The Boston Globe has named Harvard professor Elizabeth Warren “Bostonian of the Year” for bringing a “sense of sanity to the economic crisis.”
In 2003, long before the economic crash, Warren was the subject of a CommonWealth magazine interview in which she had a prescient view of the ramifications of the average American’s growing debt:
“Credit has become a product just like any other, like toasters. Only credit is deregulated and toasters are deeply regulated. Manufacturers are not permitted to market toasters in the United States that have a one-in-12 chance of bursting into flames. Credit purveyors are permitted to market home mortgage loans that have a one-in-12 chance of throwing a family into bankruptcy. That’s the principal difference. When the credit industry was deregulated, it quickly learned that it could pour money into marketing debt to marginal families and increase its profits even as the number of families who ended up in default grew.”
More recently, Warren talked to CW‘s Michael Jonas (see “Broken Homes“) about the bursting of the housing bubble and its effect on struggling neighborhoods:
“This is a catastrophe of monumental proportions … The business model was premised on selling high-priced mortgages to people who had low probability of repayment, and over time that was unsustainable.”