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Elizabeth Warren on Budget & Economy

Massachusetts Senator; former head of CFPB; Dem. Presidential Challenger

 


Utility profit is OK if they don't externalize costs

Q: Bernie Sanders has endorsed public ownership of utilities, to remove the profit motive from the distribution of essential needs like energy. Do you support that to reduce carbon emissions?

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.

Source: CNN Climate Crisis Town Hall marathon (10 Democrats) , Sep 4, 2019

Democrats win when they fight for what's right

I know how to fight and I know how to win. I took on giant banks, and I beat them. I took on Wall Street, and CEOs, and their lobbyists, and their lawyers, and I beat them. I remember when people said Barack Obama couldn't get elected. Shoot, I remember when people said Donald Trump couldn't get elected. But here's where we are. Democrats win when we figure out what is right and we get out there and fight for it. I am not afraid. And for Democrats to win, you can't be afraid, either.
Source: July Democratic Primary debate (first night in Detroit) , Jul 30, 2019

Regulate free market; break up Big Tech

Said she identifies as a "Democrat capitalist," rather than a "democratic socialist." She told Pod Save America she sees "the value of markets and that they can produce a lot of good if they have rules." Proposed a plan to break up Google, Facebook and Amazon. It would prohibit companies with over $25 billion in revenue to act as operators and users of a platform and would install regulators to break up already-closed mergers.
Source: Axios.com "What you need to know about 2020" , May 8, 2019

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

Non-wealthy people need financial books too

[After we wrote] "The Two-Income Trap", which told the story of how the new rules of money had trapped millions of hardworking families into a financial struggle, the phone started ringing. The book did more than raise some public policy issues; it touched a raw nerve. People would pause and say quietly, "You're not just talking about money, you know. You're describing my whole life."

[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."

Source: All Your Worth, by Elizabeth Warren, p. 6-7 , Jan 17, 2006

Can't count on good old-fashioned hard work like our parents

The rules of the game have changed. Somewhere in your bones you already know this. Hard work and good intentions are no longer enough. Security, comfort, lasting prosperity--you want it, you work hard for it, and yet the worry remains.

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.

Source: All Your Worth, by Elizabeth Warren, p. 1-3&7 , Jan 17, 2006

Rules were different when banks were regulated

Your parents lived in a time when the government strictly regulated the banking industry. The amount of interest a lender could charge was tightly limited, so banks had to be very careful to lend money only to people who could comfortably pay them back. As a result, in your parents' generation there were no "zero-down" mortgages. Almost no one was "house poor," spending too much on a home or apartment. There were no offers on TV to "cash out" your home on equity. No one had a car payment the size of Texas, and car leases hadn't even been invented.

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.

Source: All Your Worth, by Elizabeth Warren, p.16-7 , Jan 17, 2006

Minorities are targeted for high-priced mortgages

African Americans, Latinos, and older Americans are specifically targeted for high-priced mortgages. Take it straight from the mortgage lender's mouth; when a loan officer at a major bank was asked how she decided which customers to hit with extra fees, here's what she said:

"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.

Source: All Your Worth, by Elizabeth Warren, p. 86 , Jan 17, 2006

Congress took reins off credit industry in 1970s

For millions and millions of Americans, debt has become a way of life. In fact, more than 80 million Americans now owe money on a credit card. And not just a little bit of money: The average family that carries a balance now owes more than two month's income on their credit cards.

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.

Source: All Your Worth, by Elizabeth Warren, p.132-4 , Jan 17, 2006

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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