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Senator Elizabeth Warren has proposed a drastic reduction in student loan interest rates, based on the argument that "big banks" can borrow money from the Federal Reserve at .75% (a rate called the "Discount Rate"):

http://thelead.blogs.cnn.com/2013/05/09 ... ent-loans/

http://en.wikipedia.org/wiki/Discount_window

People make fun of female politicians like Michelle Bachman and Sarah Palin, but this idea is dumber than anything those two have ever said.

First of all, these loans to banks are usually overnight loans! That is a loan term of less than 24 hours! Shorter loans involve less risk, and therefore usually involve lower interest. Second, loaning money to a bank involves much less risk than loaning money to a student. Less risk involves lower interest.

And third of all, lower interest loans will only help to inflate the education financial bubble that we are in. Making student loans cheaper to get will only result in a continued raising of student costs.

(Oh, and fourth of all, that Wikipedia article shows that the "Discount rate" is .75% now, but it was as high as 6.75% as recently as 2007, and much higher than that historically):



So I'm not sure it's a good idea to tie student loan interest to that indicator.

cinepro wrote:Senator Elizabeth Warren has proposed a drastic reduction in student loan interest rates, based on the argument that "big banks" can borrow money from the Federal Reserve at .75% (a rate called the "Discount Rate"):

http://thelead.blogs.cnn.com/2013/05/09 ... ent-loans/

http://en.wikipedia.org/wiki/Discount_window

People make fun of female politicians like Michelle Bachman and Sarah Palin, but this idea is dumber than anything those two have ever said.

Elizabeth Warren beating Scott Brown was the worse thing that happened last election.

Keep fighting the good fight against working Americans while defending big banks cinepro. I'm sure you're doing a fine job of correct that stereotype.

Elizabeth Warren is a Godsend, and probably the strongest advocate for consumer rights that has ever existed in public office. I can see why big corporations, big banks, and therefore, Republicans, hate her so much.

People make fun of female politicians like Michelle Bachman and Sarah Palin, but this idea is dumber than anything those two have ever said.

Thanks for the laugh, it truly reveals your bias.

One may have an argument to make by saying Warren's plan " has a flaw," but to compare her to the uneducated hacks Palin and Bachman is really ridiculous. I can't think of any effective, coherent plans either one of those women came up with on their own. Mrs. Sarah "Paul Revere warned the British" Palin.

Besides, there are other factors this argument doesn't account for such as the decrease in defaults at lower rate of interest. This is precisely the point on which Warren bases her argument:

In an open market, shakier borrowers get higher interest rates. Therefore, one could argue that it wouldn't make sense for student borrowers to get better terms than the government. A spokesperson from Warren’s office, however, says that lower interest rates will mean lower default rates for students, just as low interest rates mean reduced risk of default for U.S. banks. The question is whether a 6.8 percent interest rate would be justified while interest rates on so many other assets – mortgages, treasury bonds –are near historic lows.

Warren's bill does address this very problematic point by taking student loan interest rates out of Congress' control. With Congress dictating the rates students pay,student loan interest can be out of step with broader financial markets.

You also failed to mention this was only intended to be a temporary measure: "Warren proposes to implement the super-low rate for only one year, in order to give Congress time to create a longer-term fix for student loans."

By the way, those banks who got bailed out a few years ago, were those loans all paid back "overnight"?

And just so we're clear, this is the woman you folks on the Right, now fear and despise:

Sen. Elizabeth Warren (D-MA) embarrassed government regulators during a Senate Banking Committee hearing on Thursday morning as she demanded to know why they won’t reveal how frequently big banks illegally foreclosed on homeowners. In January, regulators abandoned a case-by-case review of foreclosure fraud conducted by some of the nation’s largest banks in favor of a $9.3 billion settlement. Under the deal, most of the 4.4 million homeowners who were foreclosed on in 2009 or 2010 received less than $1,000 each.

Fair housing advocates and Democratic lawmakers panned the agreement, claiming that it short-circuited a more detailed review process (known as Independent Foreclosure Review) and let banks off the hook for illegally foreclosing on millions of homeowners. Regulators had initially claimed banks broke the law or made errors in 6.5 percent of all the loans reviewed, though the number has since been revised upward.

During the hearing, Warren pressed officials from the Office of the Comptroller of the Currency and The Federal Reserve for answers about how frequently banks broke the law, only to discover that regulators didn’t know the exact number before reaching their settlement and were now unwilling to publicize the error rate. “You’re saying that the [you] did not have an estimate in mind of how many banks had broken the law and how many home owners were the victims of illegal activities?” Warren asked in disbelief. She pressed for public disclosure, but was told that the information about banks’ illegal activities is proprietary and may not ever be released:

WARREN: So you have made a decision to protect the banks but not a decision tell the families who have been illegally foreclosed against?

RICHARD ASHTON (FEDERAL RESERVE): We haven’t made a decision about what information we would provide to individuals. [...]

WARREN: So I just want to make sure I get this straight. Families get pennies on the dollar in the settlement for having been the victims of illegal activities or mistakes in the banks’ activities. You now know individual cases where the banks violated the law and you’re not going to tell the homeowners or at least it’s not clear if you’re going to do that?

Last week, the Government Accountability Office issued a report of the reviews and concluded that regulators at the Fed and OCC gave banks “too much leeway” in how the reviews were conducted, implying that the shoddy review process led to a hastened settlement instead of a complete review process. “On Tuesday, regulators released new information suggesting that banks may have made errors in as many as 30 percent of all loans that qualified for a review,” the Huffington Post reported.

