Wall St. speech

Warren praises Sanders' Wall St. speech

By Nick Gass

Though she has not yet endorsed a presidential candidate, Elizabeth Warren on Wednesday offered some strong praise for Bernie Sanders.

"I'm glad @BernieSanders is out there fighting to hold big banks accountable, make our economy safer, & stop the GOP from rigging the system," she tweeted as part of a series supporting the candidate's proposal, which he announced in a speech the previous day, invoking her own proposed legislation as an example.

In his address, Sanders promised to prosecute Wall Street executives and to tax speculators, as well as to implement what he called a "21st century Glass-Steagall Act" that would restore the boundaries between commercial and investment banking.

"Let’s be clear: this legislation, introduced by my colleague Senator Elizabeth Warren, aims at the heart of the shadow banking system," Sanders said. "In my view, Senator Warren, is right. Dodd-Frank should have broken up Citigroup and other 'too- big-to-fail' banks into pieces. And that’s exactly what we need to do. And that’s what I commit to do as president."

For her part, Hillary Clinton has rejected the notion that a Glass-Steagall replacement is a viable solution for preventing future financial calamity, pointing instead to the fact that the act would not have limited the "reckless behavior" on the part of large "non-traditional" institutions like Lehman Brothers and AIG.

"Nor would restoring Glass-Steagall help contain other parts of the 'shadow banking' sector, including certain activities of hedge funds, investment banks and other non-bank institutions," she wrote in a December op-ed for The New York Times. "My plan would strengthen oversight of these activities, too — increasing leverage and liquidity requirements for broker-dealers and imposing strict margin requirements on the kinds of short-term borrowing that also played a major role in spurring the financial crisis."

Sanders has long maintained the opposite, remarking Tuesday that while shadow banks "did gamble recklessly," the money "came from the federally-insured bank deposits of big commercial banks – something that would have been banned under the Glass-Steagall Act."