Ok, so now she's in.

Many progressives I talk to adopt the view that "what can she do?  She's just one senator."

So why were Rove and Kochs and so many major players dumping truckloads of cash into Massachusetts to try to keep her out of the senate?  And why is Wall Street terrified of this woman?

Well, it turns out there is a great deal a US senator is capable of doing--IF they can figure out how to work effectively with enough of their colleagues to earn an opportunity to use the bully pulpit effectively on an issue the public either cares about, or can come to care about under certain circumstances.

The reality is that Dodd-Frank, even to the degree its implementation is not thwarted or gutted by the Wall Street lobby, does not even on its face address some of the most important realities about Big Finance which continue to put our economy at great risk.

In particular it does not address the Too Big to Fail problem.  Which is actually not simply one problem but at least two related problems.

*Size: The megabanks are even larger than they were in 2007 and 2008, just prior to the crash.  This means that the impact of their potential failure remains so great that regardless of which party or person is in power we the taxpayers will be obliged to do what is necessary to prevent them from failing.  The consequences of their going out of business are simply too devastating for anyone in power to allow them to fail.  This does gross violence to basic premises of how a capitalist economy can work, which even Alan Greenspan came to recognize when he testified publicly that he was wrong, that self-regulation does not work, and that too big to fail is too big.  That has not changed since the meltdown.  And it will not change on account of Dodd-Frank.  It remains unfinished business.  

*Systemic risk: The fact that the megabanks that have created, and market, unbelievably complex, derivates-based financial instruments do not understand them implies that, of course, neither publicly accountable elected officials nor regulators understand them, either.  This is no way to run a country.  It has not been addressed since the meltdown.  This reality means we are in a situation where there is unknown, indeed unknowable, risk of future domino-effect meltdowns unless and until the situation is changed.  The only entity that potentially has the power and legal authority to change it is our federal government, which has so far, even after the crash, declined to fix it through legislation.

So too big to fail is actually two interrelated problems--sheer size of the megabanks, plus the systemic risk permitted on account of the continued opacity of the too hard to understand (for anyone) financial instruments they continue to create and sell.

Elizabeth Warren is scary to Wall Street and to politicians more or less committed to slightly refined (thru Dodd-Frank) business as usual by the megabanks precisely because she is capable, if allowed, of educating the public as to these realities.  An educated public could become an engaged and aroused public.  And that is the only scenario Wall Street megabanks have to concern themselves with, in terms of what might bring unwanted public policy changes to this sector.

Will her caucus allow her to do that, via public hearings which will, because of who Elizabeth Warren has become, be high profile?  Well, we'll see.  We'll see what her committee and subcommittee assignments will be, an early tell. We'll see in the early months whether there are oversight or other hearings scheduled on continuing risks posed by the mega-large financial sector. 

If one is looking for reasons for guarded optimism, Elizabeth Warren is no ordinary freshman senator-elect.  Normally, freshman senators have limited influence in their early years, until they work their way up the pecking order and gradually acquire credibility and influence in the issues they carve out for themselves as their areas of special expertise.

Elizabeth Warren might be compared with recent freshman senators Hillary Clinton and Barack Obama.  

Obama became no ordinary senatorial candidate upon the delivery of his 2004 Democratic convention speech, which (regardless of what some of us saw, and see, as it unremarkable contents) vaulted him to the status of a high-profile senator upon his swearing in.  His elevation to public prominence was the result of his optimistic persona and appealing (and deliberately vague, but no mind), very well articulated, ideas taken in combination with the fact that he was a person of color seeking high office in these United States.

Hillary Clinton is an icon to millions of American women (in particular) who see her as a heroine, example, and role model for absorbing over the top abuse yet unflinchingly persisting in pursuit of high levels of public influence and power which white men in our society have always taken for granted as potentially available to them.  Her iconic status upon entering the senate stemmed from her cultural significance, made possible by her stature as a former First Lady respected by many for her intelligence, commitment to public service, and accomplishments in her own right.

Elizabeth Warren is a different kettle of fish.  Her standing as a freshman senator is more or less entirely attributable to her association with a deep understanding, and the courage and tenacity to take on, the excesses of Big Finance in our country.  It is almost entirely issue and character-based.  She does not strike me as a freshman senator who is likely to hold back and remain silent, passive, or deferential on the issues she is publicly associated with.  We've seen incoming elected officials with high profiles "go Washington" very quickly, and also more gradually.  

I could be wrong, but I don't think Elizabeth Warren is going to "go Washington" in any negative sense of the term implying reduced focus and commitment to high public purpose.  She of course will have to figure out how to be effective working with people who share neither her views, initially, nor her commitments, and many of whom are slightly if not more so petrified of her precisely because they fear she will not adhere to the usual rules of Washington insider culture. 

On a best-case scenario for we the people, we could see some public hearings on where our society is in re to the role and power of Big Finance which will attract much interest, because of who Elizabeth Warren already is.

I will predict only that this is all going to be interesting.  Most of the public has very limited understanding of just what the continuing dangers and risks to all of us posed by the operations of the Big Banks are.  If that begins to change we could see the climate of public opinion change substantially.  That would provide the opportunity, at least, for efforts to go beyond Dodd-Frank and truly reinstate adult supervision of Wall Street megabanks in areas Dodd-Frank did not touch.  Enough has been written about how these institutions operate to permit a conclusion that these are grown men (most of them are men) who have been permitted to gamble in ways that need to become unacceptable and impermissible for the dangers they pose.  

The megabanks do not exist to serve and protect the public.  That's what our elected officials are supposed to be doing.  On the issues of megabank behavior and the grave dangers they have posed and continue to pose to all of us, they haven't been, for some time, as even longstanding veterans of Congress such as Senator Richard Durbin, one of the good guys, have in less guarded moments acknowledged.  

Major policy changes which are essential to protect against a repeat of 2008 have simply been off the table for lack of sufficient political courage and will in Washington.  What has been needed is one member of both the Senate and the House, at least, with the courage to try to educate and bring along their peers and the public, the better so that the 800 pound Too Big to Fail elephant that remains in the closet can be brought out of it, and, finally, tamed.  It is that prospect which Karl Rove and the Koch brothers and the megabanks feared with the potential election of Elizabeth Warren, and did everything in their power to thwart.