jason ross

My name is Jason Ross. And in the spring of 2009, I was a writer at “The Daily Show With Jon Stewart.” And we had a big problem, because we had to make comedy about the financial crisis. And that was hard, much harder than writing jokes about something horrible like the Iraq War. Everybody understands war. Nobody understood the financial crisis. It didn’t help that we couldn’t even trust the experts, because they’re the ones who got us into this. In 2009, nobody had any credibility. The media didn’t have credibility, because they let it happen under their watch. Wall Street didn’t have credibility. They created it. Washington was creating something called a money bazooka, so they didn’t have any credibility with us. So we were kind of in a bind with some of these guests, because we didn’t trust them 100 percent. But we also didn’t have the expertise to challenge them with much credibility. So we had some limited options. And it was always a lot of work. But on April 15, 2009, we had a guest coming on who would really give us the goods.

[music]

elizabeth warren

I thought, what am I doing here? This is a really bad idea.

michael barbaro

From The New York Times, I’m Michael Barbaro. This is “The Daily.” Part 3 in our series on pivotal moments in the lives of the top four Democratic candidates for president. Today: Elizabeth Warren. It’s Friday, December 13.

elizabeth warren

Good to see you. I’m well.

michael barbaro

Senator.

elizabeth warren

How are you doing, Michael? That’s O.K. There we go. We got it. Where do you want me?

michael barbaro

Right there. Yeah. There’s your hot water.

elizabeth warren

Got it.

michael barbaro

So thank you for making time for us.

elizabeth warren

I’m delighted to be here.

michael barbaro

Let’s just jump in. My colleague Andrew Ross Sorkin, he’s a financial columnist at The Times who’s written a lot about your career, told me about what feels like a turning point moment for you back in April of 2009. So that’s where I want to start this conversation. It’s the height of the financial crisis. And you get a call from “The Daily Show With Jon Stewart.” What do you remember thinking when you got that call?

elizabeth warren

Really? [LAUGHS] I mean, here I am, doing this really wonky work as the financial markets are in freefall. The question every day is whether the banks can survive. Millions of families are facing foreclosure. People have lost their jobs. Pension funds have gone down. And I have this little panel, the Congressional Oversight Panel, that is supposed to bring some accountability to this system. And I’m fighting the Treasury Department every day, the Federal Reserve every day, and just trying to talk about what’s happening. And, frankly, since there is no official legal power for that little oversight panel, to try to get more people engaged so we can put some pressure on them to get some accountability in what’s going on with taxpayer money and with these big banks and with the bailout following the crash — this $700 billion that Congress had authorized. And when Jon Stewart called, I thought, wow! I could talk to a whole lot of people who otherwise might not be watching this and be able to talk about what’s going on and start to put it in some context, because it’s not only — think about where it is at that moment. It’s about the crash and arresting the freefall and trying to save the economy, but it’s also about understanding what went wrong so we do the right thing next in terms of how we change the rules and regulations around Wall Street and financial matters.

michael barbaro

So you see this as a big opportunity to explain what is going on —

elizabeth warren

Right.

michael barbaro

— to people.

elizabeth warren

That’s my first response. [LAUGHTER] And then —

michael barbaro

And then?

elizabeth warren

I actually show up in New York to do the Jon Stewart show. And I’ve been watching it for a long time, and, frankly, taken real delight in watching Jon Stewart skewer one guest after another. And all of a sudden, it’s like realizing, whoa, I may be the turkey at this Thanksgiving dinner. So the closer I get to going on, the more anxious I get. And they put you back in this little tiny, tiny green room, right, where they have some food out and some drinks out. And I sat there. You could hear kind of through the walls, they’re warming up the crowd. And I thought, what am I doing here? This is a really bad idea. And I went to the bathroom and threw up.

michael barbaro

You threw up?

elizabeth warren

Yep. And I thought, I may look stupid and, more importantly —

michael barbaro

Your work.

elizabeth warren

— I may make the work look stupid.

michael barbaro

So once you kind of clean yourself off —

elizabeth warren

And that’s what I had to do. That’s exactly right. I still remember standing over this tiny little sink and washing my mouth out, you know, with my hand and putting cold water all over my chin and looking up, looking at myself in the mirror and thinking, you think anyone can tell you just threw up?

michael barbaro

[LAUGHS]

[music]

michael barbaro

So once you get out on the set, how does it go?

