Your Money ;
; We’ve lost $5 trillion in retirement savings.
; Credit cards are loaded with traps.
; Who’s protecting the public?
Speaking Out An interview with consumer watchdog Elizabeth Warren
Elizabeth Warren is angry— angry for you, as she has always been. Warren chairs the special congressional panel monitoring the $700 billion
banking bailout. And her anger is for the $5
trillion lost in 401(k) and other retirement
accounts, losses that scrambled the nest
eggs of millions of hard-working taxpayers,
consumers and homeowners. It’s directed at
mortgage and credit card lenders who for
decades, she says, knowingly tricked and
trapped consumers with bad debt—earning
themselves millions in bonus money in the
process. It’s at the government for not doing more to
protect its citizens before the economic fallout of last
fall and, since then, for failing to require more disclosure and accountability of those companies that got
your tax money for their mistakes.
A tenured Harvard law school professor, Warren has long been a
champion for consumers. In 2005, for example, she found that nearly
half of all U.S. bankruptcies were filed by working families in the aftermath of a major illness or injury, even though three out of four had
health insurance at the onset of their physically—and financially—
debilitating condition. “That should not be happening,” she says.
In a study for AARP released in June 2008, months before the Wall
Street meltdown, she reported that those age 55 and older were the
fastest-growing group to declare bankruptcy in 2007—nearly one of every four cases, and with bankruptcy rates increasing significantly with
age (including a sixfold increase since 1991 among those 75-plus).
“Again, medical problems were a big reason,” she told the AARP Bulletin, “but so were their attempts in trying to just maintain their homes—
such as having to charge emergency repairs to credit cards because their
expenses outstripped their incomes for months or years.”
Warren was appointed to the panel overseeing the U.S. Treasury Department’s Troubled Asset Relief Program (TARP) in November by Senate Majority Leader Harry Reid, D-Nev. “He was very much impressed
by her advocacy on behalf of middle-class families and consumers,” says
Reid spokesman Jim Manley.
It’s an advocacy that stems from her own childhood in Oklahoma, as the
youngest of four children. Her parents survived the Depression and Dust
Bowl, but never fully recovered. Her father, who lost his job as a salesman just as she was born, wound up working as a maintenance man. Her
mother worked full time (for Sears’ catalog department)—a rarity in those
days. “We needed the money,” says Warren, who turns 60 this month. “As
a child, my mother would put her hand on my forehead when I was sick
while she calculated how big the doctor’s bill already was and whether
she was able to pay another. There were a lot of times, with all four kids,
when she would say, ‘Let’s give it a couple more days.’ ”
Hard work and self-reliance were learned early on. “My parents raised
me to believe you can’t count on others to bail you out from your problems,” she says. Warren’s first job was at age 9, baby-sitting a neighbor’s
child with a bad case of colic. “I earned 35 cents an hour to rock that
screaming baby back and forth, so his mother could escape for a while,”
she says. “But by the time I was 10, I had a sock full of money … and have
never been without cash since then.”
She graduated from high school at age 16 and attended college on a full
scholarship. She became a law professor at age 26, first at Rutgers, where
she graduated, and later taught at Texas, Michigan, Penn and, since 1995,
at Harvard, where she has specialized in commercial law, contracts, bankruptcy and consumer debt.
She’s also been a best-selling
author, whose eight books include The Two-Income Trap
and All Your Worth, co-writ-ten with her daughter, Amelia Warren Tyagi. And she has
been an attorney who went
after job-discriminating employers and deadbeat dads.
Early on, she taught brain-injured children.
With the congressional
panel, Warren has been
charged with tracking the effectiveness of the huge federal bank bailout program.
The panel’s monthly reports
14 AARP BULLETIN JUNE 2009