An Interview with Elizabeth Warren

Q: Where are we with the bailout? Has it done anything to help the economy and save jobs?

Elizabeth Warren: Let’s look at where we are. A year ago, we were talking about how there was too much concentration in the financial services industry. Remember too big to fail? Now the big banks are bigger. Instead of having implicit government guarantees, they have, in effect, explicit government guarantees. And the number of smaller financial institutions has shrunk. So there is more concentration.

A year ago, we were talking about toxic assets on the books of the banks. They still have toxic assets on books. We are talking about pulling some of those toxic assets off their balance sheets with a program that, at best, is going to be modest.

In February, we talked about the stress tests. All of the banks passed their stress tests. The Congressional Oversight Panel had real concerns about those stress tests—whether they were stressful enough. If you remember, the stress tests had a worst-case set of metrics. One of them had to do with jobs data. The worst-case scenario was 8.9 percent unemployment—far below our current level. So, we’ve been calling to repeat those stress tests.

We’ve pumped a lot of money into the top of the financial structure. The stock market has recovered. There has been some recovery, especially in financial services, but that hasn’t had the trickle-down effect that Henry Paulson said it would.

We have used our taxpayer dollars not only to subsidize these banks but also to subsidize the creditors of those banks and the equity holders in those banks. We could have talked about forcing those investors to take some serious hits on their risky dealings. The idea that taxpayer dollars go in first rather than last—after the equity has been used up—is shocking.

This is just a sample of the important interview that Ruth Conniff had with Elizabeth Warren in the December/January issue of The Progressive. To read the entire interview, subscribe now for only $14.97. Plus, you'll immediately get to read the other urgent articles in the December/January issue, including an essay by Wendell Berry on the costs of displacement and an article by Senator Bernie Sanders denouncing the Wall Street bailout.