Massachusetts Sen. Elizabeth Warren (D) isn’t letting regulators off the hook for their lack of prosecutions of Wall Street banks in the wake of the financial crisis. After using her initial Senate Banking Committee hearing to press regulators about whether big banks are “too big to trial,” Warren is doing so again — this time in a letter to the Securities and Exchange Commission, the Justice Department, and the Federal Reserve.

The letter questioned regulators’ willingness to pursue settlements instead of prosecutions, and asked them to provide any analysis to justify that practice, The Hill reports:

“I believe strongly that if a regulator reveals itself to be unwilling to take large financial institutions all the way to trial — either because it is too timid or because it lacks resources — the regulator has a lot less leverage in settlement negotiations,” Warren wrote in the letter.

“If large financial institutions can break the law and accumulate millions in profits and, if they get caught, settle by paying out of those profits, they do not have much incentive to follow the law.”

Warren isn’t alone in her criticism: Ohio Sen. Sherrod Brown (D) and Iowa Sen. Chuck Grassley (R) pushed the Justice Department over the notion that big banks have become “too big to jail” in January, and Grassley accused regulators of giving banks a “get out of jail free card” for their involvement in the crisis.

Prosecutions for financial fraud hit a 20-year low in 2011, and regulators largely turned to settlements to punish big banks after the crisis. But various settlements have allowed them to avoid admissions of wrongdoing, and the largest of the settlements — the mortgage and foreclosure fraud settlements — have been rife with problems that have allowed banks to game their requirements while homeowners have struggled to access required assistance.

Ohio Sen. Sherrod Brown (D) and Louisiana Sen. David Vitter (R) Wednesday introduced legislation aimed at reining in “too big to fail” megabanks by imposing strict capital requirements and preventing them from structuring themselves to elude existing regulations.

The largest Wall Street banks are even bigger today than they were before the crisis, Brown noted in a floor speech in February when he renewed calls to break up large banks. In a new video explaining why he and Vitter introduced the legislation, Brown said the industry hasn’t learned its lesson from the crisis and that taxpayers shouldn’t be on the hook for banks’ risky practices again as they were when the financial system nearly collapsed in 2008:

BROWN: Did we learn our lesson after taxpayers had to bailout the megabanks in 2008? Well, since then, our banking industry has become even more — not less — consolidated. Ten large financial institutions merged into just four. These four behemoths are nearly $2 trillion dollars…larger than they were the last time we determined they were “too big to fail.” This growth didn’t come from innovative new products and services…it was built by the perception that these banks aren’t just backed by their investors, they’re also, unfortunately, backed by every American taxpayer.

Watch it:

The Brown-Vitter legislation would rein in banks by increasing capital standards — that is, the amount of money they have to keep on hand to manage the risk they take through investments and lending. The largest banks, those with more than $500 billion in assets, would be subject to a 15 percent capital requirement. That provision, which would apply to JP Morgan Chase, Citibank, and Bank of America, would force large banks to either hold more money to cover their risks or to reduce in size to avoid the capital requirements. Those standards are even stronger than the Basel III requirements sought by international regulators.

The legislation would also limit the taxpayer guarantee to traditional banking practices, leaving banks to rely on their own capital to insure the riskier practices in which they engage. That, Brown said, would prevent taxpayers from subsidizing the riskiest lending and trading practices that helped spark the financial crisis. “If megabanks want to be large and complex, that’s their choice,” Brown said. “But taxpayers shouldn’t have to subsidize their risk-taking.”

Draft legislation authored by Ohio Sen. Sherrod Brown (D) and likely to be cosponsored by Louisiana Sen. David Vitter (R) would attempt to limit the size of “too big to fail” banks by imposing strict capital requirements and preventing them from structuring themselves to elude the rules.

The draft bill, which leaked Friday, would mainly target the six largest banks, since it would impose an even larger capital requirement on banks that exceed $400 billion in total assets, the Wall Street Journal reports:

The draft bill would require all U.S. banks to hold 10% equity capital and subject banks with more than $400 billion in total assets to additional capital surcharges based on the size of the institution. Importantly, the legislation would pull the U.S. out of the Basel 3 international capital accord.

