Elizabeth Warren on Budget & Economy



Regulations built economic stability after 1930s

From the 1790s to the 1930s, there weren't many financial regulations, and the economy swung back and forth from boom to bust every twenty years or so. Banks boomed and banks crashed. The busts were long and hard; with no cop on the beat, uneasy investors held tight to money that might have funded good business ideas on Wall Street. With no antitrust laws, corporations began to grow much bigger, and many ran roughshod over both customers and smaller competitors.

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.

Source: This Fight is Our Fight, by Sen. Elizabeth Warren, p. 91-2 , Apr 18, 2017

Separate consumer banking from risks on Wall Street

I don't love all regulations--no one does--but some problems can be solved only when our government writes and enforces a set of rules.

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.

Source: This Fight is Our Fight, by Sen. Elizabeth Warren, p. 93-4 , Apr 18, 2017

A generation of I-got-mine policy-making has failed

What would it take to help strengthen the middle class? There is one overriding idea: "Together we can." It's time to say it out loud: a generation of I-got-mine policy-making has failed--failed miserably, completely, and overwhelmingly. And it's time to change direction before the entire middle class has been replaced by hundreds of millions of Americans barely hanging on by their fingernails.
Source: The Two Income Trap, by Elizabeth Warren, p.xxii , Apr 12, 2016

Middle class grows economy, not financial sector

What we need is a system that puts an end to the boom and bust cycle. A system that recognizes we don't grow this country from the financial sector; we grow this country from the middle class. When I question federal regulations in Banking Committee hearings, they insist that they don't need to take big banks to trial when they break the law. They stand by their claim that settlement agreements are tough enough. If there had been a Financial Product Safety Commission in place ten years ago, the current financial crisis would have been averted.
Source: Quotable Elizabeth Warren, by Frank Marshall, p. 18-23 , Nov 18, 2014

When risk & cost aren't disclosed, it's bad for our country

If there is a lesson from the past five years, it's this: We all lose when consumers cannot readily determine whether they can afford to pay back their loans, and when lenders sell credit in ways that make it hard to see the risks and costs-- in other words, when the system is in some ways fundamentally broken.

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.

Source: Quotable Elizabeth Warren, by Frank Marshall, p. 6&8 , Nov 18, 2014

Banking lobbyists fought me on bank consumer protection

[In Jan. 2010, in exchange for passing an overall financial package, it appeared that] there might be some face-saving attempt to set up a new consumer protection department somewhere else in the government, but there would be no strong, independent agency with the authority to get much done.

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.

Source: A Fighting Chance, by Elizabeth Warren,p.155-7 & 314 , Apr 22, 2014

Bankruptcy is due to job loss or divorce, not deadbeats

[In bankruptcy court in the 1980s], The people seeking the judge's decree were once solidly middle-class. They had gone to college, found good jobs, gotten married, and bought homes.

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.

Source: A Fighting Chance, by Elizabeth Warren, p. 34-35 , Apr 22, 2014

2005 bankruptcy law: great for companies & bad for families

The changes to the bankruptcy law went into effect in 2005. That year, more than 2 million families raced to the bankruptcy courthouse, afraid they would lose their last, best chance at protection. Sure enough, the minute the amendments to the law kicked in, bankruptcy filings dropped sharply. And the credit industry got what it wanted--less help for families in trouble.

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.

Source: A Fighting Chance, by Elizabeth Warren, p. 80 , Apr 22, 2014

Everyone hated "Too Big To Fail" except bankers who benefit

A financial company that was truly gigantic and owed lots of money to lots of other big companies would be so important to the economy as a whole that the government would not let it fail. Throw in a few billion dollars of FDIC-insured checking accounts, and the government would always make sure that this megabank stayed in business.

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.

Source: A Fighting Chance, by Elizabeth Warren, p.110 , Apr 22, 2014

Make bank complaint hotline public, to force self-policing

One day I asked, "What will the complaint hotline really do?"

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.

Source: A Fighting Chance, by Elizabeth Warren, p.182-4 , Apr 22, 2014

How we spend federal money is about choices

Someone had asked me how we were going to tackle the deficit, and in my response I got a little wound up. We hear about the deficit as if it's a monster and America's only choice is to slash and burn huge swaths of our budget immediately or face total destruction. All or nothing, live or die.

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.

Source: A Fighting Chance, by Elizabeth Warren, p.214-5 , Apr 22, 2014

Financial crisis due to deregulation, not boom-bust cycle

In a Wall Street Journal op-ed, I'd quoted his remark that a financial crisis every 5 to 7 years was inevitable and given my own blunt assessment: He was wrong. The real cause of the crash was not some inevitable cycle; this crash was the direct consequence of years of deliberate deregulation and the resulting dangerous actions of the big banks. I'd repeated this view multiple times, saying we needed a cop on the beat to make sure that a crash didn't happen again.
Source: A Fighting Chance, by Elizabeth Warren, p.177 , Apr 22, 2014

Balanced approach to deficit reduction

Warren said she favored a "balanced approach" to deficit reduction--one of President Obama's favorite euphemisms for tax increases. Brown sought to depict Warren as a tax-increaser, and he deflected her attacks, saying: "Her criticism of me is that I'm not gonna raise taxes, and that's an accurate criticism." He said of Professor Warren, "she's obsessed with raising taxes. The first thing, every single time, is to raise taxes."
Source: FutureOfCapitalism.com on 2012 Mass. Senate Debate , Sep 21, 2012

Deregulation has created Wild West conditions at banks

She crisscrossed the country, spreading the word about the Consumer Financial Protection Bureau. She spoke about her belief in free markets & in government regulation as a mechanism that protected free enterprise by ensuring that the markets functioned fairly and honestly.

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."

Source: By Suzanna Andrews in Vanity Fair, "Woman Who Knew Too Much" , Nov 1, 2011

Increased financial transparency and accountability

Markets work. Capitalism works with a set of rules. We can make the system work with regulation. I'm not somebody who believes it's time to throw the whole thing out. But regulation has got to support it. And the way it supports it, is it increases transparency in this system, it increases honesty in the system. It increases accountability in the system. When you get those things there's plenty of room to make profits. There's plenty of room to be rich, I'm all for that. But it's got to be profits that were made honestly. It's got to be profits made from bringing something new and valuable to the marketplace not just figuring out the newest trend. You know I hate to say it but something like regulatory reform sounds so boring that I may fall asleep when I say it.
Source: YouTube: NWO Economics Series, video BZWY4LJ789Y , Apr 1, 2010

Harsher rules on credit agencies

The rules are the same. Nothing has changed. The laws have not changed. They continue to run their credit rating agencies in the way they believe will best enhance their own profits and revenues. You have to change the rules of the road.
Source: YouTube: NWO Economics Series, video BZWY4LJ789Y , Apr 1, 2010

Opposes a constitutional BBA.

Warren opposes the CC Voters Guide question on a constitutional BBA

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"

Source: Christian Coalition Voter Guide 12-CC-q11c on Oct 31, 2012

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