Elizabeth Warren made waves recently when she introduced the Bank on Students Loan Fairness Act, which would offer students the same low interest rate the Federal Reserve offers big banks through the discount window, currently around 0.75%. This strong proposal highlights one of the most destructive, anti-capitalist practices of our government.
The Fed, which is partially owned and controlled by the banks, has been offering those very banks very low interest loans. Even though the abyss of private sector debt crippling ordinary consumers remains the primary force holding down aggregate demand, the Fed has refused to take more aggressive action to lower the real interest rates ordinary Americans pay on that debt. Warren’s bill would change that.
The sort of populist message that made the Democratic party the electoral juggernaut it once was, this bill has garnered considerable support from red state Democrats. Of the seven Senate cosponsors, four hail from states that voted for Romney and McCain. What these Senators see in Elizabeth Warren’s brand is that old-school FDR Democratic party, that pro-growth Democratic party that once swept to victory in today’s red states by catastrophic margins. Economic populism made the party great. If we return to it, we will be great again.
That is why it is so important that David Cicilline signed on as a cosponsor of the House version of Warren’s bill. It is a vote of confidence in the true vision of the party. Congressman Cicilline deserves to be recognized for his strong stance on this issue. You can give him a call to thank him here:
David Cicilline: (202)-225-4911
Unfortunately, Langevin, Reed, and Whitehouse have yet to sign onto Warren’s bill. Each of them has a good record on financial issues and should be winnable. If you’d like to see them join Elizabeth Warren, you can give them a call here:
Jim Langevin: (202) 225-2735
Jack Reed: (202) 224-4642
Sheldon Whitehouse: (202) 224-2921
A key ally of Warren on the banking committee, Jack Reed has introduced a compromise bill that keeps the interest rate on student loans from doubling but doesn’t push to lower them. Compromise is important. But it should never be your opening offer. Without a bold progressive proposal like Warren’s, Reed’s compromise will be seen as what the Democrats want. It will be the place Republicans start bargaining from. So the best thing Senator Reed can do to protect his bill is cosponsor Senator Warren’s.