It would also restrict banks from structuring themselves or their activities to avoid the new capital rules, and would prohibit government assistance for non-banks

The bill would also call on the U.S. to replace Basel III international financial regulations, which some financial reform advocates argue would not impose tough enough standards on large banks. Others have raised concerns that replacing Basel III would hurt international efforts to coordinate financial regulations.

Brown has been a strong proponent of reining in large banks, raising concerns over the Justice Department’s lack of prosecutions of Wall Street banks for their roles in the financial crisis. Criticism of “too big to fail” has risen in recent months among both Democrats and Republicans, and Federal Reserve Chairman Ben Bernanke said that such banks were “a real problem” that “needs to be addressed if at all possible” at a press conference in March. The Brown-Vitter legislation hasn’t yet been finalized and isn’t expected to be introduced until later in April.

Florida’s Senate Banking and Insurance Committee this week approved legislation that would speed up the state’s foreclosure process, a move that would remove some protections for homeowners and could increase the likelihood of bank fraud. The committee, which passed the bill 8-2, passed similar legislation in 2012 that did not advance farther.

The bill is an effort to clear Florida’s backlog of foreclosures that piled up as a result of the financial crisis, but as we pointed out when it was introduced in February, it is likely to have unintended consequences that make it easier for banks to deceive homeowners or process unlawful foreclosures. Banks’ past efforts to speed up the process led to fraudulent techniques like robo-signing, and banks foreclosed on homes they didn’t own, homeowners that were seeking to modify their loans, or because of minor clerical errors the banks themselves had made.

While Florida does have a lengthy backlog of foreclosures, its process is not atypically long. The average Florida foreclosure takes more than 600 days to process, about the same length of time it takes the average home nationally to enter foreclosure.

Consumer advocates have pointed out many problems with the foreclosure bill. In addition to potentially inviting fraud, the bill would remove homeowners’ right to reclaim their property after an improper foreclosure. Instead, they would only be eligible for compensation.

Amid rising concerns about large banks from senators, Federal Reserve Chairman Ben Bernanke said Tuesday that “too big to fail” banks still pose a major risk to the American economy. Massachusetts Sen. Elizatbeth Warren (D) grilled Bernanke over the persistence of Too Big To Fail institutions during a Senate hearing last week, and at a press conference yesterday, Bernanke made it clear that he agrees with Warren that such banks are still a “major issue” that need to be addressed:

BERNANKE: I certainly never meant to say to Senator Warren, and I share her concern about Too Big To Fail, it’s a major issue. I never meant to imply that the problem was solved and gone. It is not solved and gone. … I hope that we’ll make progress against Too Big To Fail, because I agree with her 100 percent that it’s a real problem and needs to be addressed if at all possible.

Warren’s reputation as a critic of Wall Street followed her to the Senate, where she has questioned regulators over bank prosecutions and whether large financial institutions were “too big for trial.” But Warren isn’t alone: Ohio Sen. Sherrod Brown (D) and Louisiana Sen. David Vitter (R) are prepping legislation to reduce the size of large banks, and Brown and Iowa Sen. Chuck Grassley (R) have also pressed regulators and the Justice Dept. over the lack of prosecutions that creates the perception that banks have a “get out of jail free” card.

The largest banks, as this chart Brown displayed on the Senate floor last month shows, have only grown larger since the financial crisis:

The key focus for Bernanke right now, he said, was ensuring that rules included in the Dodd-Frank Wall Street Reform Act and other international guidelines meant to reduce the risk of Too Big To Fail banks were instituted properly.

If you’re a black woman looking for to refinance your home, the forces of discrimination are working against you. If you’re a white man, you’ll probably have an easier go of it.

