This has been the week where we got a taste of how Elizabeth Warren would comport herself as a US Senator. Since JPMorgan Chase’s Fail Whale trade, which has reportedly already grown to a $3 billion loss, nobody in the political arena has been more vocal – or more knowledgeable – about the trade and what it means for reforming the financial system than Warren.

She has criticized big banks for their lobbying efforts to weaken Wall Street reform, but she has also gone beyond that. She has explained why a bad trade like this isn’t just “the normal course of business,” as Mitt Romney suggested yesterday, but a scary reminder of the significant risks being taken by banks with federally insured deposits, access to cheap credit and an implicit subsidy from being too big to fail. She advocated for a reinstitution of the Glass-Steagall Act, to explicitly separate commercial and investment banking activity. She demanded that JPMorgan Chase CEO Jamie Dimon step down from the board of the New York Federal Reserve Bank. And she has taken the lead among a growing number of Democratic candidates, reinvigorating a debate about financial reform and accountability for Wall Street. One thing we know; Warren knows how to use the bully pulpit, especially on an issue where she has credibility.

I’m going to post a transcript, edited somewhat for clarity, of an interview I did with Professor Warren yesterday afternoon. But I want to highlight the very last thing we talked about. After Warren discussed how, without meaningful civil and criminal investigations of the financial sector, it will not be possible to “clean out the system and rebuild it,” I asked her if she was confident that the current set of investigations, in particular the task force co-chaired by Eric Schneiderman, looking into criminal actions in the securitization process, would yield this level of accountability. She had a simple answer:

“I am not confident. No. And that’s the answer to your question. The American people are pushing for more accountability. They need to keep on pushing until it happens.”

This is a significant statement. The RMBS working group, as it was known, was announced to much fanfare in the State of the Union address, but it has not received anything approaching adequate resources, and it has been eerily silent for the past few months, without offices, without phone numbers and (still) without an executive director. Schneiderman in particular, and the Justice Department, have pushed back on criticisms, claiming that the task force remains committed to pursuing the investigation wherever it leads. But here is Elizabeth Warren, as credible a voice as there is on these issues, flat-out saying she lacks confidence in the investigation (or more broadly, any investigation happening at this time). That is extremely damaging to the attempt to pass off the RMBS working group as something legitimate.

Here’s the rest of the interview, on the flip, again lightly edited for clarity:

FDL News: Hi Professor, thanks for speaking to me today. You’ve had a busy week.

Elizabeth Warren: It’s been great, I feel like I get to unleash my inner dork about these important events that continue to unfold. You know, the biggest financial institutions continue to resist regulations by assembling an army of lobbyists. And Americans look at what just happened at JPMorgan Chase, and they say, “this is just business as usual.” The banks hire lobbyists to make sure no one regulates, and we can’t have that anymore.

FDL News: So one of the things you’ve advocated for is the Glass-Steagall reinstitution. As I hear from other members of Congress and experts, some make the point that the firewall between investment and commercial banking is inherent in the Volcker rule, at least the version Congress passed. Why do we need to go further, in your view?

Warren: As you remember, the Volcker rule, which I supported, was designed to permit biggest financial companies to stay in trading, but to do it in a way which was safe. Many of experts say that’s not possible. If you look at a trade, or a hedge, it’s often hard to tell in advance what it is. They both exhibit the same kind of properties. So the question is what to do with that. If it’s true that the Volcker rule can’t adequately manage the risks that the largest banks are determined to take on, then the right answer is Glass-Steagall. A modernized Glass-Steagall. Separate commercial banking from Wall Street. I held a meeting and someone asked me, why support Glass-Steagall. And I said, because banking should be boring.

FDL News: OK, but if new rules have to go through the same regulators, the ones already shown to be susceptible to that army of lobbyists, should we believe that we’ll get a different outcome? Aren’t regulations only as good as the regulators who choose to implement them?

Warren: It’s clear that the lobbyists have had their way in Washington. They have persuaded members of Congress to issue statements opposing the new rules, lobbied the regulatory agencies to delay implementation, and argued for loopholes. They have done everything possible to stop financial reform in its tracks. Part of the reason they can do that on the Volcker rule, for example, is that the Volcker rule is complicated. As I said, the trading activities look the same. I believe in simple rules. The benefit of separating commercial banking from Wall Street trading is that it’s clear. It requires less regulatory judgment. So there are fewer opportunities for lobbying.

FDL News: So you don’t feel that the Volcker rule and Glass-Stegall are two ways to get at the same problem.

Warren: They aren’t the same. Complexity surrounded the implementation of the Volcker rule. JPMorgan Chase is teaching the entire world right now about the consequences of complicated approaches to regulation.

FDL News: You have made another point throughout this past week, one that’s a little under the radar, one about Jamie Dimon serving on the Board of the New York Federal Reserve. This gets back to the importance of the regulators, especially if they’re being advised by the people that they end up having to regulate. Is that the kind of coziness you need to eliminate to get effective oversight of Wall Street?

Warren: I think that many people just weren’t aware that Jamie Dimon was advising the New York Federal Reserve. So part of this conversation is just having a lot of people say, “What?” More broadly, Jamie Dimon should resign, but it’s also time to look at the structure of the New York Fed.

FDL News: Of all the regional Fed banks, no?

Warren: All of them, certainly, but let’s remember. The New York Fed decided to bail out AIG, and they set the terms for that bailout. When I was at the COP, we did a massive investigation to understand the process that the New York Fed went through. How they decided not just to bail out AIG, but to pay the counter-parties 100%. I’m sure you remember my questioning of a certain Secretary of the Treasury on that matter. The point is remembering the origin of that as coming from the New York Fed. The basic decisions and execution were shaped by NYFed. So Jamie Dimon should not sit in a position of responsibility, advising that bank, when there’s so much at stake.

FDL News: Can all of these issues with regulation and oversight of Wall Street ever be successful without them involving handcuffs in some manner? The efforts to hold the banks and their executives accountable have all resulted in slap-on-the-wrist fines and settlements. We’re four years on from a financial crisis that wrecked the US economy, one rooted in multiple levels of fraud, and no top executive has gone to jail for it.

Warren: And that is disgraceful. No one has been held accountable. Americans know that all the way down to their gut. The financial crisis has been treated as if it were a tsunami or a snowstorm, or a natural act for which no human being had any direct participation. The people who broke the economy should be held accountable. It’s as simple as that. And that means criminal investigations, civil investigations. Without that, it’s not possible to clean the system and rebuild it.

FDL News: Are you confident that the current set of investigations, including this task force co-chaired by Eric Schneiderman looking into mortgage abuses – there’s been a lot of controversy about it, about staffing and resources – are you confident that the investigations in place today will actually lead to the necessary accountability for Wall Street for their role in the crisis?

Warren: I am not confident. No. And that’s the answer to your question. The American people are pushing for more accountability. They need to keep on pushing until it happens.