Even Doonesbury heroine Joanie Caucus is dying to know whether consumer champion Elizabeth Warren will run for the U.S. Senate. Scott Brown’s campaign machinery can’t decide whether to tar her as a “liberal Harvard professor” or a carpetbagger from Oklahoma.
I don’t know whether the Senate is the highest and best use of Dr. Warren’s talents now that President Obama has decided not to nominate her to head up her brainchild, the Consumer Financial Protection Bureau. I don’t know how she would weather the absolute weirdness that characterizes modern political campaigns.
But here are three things I know about Elizabeth Warren, which you will know too if you pick up her 2003 book, The Two-Income Trap (co-authored with her daughter Amelia Warren Tyagi). The community of consumer protection lawyers has known her for a long time, since she spoke at one of our professional conferences soon after the release of that book. That was several years before the current predatory lending crisis and recession broke, vindicating many of her predictions.
- She is very effective at linking personal stories to prescriptions for policy, unlike many liberal political candidates.
- She has a great understanding of the unifying potential of consumer debt as a political issue.
- She won’t roll over for anybody.
My favorite story, found in the chapter of the book entitled “The Cement Life Raft,” recites Dr. Warren’s interactions with Hillary Clinton. In 1998, when Ms. Clinton was First Lady, she asked for a private briefing from Dr. Warren on a proposed bankruptcy law that would have made it harder for families to discharge debts. Warren succeeded in convincing her that the “reform” law, which was widely believed to be supported by then-President Bill Clinton, was bad for children and families. And indeed, when the Republican-led Congress passed the law in 2000, President Clinton vetoed it. But in 2001, when the bill passed Congress again in substantially the same form, then newly elected Senator Hillary Clinton — having received $140,000 in campaign contributions from the banking industry — voted for it.
A close second is the story of Dr. Warren’s brief consultancy for the country’s largest credit card lender, which asked her to suggest policies that would help the bank cut its losses from cardholders in financial trouble. The nub of her recommendation “boiled down to a single, not very startling idea: Stop lending money to families that are already in obvious financial trouble.” The highest ranking banker in the room cut her off, responding, “We have no interest in cutting back on our lending to these people. They are the ones who provide most of our profits.”
This 2003 book also contains the germ of the idea that became the Consumer Financial Protection Bureau: “The argument for re-regulation of consumer lending is a lot like the argument for regulating any other useful but potentially dangerous product. Consider the toaster. … No toaster manufacturer may peddle toasters that have even a 1 percent chance of catching fire. Toaster makers (and conservative economists) could point out that riskier toasters could be made more cheaply… Companies might put special disclaimers and instructions on their toasters, telling customers how to extinguish the fires themselves. But as a nation, we have collectively decided that the risks posed by an unregulated toaster industry are not acceptable. …. Predatory loans may not set houses on fire the way a faulty toaster might, but they steal people’s homes all the same.”
Isn’t this the kind of clear, fresh, humane prose you’d like to hear more of in a political campaign?