elizabeth warren

It’s worse than I thought.

archived recording (jon stewart) My guest tonight, a professor of law at Harvard University —

elizabeth warren

I’m standing behind this big, heavy curtain. And then, pshoom!

archived recording (jon stewart) Please welcome to the show Elizabeth Warren! [APPLAUSE]

elizabeth warren

I end out on stage. And all of it is new to me.

archived recording (jon stewart) Welcome to the show. You are — you are the head of the Congressional Oversight Panel on this relief effort, the money that is being funneled to these companies. How much money has been sent to them, and what have these companies done with it? archived recording (elizabeth warren) Well, we think it’s about $590 billion.

elizabeth warren

And he just starts peppering me with questions. I mean, he is a smart and thoughtful man.

archived recording (jon stewart) Are you confident that the right thing to do was to hand over billions of dollars to these companies? Do you believe that this is going to work? Do you think this was the right thing to do? Are we already behind the eight ball? archived recording (elizabeth warren) You know, we started this process when Secretary Paulson basically said, here’s $350 billion, to the financial institutions. And he did it —

elizabeth warren

He’s asking me this. He’s asking me that.

archived recording (jon stewart) Was the money stolen? Is that why he didn’t want any of it? Was it — archived recording (elizabeth warren) No.

elizabeth warren

Nothing is feeling coherent.

archived recording (elizabeth warren) Some of the money is now being committed to P.P.I.P — archived recording (jon stewart) Are you about to curse? [LAUGHTER] Is that an acronym? Yeah. O.K., I’m not even going to try on this one. What — what does P.P.I.P. stand for? archived recording (elizabeth warren) I don’t remember. It’s the — it’s an investment thing.

elizabeth warren

My heart rate slowed down. And I thought, well, that’s it. I’ll call Leader Reid tomorrow, Harry Reid, the head of the Senate, and resign politely for having so humiliated myself and the Congressional Oversight Panel. And I will resign. And he can put someone in who at least can remember the names.

michael barbaro

I’ve watched it. You did — you choked.

elizabeth warren

Yeah, I choked. I choked. I choked big time.

archived recording (elizabeth warren) Is that — oh, I remember. It’s Public-Private Investment Program. I’m sorry. It just took me a minute. archived recording (jon stewart) Public-Private Investment — archived recording (elizabeth warren) Investment Program. archived recording (jon stewart) — Program. archived recording (elizabeth warren)^: ^elizabeth warren P.P.I.P. archived recording (jon stewart) P.P.I.P. archived recording (elizabeth warren) P.P.I.P.

elizabeth warren

So, anyway, we finish up, and, like, I’m ready to get out of this chair.

archived recording (jon stewart) Elizabeth Warren, we’ll be right back.

elizabeth warren

And the guy comes over to hustle me off, because, you remember, Jon Stewart’s interviews used to be one segment. And that was it. When the commercial comes, you’re through with the guest. And he’s looking at me. And he said, so what would you have said about this crisis? And I told him in one sentence. And he said, O.K., stay. And —

michael barbaro

You were granted a television reprieve.

elizabeth warren

Well, a reprieve or a second firing squad. I mean, who knows?

archived recording (jon stewart) We’re here with Elizabeth Warren.

elizabeth warren

So —

archived recording (jon stewart) Why isn’t the first thing we do is to say no one will be allowed to be too big to fail? archived recording (elizabeth warren) O.K., so what you’re asking is, if we can get this bus pulled out of the ditch, the economy, what does the road look like going forward? archived recording (jon stewart) Yes. archived recording (elizabeth warren) Because this really is the big question.

elizabeth warren

I told him about what had gone wrong in America.

