By Pam Martens and Russ Martens: January 13, 2021 ~
On January 7, Senator Sherrod Brown of Ohio, the Ranking Member of the Senate Banking Committee, released a statement indicating that he is to become the new Chair of that Committee. The announcement came as the Democrats are set to take control of the full Senate from Republicans as a result of the Georgia runoff.
Yesterday, Brown went a step further and held a conversation with major media outlets to discuss the agenda he will set as the new Chair of Senate Banking. The formal appointment process making Brown the official Chair has yet to occur, thus Brown is the “presumed” Chair.
We get the feeling that Senator Brown took the very wise and preemptive step of getting mainstream media to announce his Chairmanship yesterday because he clearly understood that Wall Street’s mega banks would be fighting behind the scenes in an effort to prevent him from advancing to Chair.
Wall Street despises Brown because he has an institutional knowledge of their patterns of crimes against the public and the regulations that they have succeeded in getting the Trump administration to gut in order to make those crimes evermore opaque and lucrative.
Brown has served on the Senate Banking Committee since he was elected to the Senate in 2006. Brown became a Senator after representing Ohio’s 13th Congressional District in the House for 13 years. Brown has spent more than four decades in public service, serving as Ohio’s Secretary of State from 1983 to 1991 and, prior to that, as a State Representative in Ohio from 1974 to 1982.
We have been watching Brown’s performance in Senate Banking hearings for the past 14 years. Wall Street has plenty to worry about.
On November 10 of last year, Brown said this during his opening remarks at a Senate Banking hearing with the federal regulators of banks:
“We have to break up the biggest banks, and give that power to everyone else who has been denied a voice in our economy…
“When work has dignity, we have a strong, growing middle class, and everyone – everyone – can reach it. Making that vision possible is the job of the Banking and Housing Committee. We know we have great challenges – we’re in a public health crisis, an economic crisis, and a climate crisis. And extraordinary times call for us to aim higher and think bigger – to rise to meet this moment, and restore people’s faith in their government. I look forward to coming together with Senators on both sides of the aisle, and with the new administration, to get to work.”
Brown reserved his harshest criticism for Brian Brooks, the Acting Comptroller of the Office of the Comptroller of the Currency (OCC), the regulator of national banks, which includes the mega banks on Wall Street. Brown told Brooks the following:
“One West, the bank that you and [Treasury] Secretary Mnuchin and Joseph Otting [former head of the OCC in the Trump administration] worked at, was known as a foreclosure machine. It makes no sense that the outgoing President handed the wheels of the economy to so many people who had a hand in crashing it in 2008.
“Even though you’re running the OCC without the approval of the Senate, you’ve made sweeping changes to regulation to benefit the same corporations you used to lobby for. It’s exactly this kind of self-dealing that’s eroded so many Americans’ trust in their government and the economy. And last week, 80 million American voters rejected that thinking.”
Back in 2014, Brown Chaired the Subcommittee on Financial Institutions and Consumer Protection, part of the Senate Banking Committee. It held a hearing on January 14 titled “Regulating Financial Holding Companies and Physical Commodities” to investigate Wall Street’s rigging of physical commodities markets. Brown called Norman Bay, the Director of the Office of Enforcement at the Federal Energy Regulatory Commission (FERC), as a witness. In Bay’s written testimony, he cited examples of fraudulent activity by Deutsche Bank, Barclays, and JPMorgan. In the JPMorgan case, FERC forced the bank to pay a combined $410 million in civil penalties and disgorgements to ratepayers in July of 2013. At the time, FERC said JPMorgan engaged in 12 manipulative bidding strategies designed to make profits from power plants that were wildly excessive and resulted in the overpayment of tens of millions of dollars to JPMorgan.
This hearing was the second leg of a 2013 hearing by Brown’s Subcommittee titled: “Examining Financial Holding Companies: Should Banks Control Power Plants, Warehouses, and Oil Refineries?” Witnesses called to testify made the convincing case that the London Metal Exchange (LME) had become rigged by the Wall Street banks to control the price of aluminum, to the detriment of manufacturers and consumers. Wall Street was extremely upset that this can of worms was opened in a public hearing by Brown.
Brown is also not a pushover for the Wall Street-friendly wing of the Democratic Party. Back in 2013, President Barack Obama’s nominee to Chair the Securities and Exchange Commission, Mary Jo White, came before the Senate Banking Committee for her confirmation hearing. Brown questioned her as follows:
Senator Brown: When you were U.S. Attorney, my understanding is you consulted Bob Rubin and Larry Summers [President Bill Clinton’s Treasury Secretaries] when considering whether to bring charges against financial firms. Is that correct?
White: I actually consulted the Deputy Attorney General who had Mr. Summers call me back. I was asking a factual question.
Senator Brown: Did they reject the argument that institutions could not be prosecuted to the fullest extent of the law?
White: I’d like to answer that yes or no but I can’t. Essentially, I was seeking information based on an argument that had been made by the lawyers for the institution that I ultimately indicted, as to whether an indictment of that institution would result in great damage to either the Japanese economy or the world economy. And the answer I got back is that I should proceed to make my own decision; which I took to mean that it would likely not have that impact.
Senator Brown: Policy seems to have changed. You a moment ago said, you talked about the SEC doesn’t consider, you used the term collateral consequences to Senator Menendez’ question. And in 2008, the Fed’s General Counsel called the SEC to urge the Commission not to pursue fault penalties against bailed out firms that had committed fraud. As a result, institutional investors, pension funds that provide retirement security for working Americans for example, ended up with less compensation in the settlement. The New York Times affirmed the costs were shifted from Wall Street banks to working Americans. Was the SEC right to lower these penalties back in ’08?
White: I think what the SEC does do – they don’t, as I understand it, they don’t take collateral consequences into their charging decisions. But they do consider consequences in their remedies. So that, for example, a corporate fine that in effect would have grievous impact on innocent shareholders is taken into account in terms of remedies that they seek. I don’t know all the particulars of the example you’re giving me so I can’t respond any further than that.
Brown was the sole vote on the Senate Banking Committee against confirming Mary Jo White. Explaining his vote to Politico, Brown said this: “I don’t question Mary Jo White’s integrity or skill as an attorney, but I do question Washington’s long-held bias toward Wall Street and its inability to find watchdogs outside of the very industry that they are meant to police.”
At the time of her nomination, White was representing a broad swath of Wall Street banks as a partner at the law firm, Debevoise & Plimpton. Her husband, John White, was a law partner at Cravath, Swaine & Moore LLP, which also represented a bevy of the biggest Wall Street banks. Mary Jo White filed an ethics disclosure letter advising that she would “retire” from her position at Debevoise & Plimpton if confirmed to Chair the SEC. She did not follow through on that promise but returned to the law firm after leaving the SEC.
In 2015, the New York Times would report the following:
“In the nearly two years since Ms. White took over the agency, she has had to recuse herself from more than four dozen enforcement investigations, the interviews and records show, sometimes delaying settlements and opening the door, in at least one case, to a lighter punishment.”
Brown’s prescient vote against Mary Jo White was further buttressed by a scathing 13-page letter Senator Elizabeth Warren sent White in 2015. The letter called out White on a long laundry list of broken promises, including failure to require disclosure of the ratio of CEO pay to the median worker; White’s failure to curb the use of waivers for companies that violate securities law; and the SEC’s continued practice of settling the vast majority of cases without requiring meaningful admissions of guilt.
Every American needs to pay close attention to make sure it is Senator Sherrod Brown that gavels the Senate Banking Committee to order.