-Frank reforms or any other banking regulation.

As a member of the Senate committee, Warren would have a hand in crafting new rules or closing perceived gaps in existing ones. She could simply use her stature to push for more sweeping reforms (breaking up the big banks, say) or to fight back against those who want to block future changes, such as, say, taxing carried interest at the same levels as regular income. (Currently, it is taxed at a much lower level, a fact that has helped make multi-millionaires and billionaires of many buyout fund managers.)

She may be a neophyte in the halls of Congress – she hasn't even been sworn in yet – but Warren commands respect for her critique of Wall Street. That has populist appeal across party lines among the electorate. Republican lawmakers may have sneered when she declared at the Democratic National Convention this year that "the system is rigged" and blasted Wall Street CEOs for continuing to "strut" around Washington "demanding favors, and acting like we should thank them." But that message may resonate with grassroots GOP voters, even if they differ in their prescriptions to solve the problem.

It's hardly surprising that Democrats would want Warren in a place where she can best deploy her extensive knowledge of Wall Street and of financial legislation, honed during the battle to create the Consumer Financial Protection Bureau. Nor is it surprising that Wall Street lobbyists are said to be battling against her joining the Banking Committee. She's a far greater threat to their interests than Chuck Schumer, the New York Democrat who has earned the title of the Senator from Wall Street, reflecting the fact that Wall Street donations to Schumer consistently have dwarfed those to any other candidate on either side of the aisle.
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