archived recording (elizabeth warren) Every 10 to 15 years, there’s a financial panic in our history. You just look at it. And there’s a big collapse, big trouble. People lose their farms, wiped out, until we hit the Great Depression. We come out of the Great Depression. And you see, you know, we can do better than this. We don’t have to go back to this kind of boom and bust cycle. We come out of the Great Depression with three regulations. We go 50 years without a financial panic, without a crisis. Then what happens is we say, regulation, ah, that’s a pain. It’s expensive. We don’t need it. So we start pulling the threads out of the regulatory fabric. And what’s the first thing we get? We get the S. & L. crisis. And what is our repeated response? We just keep pulling the threads out of the regulatory fabric. So we have two choices. We’re going to make a big decision probably over about the next six months. And the big decision we’re going to make is it’s going to go one way or the other. We’re going to decide basically, hey, we don’t need regulation. You know, it’s fine. Boom and bust, boom and bust, boom and bust, and good luck with your 401(k). Or, alternatively, we’re going to say, you know, we’re going to put in some smart regulation. It’s going to adapt to the fact that we have new products. And what we’re going to have going forward is we’re going to have some stability and some real prosperity for ordinary folks. archived recording (jon stewart) And that’s socialism. That, by the way, that is the first time in probably six months to a year that I felt better. Something — I don’t know what it is that you just did right there, but for a second, that was like financial chicken soup for me. That was — [CHEERS] Thank you. That actually put things in a perspective and made a little bit of sense. And I really do appreciate that. And good luck with that.

[music]

michael barbaro

Andrew Ross Sorkin, why is this the moment that you wanted us to ask Elizabeth Warren about?

andrew ross sorkin

So this is really the moment for Elizabeth Warren when she learns how to tell a story with a narrative arc about big, complicated ideas. And she figures out how to make those stories resonate with a large audience. This is that skill that has really become almost her political brand and has brought her the followers and created this ascension of her role as one of the leading candidates in the presidential 2020 campaign. That episode of Jon Stewart was the first time I ever saw her do that and, really, I think the first time the public ever saw her do that. It was also the moment, as I’m covering the financial crisis in real time as a columnist for The New York Times, that the financial world looks up and says, who is that and where did she come from?

michael barbaro

I want to understand how you end up on that set. How do you become an authority on the U.S. financial system? Where does that interest really begin?

elizabeth warren

So I grew up in a family that was hanging on to its place in the middle class by its fingernails. And I always wanted to be a teacher, started out as a public school teacher. I taught special education. I ended up going to law school, practiced law for about 45 minutes and ended up right back in teaching. So I teach contract law, commercial law, corporate finance, partnership finance, bankruptcy law, debtor-creditor, law and economics. If it was about money, I was teaching it. And the question that always was at the center of what I did is, what’s happening to America’s working families? Why is America’s middle class being hollowed out? So piece at a time, what this pulls me into is first studying the families themselves — that they’re going broke. Why were bankruptcy rates in the ‘80s going up and up and up?

andrew ross sorkin

So during this period, personal bankruptcies are skyrocketing. People are taking on way too much debt. In fact, individuals are going to personal bankruptcy court and asking for the equivalent of loan forgiveness to get back to zero. And Elizabeth Warren is fascinated by this phenomenon and what’s driving it and where it came from. And, you know, at this point, she’s a registered Republican.

elizabeth warren

I think so, at this time period. I’ve been registered an independent, registered a Republican.

andrew ross sorkin

And so while she’s going into this research project, she’s making some assumptions that follow those politics.

elizabeth warren

So when I first started the research — now, this is before I quite had all the pieces — I thought, well, my family was in a lot of financial trouble. But we never declared bankruptcy. So I was willing initially to kind of accept this notion that the people who end up bankrupt, the people who end up broke, did something wrong. They are the profligates. They were the ones who went to the mall and hooped it all off. And they tried to buy a house they couldn’t possibly afford and four cars. And then it all came piling in on them. And they took the easy way out and went to bankruptcy.

andrew ross sorkin

And so she gets on a plane and literally starts traveling the country and visiting bankruptcy courts.

elizabeth warren

And I’m really thinking, yeah, I’m going to go check out these people who have carelessly run up debts and, you know, now they’re coming to the court to be able to wash away these debts in a very generous bankruptcy program. And I was in court — I remember this — in San Antonio, Texas. And a lot of courtrooms, they’re quiet. They’re often sort of dark. And up at the front is a judge on a raised platform behind a heavy, imposing desk. And I’m sitting in the back. And I watch the people who come in. And they’re — they’re dressed for church. You can just tell they’ve got on their finest. They’re men and women who are clearly anxious. Most of the women are clutching tissues. Most people look just one step away from tears. And as I sat there, I started to think, wait, these are people who look like my neighbors. They look like folks in my family. And they are so humiliated to be there. That was the part that hit me the hardest, that it’s easy for an economist to say, oh, bankruptcy is a great deal. Yeah, right. You stand up and try declaring publicly —

michael barbaro

That you’re out of money.

