Is Elizabeth Warren Winning?

While media attention was consumed by the government’s surveillance of phone records, Elizabeth Warren quietly reached a small milestone in her brief five-month Senate tenure: on June 6, 2013, she had her first amendment adopted.

The sleepy Senate Banking Committee agreed to include her idea to modify the structure of the board that regulates national insurance licensing.  Hardly scintillating policy.  It grabbed zero headlines.  This is not the stuff that progressive dreams are made of.

But in the torpid world of legislating through the U.S. Senate, it’s a freshman year chit she should cherish.  Because Warren’s allies and foes alike agree that her most trumpeted twin goals of breaking up the big financial institutions and sending their law-breaking bosses to prison aren’t in the cards.  At least not anytime in the near future.

When back in February Warren uttered the phrase, “I’m really concerned that too big to fail has become too big for trial,” her loyal liberal followers swiftly circulated the comment as the latest piece of evidence that the Massachusetts senator was making headway towards putting Wall Street bad boys in handcuffs.

But even her aides say Warren — a veteran of consumer battles in Washington over the past two decades — privately holds a more pragmatic view.  She’s well-aware she is fighting a long hard slog against an entrenched industry and that even incremental reforms won’t come easily, let alone quickly.

“The reality is if Elizabeth Warren can make stupidity a crime, then she can put the entire financial services sector in jail, but until that happens, this is just rhetoric,” assessed Douglas Holtz-Eakin, the chief economic adviser to Sen. John McCain’s 2008 presidential campaign.

But due to her unique star power and aggressive posture, her rhetoric reverberates in ways others doesn’t.  Whether it’s her merciless grilling of the Treasury Secretary, Securities and Exchange chair or other regulators, Warren uses her sparse time in committee to maximum effect, combining probing queries with easy to understand language.

Her overarching mantra: The banks are getting bigger and better breaks than anyone else and when they flout the law, they usually get a slap on the wrist.  Why aren’t you doing more to change this?

The witnesses often stumble, stammer, filibuster or pass the buck.  But that only strengthens Warren’s hand — especially when those 5-minute exchanges are posted on YouTube and viewed tens of thousands of times.

“Your ability to do significant things as a junior senator is really pretty limited.  But what you can do, and what she has done extremely effectively, is to use the platform and megaphone that you have, in particular in hearings,” said Dennis Kelleher of the Washington-based nonprofit Better Markets.  “It requires these people at least to confront the issue — even if they’re not responsive — and on top of that, it generates a lot of press.”

In the wake of the Dodd-Frank financial bill that’s still being implemented, the likelihood of further legislation out of the Banking Committee is small.  The ability to prosecute criminal behavior falls under the Department of Justice’s jurisdiction.  And even some in her own party are leery to hatch themselves to Warren’s bare-knuckle approach.

That means, success will be more difficult to measure.

It’s about gradual altering of hearts and minds by showering sunlight on the worst practices and offenders and eventually striking enough fear in regulators that it impacts their day-to-day decisions at financial agencies.      

So, no, don’t expect to see bankers doing perp walks anytime soon.

But maybe, just maybe her relentless shaming of regulators will create a different culture of enforcement.

“Her ability to put this issue front and center and into the national conversation really is pushing forward the effort of bringing the banks to justice,” said Matt Wall of the Progressive Change Campaign Committee, a group that ardently backs Warren.  “They know if they’re not being the cop on the beat, they’re going to be taken to task very publicly.”