Getty Elizabeth Warren
Elizabeth Warren says we are all living with a “ticking time bomb.” The Massachusetts Senator is warning that unless the federal government takes action, big banks and their bad lending practices could “blow another hole” in the US economy, leading to another financial crisis like the one we faced back in 2008.
In a tweet today, Warren wrote,
“Banks are making a record amount of loans to companies swimming in debt, then pushing the risk to investors. Just like the pre-2008 subprime mortgage market, it’s a ticking time bomb that could blow another hole in our economy. Regulators must take action — before it’s too late.”
Warren Says the Trump Administration Isn’t Doing Enough to Prevent a Financial Crisis
Warren sits on the Senate Banking Committee and often speaks out about banks’ lending practices and housing discrimination. On Wednesday, Warren sent a letter to Steve Mnuchin, the Secretary of the Treasury, warning him that there could be a financial crisis if banks don’t change the way they’re handing out loans.
Warren says that banks are taking on too many risky, leveraged loans — which, she says, could lead to the kind of crash that Americans saw in 2008. In her letter to Mnuchin, Warren warned that big banks are behaving in the same way they did back in 2008. And, she said, regulators still aren’t doing enough to rein in their dangerous behavior. “The large leveraged lending market exhibits many of the characteristics of the pre-2008 subprime mortgage market,” Warren said, adding, “I fear that continued growth in leveraged lending — along with the steady degradation in loan terms — creates significant risk to the financial system”
Warren said there has been a “lack of appropriate response” from Trump-appointed regulators, and asked Mnuchin for an overview of what’s being done by individual agencies and by the Financial Stability Oversight Council, the watchdog group which was set up after the 2008 crisis.
Warren just handily won re-election to her Senate seat, but she is widely expected to run for president in 2020.