elizabeth warren

— you’re a loser, not just out of money. You’re in a hole so deep that dead flat broke looks good to you.

michael barbaro

So you’re realizing that your assumptions about who is in trouble financially, who goes bankrupt —

elizabeth warren

They’re just wrong.

michael barbaro

— they’re wrong?

elizabeth warren

Many of them are solidly middle-class people who got good educations, bought homes, had families, and then a serious medical problem, a job loss, a divorce or death in the family, and they were over a financial cliff. And, actually, you know something that made me angry about it? That story of who those people are is one that was actively being pushed through the media, actively being pushed by these bankers who put out, oh, bought and paid for study to say, people enrich themselves through bankruptcy as often as the law allows. No.

archived recording The committee will come to order.

andrew ross sorkin

So as this is happening, Washington is considering reforming the personal bankruptcy process.

archived recording This year, 1 in every 100 households will declare bankruptcy. In other words, individuals are falling deeper and deeper into debt with less and less capacity to get themselves out.

andrew ross sorkin

And she’s watching this all play out. And she’s seeing the credit card companies and the big banks lobbying not to make it easier for individuals to get out of debt, but actually to make it harder.

archived recording So the federal bankruptcy law is probably too liberal. I mean, it’s grossly too liberal. And if you want to know how liberal it is, compare it with all the bankruptcy laws of Western Europe. And you’ll see that ours is a kindergarten system compared to a very severe system over there.

andrew ross sorkin

And so between her research and watching what’s happening in D.C. —

archived recording I think it’s — it’s too easy to go bankrupt, and it’s too tempting.

andrew ross sorkin

She decides it’s not only not a personal responsibility story, it’s actually something much more systemic. It’s a system that she sees as being designed to prey on people who rely on credit cards. It’s the insurance companies that don’t cover what you think they cover. It’s the mortgage agreements with intentionally confusing fine print. It’s the whole system set up in a way that if you’re not rich, you’re extremely vulnerable. And on top of all of that, it’s a system that she sees as being put in place and paid for by the big banks themselves.

elizabeth warren

It’s so wrong. And there is just not much of anybody out there to fight for these families.

andrew ross sorkin

What happens to Elizabeth Warren in this moment is pretty remarkable. She changes her party affiliation from Republican to Democrat. She changes stripes, midlife.

elizabeth warren

And, boy, that’s when I got in the fight.

michael barbaro

We’ll be right back.

[music]

michael barbaro

So with all that in mind, Senator, this journey that you’re on at this moment, it intersects with a financial crisis, the financial crisis. So what did you do once the financial system starts unraveling? Because you’re an academic at this point.

elizabeth warren

Yeah. I’m a teacher.

michael barbaro

How do you — how do you suddenly become somebody who is suddenly involved in trying to put out this fire?

elizabeth warren

So I’m at home one night, late in the fall of 2008. And the markets have crashed. I’m going in literally every morning and teaching my bankruptcy class. And I end up not teaching the day’s lessons. I end up teaching all of the things that were in the headlines the day before. So I’m having a bunch of students over on a Thursday night for dinner, for barbecue. And the guy is delivering the barbecue. Our golden retriever is doing big circles around — you know, is in heaven smelling this barbecue. And the phone rings. And it’s this soft-spoken man who says, this is Harry Reid. But I said, who? And he said, Harry Reid. I’m the majority leader in the United States Senate. I said, right.

harry reid

I called her up in her home in Massachusetts and asked her to come down to visit with me.

elizabeth warren

And he says he wants me to come head up this Congressional Oversight Panel, come to Washington and help oversee what’s going on during this crisis.

harry reid

I was going to have within the Senate a task force to take a look at what was going on with the financial meltdown.

andrew ross sorkin

What Harry Reid wants her to do is to help Congress oversee this huge bank bailout, the $700 billion of taxpayer money that Congress authorized to save the banks in the weeks after the crash and really to try to help understand what went wrong in the first place.

harry reid

It was very important for me as the leader to see somebody that I felt they really knew what they were talking about.

andrew ross sorkin

And Harry Reid’s really looking for somebody who’s independent, an independent expert who is not all enmeshed in this whole world and can see, hopefully, things a little bit more clearly.

harry reid

Elizabeth Warren was different. She was an academic. She had studied the financial world and had an insight into it that others didn’t have. She had a different insight than people who were actually in the business community, and they were, in some ways, significantly different.

