NEW YORK ( TheStreet) -- Consensus is that after Elizabeth Warren was elected as the next Senator for Massachusetts, the former Harvard Law School professor and figurehead of the Consumer Financial Protection Bureau will use her bully pulpit to dismantle Wall Street mega banks like Citigroup ( C) and Bank of America ( BAC). Were Warren to emerge in the Democratically controlled Senate as the chair of its Banking Subcommittee, many are already envisioning a crackdown that may pressure the likes of Citigroup, Bank of America and even JPMorgan Chase ( JPM) to split investment banking businesses from consumer lending operations. Warren, after all, made it a point of her Senate pitch to Massachusetts voters that she'd consider reinstating the Glass Steagall Act, a post-Depression banking sector reform that split off investment banking from ordinary Main Street lending. Meanwhile, former administration officials who played key roles in President Obama's first-term banking sector fixes and reforms say that a strong Election Day showing by Senate Democrats augur poorly for banks, while strengthening the mandate for reforms like the 2010 Dodd Frank Act "Wins by Warren, Sherrod Brown & Grayson means bad day for the banks and a very good day for supporters of real regulatory reform," wrote Neil Barofsky, the former inspector general for the Treasury's Troubled Asset Relief Program, on Twitter. But industry insiders may be overreacting to Warren's election, in favor of Republican Scott Brown, who was portrayed in a lengthy Businessweek profile as "Wall Street's hope to stop Elizabeth Warren." Why an Obama Financial Selloff Would be an Investor Gift. Were Warren to become chair of the Senate's Banking Subcommittee, her impact might be felt most by pushing a completion of Dodd Frank, which could help clarify how banks will earn their way out of a long post-crisis profit slog. Instead of spending efforts trying to repeal Dodd Frank - as Republican presidential candidate Mitt Romney indicated he'd do -- banks may now take Warren's election and her expected top legislative position on the industry as reason to problem-solve lingering uncertainties and issues surrounding the law. Already, Jamie Dimon, the head of the nation's largest bank JPMorgan, and Lloyd Blankfein, CEO of Goldman Sachs ( GS) have publicly said many parts of Dodd Frank are beneficial to the financial sector, even if the industry generally oppose reform. Meanwhile, the nation's top performing banks like JPMorgan and Wells Fargo ( WFC), and those on the mend like Bank of America and Citigroup are in their strongest post-crisis position when it comes to capital and normalized earnings. Housing markets are on the rebound, and recent quarterly reports show strong growth in mortgage lending. Why Goldman Sachs and JPMorgan can fall off the 'fiscal cliff.' In fact, financial sector bellwethers like Warren Buffett-run Berkshire Hathaway ( BRK.A) are also making big acquisitions to boost exposure to a recovering housing market, after previous calls of a housing bottom fell flat.
Given Warren's strong positions on regulation and her commitment to voters to enforce post-crisis banking fixes, she may represent to the public that the industry has been reined in, after reckless trading and lending during the housing boom put the U.S. economy on the brink four years ago. Instead of focusing on whether Wall Street will return to pre-bust ways, industry watchers may now divert their attention to improving trends for sector's largest players. There are already signs that in the wake of Dodd Frank, the public has lost interest in the countless stories of CEO mismanagement, fraud and deceit that gripped the financial sector of yesteryear. Roughly a year after Occupy Wall Street hit New York City streets, the movement petered-out without making headway in reigniting widespread anger at the financial sector. Meanwhile, tell-all expose's of Wall Street greed like former Goldman Sachs trader Greg Smith's recently released memoir Why I left Goldman Sachs hit bookstores with a poor critical reception. The tell-all was seen as breaking little ground on uncovering Wall Street misdeeds or those at Goldman Sachs - hardcover copies are already discounted 41% on Amazon ( Amzn) Amid signs of a stronger capitalized financial sector with earnings prospects on the mend, it's possible the election of Republican Massachusetts Senator Scott Brown could have reignited anger against the industry. A Republican campaign to repeal Dodd Frank or the perception that Wall Street was on the path back to reckless risk taking could have mired the industry once more in with public outcry. Still, Warren's election coincides with a still murky outlook for the nation's largest banks. She may very well push for a return to Glass Steagall or the finalization of trading bans like the so-called Volcker Rule. There's reason to believe the headwinds for banking sector giants have little to do with Warren's Senate election. Recent legal settlements and disclosures signal worst may still be to come as the world's largest lenders try to settle crisis-era regulatory inquiries. The industry's largest players will also continue to need to raise capital or dispose assets to meet bolstered Federal Reserve capital requirements. As Election Day results signal a strengthening mandate for Democratic banking sector reforms in the White House and Congress, financial industry insiders might try to view Elizabeth Warren's Senate election as a step forward for large banks, instead of a step backwards. It's likely, C-Suites at the nation's largest lenders are already coming to grips with such a perspective. See Why Banks and Regulators are Stepping-Up Mortgage Relief in Sandy's Wake Follow @agara2004 -- Written by Antoine Gara in New York