According to a new study from the Woodstock Institute, banks discriminate on the basis of both gender and race when they make decisions about which loans they’ll approve. That goes for both mortgage applications and refinancing loans, and it’s worst for African American women:

Female-headed joint applications are much less likely to be originated than are male-headed joint applications. Controlling for the loan-to-income ratio, female-headed joint applications overall were 24 percent less likely to have purchase mortgages originated, and 39 percent less likely to have refinance mortgages originated, than were male-headed joint applications. The disparities were maintained across all racial categories. The largest disparity is for African American female-headed joint applications for purchase, which were 34 percent less likely to be originated than were African American male-headed joint applications, and refinance applications, which were 44 percent less likely to be originated.

Latino and Asian women, too, struggle to get trust from the banks, as this chart illustrates:

The blatant discrimination from banks exposed in this study isn’t the first of its kind. Indeed, the industry has a long and sordid history of discrimination. Last year, one mortgage company forked over $3.5 million after an investigation found it had been overpricing loans to non-white borrowers. Similarly, Bank of America paid out the Department of Housing and Urban Development after it denied a home mortgage to a lesbian couple.

(HT: Next New Deal)

Both Democrats and Republicans have raised criticism of the Justice Department’s leniency when it comes to the prosecution of Wall Street banks for their roles in the housing crisis and financial collapse that sparked the Great Recession. But today, Attorney General Eric Holder told the Senate Judiciary Committee that the very size of those banks is what inhibits prosecution, Bloomberg reports:

Criminal charges against a bank — something that could threaten its existence — may also endanger the national or global economies in the case of the largest ones, because of their size and interconnectedness. That has “made it difficult for us to prosecute” some of those institutions, Holder said today at a Senate Judiciary Committee hearing.

“That is a function of the fact that some of these institutions have become too large,” Holder told lawmakers. “It has an inhibiting impact on our ability to bring resolutions that I think would be more appropriate.”

The six largest Wall Street banks have grown exponentially in recent decades and now hold assets worth more than 60 percent of the American economy. But despite widespread fraud, discrimination, and other predatory acts during and after the recent crises, the banks have largely escaped prosecution, drawing the ire of both Democratic and Republican senators.

Ohio Sen. Sherrod Brown (D) and Louisiana Sen. David Vitter (R) renewed their calls to break up banks in Senate speeches last week, and Massachusetts Sen. Elizabeth Warren (D) challenged regulators on the lack of prosecutions in a Banking Committee hearing in February. Brown and Iowa Sen. Chuck Grassley (R) wrote a letter to the Justice Dept. alleging that banks have become “too big to jail,” and Grassley has criticized the banks for having a “get out of jail free” card.

Financial prosecutions reached a 20-year low in 2011, as regulators and the Justice Dept. chose instead to settle claims with large banks over mortgage and foreclosure fraud and other scandals. But those settlements have been rife with problems, as banks have found different ways to game the settlements to their advantage.

Yesterday, Sen, Richard Shelby (R-AL) introduced new legislation to gum up implementation of the Dodd-Frank financial reform law, in the latest Republican effort to prevent bank regulations from going into effect. A bipartisan group of lawmakers today decided to get into the act, introducing a bill that would weaken rules meant to prevent banks from engaging in risky trading of derivatives with federally backed dollars:

U.S. House and Senate lawmakers introduced legislation that would allow more swaps trading to be conducted at banks that have federal insurance by repealing part of the Dodd-Frank Act.

The bipartisan measures call for altering the 2010 law’s requirement that banks with access to deposit insurance and the Federal Reserve’s discount window move some derivatives trades to separate affiliates that have their own capital.

Banks have already received a reprieve from these rules courtesy of regulators who have delayed its implementation, giving these lawmakers time to water it down. But as Marcus Stanley, policy director for Americans for Financial Reform, said, “the swaps-pushout provision is a really important part and something that absolutely should be a central part of the regulatory framework.” Economists Jane D’Arista and Gerald Epstein added, “the intent is to remove risky activities from the core banking functions that are essential to the economy and to ensure that those risky activities will not trigger the need for a bail out to prevent systemic collapse in the future as they did in the 2008 crisis.”