elizabeth warren

I had no idea. I didn’t even know what this particular thing was, this little regulatory thing that he was asking me to do. But my view was, our country is in a crisis. And so I said, yes. My view was, oh, this could be cool. I’m going to have authority to be able to come in and say to the Treasury Department and to the Fed, I want to see your numbers. And I want to see your plan. I want to see where this $700 billion that Congress had authorized, I want to see where that money is going and what you’re getting in return, what kind of promises and changes from the banks. And so I’m thinking, ah, we’re going to do this, right? So that night, I sat down and actually looked up the statute that authorized this Congressional Oversight Panel. And it had some stuff about how people get appointed and how they get paid and so on. And then it just says, we’ll write reports every 30 days. And I thought, whoa! What? So I kind of have this moment of, I’m still going to do it. I’ll do whatever I’ve been asked to do. But I thought, O.K., they gave me one tool. Write reports? I’ll write reports. And that’s what I started doing. I write these reports. Every 30 days, I get my panel together. There are five of us all together. I’m the chair. And, man, we just tear into it. But here was the thing. This was important to me. This is — this is the part I was starting to learn. The reports are very technical. But the front part is always written in plain English. And then I did videos.

archived recording (elizabeth warren) I’m Elizabeth Warren, chair of the Congressional Oversight Panel. I’m here to introduce our June oversight report.

elizabeth warren

To explain what had happened, explain what the report’s about.

archived recording (elizabeth warren) A.I.G. was so seriously under-regulated that although 400 agencies were supposed to keep an eye on it, nobody had a complete picture.

elizabeth warren

And explain what our recommendations are.

archived recording (elizabeth warren) The rescue of A.I.G. continues to have a poisonous effect on the marketplace.

elizabeth warren

And just kept doing it every 30 days.

archived recording (elizabeth warren) By providing a complete rescue that called for no shared sacrifice among A.I.G. and its creditors, the government fundamentally changed the rules of the game on Wall Street.

andrew ross sorkin

So she’s doing these reports and making these videos. And they’re getting some traction. But, obviously, there’s a limited audience for these things. And they’re clear, but they’re not exactly must-watch TV.

elizabeth warren

So what I mostly am doing in those months is just explaining what went wrong. My job was to say, no, it is not too complicated to understand. Here’s exactly what happened.

andrew ross sorkin

Finally, that story lands a big audience.

michael barbaro

The story you told on Jon Stewart’s show.

elizabeth warren

That’s right.

archived recording Welcome back to “Morning Joe.” And here with us now, the chair of the Congressional Oversight Panel and professor at Harvard Law School, Elizabeth Warren.

andrew ross sorkin

And it gets her this big public platform —

archived recording 1 For Harvard professor Elizabeth Warren. We’ll hear from her in just a moment. archived recording 2 Oversight Panel chair, Elizabeth Warren, is going to join us live. archived recording 3 Elizabeth Warren, she’s going to be joining us live. archived recording 4 Welcome Elizabeth, appreciate you joining us. archived recording (elizabeth warren) I’m always glad to be here. archived recording 5 Professor Warren, thanks very much for joining us again. archived recording 6 Will you run for president — archived recording 7 Please? archived recording 8 — in 2012, please? archived recording 9 It would be helpful. archived recording (elizabeth warren) [LAUGHS] I have to go teach a class in two hours. archived recording 10 Oh, my gosh. O.K.

andrew ross sorkin

— that she then uses to advocate for what some believe to be radical regulatory shifts in the system — much tougher protections for consumers, much tougher rules governing Wall Street, and a stronger watchdog overseeing it all. And a lot of people applauded that. But others thought it was crazy.

robert wolf

I think Elizabeth Warren, in some ways, became the boogeywoman.

andrew ross sorkin

Wall Street hates her. Her name is like a dirty word on Wall Street. I mean, I remember calling up bank C.E.O.s at that time. And if I mentioned the name Elizabeth Warren, you know, they might have dropped the phone on me.

robert wolf

There was incredible amount of anxiety, right?

andrew ross sorkin

People like Robert Wolf, the C.E.O. at the time of the American arm of UBS, the largest Swiss bank.

robert wolf

And there was just an unknown. And I think that this just brought a new unknown to it with kind of a new sheriff in town. And Elizabeth Warren was a smart sheriff. She was a passionate sheriff. And she had a plan that she’s been talking about, unbeknownst to us at that time, for years.

