Senator
Elizabeth Warren scarcely requires an introduction. She is the single
most exciting Democrat currently on the national stage.
Her differences from the rest of the political profession is stark and
obvious. It extends from her straightforward clarity on economic issues
to the energetic way she talks. I met her several years ago when she was
taking time out from her job teaching at Harvard to run the
Congressional Oversight Panel, which was charged with supervising how
the bank bailout money was spent. I discovered on that occasion not only
that we agreed on many points of policy, but that she came originally
from Oklahoma, the state immediately south of the one where I grew up,
and also that high school debate had been as important for her as it had
been for me.
In the years since then, Professor Warren helped to
launch the Consumer Financial Protection Bureau (which will probably be
remembered as one of the few lasting achievements of the Obama
Administration); she wrote a memoir,
That’s the question that lies at the heart of whether our democracy will survive. The system
rigged. And now that I’ve been in Washington and seen it up close and
personal, I just see new ways in which that happens. But we have to stop
and back up, and you have to kind of get the right diagnosis of the
problem, to see how it is that—it goes well beyond campaign
contributions. That’s a huge part of it. But it’s more than that. It’s
the armies of lobbyists and lawyers who are always at the table, who are
always there to make sure that in every decision that gets made, their
clients’ tender fannies are well protected. And when that happens — not
just once, not just twice, but thousands of times a week — the system
just gradually tilts further and further. There is no one at the table…I
shouldn’t say there’s no one. I don’t want to overstate. You don’t have
to go into hyperbole. But there are very few people at the
decision-making table to argue for minimum-wage workers. Very few
people.
They need to get a lobbyist. Why haven’t they got on that yet?
Yeah.
Why aren’t they out there spending? In the context when people talk
about “get a lobbyist,” the big financial institutions spent more than a
million dollars a day for more than a year during the financial reform
debates. And my understanding is, their spending has ratcheted up again.
My insight about that, about exactly that point, [is] in the book [
A Fighting Chance],
in the second chapter, which is when my eyes first get opened to the
political system. Here I am, I’m studying what’s happening to the
American family, and just year by year by year, I’m watching America’s
middle class get hammered. They just keep sliding further down. The data
get worse every year that I keep pulling this data. Bankruptcy is the
last hope to right their lives for those who have been hit by serious
medical problems, job losses, a divorce, a death in the family — that
accounts for about 90 percent of the people who file for bankruptcy.
Those four causes, or those three if you combine divorce and death. So,
how could America, how could Congress adopt a bankruptcy bill that lets
credit card companies squeeze those families harder?
What year was that?
When
they finally adopted it was 2005. But the point was, it started back in
— actually it started in 1995, the effort [to change the bankruptcy
laws]. And that’s when I got involved with the Bankruptcy Commission.
When, first, [commission chairman] Mike Synar came to me, and then Mike
Synar died. It was just awful. And Brady Williamson [the replacement
chairman] came to me. But what I saw during that process is, this was
not an independent panel that could kind of sit and think through the
[problem]: “Let’s take a look at what the numbers show about what’s
happening to the families. Let’s take some testimony, get some people in
here who have been through bankruptcy, and some creditors who have lost
money in bankruptcy, and let’s figure out some places where we could
make some sensible recommendations to Congress.” That wasn’t what it
turned out to be at all.
It turned out that it was all about paid lobbyists . . .
And what they wanted.
And
what they wanted. I tried as hard as I could, and there were almost no
bankrupt families who were ever even heard from. And you stop and think
about it — why would that be so?
Well, first of all, to show up
to something like that, you’ve got to know about it and you’ve got to
take a day off from work. Who’s going to do that? These are families who
are under enormous stress and deeply humiliated about what had happened
to them. They had to make a public declaration that they were losers in
the great American economic game.
