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US Consumers’ Champion Elizabeth Warren Accurately Predicts Middle Class Financial Crisis
 Lynne Snierson - Massachusetts School of Law at Andover
April 02, 2010
| | Elizabeth Warren | |
Andover, MA — Elizabeth Warren, the head of Congressional oversight for the Troubled Asset Relief Program who is under consideration to head a new federal consumer financial protection agency, accurately predicted the current crisis of the American middle class five years ago. She did so in an interview conducted by Massachusetts School of Law Dean Lawrence Velvel and the solutions she offered to the escalating problem are even more relevant today.
Warren, a Harvard Law School professor, was the subject of a front page profile in the New York Times last week. She authored the “The Two-Income Trap: Why Middle-Class Mothers and Fathers are Going Broke”. She discussed her ideas with Dean Velvel in an episode of “Books of Our Time” aired on Comcast. Although the program originally aired five years ago, her insights are right on the mark.
In her interview with Dean Velvel, Warren made the point that dual-income households are in fact more prone to economic collapse than single-income families and they are particularly vulnerable when faced with an unexpected job loss, devastating illness, or divorce. She also discussed in detail the other factors, such as the predatory lending practices of the major financial institutions, which contribute to the high rate of bankruptcies and foreclosures nationwide.
Under the headline “Consumers’ Champion Wages Her own Crusade”, Thursday’s front page Times story identified Warren as the “scourge of Wall Street bankers” for her resolve to protect the middle class and help families stop drowning in debt. The article also termed her the “most prominent consumer advocate in years.”
In the episode of “Books of Our Time”, Warren told the story of a homeowner who had suffered a serious heart attack and could not work. Consequently, he fell behind in his mortgage payments and received the dreaded call from his lender. Rather than foreclose on the family home, the lender offered to restructure his loan, with cash taken out. As Warren relayed, the homeowner was sophisticated enough to recognize that his interest rate would be doubled and his term lengthened so that he would in fact lose his home sooner and the lender would own his valuable property.
As Velvel noted, the average mortgagee is usually not that savvy and in desperation would accept the offer. Warren concurred. She said that financial institutions issue credit to those least likely to repay the debt, charge them high interest rates on credit cards and loans, and then tack on additional fees and charges. She said that once someone becomes deeply in debt to the financial institutions it is nearly impossible to recover. So the system must be changed.
Currently, the White House is backing Warren’s idea for a new consumer financial protection agency and it has already been approved by the House of Representatives. Warren’s plan is a top Democratic priority in the Senate, according to the Times, and she may be picked to head the agency.
Because of the timely subject matter, the episode of “Books of Our Time” featuring Warren’s interview with Dean Velvel was re-broadcast last weekend on the Comcast network in New England and the Mid-Atlantic region and on WZMY-TV in New England. The show, which won the 2005 Communicator Award of Distinction, will be rebroadcast on 65 other stations around the country.
Warren’s comments have proven to be even more topical and relevant today and her views may be accessed by clicking here.
snierson(at)mslaw.edu
MSL Educational Forum and Books of Our Time are MSL’s two multi award-winning cable shows on the Comcast network and WZMY-TV (Ch.50) that deal with current legal, literary, and educational issues. Velvel’s talk with warren is timely, provocative, and informative.
The Massachusetts School of Law at Andover is a non-profit law school purposefully dedicated to the education of students from minority, immigrant, and low-income households who otherwise would not have the opportunity to obtain a legal education. |
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