andrew ross sorkin

She was advocating for a complete rethink of the banking system. And that was anathema to the bankers, because it would have fundamentally rewritten the rules. It would have meant that most of these people wouldn’t even have jobs when it was over.

robert wolf

Most of the bank C.E.O.s felt that she was very smart. She was very passionate. But she’s never been there, done that. There was no question that they were nervous that she would take her passion and angst and then drive home these rules that — no one was sure at the time whether they would be helpful or hurtful. So it was clear to me that, in many ways, people were either scared of her or disliked her or felt like, you know, you’ve never really been there. So what do you know about it?

michael barbaro

So what is your overarching goal at this moment? What are you envisioning that you can get done in this corner of the regulatory oversight system in the middle of this financial crisis?

elizabeth warren

I started thinking, this is a great moment to make government work again for the people, instead of working for the big banks. I think of it as the fire — the crash of 2008 is enough that everyone will lift their heads and said, oh, my god, we need to put the rules back in place. We need to get this system back on track. We need to make capitalism work not just for the rich, not use it as an instrument for theft. We need to make this work for everyone. So it’s about — for me, it’s about watching what’s happening now as you’re trying to steady the economy. But I’m very focused on what’s going to come next.

michael barbaro

Right.

andrew ross sorkin

So Warren is seeing this as the fire that should convince everybody that big changes needed to be implemented immediately, like now, in the moment. There’s no time to let up. We’ve got to do it. And in theory, most Democrats agreed with her on the big ideas. But when it came to the tactics and the timing, not so much.

david axelrod

There wasn’t great enthusiasm for Elizabeth among the economic team.

andrew ross sorkin

People inside the Obama administration, senior people, like David Axelrod, will say, they kind of saw her as a thorn in their side.

david axelrod

They saw her as a relentless opponent of the financial industry at a time that they were trying to prop the financial industry up.

andrew ross sorkin

Tim Geithner, who was the secretary of the Treasury at the time, hardly could get along with her and fundamentally disagreed with her about what the solutions should really be.

david axelrod

Inside the administration, we literally feared a second Great Depression. And the thing that would have triggered it would have been the collapse of the financial system. And that was not out of the question. So we were left to try and undergird the financial system, while she wanted to prosecute it. And, you know, the feeling among the economic team was that this was deeply unhelpful at a time when we had a real crisis and that there may be a time and place for that, but first put out the fire.

andrew ross sorkin

Secretary Geithner’s position at that time under President Obama was to try to figure out a way to put as many people back to work and to invigorate the economy as quickly as humanly possible to save the system. Her view was, I’m going to blow up the system, and it will be a better system in the long term. And if there’s some collateral damage along the way, or this crisis lasts longer, that might be an O.K. outcome. Politically, though, President Obama didn’t have that time.

archived recording Hey, Elizabeth, you’ve got Tim Geithner, Secretary Geithner, in front of your Oversight Panel tomorrow. What is the one question you want answered on behalf of the American people? archived recording (elizabeth warren) Oh, I still want to know, where did the money go? [LAUGHTER]

andrew ross sorkin

Warren would haul Geithner up to Capitol Hill over and over to testify in front of her panel.

archived recording (elizabeth warren) [GAVEL HITTING] This hearing is called to order. Thank you for being here today, Mr. Secretary. A.I.G. has received about $70 billion in TARP money, about $100 billion in loans from the Fed. Do you know where the money went?

andrew ross sorkin

And just grill him, laying into him, about how the administration was handling the bailout —

archived recording 1 (elizabeth warren) And so now I’m caught in the question of, what is your metric for success here? You believe we have a sense of how much is left in the way of toxic assets on their books? archived recording (timothy geithner) Absolutely. archived recording (elizabeth warren) We have a dollar figure for that? archived recording (timothy geithner) Well, again — archived recording (elizabeth warren) Does Treasury plan to do that? How do you deal with that problem, Mr. Secretary? archived recording (timothy geithner) — usually finish, so where are you going? What would you like — what would you like to know? archived recording (elizabeth warren) I just want to know —

andrew ross sorkin

— and basically suggesting they weren’t being tough enough on the banks.

