Elizabeth Warren on Budget & Economy
Massachusetts Senator; former head of CFPB; Dem. Presidential Challenger
WARREN: Gosh, you know, I'm not sure that that's what gets you to the solution. I'm perfectly willing to take on giant corporations. I think I've been known to do that once or twice. But for me, I think the way we get there is we just say, "Sorry, guys, but by 2035, you're done. You're not going to be using anymore carbon-based fuels," that that gets us to the right place. And if somebody wants to make a profit from building better solar panels and generating better battery storage, I'm not opposed to that. What I'm opposed to is when they do it in a way that hurts everybody else. You shouldn't be able to externalize these costs. That's the problem with fossil fuels right now. I think that the best way we go forward here is we invest in the pieces that let us build a future together going forward.
Franklin Roosevelt reined in the big banks and giant corporations in ways that had never been done before. Government became a more active participant in keeping markets honest. Together, over time, we built economic stability and growth. In the 1980s, Ronald Reagan turned that around. He declared that government was the enemy and began unraveling the regulatory net, and he led the country down a path that ultimately resulted in the greatest economic crash since the Great Depression.
For starters, we should put in place a modern version of Glass-Steagall and separate plain-vanilla banking like checking accounts and savings accounts from crazy risk-taking on Wall Street. This doesn't have to be partisan. My first cosponsor for a twenty-first-century Glass-Steagall bill was the Republicans' 2008 presidential nominee, Senator John McCain. In 2016, Donald Trump campaigned on this idea, and, at his insistence, adopting Galss-Steagall was added to the Republican platform. But the Republican leadership has refused to move any such legislation and now President Trump has put in place an economic team that is headed in the opposite direction.
Here's another idea: The SEC should hire a leader who doesn't work for Wall Street.
Oh, and here's a good one: when CEOs break the law, they ought to go to jail, just like anyone else.
When risk and cost aren't disclosed, and when market data and information are not made publicly available, it's bad for families, it's bad for markets, and it's bad for our country.
The death wouldn't be a public execution. Instead, the Senate Banking Committee would propose a financial reform bill with no consumer agency. No one would ever know exactly who had killed it, or why.
I tried everything. I wrote an Op-Ed for the Wall Street Journal. I showed up [on TV shows]. To me, the issue was simple: Banks versus families. And the request was reasonable: A public vote. The lobbyists bore down. Plan A: Kill the agency. Plan B: Maim it so it won't interfere with the big banks' business plans.
Martha Coakley and I wrote an op-ed piece in the New Republic, strongly advocating for a new agency. [The article was entitled, "The Right Way to Regulate", New Republic, November 18, 2009.
All around the country, the overwhelming majority of people filing for bankruptcy were regular families who had hit hard times. Nearly 90% were declaring bankruptcy for 1 of 3 reasons: a job loss, a medical problem, or a family breakup (typically divorce, sometimes the death of a husband or wife). By the time these families arrived in the bankruptcy court, they had pretty much run out of options.
Worse yet, the number of bankruptcy families was climbing. In the early 1980s, Banks complained loudly about unpaid credit card bills. The word "deadbeat" got tossed around a lot. It seemed that people filing for bankruptcy weren't just financial failures--they had also committed an unforgivable sin.
No single change made the difference. Instead, it was death by a thousand cuts. The law got more complicated. The paperwork multiplied. Single mothers got less help, and they had a harder time collecting past due child support. Filing fees went up. Some people were still eligible for relief, some people weren't. Some debts could be discharged, some could not. There were hundreds of changes, some big and some small, but every change tilted in the same direction: Squeeze the families in trouble and increase the profits for big banks, credit card companies, car lenders, and a slew of other very successful businesses.
By the time TARP came along, pretty much everyone had grown to hate TBTF [Too Big To Fail]--except for the bankers who benefited. TBTF allows the megabanks to operate like drunks on a wild weekend in Vegas. They can take any kind of crazy risk--put $1 billion on black 22!--and if the bet pays off, the CEOs and the shareholders will be richer than kings. If it doesn't pay off and the bank is wiped out, the taxpayers will foot the bill. A no-strings-attached bailout created a Too Big to Fail monster, and I was pretty sure we'd be paying for that mistake for a long time.