I know exactly the kind
of people you’re talking about. I wanted to ask you, not specifically
about people declaring bankruptcy, but about the broader working people
of this country. You’re from Oklahoma. I’m from Kansas. You’ve seen
what’s happened in those places. There are lots and lots of working
people in those places and a lot of other places…
Hardworking people. People who work hard. That’s what you want to remember. Not just people who kind of occasionally show up.
Yeah. The blue collar backbone of this country. And
in places like I’m describing, it gets worse every year—well, I
shouldn’t say worse, because it’s their choice, but a lot of them choose
Republicans. I was looking at Oklahoma, I don’t know if you’re aware of
this, I’m pretty sure you are, 16 percent of the vote went for Eugene
Debs in 1912 and today it’s going in the other direction as fast as it
can. How is this ever going to change?
I have at least
two thoughts around that and we should explore both of them. One of them
is that we need to do a better job of talking about issues. And I know
that sounds boring and dull as dishwater, but it’s true. The differences
between voting for two candidates should be really clear to every voter
and it should be clear in terms of, who votes to raise the minimum wage
and who doesn’t. Who votes to lower the interest rate on student loans
and who doesn’t. Who votes to make sure women can’t get fired for asking
how much a guy is making for doing the same job, and who doesn’t. There
are these core differences that are about equality and opportunity. It
can’t be that we don’t make a clear distinction. If we fail to make that
distinction, then shame on us. That is my bottom line on this.
You
know, during the Senate race that I was in — I mean, I was a first-time
candidate, I’d never done this before — the thing that scared me the
most was that the race wouldn’t be about the core differences between my
opponent and me. I wanted people to understand where I stood on
investments in the future, investments in education and research that
help us build a future. Where I stood on the minimum wage and equal pay.
And where he stood on the other side. The point was not to blur the
differences and to run to some mythical middle where we agreed with each
other. The point was to say that, here are really big differences
between the two of us. Voters have a chance to make a choice.
In
some ways that’s exactly the problem. When I talk to people, they often
say Democrats aren’t the party of working people at all. And they talk
about NAFTA and deregulating Wall Street, and they say, look at these
guys, they won’t prosecute the financial industry. They say, Democrats
talk a good game, but they’re always on the side of the elite at the end
of the day. What do you say to these people?
We’re the
only ones fighting back. Right now, on financial reform, the Republicans
are trying to roll back the financial reforms of Dodd-Frank. In fact,
Mitch McConnell has announced that if he gets the majority in the
Senate, his first objective is to repeal healthcare and his second is to
roll back the financial reforms, and in particular to target the
Consumer Financial Protection Bureau — the one agency that’s out there
for American families, the one that has returned more than four billion
dollars to families who got cheated by big financial institutions.
That’s in just three years.
So, Democrats have not done all that
they should, but at least we’re out there fighting for the right things.
We’re fighting and I think trying to pull in the right direction. So if
the question is, hold us to a higher standard, man, I’m there. You’re
right. [If] you want to criticize and say, “you should do more!,” the
answer is: Yes, we should! You bet! We should be stronger. We should be
tougher. But understand the difference between the Democratic Party and
the Republican Party right now. It’s pulling as hard and fast as it can
in the opposite direction.
No doubt about that. I should
ask you about — and we’re talking about the financial crisis and the
failure to prosecute anyone, and the…I’m sorry, I’m going to get the
name confused, the Consumer Financial Protection Bureau.
That’s
okay. It was named by Republicans to be as confusing a name as
possible. (laughs) I used to think of it as the four random initials.
(laughs) I just call it my consumer agency. So that’s it, just the
consumer agency.
So here’s another aspect of this: Eric
Holder is stepping down as attorney general, and you in the Senate are
going to have to confirm a successor. And one of the things, I don’t
know if you’ve followed this or not, but one of the things the
Department of Justice has been doing, if you look at the actual
prosecutions they’ve been making, they essentially blame the financial
crisis on little people. People who lied on their loan applications. And
I wonder, are you going to demand something different out of his
successor? You’re going to have a chance to confirm this guy and talk to
this guy…
You bet I am. I want to be clear on this. It’s
the Justice Department. But it’s also the banking regulators. And the
SEC. So the most recent hearing we held that had them all in together —
you know we get them in twice a year — and, boy, you want to ask me if
I’m glad to be in the United States Senate? (laughs) I get to be on the
Banking Committee, and twice a year we haul the banking regulators in
front of us for supervision. For oversight I should say, not
supervision. So we had them all in. . . . We had them all in, in July.
