Elizabeth Warren: Financial Rules ‘Literally Don’t Work Anymore,’ Regulations Should Be ‘Clear And Painful’
Elizabeth Warren, a professor at Harvard Law School who has more recently assumed the role of chairwoman of the Congressional Oversight Panel for the Troubled Asset Relief Program (TARP), sat down with The New Yorker's James Surowiecki recently. The topic was Warren's brainchild, the Consumer Financial Protection Agency Act, which is currently being debated in Congress.
The agency would demand transparency in consumer financing, which Warren detailed in her essay, "Unsafe at Any Rate," published in Democracy in the summer of 2007.
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Surowiecki pointed out that critics charge that consumer financial protection would restrict consumer credit too much, making it difficult for people to borrow money. Warren's response: "the point is not to say, 'Thou shalt not charge somebody more than X,' which would have restrictive consequences. It's to say, you've got to be really clear about it."Warren added that last year's historic bailout of the financial sector necessitated a different set of rules regulatory principles:
"...The old rules of regulation just literally don't work anymore. Because now we're under this giant shadow of implicit and explicit government guarantees ... we said in effect ... we will throw as many taxpayers as we need to throw under the bus to keep your business functionally operational in the way that it was functionally operational before without a cost to you personally, and to your shareholders personally. That's a whole new world."
According to Warren, financial institutions need a regulator regime that is both "clear and painful."
She has been warning about the financial system for a long while.
Pharma Screwing Customers Before New Laws Take Effect
Drug Makers Raise Prices in Face of Health Care Reform
Even as drug makers promise to support Washington’s health care overhaul by shaving $8 billion a year off the nation’s drug costs after the legislation takes effect, the industry has been raising its prices at the fastest rate in years.
In the last year, the industry has raised the wholesale prices of brand-name prescription drugs by about 9 percent, according to industry analysts. That will add more than $10 billion to the nation’s drug bill, which is on track to exceed $300 billion this year. By at least one analysis, it is the highest annual rate of inflation for drug prices since 1992.
The drug trend is distinctly at odds with the direction of the Consumer Price Index, which has fallen by 1.3 percent in the last year.
Drug makers say they have valid business reasons for the price increases. Critics say the industry is trying to establish a higher price base before Congress passes legislation that tries to curb drug spending in coming years.
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But drug companies say they are having to raise prices to maintain the profits necessary to invest in research and development of new drugs as the patents on many of their most popular drugs are set to expire over the next few years.
So they are telling us that they can't plan ahead a few years in advance to anticipate patent expirations? That's a crock.
This is also a bit different than credit card companies. You can at least take your credit and debt to another place but in this case drugs are patented and thus you don't have a choice if there is not a generic. This is the other instance where a health motive conflicts with a profit motive. Is there an easy way to turn the profit motive to health motive for pharma? Maybe make them non-profits like health insurance companies?