After a little eyeball rolling, someone finally answered, "Uh, it'll take complaints."
I figured we could be stupid for a while. "Uh-huh. And what will we do with the complaints?"
"Uh, take them."
"And then what?" We eventually got to the key point: A lot of government agencies collect complaints from consumers, but to those who complained, the process often seems like a dead end. Nothing seems to happen.
Surely there had to be a better way. To begin with, a 21st century agency could use new technologies to take complaints online, tag them electronically, email them to the appropriate bank--and then track what happened.
And what if we also made the complaint data PUBLIC? The big banks would HATE this. It would be their worst nightmare come to life: we'd be taking their dirty laundry and airing it in public. The bank lobbyists got more hostile. There was even talk of a lawsuit if we went ahead. But we went ahead anyway.
Yes, the deficit is a problem, and it deserves serious attention, but I don't buy that there's only one way out. I think we have to face a more fundamental issue first: How we spend our government's money is about values, and it's about choices. We could cut back on what we spend on seniors and kids and education, as the Republicans in Congress insisted we should. Or we could get rid of tax loopholes and ask the wealthy and big corporations to pay a little more and keep investing in our future. How we spend our money isn't some absurdly complicated math problem. It's about choices.
In those speeches she would outline the impact on middle-class Americans of rising health-care costs, burgeoning debt, and the depletion of not only their savings but also, with the rise in joblessness, their confidence. She spoke of "the Wild West" conditions deregulation had created, where banks could sell virtually any product they wanted, on any terms: mortgages they knew consumers could not pay off, credit cards whose rates they could raise at whim. Her final remarks: "We cannot run our country without a strong middle class. We cannot run a democracy without a strong middle class," she said, her voice quavering slightly. "If we hollow out the middle class, then the country we know is gone."
[We tried to] find a couple of good books we could recommend. Everywhere we went, we found plenty of books on the difference between bull and bear markets, and lots of tips on how to find a great deal in potato futures. In other words, we found oodles of advice for people who are financially secure and just want to make a little more money.
But what about the people who AREN'T so secure? What about the people who stopped us in the grocery store, the mothers at the preschool, and the guys at Home Depot? Where was the advice for them? It didn't exist. Se we developed "All Your Worth."
Real financial peace seems so hard to achieve. You can't count on good old-fashioned hard work the way your parents did. Go to school, get a job, do your work, don't go too crazy with spending, and everything will work out right? Not anymore.
All Your Worth>/i> is for anyone who ever worries about money. For anyone who works hard and plays by the rules, but discovers that the rules have changed. For anyone who wants to build wealth, but isn't sure how to get started.
"No one knows how much I worry about money. What should I do?" Of course, we gave the best answer we could.
The rules were different in other ways. Tuition at State U was less than $1 a day, so no one started out life with a six-figure student loan. Once someone found a job, if they worked hard, they could pretty much count on keeping that job until it was time to collect a gold watch at retirement.
"If someone appeared uneducated, inarticulate, was a minority, or was particularly old or young, I would try to include all the [additional cost] CitiFinancial offered."
In other words, this company's lending agents routinely steered families to higher-cost loans whenever they thought there was a chance they could get away with it, and they thought they could get away with targeting certain groups. This wasn't an isolated incident; one study showed that on average, people who live in high income African-American neighborhoods get neighborhoods get charged MORE for their loans than people who live in low-income white neighborhoods. Most of the time, it isn't even legal.
When your parents were young, interest rates were regulated by law, which meant that credit card companies could make money only if everyone paid them back. But all that changed during the last twenty-five years.
Congress and the Supreme Court quietly took the reins off the credit industry in the late 1970s, freeing the way for credit card companies to jack up their interest rates (and their fees).
And the card companies learned something new: They could make higher profits from lending to ordinary, middle-class people.
Why are the card companies so eager to sign everyone up? Credit card debt has become the single most profitable line of business for big banks.
Christian Coalition publishes a number of special voter educational materials including the Christian Coalition Voter Guides, which provide voters with critical information about where candidates stand on important faith and family issues. The Christian Coalition Voters Guide summarizes candidate stances on the following topic: "Passage of a Balanced Budget Amendment to the U.S. Constitution"
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