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Yes, it is perfectly understandable why this woman represents the bane of Capitalistic greed, which obviously drives Right Wing constituents and funds the hit pieces against her. Keep fighting the good fight cinepro! Protect those bankers.

Kevin Graham wrote:Keep fighting the good fight against working Americans while defending big banks cinepro. I'm sure you're doing a fine job of correct that stereotype.

Elizabeth Warren is a Godsend, and probably the strongest advocate for consumer rights that has ever existed in public office. I can see why big corporations, big banks, and therefore, Republicans, hate her so much.

I personally don't have a problem with her. I just think this idea is a really bad one.

How does her student loan proposal hurt "big banks"? She is justifying her proposal by pointing out that banks can make short term loans for a low interest rate, but she doesn't explain how that is related to student loans.

If Senator Elizabeth Warren is really a Godsend and is so great for consumers, than why did she recently vote for the Internet Sales Tax???

What's wrong with Internet sales tax

Editorial: House should block Internet sales tax

That brings up another problem. "Unfortunately, we're probably going to have to downsize," Nancy Mashragi, who runs Concept Electronics in Florida with her husband, told USA Today. At least one of the firm's eight employees would have to be cut to make way for a new employee whose only job would be paying the new taxes to all those local jurisdictions.

S. 743 is being promoted as a federalism bill supposedly empowering states to protect local retailers harmed by out-of-state sales. Its subtitle even reads that it would "restore States' sovereign rights to enforce State and local sales and use tax laws." In fact, it would allow some states to use the immense power of the federal government to grab taxes from residents of other states.

That especially is clear for the five states with no sales taxes: Alaska, Delaware, New Hampshire, Oregon and Montana. Their businesses would be forced to set up sales-tax collection systems. The bill also would short-circuit the competition among states – which are supposed to be the "crucibles of democracy" – so essential to a federalist system.

We're also disappointed that the bill gained so much support among Senate Republicans. The caucus split, 21 for, 22 against and two not voting. S. 743 was sponsored by Sen. Mike Enzi, R-Wyo. The GOP hopes to recapture the Senate next year but is less likely to do so if it keeps selling out on its signature issue: "no new taxes."

Democratic Senator Ron Wyden On Why The Internet Sales Tax is Coercive and Discriminatory

Brackite wrote:If Senator Elizabeth Warren is really a Godsend and is so great for consumers, than why did she recently vote for the Internet Sales Tax???

What's wrong with Internet sales tax

Editorial: House should block Internet sales tax

That brings up another problem. "Unfortunately, we're probably going to have to downsize," Nancy Mashragi, who runs Concept Electronics in Florida with her husband, told USA Today. At least one of the firm's eight employees would have to be cut to make way for a new employee whose only job would be paying the new taxes to all those local jurisdictions.

S. 743 is being promoted as a federalism bill supposedly empowering states to protect local retailers harmed by out-of-state sales. Its subtitle even reads that it would "restore States' sovereign rights to enforce State and local sales and use tax laws." In fact, it would allow some states to use the immense power of the federal government to grab taxes from residents of other states.

That especially is clear for the five states with no sales taxes: Alaska, Delaware, New Hampshire, Oregon and Montana. Their businesses would be forced to set up sales-tax collection systems. The bill also would short-circuit the competition among states – which are supposed to be the "crucibles of democracy" – so essential to a federalist system.

We're also disappointed that the bill gained so much support among Senate Republicans. The caucus split, 21 for, 22 against and two not voting. S. 743 was sponsored by Sen. Mike Enzi, R-Wyo. The GOP hopes to recapture the Senate next year but is less likely to do so if it keeps selling out on its signature issue: "no new taxes."

Democratic Senator Ron Wyden On Why The Internet Sales Tax is Coercive and Discriminatory

The internet sales tax issue is a tough one, because either way there are winners and losers. Ultimately, you have to decide who should win, and who should lose. And there are good arguments from both side towards what is "fair".

I'm quite torn on the sales tax issue. On the one hand, the largely sales tax free environment e-commerce creates economic efficiency that I absolutely favor. It actually stands as a unique example demonstrating how policies I more broadly favor work in collectively beneficial ways. On the other hand, the fact that brick and motar commerce can't escape local sales taxes puts them at an artificial, market-distorting disadvantage that I strongly disfavor. I do think fairness goes to imposing a sales tax regime on e-commerce. I don't really have a position I'd throw my hat in with yet. Because the special interests that are hurt or benefited by the policy change don't align (or make donations) in traditional partisan ways, this is one of those few issues where you get wide bipartisan splitting. That prevents the partisan talking-point machine from whipping sides up into frenzies.

cinepro wrote:

Kevin Graham wrote:Keep fighting the good fight against working Americans while defending big banks cinepro. I'm sure you're doing a fine job of correct that stereotype.

Elizabeth Warren is a Godsend, and probably the strongest advocate for consumer rights that has ever existed in public office. I can see why big corporations, big banks, and therefore, Republicans, hate her so much.

I personally don't have a problem with her. I just think this idea is a really bad one.

How does her student loan proposal hurt "big banks"? She is justifying her proposal by pointing out that banks can make short term loans for a low interest rate, but she doesn't explain how that is related to student loans.

The Federal Government guarantees student loans. Therefore, banks should receive from students essentially the same return as a government-issued callable bond, plus a nominal fee for account maintenance. To the extent they make more than that, they are getting an arbitrage profit. Taking that away from them would hurt them.