And that was the question I asked: How many big bank executives have you
referred to the Department of Justice for criminal prosecution?
That’s a very good question. I was going to ask you that, too.
Exactly
right. Because that’s the other half of how the game is rigged. You
know, we think of it in terms of Congress, and we should, because it’s
definitely rigged in Congress and this is a place where people can do
something about it. But the wind always blows from the same direction
through the agencies. Those agencies, the banking regulators, who do
they hear from, day in and day out? Big banks. They don’t hear from
people who got cheated on their mortgages, people who got tricked on
their credit cards. They hear from the big financial institutions, day
after day after day. That’s, in part, what this whole Fed — this latest
scandal at the Fed — you know with Carmen Segarra who has the tapes.
Part of what that shows, if you just back up and think about what you’re
seeing there, it’s that the supervisors, or regulators as they’re
called — everybody commonly calls them that — the regulators all meet
with Goldman Sachs executives and employees day after day after day.
They don’t see the people who get tricked, the people who get cheated,
the people who get fooled by the products that Goldman turns out.
That’s
right. Regulatory capture, this is an old problem. I was writing about
it, obviously, in the Bush days. But President Obama had a golden
opportunity when he came in to change the system and I just don’t feel
like it has changed, the Consumer Financial Protection Bureau aside. I
mean, are the regulators now referring things to the Justice Department?
Are the wheels turning again?
There has not been nearly
enough change. Not nearly enough. The consumer agency — this is why I
argued for it — the consumer agency is structural change. So basically,
the premise behind it was that there were plenty of federal laws out
there, but no agency would step up and enforce them. And the
responsibilities of these laws were scattered among seven different
agencies and not one of those agencies saw its principal job as looking
out for American families. So the OCC [Office of the Comptroller of the
Currency] was all about bank profitability, the Fed was all about
monetary policy. Everybody had something that they were about, but
consumer protection was everybody’s job and therefore nobody’s job. You
know, it was down seventh, or tenth or hundredth on the list and they
never got to it, even as the big financial institutions were selling
mortgages that should have been described as grenades with the pins
pulled out. Really! My whole thing about toasters—remember, that was
based on fact. At the time I wrote
that piece on it,
that was before the crash, one in five mortgages that were being
marketed by the biggest financial institutions were exploding and
costing people their homes. No one would permit toasters to be sold when
one in five exploded and burned down somebody’s house. But they were
selling mortgages like that and every regulator knew about it.
And those people who had it blow up in their faces, those are the ones we’re prosecuting.
Oh
God. So exactly right. Well, to the extent we do [prosecute] anyone.
But that’s exactly right. And so the idea behind the consumer agency was
to say: structural change. We need an agency that has one and only one
goal, and that is to look out for American families. To level the
playing field, to make sure that people are not getting tricked and
trapped on these financial instruments. And so it was a big shift, and
it’s a shift worth thinking about. We took away — Dodd-Frank took away —
all this responsibility that had nominally been spread among the other
agencies, concentrated it in one agency, and now holds that agency
accountable. So you give the agency the tools and then hold them
accountable. The reason I think that story is so important is because it
is structural. It’s not just a question of, “Gee, get good people and
somehow things will work better.” There are structural changes we have
to make. . . . The idea, the question that haunted me at the agency was:
How do we make sure the agency is true to its mission, not just today
with the people that we hire in the first plume of excitement, but 30
years from now, 40 years from now, 50 years from now…
Yeah, that’s the problem, when President Huckabee has . . . [At this point Senator Warren conferred with an aide about her schedule.]
