Elizabeth Warren: Sanity in a Wall Street Run Amok
I first heard of Elizabeth Warren on NPR’s Fresh Air during an interview with Terry Gross. It was one of those “driveway moments” where you don’t want to leave your car for fear of never being able to recapture what you are hearing.
Warren, among other things, teaches Business Law at Harvard University. She was describing a lesson she had given her law students. She had handed them all credit card applications from various banks. The assignment was for the students to tell her by the end of the class what percentage rate they would be paying at the end of a year. Harvard’s best and brightest, which presumably means among America’s best and brightest, could not answer the question.
I heard this broadcast in early 2008 while I was still gainfully employed. It was the beginning of the end of America as we once knew it. This Elizabeth Warren person I had just “met” was a cool head that had a firm grip on what was happening to our country.
She is the daughter of a janitor. Before she was born, her father lost his hard earned money to a crook. She is truly a crusader for the average American homeowner and consumer.
Following the 2008 election, Senate Majority Leader Harry Reid appointed Warren chairman of the five-member Congressional panel tasked with making sure the Troubled Asset Relief Program worked as Congress instructed.
Warren: A sensible voice in troubled times.
From her appointed position she lobbied heavily for creation of her brainchild, the Consumer Financial Protection Bureau. Warren states, “Just as the Consumer Product Safety Commission protects buyers of goods and supports a competitive market, we need the same for consumers of financial products — a new regulatory regime, and even a new regulatory body, to protect consumers who use credit cards, home mortgages, car loans, and a host of other products.”
She succeeded. How can this be a bad thing? Not surprisingly, Warren’s assignment has ruffled some powerful feathers on Wall Street and among their Republican friends.
Writes Warren in a 2007 issue of Democracy: A Journal Of Ideas: “It is impossible to buy a toaster that has a one-in-five chance of bursting into flames and burning down your house. But it is possible to refinance an existing home with a mortgage that has the same one-in-five chance of putting the family out on the street– and the mortgage won’t even carry a disclosure of that fact to the homeowner. Similarly, it’s impossible to change the price on a toaster once it has been purchased. But long after the papers have been signed, it is possible to triple the price of the credit used to finance the purchase of that appliance, even if the customer meets all the credit terms, in full and on time. Why are consumers safe when they purchase tangible consumer products with cash, but when they sign up for routine financial products like mortgages and credit cards they are left at the mercy of their creditors?”
On September 17, 2010, she was named a special adviser by President Obama to oversee the development of the new Consumer Financial Protection Bureau. Her position will include the responsibility of recommending a director for this new entity, although it is unclear whether Warren herself will be considered for the position. Why will she not permanently head the very bureau she helped create? The director’s job must be ratified by congress and it’s still unclear if Obama and Harry Reid and Barney Frank can garner enough votes. Nearly all Republicans object to her nomination.
Warren is fearless in male dominated Wall Street
Granted, “home mortgages are not toasters”, which some nay-sayers argue. The manufacturer of the toaster has a vested interest in you liking their product. The lender has an interest in the layman not being able to understand her/his mortgage or credit card contract. For over 30 years Wall Street has whittled away at the Glass-Steagall Act which was enacted following The Great Depression in 1933.
Again, from her article in Democracy: “Nearly every product sold in America has passed basic safety regulations well in advance of reaching store shelves. Credit products, by comparison, are regulated by a tattered patchwork of federal and state laws that have failed to adapt to changing markets. Moreover, thanks to effective regulation, innovation in the market for physical products has led to more safety and cutting-edge features. By comparison, innovation in financial products has produced incomprehensible terms and sharp practices that have left families at the mercy of those who write the contracts.”
Regulating the manufacture and safety of toasters has not driven the toaster industry out of business. Nor has the auto industry crumbled by being forced to make automobiles safer. Wall Street and therefore the Republican Party do not like Elizabeth Warren simply because by making their products safer and easier to understand for consumers, their profit margins might shrink a little. Seven figure bonuses versus eight figure bonuses. In these troubled times this choice should not be difficult for 90% of Americans to make.
Elizabeth Warren’s cool head and mild manner make her a candidate for sanity. However, pity the poor fool who tries to outwit her. As many have learned, she was Oklahoma’s debate team champion in 1965 at age 16.
For the full transcript of Warren’s Democracy article:
For Further biography info on Warren, go to:
All photos from Google images.