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In ‘Finance 202,’ TRP’s Rosenstock Offers Commentary on Warren’s Departure from 2020 Presidential Primary

March 6, 2020

In today’s Washington Post “Finance 202” newsletter — a leading beat for financial services news in Washington, D.C. — TRP’s Jason Rosenstock offered commentary on what Sen. Elizabeth Warren’s departure from the 2020 presidential race means for financial regulations moving forward. While the piece notes that industry leaders don’t believe former Vice President Joe Biden would bring the type of regulatory change that Sen. Warren promised in her campaign, Rosenstock astutely pointed out that the leftward shift of the Democratic party could indicate that the some of the Massachusetts Senator’s ideas for financial regulation could come to fruition. “Warren may ultimately win the ideas primary,” said Rosenstock.  “And a lot of the stuff she’s proposed may find its way into platform.”

The newsletter in its entirety can be read below.

Elizabeth Warren’s threat to Wall Street persists

The threat Elizabeth Warren presents to Wall Street will survive the end of her presidential bid.
The question, for both Warren and the industry, is what shape it takes now.
The senator from Massachusetts will begin to answer it in the days ahead as she decides whether to endorse one of the two major remaining Democrats in the field. Backing Sen. Bernie Sanders (I-Vt.) makes sense, considering their ideological alignment. But former vice president Joe Biden may have built an insurmountable lead for the nomination in delegates and momentum and his supporters may be more similar to hers than many people think.
Warren’s team had been in talks with both campaigns before she announced her decision Thursday to suspend her bid. Warren gave no timeline for announcing a decision in an interview with MSNBC’s Rachel Maddow.

“Not inconceivably, Warren could be tapped as Biden’s running mate,” Capital Alpha’s Ian Katz writes in a note. “But much more likely she could find herself in a key Cabinet position. We’re getting way ahead of ourselves, but the words Treasury Secretary Elizabeth Warren would make a lot of financiers shudder.”
That’s because Warren built her bid on a foundation of white papers. They detailed with unrivaled specificity how she would seek to bring what she framed as rogue industries to heel, focusing in particular on the financial services sector.

Her plans called for big legislation that stood little chance of passage, including breaking up the big banks by restoring the Glass-Steagall Act. Arguably more of it could advance with executive action that Warren might still oversee from a key administration post. That includes, as we’ve noted here: ramping up pressure on the big banks through the living wills process; applying new scrutiny to credit ratings agencies via the Securities and Exchange Commission; and cracking down on non-bank financial companies, including by reviving the designation of some as systemically risky, subjecting them to stricter federal oversight.
“Above all else she’s interested in enacting her policy agenda, period,” one Warren adviser tells me. “She flows like water to pressure points to exert influence over policy, and she will continue to do that.”
Warren and Biden would have to reconcile a history of clashing on financial services issues. The two spent years locked in a feud over rewriting bankruptcy protections beginning when Warren was a Harvard Law professor, as Politico’s Theodoric Meyer chronicled. The fight came to a head in 2005, when Biden — then a Delaware senator representing MBNA, a leading credit card issuer at the time — helped pass a law making it more difficult for Americans to shed debt from credit cards, medical bills and private student loans.
Warren made a name for herself studying bankruptcies and became a public face of the opposition to the bill. As Meyer notes, at times she singled Biden out, writing in the Harvard Women’s Law Journal that “he supports the financial industry’s legislation because there is no political disadvantage to supporting it.”
Biden secured the legislative win. But Warren continued her criticism of his role in it. After the measure was signed into law, she blasted him in a blog post for “twisting arms to get the bankruptcy bill through Congress.”
Warren nodded to that fight in her interview with Maddow. “We go back a long way,” she said of her history with Biden. “We were in the bankruptcies wars against each other. When he was vice president, I got to do some work with him… He is exactly who he says he is. He’s a decent guy… and it comes through.”
Of their policy differences, Warren said her focus has always been on working families. “I believe that the vice president has the same goal. We may have come at it from different directions and may continue to come at it from different directions. But I don’t have any doubt about the sincerity of the goals.”
Biden has been vague about how he would approach regulating financial services. His website prominently features a quote from the candidate: “This country wasn’t built by Wall Street bankers and CEOs and hedge fund managers. It was built by the American middle class.” But he doesn’t spell out a plan for the industry, even in broad strokes.
And if the stream of contributions from Wall Street wallets now pouring into his campaign is any indication, industry leaders don’t believe Biden would bring the sort of systemic change that Warren made a centerpiece of her campaign.
Then again, “the party has really shifted left,” Jason Rosenstock, a financial services lobbyist at Thorn Run Partners, tells me. And Biden has proposed some $3 trillion in new programs needing new sources of revenue. Some of that could come from a financial transactions tax, which Biden endorsed in an interview last year, or another Wall Street-focused levy.
“Warren may ultimately win the ideas primary,” Rosenstock says. “And a lot of the stuff she’s proposed may find its way into platform.”
In an email to supporters announcing her decision Thursday, Warren highlighted her inclination to draw bright lines:
Some of you may remember that long before I got into electoral politics, I was asked if I would accept a Consumer Financial Protection Bureau that was weak and toothless. And I replied that my first choice was a consumer agency that could get real stuff done, and my second choice was no agency and lots of blood and teeth left on the floor. In this campaign, we have been willing to fight, and, when necessary, we left plenty of blood and teeth on the floor.
And the now-former presidential hopeful, in her interview with Maddow, reminded viewers her website hosting her plans is still up, and she encouraged people to read them.
“The only we make change is we get back up tomorrow and we get back in the fight,” she said