Can I skip to another subject real quick?
You can.
Let’s
get back to the mindset of a lot of people. They look at you and they
say, Elizabeth Warren, she’s part of the elite too. She was a professor
at Harvard. And people would also say, look at the student loan disaster
which you talk a lot about these days, the root cause of it is college
tuition, which has increased by a thousand percent in 30 years. You look
at the advertised price at Harvard right now, I know that not everybody
pays it, but the advertised price is sixty grand a year. If you have
three kids and all of them have to pay that much for four years—you know
what I’m talking about?
I do.
Nobody can afford that. Is it time to do something about college tuition?
Absolutely.
Yes it is. But let’s get the right frame on this. Because I think this
is really important, and it’s the right question to ask. But start with
this: three out of four kids in college are in public universities. A
generation ago, state support for public universities was strong enough
that three out of four dollars to educate those kids came from taxpayers
and the family had to make up the difference for the fourth dollar.
Today, that has basically reversed itself. That is, that the states are
putting up, just generally across the country, about one out of four
dollars and the families have got to come up with the other three out of
four dollars. This matters because it is the state universities that
are the backbone of access to higher education for middle class
families, and I think that’s the place you have to start the
conversation. I’m not going to let anybody off the hook, but I think
it’s the critical part of the conversation. And I say this — it’s like I
talk about in the book — this is personal for me. I graduated from a
commuter college that cost $50 a semester in Texas.
Those were the days.
That’s
right. It opened a million doors for me. And that happened because I
grew up in an America that was investing in its kids. That America is
gone. We’re not doing that anymore. So I start there at the heart of it.
. . . And then there’s a second piece that we’ve got to factor into the
equation, and that is: one in 10 kids in college is in a for-profit
university. Actually, here are three numbers. They’re not perfect, but
they’re just about right: 10, 25, 50. Ten percent of our kids are in
for-profit universities, colleges. Those for-profit universities are
sucking down 25 percent of federal loan dollars, and they are
responsible for 50 percent of all student loan defaults.
It’s an outrage.
So
we are, the federal government is currently subsidizing a for-profit
industry that is ripping off young people. Those young people are
graduating — many of them are never graduating — and of those that are
graduating, many of them have certificates that won’t get them jobs,
that don’t produce the benefits of a state college education.
You
know somebody to talk to sometime if you want to ever do a separate
story on this is Marty Meehan [who] is the president of the University
of Massachusetts at Lowell. And what he talks about is, particularly,
the young vets who come to UMass-Lowell already sixty or seventy
thousand dollars in debt without a single college credit that will
transfer to an accredited university. Now, think about that.
So
who do you think gets targeted by these for-profit universities? It’s
kids who are the first in their family to go to college. It’s not
happening to the sons and daughters of graduates from elite schools.
It’s happening to young people who are the first in their family to
graduate from college. Many of them have come out of the military,
they’ve gone into the military straight from high school. They’ve now
completed their military service. These are strivers, boot-strappers,
hard-working kids who are the very kids we most want to make sure the
doors of opportunity are open for. You know who else goes [to these
schools]? It’s young, single mothers who are trying to make something
out of their lives, many of them are working two and even three jobs,
who believe that if they can get a college education, their children
will have opportunities that would otherwise be closed off, and yet
that’s not what they’re getting. They’re getting preyed on by these
schools. So I mention this only by way of saying, when we look at
college — you’re not wrong — we have got to use the leverage of the
federal government investment to bring down the cost of college across
the board. But we’ve got particular problems to focus on, both in
support for public universities and the resources that are being drained
away by the for-profit schools.
Here’s the penultimate
question: everything you’re saying are issues that have been important
to me most of my adult life. In 2008, I thought I had a candidate who
was going to address these things. Right? Barack Obama. Today, my
friends and I are pretty disappointed with what he’s done. I wonder if
you feel he has been forthright enough on these subjects. And I also
wonder if you think that someone can take any of this stuff on without
being president. You know, there are a lot of good politicians in
America who have their heart in the right place. But they’re not the
president. Well anyhow. You understand my frustration…
I
understand your frustration, Tom and, actually, I talk about this in the
book. When I think about the president, for me, it’s about both halves.
