Elizabeth Warren: An Okie in Washington riles Wall Street
Oklahoma native Elizabeth Warren is among the leading candidates to
head the newly minted Consumer Financial Protection Bureau. Some
financial insiders are not pleased.
BY DON MECOY
Oklahoman
Published: August 1, 2010
NORMAN — At ease amid noisy young relatives and family photos in her
brother's Norman home, Elizabeth Warren doesn't seem like a person at
the center of a fierce political battle that stretches from Wall Street
to the White House.
But Warren, an Oklahoma native who is a leading candidate to head the
Consumer Financial Protection Bureau that she helped create, has been
the target of invective from financial insiders who fear her ideas.
Anton Schutz, president of Mendon Capital Advisers, last week said in a
Reuters story: "I get disgusted every time I hear her speak." Warren,
61, is baffled by the invective.
"I have never run into anything like what has happened the past few
weeks," she said. "I found myself thinking: So what is it I say? I'd
really like the content."
Her goal, she said, is what it has been throughout the 20 years that
she's been researching financial data, particularly as they relate to
American consumers, whom she believes have been victimized by predatory
practices.
"I want to make it so regular families can read a credit card agreement
in four or five minutes and fully understand what the terms are. No
tricks. No traps. No things that you don't figure out what's happening
until after it bites you and they charge you the $39 and raise your
interest rate to 29 percent," she said.
Financial insiders point to Warren's lack of industry experience as
evidence that she doesn't grasp the complexities of their business or
the impact regulatory changes would have.
"I do understand," she said. "It's that we disagree. There are some
things that I don't think are all right, and people who are making money
off of it think it's just fine."
Last week, White House press secretary Robert Gibbs labeled Warren "a
terrific candidate" to head the Consumer Financial Protection Bureau.
Asked if "Wall Street opposition" to Warren's potential nomination would
factor into the president's decision, Gibbs said: "I don't think any
criticism in any way by anybody would disqualify her."
Always an Okie
Warren attended grade school in Norman, then skipped sixth grade when
her family moved to Oklahoma City. Living on NW 25 Street, she learned
to drive the family Studebaker in the parking lot of the brand new
Shepherd Mall.
She graduated from Northwest Classen at 16 as a debate champ, which earned her a college scholarship.
She became a teacher to brain-injured children, but felt stifled by the
administrative constraints of the New Jersey public school where she
worked. During a Christmas visit to Oklahoma City, her former high
school debate classmates urged her to attend law school.
After operating a private law practice, Warren returned to her first love of teaching.
"As a teacher at that level, you do research — that's just part of the
job," she said. "The area where I was teaching were all the money
courses — commercial law, contract law, bankruptcy law. That's where my
research was, and that's when I started doing research on families that
went broke."
It's a topic she knows something about. Before Warren was born, her
parents lost most of their savings when a partner in a planned car
dealership in Seminole absconded with their money.
Her father, a self-taught pilot who was a flight instructor in Muskogee
during World War II, worked as a traveling salesman and in Oklahoma
City, at Montgomery Ward. He was demoted after suffering a heart attack,
and later took a job as a maintenance worker at an apartment house. The
working-class family couldn't afford to send Warren to kindergarten,
which at the time was offered only at private schools.
"Sure it was partly about my family, but it was about millions of other
families," the Harvard law professor said of her research. "That was the
work I started doing. That's how I ended up where I am today."
Warren has written numerous books and academic articles. Her work
uncovered the fact that most American consumer bankruptcies are not
filed by financial freeloaders, but by people whose finances have
unraveled due to divorce, death or health crises.
Not a politician
Warren's public profile grew through her consumer advocacy, although she
was unsuccessful in her attempts to derail the 2005 bankruptcy reform
pushed by the financial industry.
In the wake of the financial crisis, Warren was appointed to head the
Congressional Oversight Panel charged with reviewing the Treasury
Deparment's implementation of the $700 billion Troubled Assets Relief
Program, commonly called TARP.
Her Oklahoma upbringing is evident in the blunt, basic questions she
asks during hearings, and she recognizes her style differs from the
typical Washington way.
"These people aren't used to simple questions. They don't expect to hear
them and they somehow, when you do (ask them), act like you're not
half-bright or you're somehow asking something nasty," she said.
When asked if TARP has been a successful use of taxpayer dollars, Warren
doesn't evoke economic theories or delve into the fallout from overly
complex financial instruments.
"It's like having a garage sale and you know what you paid for each
thing you're now going to resell and the good stuff is resold at a
profit so it looks like you're making good money. Yeah, but how about
the stuff that's still left behind? That's where the problem is — AIG,
GMAC, GM, Chrysler, Citi," she said. "How fully the American taxpayer
gets paid back, we don't have enough information to tell for sure."
While her plainspoken ways may annoy some, Warren is no fan of business as usual in Washington.
"What's begun to hit me is that people have enormous power and yet
nobody's ever responsible," she said. "How does that happen? Nobody's
ever accountable. Nothing is ever anybody's fault. I hope that the way
this new agency works out is not just that it has the tools to get
things done — it's accountable for making change."
Warren pushed for agency
For several years, Warren has called for the creation of a government
agency charged with protecting American consumers on financial matters.
She repeatedly has noted that toasters are more strongly regulated than
financial products.
She admits her major role in the creation of such an agency is "pretty
cool." While reluctant to discuss her potential nomination as head of
the Consumer Financial Protection Bureau, she acknowledges that the
choice of who leads the agency is an important one.
"I care about the changes that need to be made for middle-class
families," she said. "That's what this new agency is all about. It's
what my work has been about for 20 years. ... the lights suddenly come
on because we're talking about Washington and some big stir there, but
the truth is, for me this is just a logical extension of what I've been
working on for more than 20 years."
However the political matters work out, Warren will continue to return to Oklahoma several times a year.
"My brother David is the best storyteller God has put on this earth,"
she said. "There's nothing I'd rather do than sit on the back porch and
listen to him tell the story of the time they put the pig on the
motorcycle and ran it down the main hall of Norman High."
"I'll always be an Okie."
ELIZABETH WARREN
Age: 61
Occupation: Harvard Law School Leo Gottlieb Professor of Law, currently
on leave. Chair of the Congressional Oversight Panel that reviews
implementation of the government's $700 billion Troubled Asset Relief
Program.
Previous employers: The University of Pennsylvania Law School, 1990-95;
The University of Texas School of Law, 1981-87; The University of
Houston Law Center, 1978-83. The University of Michigan, 1985. Rutgers
School of Law (Newark). 1977-78.
Books written: "All Your Worth: The Ultimate Lifetime Money Plan," 2005
(A New York Times bestseller). "The Two-Income Trap: Why Middle-Class
Mothers and Fathers Are Going Broke," 2003. "The Fragile Middle Class:
Americans In Debt," 2000. "As We Forgive Our Debtors: Consumer Credit
and Bankruptcy in America," 1989. Plus about a dozen academic legal
books.
Recognition: Named one of Time magazine's "100 Most Influential People
in the World" in 2009 and 2010. Named "Bostonian of the Year" in 2009.
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