archived recording (elizabeth warren) Mr. Secretary, I’m familiar with all — archived recording (timothy geithner) Right. archived recording (elizabeth warren) — all that you think you’ve done to support housing overall. archived recording (timothy geithner) Right. But — archived recording (elizabeth warren) The question is —

andrew ross sorkin

So you have these sort of competing forces at work. Elizabeth Warren had a philosophical view about what the system should look like in the future. And Secretary Geithner and the Obama team would tell you they had a very grounded, realistic, on-the-ground view of, we need to get people back to work right now. And if we completely blow up the system, we have no idea what’s on the other side.

david axelrod

So it put us in a bind, because, on the one hand, we couldn’t allow these institutions to collapse, because the whole economy would totally collapse with it. But on the other hand, by stepping in to try and make sure they didn’t collapse, we looked, you know, vaguely complicit. And so having Elizabeth out there banging that drum, you know, added to the difficult atmospherics. You know, her rhetoric was inflammatory to a lot of people.

andrew ross sorkin

So here’s the thing about Elizabeth Warren as this is happening. She understands the position of the Obama administration. She gets the conundrum that they face. She gets the political forces at play. But she doesn’t really care about being friends with Tim Geithner. She doesn’t want to be friends with the Obama administration. She doesn’t want to be friends with people on Wall Street. She relishes the role of being the outsider. She’s not trying to change the system from the inside. So she’s willing to alienate the people who would have traditionally been her allies because she really believes she has this principled stand. And if she commits to that principled stand, her supporters won’t just stick with her, but they’ll grow.

michael barbaro

There was a lot of fighting over this, a lot of fighting over the words you used and the approach you took. David Axelrod we spoke with. At times, he sensed that how you were approaching this could be pure and right in spirit, but counterproductive in tactics. The word that gets used a lot to describe this period and how you are approaching these questions is that you “alienated” people. And that’s a word that gets used a lot. What’s your reaction to that word? What does that mean to you?

elizabeth warren

You know, I always heard that as, you wouldn’t play nice with the banks and the big donors. And I just didn’t care about the banks and the big donors. If you thought I was wrong in what families needed, tell me. But nobody ever did. You know what everybody said to me? It’s a great idea. But don’t even try to do it, because the banks call the shots. The big money calls the shots. And they’re going to keep this from getting done.

andrew ross sorkin

And so there comes this time in 2010 when the economy is now no longer in complete freefall, at least. The administration is now ready to act on some of these ideas of hers, including perhaps her biggest idea, which was this new agency that she conceived of, called the Consumer Financial Protection Bureau.

david axelrod

She was very clear that she wanted to lead this bureau. And she said, you know, I could do that. And I’d be very enthusiastic about it. Or I could spend the next 10 months looking over Tim Geithner’s shoulder. So it was, you know, about as subtle as a screen door on a submarine, you know? The message was very, very clear.

andrew ross sorkin

She’s basically saying, I can make your life hell by going out on TV every single day and continuing to tell everybody that I can find that you’re in bed with the banks, and I will.

david axelrod

You know, I took that message to the president. And he basically said, tell her to shut up, let us pass this bill, and then we can talk about this.

archived recording (barack obama) Good afternoon, everybody. It has been almost three years since the financial crisis pulled the economy into a deep recession.

david axelrod

He wanted to bring her in because she was the author of the idea. I mean, she was the most prominent promoter of it.

archived recording (barack obama) Elizabeth was sounding the alarm on predatory lending and the financial pressures on middle-class families.

david axelrod

And she was someone who he felt would be a very strong advocate. And he wanted that.

archived recording (barack obama) She’s become perhaps the leading voice in our country on behalf of consumers.

david axelrod

But he also had to manage the politics of the financial reform.

archived recording (barack obama) And let’s face it, she’s done it while facing some very tough opposition and drawing a fair amount of heat. Fortunately, she’s very tough.

david axelrod

You know, Elizabeth Warren was deeply, deeply controversial among members of Congress, among members of the Senate, not just Republicans, but Democrats who had ties to the financial industry.

archived recording (barack obama) Over the past year, she has done an extraordinary job.

david axelrod

She was seen as an inconvenient voice out there and one who they thought was unfair in her attacks. And there was a real resistance to her.

archived recording (barack obama) As part of her charge, I asked Elizabeth to find the best possible choice for director of the bureau.

david axelrod

We wanted her, but we had to navigate that.

archived recording (barack obama) And that’s who found in Richard Cordray.

