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Elizabeth Warren’s Long Game Against Wall Street

“Yesterday, Senator Elizabeth Warren undertook a big act of financial rabble-rousing, by introducing a bill that would reinstate key provisions of the 1933 Glass-Steagall Act that were repealed in 1999. The new bill would essentially force big bank holding companies like Citigroup and Bank of America to split in half — commercial banking on one side, investment banking on the other — and hypothetically make the entire banking system safer and less crisis-prone by (a) shrinking banks, and (b) reducing the amount of risky stuff that goes on at the commercial banks where normal people keep their savings accounts. She's calling this bill the ‘21st Century Glass-Steagall Act’ and promoting it using the slogan ‘Banking should be boring.’

The bill, which Warren has already said won't get support from the Senate Banking committee, is the second piece of legislation Warren has sponsored since taking office that has virtually no chance of passing. In May, she introduced the Student Loan Fairness Act, which for one year would bring student loan interest rates down to the rates the Federal Reserve charges banks. That bill was called ‘embarrassingly bad’ by the Brookings Institution, and the new one isn't faring much better among policy wonks.

So, with two largely symbolic bills in seven months in office, the question must be asked: What is Elizabeth Warren really doing here?

One theory, held by most of the Wall Streeters I've spoken with about Senator Warren, is that she's simply playing for attention. They see her grandiose bills and made-for-YouTube tirades against financial excess and lax regulation as shallow populism, designed to garner reelection, solicit donations, and boost her reputation as a badass. Even one ex-financier I spoke to recently said he thought Warren was doing ‘showy stuff,’ not meant to make it into actual law.”

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