This post first appeared at The Baseline Scenario blog.

Citigroup is a very large bank that has amassed a huge amount of political power. Its current and former executives consistently push laws and regulations in the direction of allowing Citi and other mega-banks to take on more risk, particularly in the form of complex highly leveraged bets. Taking these risks allows the executives and traders to get a lot of upside compensation in the form of bonuses when things go well – while the downside losses, when they materialize, become the taxpayer’s problem.

Citigroup is also, collectively, stupid on a grand scale. The supposedly smart people at the helm of Citi in the mid-2000s ran them hard around – and to the edge of bankruptcy. A series of unprecedented massive government bailouts was required in 2000-09 – and still the collateral damage to the economy has proved enormous. Give enough clever people the wrong incentives and they will destroy anything.

Now the supposedly brilliant people who run Citigroup have, in the space of a single working week, made a series of serious political blunders with long-lasting implications. Their greed has manifestly proved Elizabeth Warren exactly right about the excessive clout of Wall Street, their arrogance has greatly strengthened a growing left-center-right coalition concerned about the power of the mega-banks and their public exercise of raw power has helped this coalition understand what it needs focus on doing – break up Citigroup.

In a blistering speech on Tuesday, December 9th, Senator Warren emphasized how much power large Wall Street banks have in Washington. The pushback from those banks’ supporters was, not surprisingly, to deny any special rights and privileges.

On Wednesday, a provision — drafted by Citigroup — to repeal part of the Dodd-Frank financial reforms (Section 716) was added by House Republicans to their spending bill. On Thursday, Citigroup led the charge to persuade enough Democrats to vote for that bill. The repeal of Section 716 stayed in the spending bill only because Wall Street brought so much pressure and influence to bear.

Everything that transpired on Wednesday and Thursday exactly fit the pattern that Senator Warren had described on Tuesday.

Those seeking to disparage Senate Warren now attempt to paint her as some sort of extremist – the tea party of the left. But such a description is completely at odds with the reality of what happened last week.

In arguing against the repeal of Section 716, Senator Warren was supporting arguments put forward by Thomas Hoenig (a Republican appointee at the Federal Deposit Insurance Corporation), Sheila Bair (Republican and former chair of the FDIC) and Senator David Vitter (R-LA). On Friday, the Systemic Risk Council – chaired by Sheila Bair – put out a statement against the repeal of Section 716. (I am a member of the SRC; the council includes people from the left, center and right of the political spectrum.)

These are not left vs. right issues. And the key divide is certainly not the liberal left against anyone else. This is a broad coalition of people who care about financial stability — and who are fighting against a mighty lobby.

Speaking on the floor of the Senate on Friday evening, Senator Warren articulated the core of the problem and what needs to be done. (All the quotes that follow are from the text circulated by her press office.)

Mr. President, in recent years, many Wall Street institutions have exerted extraordinary influence in Washington’s corridors of power, but Citigroup has risen above the others. Its grip over economic policymaking in the executive branch is unprecedented. Consider a few examples: Three of the last four Treasury Secretaries under Democratic presidents have had close Citigroup ties. The fourth was offered the CEO position at Citigroup, but turned it down. The Vice Chair of the Federal Reserve system is a Citigroup alum. The Undersecretary for International Affairs at Treasury is a Citigroup alum. The U.S. Trade Representative and the person nominated to be his deputy – who is currently an assistant secretary at Treasury – are Citigroup alums. A recent chairman of the National Economic Council at the White House was a Citigroup alum. Another recent Chairman of the Office of Management and Budget went to Citigroup immediately after leaving the White House. Another recent Chairman of the Office of Management of Budget and Management is also a Citi alum — but I’m double counting here because now he’s the Secretary of the Treasury. That’s a lot of powerful people, all from one bank. But they aren’t Citigroup’s only source of power. Over the years, the company has spent millions of dollars on lobbying Congress and funding the political campaigns of its friends in the House and the Senate.”

And on the big banks’ complaints about Dodd-Frank, she said this,

There’s a lot of talk lately about how the Dodd-Frank Act isn’t perfect. There’s a lot of talk coming from Citigroup about how the Dodd-Frank Act isn’t perfect. So let me say this to anyone who is listening at Citi: I agree with you. Dodd-Frank isn’t perfect. It should have broken you into pieces. (Emphasis in the original)

We are going back to the original Republican principles and courage at work the last time this country took on – and won against – concentrated corporate power.

A century ago, Teddy Roosevelt was America’s trustbuster. He went after the giant trusts and monopolies in this country, and a lot of people talk about how those trusts deserved to be broken up because they had too much economic power. But Teddy Roosevelt said we should break them up because they had too much political power. Teddy Roosevelt said break them up because all that concentrated power threatened the very foundations of our democratic system. And now we’re watching as Congress passes yet another provision that was written by lobbyists for the biggest recipient of bailout money in the history of the country. And it’s attached to a bill that needs to pass or else the entire federal government will grind to a halt. Think about this kind of power. A financial institution has become so big and so powerful that it can hold the entire country hostage. That alone is a reason enough for us break them up. Enough is enough.

The views expressed in this post are the author’s alone, and presented here to offer a variety of perspectives to our readers.