Elizabeth Warren, the antidote to CNBC

The senator schools the talking heads on bank regulation

Elizabeth Warren on CNBC is my kind of TV: The plain-spoken brilliance of the Okie-gone-Harvard versus the savvy hectoring of the anchors-gone-Wall Street.

Last Friday, the senator made an appearance on “Squawk Box” to promote her 21st Century Glass-Steagall Act, which she’s co-sponsoring with John McCain, and while there might not have been blood and teeth left on the floor, it was a TKO for Warren.

She makes CNBC’s Brian Sullivan looks downright foolish here:

SULLIVAN: Senator, I will push back, though, on the relative security that you are portraying Glass-Steagall to have given us, because Continental Illinois in the early ’80s was the seventh largest bank in America. It failed. Almost set off another major banking crisis. Shouldn’t we just tell the American consumer that no matter what we do there will be bank boom and bust cycles no matter what the laws and regulations? You can’t protect everything.

WARREN: No! That is just wrong.


WARREN: Look at the history

SULLIVAN: I did look at the history. We’re filled with booms and busts from the Dutch Tulip Crisis to now.

Sullivan is flat wrong, as Warren points out in the clip above (make sure to watch the clip. The transcript doesn’t quite capture Sullivan’s tone and the resulting smackdown). There were no banking crises in the U.S. after the New Deal reforms of the 1930s until the early 1980s. Tough regulation, which separated investment banking from commercial banking, prevented over-consolidation, and reined in speculation, worked.

And then, bit by bit, the financial system was deregulated beginning in the mid-1970s. The Depository Institution Deregulation and Monetary Control Act of 1980 set the stage for the collapse of Penn Square Bank, which triggered the collapse of Continental Illinois and also helped unleash the S&L crisis, the first major banking collapse since the Great Depression reforms.

Sullivan’s dumb question is followed by a straw man question from Joe Kernan about how Glass-Steagall—all by itself—wouldn’t have prevented the financial crisis. Warren has amiably knocked that one down before (not coincidentally, it came from CNBCer and NYTer Andrew Ross Sorkin), and she does here as well.

And then there’s the savvy question, brought up by Amanda Drury:

With all due respect, Senator, every report I’ve read, every person I’ve spoken to says that there’s a very, very, very slim chance of this even passing.

To which an exasperated Warren responds, “Well, let me put it this way: If you don’t fight for it, the chances are zero.”

Kernan doubles down, sneering, “You’re making a statement, but we want Congress to do things that actually have a chance of happening and become law.”

Which sets Warren up to deliver the final blow:

I remember going on television multiple times, including here, when I talked about the Consumer Financial Protection Bureau, when the big banks were spending more than a million dollars a day lobbying against it, and when everybody told me ‘you’ll never get that thing through. Why are you even trying. The chances of passing it are slim to none.’

And yet look around: We now have a good strong Consumer Financial Protection Bureau. We got that agency because we got out and fought for it. I actually believe in that.

It’s always revealing to compare how CNBC treats Wall Street critics and how it treats Wall Street itself. It would be one thing if the network treated big bank CEOs like it does Warren and Paul Krugman and Eliot Spitzer.

As it turns out, JPMorgan Chase’s Jamie Dimon was on the network that day with Jim Cramer, who conducted the glowing interview entirely on Dimon’s turf.

It’s quite the contrast.

You’d think the Warren interview couldn’t end on a worse note for CNBC, but Joe Kernan then starts talking about how she “looks great.”

Cramer doesn’t comment on Dimon’s appearance.

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Ryan Chittum is a former Wall Street Journal reporter, and deputy editor of The Audit, CJR's business section. If you see notable business journalism, give him a heads-up at rc2538@columbia.edu. Follow him on Twitter at @ryanchittum. Tags: , , ,