As financial expert Jennifer Taub noted, “Swaps have been at the heart of major financial crises since the bankruptcy of Orange County. The Long-Term Capital Management meltdown, the failure of AIG and the Greek debt crisis, share this common component.” Banks are already looking for creative ways to circumvent Dodd-Frank’s various limitations on risky trading (even as Wall Street profits skyrocket back to their pre-financial crisis highs). In this environment, the last thing that the financial system really needs is lawmakers aiding and abetting the ability of banks to gamble with taxpayer funds.

In a speech today, Federal Reserve Board member Jerome Powell said that lawmakers may want consider new measures to break up the nation’s biggest banks. While he has confidence in the new rules laid out by the Dodd-Frank Wall Street reform law, Powell said that “public discussion and evaluation of these ideas [to break up banks] is important”:

Some urge the adoption of more intrusive reforms, such as a return to Glass-Steagall-style activity limits, more stringent limits on size or systemic footprint, or a requirement that the largest institutions break up into much smaller pieces. I believe that public discussion and evaluation of these ideas is important. At a minimum, we need to thoroughly understand these alternatives in case the existing reform project falters. [...]

My own view is that the framework of current reforms is promising, and should be given time to work. In any case, too big to fail must end, even if more intrusive measures prove necessary in the end.

Federal Reserve Board member Daniel Tarullo also recently floated the idea of capping bank size as a percentage of the economy.

Last week, Sen. Sherrod Brown (D-OH) took to the Senate floor to excoriate banks that he believes are still too-big-to-fail. “Wall Street has been allowed to run wild for years. We simply cannot wait any longer for regulators to act. These institutions are too big to manage, they are too big to regulate, and they are surely still too big to fail,” he said. He’s been joined in his criticism recently by a diverse set of lawmakers, including Sens. Elizabeth Warren (D-MA), Joe Manchin (D-WV), and David Vitter (R-LA).

According to data from the Dallas Federal Reserve, the largest 0.2 percent of banks — just 12 mega-institutions — now control nearly 70 percent of all banking assets. Just the six biggest banks holds assets that total 60 percent of the entire economy:

Bloomberg News recently estimated that the biggest banks receive a funding advantage of $83 billion annually simply by virtue of being perceived as too-big-to-fail. “Should those biggest financial institutions be repaying the American taxpayer that $83 billion subsidy that they are getting?” asked Warren last week.

Ohio Sen. Sherrod Brown (D) took the Senate floor today to argue against Wall Street mega-banks that have been deemed “too big to fail” and thus receive the implicit backing of the federal government, arguing that lawmakers should act immediately to break up the big banks that now have assets worth more than three-fifths of the American economy.

Wall Street banks sparked the financial crisis in 2008 and were rescued by the federal government. Congress passed the Dodd-Frank Wall Street Reform Act in 2010, but many of its rules have yet to take effect and banks are even bigger today than they were before the crisis. They are also just as scandalous, as financial institutions have faced lawsuits over mortgage and foreclosure fraud, money laundering, interest rate-rigging, and other practices. That, Brown said Thursday, should drive lawmakers to learn from past mistakes and break up the big banks to protect the health of the American economy:

BROWN: In the last five years alone we have seen faulty mortgage-related securities; foreclosure fraud; big losses from risky trading; money laundering; and Libor rate rigging. [...]

How many more scandals will it take before we acknowledge that we can’t rely on regulators to prevent subprime lending, dangerous derivatives, risky proprietary trading, and even fraud and manipulation?

Wall Street has been allowed to run wild for years. We simply cannot wait any longer for regulators to act. These institutions are too big to manage, they are too big to regulate, and they are surely still too big to fail.

Watch it:

Two decades ago, the six largest Wall Street banks held assets worth just 16 percent of the American economy, Brown said. They now hold assets worth more than 60 percent of the total economy:

Brown has emerged as a leading critic of Too Big To Fail in the Senate, and his efforts have attracted bipartisan support. Louisiana Sen. David Vitter (R) joined Brown’s call for action on the Senate floor today, and Iowa Sen. Chuck Grassley (R) has ripped big banks for holding a “get out of jail free card” and, with Brown, has urged the Department of Justice to prosecute large banks for fraudulent practices.