[music]

andrew ross sorkin

So, ultimately, she’s passed over. She doesn’t get to run the thing she created, arguably because she was so fierce in trying to advocate for it in the first place.

archived recording (barack obama) Thank you very much, and congratulations, Richard.

michael barbaro

Do you ever wonder, Senator, if the things that make you such a potent communicator and storyteller and have earned you a significant base of support, made you a front-runner in the Democratic primary, that that might make it harder to actually solve the problems you’ve been so nimble at diagnosing and that you’ve devoted so much of your career to studying, all the way back to the ‘80s and ‘90s?

elizabeth warren

No.

michael barbaro

That word, “alienating.”

elizabeth warren

No. Actually, I don’t. And I’ll tell you why.

michael barbaro

Because your vision is very uncompromising. And the question becomes —

elizabeth warren

No, it’s —

michael barbaro

— are you uncompromising?

elizabeth warren

— it’s not uncompromising. Look, the consumer agency, for example, did we get everything we want in the consumer agency? No. I can compromise when it’s the right thing to compromise. You know what I think a lot of folks are talking about on this? When you ask this question about kind of this get-along notion, it’s, how much are you going to yield to the corruption in the system? The people who are handing out all the campaign contributions, and they’ve got all the lobbyists, and they’ve got the bought-and-paid-for experts whose voices they lift up, and they give money to the think tanks, because they like the system how it works. And when they can’t fight back on substance, they go after the messenger. And they say, oh, well —

michael barbaro

You.

elizabeth warren

— too uncompromising. Well, yeah, if the question is, do I think that Washington should be making policy based on a revolving door with Wall Street? Yeah, I don’t think it ought to be doing that. And we built a really great economy for decades in which that didn’t happen. What I’m asking for, I believe, is ultimately quite reasonable. The system has been broken for decades. Donald Trump has just accelerated it. And now we see it big time. That means, very much like following the crash of 2008, the door for real change has opened a crack. Now, we could just say we want to go back to business as usual, the way it was before Donald Trump came along, but not me. I see the door opened a crack just like it did following the financial crisis.

michael barbaro

But it was hard to get through that door for you.

elizabeth warren

It’s not about me. Put down your shoulder and hit as hard as you can at that door. Open it up, and make the changes we need to make as a country.

andrew ross sorkin

So the big question is, if Elizabeth Warren is president, how hard is she really going to lean into that door to try to crack it open? You know, how much is she going to stick with this principle-based view? Is she going to need help from the other side? And is she willing to alienate not just the other side, but her own allies, in the name of principle? She’s always been fighting as the outsider. And what happens once you become the insider?

michael barbaro

Does an uncompromising vision work for a president?

elizabeth warren

It’s not about compromising. I think that’s just not the key point here. It’s about having a vision about who you want to work for. And then you make decisions as you go along. There are times to compromise. But you don’t start out by saying, you know what? There are people who are going to oppose this, so let’s just start asking for only 2 percent. That’s just not the way to go about it. You lay out the vision and say, that’s where I’m going to head in this, because this is what I believe in. I believe in what we can do together. I believe in the America we can build. But we’ve got to have a vision for that. It can’t all be about just, you know, let’s — let’s do just slight changes, because understand this, Republicans are going to fight us on slight changes. So if you’re going to be in a fight, make it a fight worth having. And make it a fight that will inspire millions of people to join.

[music]

michael barbaro

Thank you, Senator.

elizabeth warren

You bet.

andrew ross sorkin

I think she’s signaling here that she understands that being president is different from being an advocate pushing from the outside. But if her brand fundamentally is to be uncompromising, if that is the brand, if the brand is to be principled, it’s the thing that got her that public following in the first place, even when she knew it was going to alienate her from some of the people closest to her. What happens if she becomes president, and she feels like she has to compromise? Do her supporters come with her?

michael barbaro

We’ll be right back. Here’s what else you need to know today.

archived recording (boris johnson) I don’t want to tempt fate, because, clearly, lots of results are still coming in, and we’re still only dealing with projections. But at this stage, it does look as though this one-nation Conservative government has been given a powerful new mandate to get Brexit done.

michael barbaro

In Britain’s closely watched general election, Prime Minister Boris Johnson appeared to be headed for a major victory that would allow him to fulfill his promise of pulling the U.K. out of the European Union by the end of January.

archived recording (boris johnson) And not just to get Brexit done, but to unite this country, and to take it forward, and to focus on the priorities of the British people.

michael barbaro