New Orleans With the passage of Dodd-Frank and the advent of the coming Consumer Protection Finance Agency there was a huge hubbub from business and others opposing the appointment of Harvard Law Professor and bankruptcy expert Elizabeth Warren to run the agency. Supposedly she was opposed by Treasury Secretary Timothy Geithner, the bank bailout Wall Street buddy-boy, which made me like her in a kneejerk sort of way: anyone who was his enemy was surely my friend! She had a hardscrabble personal story that started in red dirt Oklahoma with a father pushed over the financial edge, and knowing that country also biased me towards her, even though her being at Harvard stuck in my craw. All of that is over now. I read the book she wrote with her daughter, Amelia Tyagi, called The Two-Income Trap: Why Middle-Class Mothers & Fathers are Going Broke, and now I’ve gotten my head together on the true facts and her core arguments, and I totally get it. Count me as a fan!
I also get why so many were lined up against her: first, she’s an equal-opportunity offender zinging left, right and in-between on the issues whether banks or unions, and, secondly, she’s an iconoclastic feminist arguing a totally womanist line with women and children in front, but questioning the normally unchallenged assumptions about women in the workplace. That’s a deadly set of variables for any political calculation. No doubt she only got this far because most people – like me! – didn’t ever bother to read the book!
- She zings Citibank before the meltdown for an average mortgage interest rate of about 17% and in a tell-all story relates the tale of a one-day consulting gig she did for them about bankruptcy and families in which she argued that Citi should simply not lend to people overstretched, and a senior executive dismissed the entire argument because jacking the overextended with more products and predatory interest rates was essentially their golden goose and business model.
- She tells a moving story of a meeting with Hilary Clinton as a former First Lady and how quickly Clinton got the importance of opposing the passage of a proposed new corporate-backed bankruptcy law and committed her support to the fight, but then once elected as a U.S. Senator from New York, turned around completely to support her new constituency on Wall Street rather than women. She everything but says that Clinton and senior Senator Chuck Schumer were bought and paid for by campaign contributions.
- She comes out for universal school vouchers and total school choice for good reasons perhaps, but based on the fuzziest of political and economic premises about what would really create “equity” in school offerings, all of which must have driven the teacher unions up a wall.
Generally she drives the hammer hard on the nail.
Over-consumption is roundly dismissed as the economic trigger of the debt crises, which she argues sprang directly from middle class parents trying to find two critically essential things for their children: good schools and safety. In the midst of a national education crises and too often random urban crime, both parents were not only forced to work, but also ended up doubling down on inflated house mortgages in the best school districts: the two-income trap. Unfortunately, doing so eliminated in the Warrens argument, the historic bench strength of having a reserve worker ready (the wife) that could go to work in a crisis brought on my job loss, medical bills, or family breakups. Folks were already stretched over the line so tautly that the least twist and they were pulled under.
I can’t say how happy I was to read this book and find out that Elizabeth Warren is fellow traveler on the citizen wealth bus. I could go on and on, but every once in a while it’s such a pleasure to go back to the first sources and find with total surprise that someone is even better than I could have imagined.
Props to President Obama for stepping up and finding a way for Warren to work in the White House and make the Consumer Financial Protection Agency happen! The beginnings always prejudice the ends, so she’s in the right space, regardless of whether or not she can run the show. Better to have a toe smasher than a tiptoe dancer protecting the financial futures of desperate families!