If Barack Obama had not been president of the United States we would
not have a Consumer Financial Protection Bureau. Period. I’m completely
convinced of that. And I go through the details in the book, and I could
tell them to you. But he was the one who refused to throw the agency
under the bus and made sure that his team kept the agency alive and on
the table. Now there was a lot of other stuff that also had to happen
for it to happen. But if he hadn’t been there, we wouldn’t have gotten
the agency. At the same time, he picked his economic team and when the
going got tough, his economic team picked Wall Street.
You might say, “always.” Just about every time they had to compromise, they compromised in the direction of Wall Street.
That’s
right. They protected Wall Street. Not families who were losing their
homes. Not people who lost their jobs. Not young people who were
struggling to get an education. And it happened over and over and over.
So I see both of those things and they both matter.
Is there anything someone can do about all the things we’re describing, short of being president?
But
we keep fighting back. The way to think about this is not…. Yes, we
want the right person for president. You bet. But it’s all of us
fighting back. . . . This is, and actually, this is where we almost
started this conversation — how, as a people, we reclaim our government.
How we, as a people, force Washington to work for us, not just for
those with money and power. So I just gave a speech this morning. It’s
interesting you would catch me on this particular day. I spoke to the
New England Council so we had lots of CEOs and COOs — about 300 people —
and I spoke on a not very sexy topic, on infrastructure and basic
research. And I made the pitch about the importance of both of those.
You know, gave some of the basic stats on why both are so important to
building a future for this country. Then I did the basic stats on how
we’re falling short. Where we’re cutting our investments — where we’ve
been cutting our investments for 30 years. The Society of Civil
Engineers says we’ve got $3.4 trillion in infrastructure underfunding —
work that we need to do to bring our infrastructure up to current
standards. So I talked about this and about the importance of it in
building a future.
But the third part of the speech was the
political part. It was the democracy part. I said, “So how could this
happen in a country like America? I mean, I’m sitting here with you.
You’re business leaders. Nobody would run a business like this. To
under-invest in the key pieces to help build a future. So how does this
happen?” It happens because there are a lot of people in Washington who
say the answer to everything is, cut taxes. And when you’ve cut them as
much as you can, cut them some more. And a lot of people have the
corollary to that, and that is — cut spending. And it’s spending in all
of the basics that help build a future: cut spending in education, in
resource management, in infrastructure, in research, in core pieces we
need to build a future.
“It’s there,” I said. “Look, get out there
and fight back against this. I’m glad to do it. But I can’t do it
alone. You have to get out there. You’re business leaders! You have to
say ‘enough is enough.’ We have to build a future going forward.” And I
said, “We need your voices. You have to be out there on the front lines.
I’m glad to be out here. I’ll take the point. I’ll be in the leadership
spot. I’ll talk about it, I’ll be loud, I’ll be blunt. But we need your
voices in this. That’s the way we build a future.” And I feel like it’s
all this series of issues we talked about, we have got to bring more
people in.
You know, the other side has its advantage, and boy
have they played it out for 30 years now — concentrated money and
concentrated power. And you can do a lot with concentrated money and
concentrated power. But our side—we have our voices and we have our
votes. If people get engaged on the issues, the votes are on our side.
Seventy-five percent of America wants to raise the minimum wage. That’s
where we’ll head.
There’s a lot of issues like that.
But
that’s the point. Look, there are two ways you can look at that. You
can look at that and say, “Well, obviously, democracy doesn’t work.” Or
the other way you can look at that is to say, “We have the opportunity.
The moment is upon us.” We push back hard enough, we’re pushing for
America’s agenda. Not an agenda to help a small group of people, an
agenda to build a future for this country. And I believe we win. I
believe it.
