WASHINGTON - The battle between Washington and Wall Street to make banks safer and more accountable tilted in Washington's favor this past year as top government players made measurable progress in reining in the banks whose reckless practices led to the financial crisis that began five years ago.
The battle is not over, and it is still far from sure that the American public, which has borne the brunt of bankers' misdeeds and lax government regulation, will ultimately be the winner.
But there are a number of "persons of the year" whose impact has led, on balance, to more restrictions on banks and the chance that some of the most egregious mistakes of the past can be avoided.
Here is a short list then of "persons of the year" in financial regulation:
• Elizabeth Warren: The Democratic senator from Massachusetts has carried on her crusade against bank abuses from a new and powerful perch this past year. After challenging the banks and the administration's coddling of them as chairwoman of the congressional oversight committee for the bailout program, Warren was thwarted in her goal of launching her brainchild, the Consumer Financial Protection Bureau created by the Dodd-Frank financial reform act.
So she ran for the Senate, instead and, though a political novice, she mobilized voters and funds to win back Ted Kennedy's seat for Democrats. Against fierce opposition from the banking lobby, she got a seat on the Senate Banking Committee, and from that platform, has relentlessly challenged regulators and bankers on reforms mandated after the crisis.
As the Volcker Rule languished in the rule-making phase at the five bank regulatory agencies, Warren proposed a new version of the Glass-Steagall Act with an even stricter separation of commercial banking from speculative investment banking. That pressure helped push the Volcker Rule to completion.
When President Obama was poised to nominate Larry Summers as chairman of the Federal Reserve, even though he had played a decisive role in championing the deregulation that contributed to the crisis, Warren didn't even need to come out publicly against it. Her leadership on the issue prompted other legislators to raise enough objections that Summers withdrew his name from consideration.
Warren has broadened her purview to a number of other issues to protect the middle class, and some see her as a potential presidential candidate in 2016, despite her repeated insistence that she will not run. In any case, she remains a forceful and effective watchdog on the financial front.
• Jamie Dimon: The chief executive of JPMorgan Chase showed rare humility in a year that saw his bank lose billions in speculative trading because of insufficient controls, and fork over further billions in record fines for mortgage securities fraud. He said the losses were embarrassing and apologized for "letting down" the regulators.
His contrition was short-lived, however, as JPMorgan sued the FDIC this month for more than $1 billion that it claims the bank is entitled to after taking over the failed Washington Mutual at the agency's behest during the financial crisis. In a holiday greeting that went viral on the Web, the ever-confident banker portrayed himself and his family exuberantly and defiantly smashing tennis balls around their home.
Dimon made himself the face of Wall Street, exuding an aura of self-confidence and bravado that buffaloed politicians up to the president. But the excesses of JPMorgan, the poster child for how these megabanks are too big to manage, have caught up with him and permanently dimmed his luster.
• Jack Lew: The two-time director of the Office of Management and Budget and White House chief of staff took over as Treasury secretary this year and stepped up the pace on implementing reforms in Dodd-Frank, which his predecessor, Timothy Geithner, had soft-pedaled.
Lew used the newly created Financial Stability Oversight Council, which the Treasury secretary chairs ex officio, as a bully pulpit to push the bank regulatory agencies toward completion of the rule-making. He succeeded notably in getting the Volcker Rule approved by all five agencies before year's end.
Less certain is whether he has succeeded in his declared goal of ending Too-Big-To-Fail, or, indeed, whether even full implementation of Dodd-Frank - with its provisions for increased capital, "living wills," and resolution authority - would actually end TBTF.
• Eric Holder: The attorney general, who was derided for congressional testimony in March suggesting that some banks were too big to jail, did manage in the second half of the year to impose a number of heavy fines on banks, including the record $13 billion settlement with JPMorgan Chase over fraudulent mortgage securities.
However, legal experts still openly question why Holder's Justice Department could not manage in five years to bring a single criminal indictment against senior banking executives. Previous financial crises generated hundreds of indictments and convictions, but the DOJ this time has found numerous excuses for not bringing any charges. Holder has indicated he will be stepping down soon, but the statute of limitations has already run out for many of the seemingly fraudulent practices that led to the financial crisis.
• Richard Cordray: The former Ohio attorney general took the helm of the CFPB, first as a recess appointment as Republicans blocked nomination of a director, then as the confirmed director, and wasted no time implementing new regulations for credit cards, mortgages, real estate settlements and other consumer finance products. The immediate success and effectiveness of the new agency vindicated its creation as consumers won an important ally in keeping banks honest.
(Copyright © 2013 USA TODAY)