Who Should the Big Banks Fear the Most? It’s Not Obama

Wall Street put its money on a Romney victory but, alas, was sorely disappointed. Looking at the manner in which big bank stocks dropped post-election, it seems like investors felt the same way.

Oh, well. Now, dreams of repealed regulatory restrictions on profits are just that, and big banks must learn to make nice with a president who, without the burden of another White House run on his mind, might be less inclined to compromise on issues affecting "fat cats."

But, the election also saw Massachusetts' Elizabeth Warren ascend to the late Sen. Edward Kennedy's former office -- most recently occupied by Scott Brown. With her unabashed attachment to liberal values and lack of sympathy for Wall Street, I would suggest that she will be more of a threat to the biggest banks than even Obama.

A defender of the average consumer
Many know Warren as the driving force behind the Consumer Financial Protection Bureau, which banks dislike intensely and had hoped to undermine if Romney won the White House.

Indeed, as an article in Forbes notes, she and the CFPB were instrumental in getting foreclosure fraud suspects JPMorgan Chase (NYSE: JPM  ) , Bank of America (NYSE: BAC  ) , Citigroup (NYSE: C  ) , Wells Fargo (NYSE: WFC  ) and Ally Financial to cough up $20 billion more than they bargained for in a settlement earlier this year. Except for Ally, all of the other banks were in the top 20 list of campaign donors for the Romney campaign.

Then, again, her activism on behalf of taxpayers as Chair of the Troubled Asset Relief Program probably didn't garner her any points with the big guys, either.

With this bit of tension already in the air, Warren began trumpeting -- even before the election -- her desire to see Glass-Steagall reinstated in law if current regulations can't rein in the big banks. Not only does she think breaking up the big banks is a good idea, but she has also called on Jamie Dimon, the charismatic CEO of JPMorgan, to resign his seat at the Federal Reserve Bank of New York.

Is she powerful enough to pull it off?
Warren is a strong personality, and many feel that her well-known consumer-defense, anti-TBTF bank background is responsible for her victory over Brown. Conservatives don't like her, but she may very well be able to rally the troops for more bank-bashing once she gets her land legs in Washington.

There's no doubt in my mind that a woman who has been put in charge of two such important financial commissions will not be ignored, even if what she has to say doesn't please Wall Street. Combined with an Obama win, the whole discussion on breaking up and reining in the banks will surely be on tap very soon. It's enough to make big banks wish they'd sent their money to the other camp.

B of A certainly has some issues to deal with, but it actually appears to be gaining ground. To learn more about the most-talked-about bank out there, check out our in-depth company report on Bank of America. The report details Bank of America's prospects, including three reasons to buy and three reasons to sell. Just click here to get access.


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  • Report this Comment On November 08, 2012, at 11:11 AM, rhealth wrote:

    Serves you right Citibank et al, you just never learn do you? From trading imaginary commodities to sucking up to the wrong guy, you seem to lose every time!

    just get back to banking and customer service, oh that's right you can always count on a too big to fail bailout cant you?

  • Report this Comment On November 08, 2012, at 11:49 AM, DrRoberts1 wrote:

    Did Ms. Alix somehow miss the fact that the House is still controlled by Republicans? A reality that is not likely to change in 2014 because of all the gerrymandering that took place in Republican controlled statehouses as a result of the census.

    Who knows, by 2016 Americans might once again look upon their banker as part of the team as opposed to the enemy.

    Even though the banks bailed on PBO this cycle, (because of one of the most poorly written and detrimental pieces of legislation to come out of the D.C. swamp in many a year as well as his populist strategy of blaming them exclusively for the financial meltdown) he needs the banks to lend to expand the economy. That's Econ 101 Ms. Alix.

    Ms. Warren should concentrate her efforts on the President not giving away the farm on the social safety net as part of his so called "Grand Bargain" and allow the Banks some additional time to recover from the damage she has already inflicted.

  • Report this Comment On November 08, 2012, at 1:07 PM, ronbeasley wrote:

    Does anyone really think that one loudmouth with an agenda can bring down the U.S. banking system? this absurd reaction in the markets is another great buying opportunity.

  • Report this Comment On November 11, 2012, at 11:45 PM, NotJesseL wrote:

    Yes, one loudmouth with an agenda can change things. What about William Wilberforce in England who brought about the abolition of slavery in that country and its holdings? What about Ralph Nader? Ideas have real power and real value and all the money and force in the world cannot hold them back.

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