VIDEO: Elizabeth Warren Grills Treasury Secretary on Too Big to Fail

At a Senate banking committee hearing Tuesday, Sen. Elizabeth Warren (D-Mass.) grilled Treasury Secretary Jack Lew on too-big-to-fail banks—financial institutions that are so large that their failure would endanger the entire financial system.

“How big do the biggest banks have to get before we consider breaking them up?” she asked.

Too big to fail is far from over. The largest financial institutions are still ballooning in size. In the past few years, banks have been beset by one scandal after another—from money laundering, to rate-fixing, to foreclosure fraud, and have mostly received wrist-slaps as punishment—probably because, as Attorney General Eric Holder recently warned, prosecuting too-big-to-fail banks for bad behavior might spook the entire financial system.

Too big to fail almost died three years ago. Warren noted that as the 2010 Dodd-Frank financial reform law was being crafted, an amendment was proposed that would have broken up the banks, but it didn’t pass—in large part, she reminded Lew, because the Treasury Department (then under Treasury Secretary Timothy Geithner) was against it.

“Have you changed your position,” Warren demanded, referring to the Treasury department. “Or are you still opposed to capping the size of banks?”

Lew responded that “ending too big to fail is our policy and we’re aiming to do it.” But Warren wouldn’t let him weasel out of the question with generalities. “I want to focus you in here,” she pushed. “My question is about capping the size of largest financial institutions.”

Lew refused to commit. “Our job right now is to implement…Dodd-Frank,” he said. “I think this is not the time to be enacting big changes.”

“Let me try the question a different way,” Warren persisted. “How big do the biggest banks have to get before we consider breaking them up?” she asked, adding that the largest American banks are 30 percent larger than they were five years ago. “Do they have to double in size? Triple in size? Quadruple in size? Before we talk about breaking up the biggest financial institutions?”

Lew said that too big to fail “is an unacceptable policy”, but urged Warren to have some patience.

She’d have none of Lew’s excuses: “What we’ve seen…is one scandal after another in these largest financial institutions,” she said. “It’s clear they have not changed their risk bearing practices nor have they decided that they’re suddenly going to start following the law.”

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SIX TRUTHS

Reclaiming power from those who abuse it often starts with telling the truth. And in "This Is How Authoritarians Get Defeated," MoJo's Monika Bauerlein unpacks six truths to remember during the homestretch of an election where democracy, truth, and decency are on the line.

Truth #1: The chaos is the point.

Truth #2: Team Reality is bigger than it seems.

Truth #3: Facebook owns this.

Truth #4: When we go to work, we're in the fight.

Truth #5: It's about minority rule.

Truth #6: The only thing that can save us is…us.

Please take a moment to see how all these truths add up, because what happens in the weeks and months ahead will reverberate for at least a generation and we better be prepared.

And if you think journalism like Mother Jones'—that calls it like it is, that will never acquiesce to power, that looks where others don't—can help guide us through this historic, high-stakes moment, and you're able to right now, please help us reach our $350,000 goal by October 31 with a donation today. It's all hands on deck for democracy.

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