In all, over the course of fifteen years, Warren either purchased or financed $1.2 million in real estate deals, according to Oklahoma real estate records.41
Warren and her husband were engaging in the sort of profit-making activity that is certainly legitimate, but also ironic, given that their profit margin was at times predicated on the financial misfortune of others. In short, for herself, she was comfortable with the sort of economic behavior for which she would later famously condemn others.
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Warren, like many law professors, had the opportunity to seek additional sources of income beyond her already high salary.
In the mid-1990s, Warren began advising the U.S. Congress on bankruptcy laws. It was her academic specialty and by 1995 she was tapped to advise the National Bankruptcy Review Commission, which had been set up by Congress to rewrite U.S. laws.42 In a 2002 court document, she would explain the role she played: “I provided assistance to various Congressional staff people . . . tried to help them understand the issues involved and to evaluate the various statutory proposals as they arose.” She was also a key advisor on an obscure but profoundly important section of the bankruptcy law called U.S.C. 524(g), which dealt with mass tort bankruptcies of corporations and had to do specifically with asbestos companies, but had broad ramifications for other corporations as well. Could large companies who were facing class-action lawsuits because of defective products shield themselves from these legal claims by declaring bankruptcy? How would corporate bankruptcies and the money owed to legal claimants be handled? Large corporations stand to gain or lose a lot based on how these bankruptcy laws are written. As Warren recounted in a legal brief involving a later corporate bankruptcy:
When the Commission formed working groups, I assisted the mass tort group, supervised the research on the subject, developed an agenda to consider mass tort issues, prepared a number of position papers, invited witnesses and participants to Commission meetings, and helped craft a proposal that was ultimately adopted unanimously by the Commissioners.43
In short, Warren was at ground zero in rewriting corporate bankruptcy laws.
The revisions to the laws that she helped to pen had enormous positive ramifications for America’s largest corporations. The new laws allowed financially healthy corporations to start using bankruptcies as a way to avoid liability from legal suits. As the New York Times explained, the legislation pushed by Warren led “Fortune 500 companies with otherwise solid balance sheets” to use “the bankruptcy courts as part of a broad strategy to resolve potentially ruinous legal woes.”44
The new bankruptcy laws were a big win for large corporations, from asbestos producers to manufacturers of breast implants.45 Warren’s role in writing these new rules created enormous financial opportunities for her. With large corporations still being sued, she was positioned to provide legal advice and services to those same companies for a high fee. Who better for them to hire than the person who helped to write the new laws?
It was the ultimate Washington leverage move.
Warren was walking a well-worn self-enrichment path in the nation’s capital, whereby the people who write the rules interpret those same rules in order to use them for their benefit. What makes Warren’s case unusual is that she has continued to insist that she is an outsider, not part of the madding crowd in Washington who were cashing in on public service and leveraging it for profit.46
Warren claims that she has been consistent for years in her advocacy for families and workers. “I’ve been out there working for families,” she said when asked about her legal work in 2012. “I’ve been out there working for people who’ve been injured by big corporations. I’ve been out there working for people who’ve been injured by asbestos. I’ve been doin’ that for years and years and years.”47
But a detailed examination of her legal consulting record shows otherwise. Indeed, of the known cases where she did legal consulting, her work on a number of those cases was on behalf of major corporations. Each of these companies was facing major liability involving pensions or class-action lawsuits, which she helped them avoid.48 She was extremely well compensated. In a legal brief, she described her “customary billing rate” as $700 per hour back in 2002. Today in 2019, that equates to about $996 per hour.49
Let us consider what she was paid to do and who was paying her.
In one of her earliest cases, Warren represented corporations seeking release from a law that required them to pay health benefits to coal miners. One of those clients was LTV Steel, which was trying to overturn a court ruling that required the company to pay its former employees and dependents $140 million in retirement benefits. LTV was trying to avoid its responsibilities under the 1992 Coal Act, which established a fund to pay retired coal workers. The appellate court sided against Warren’s clients, and Warren filed a brief with the Supreme Court seeking to overturn the decision. The Supreme Court never took up the case.50
Warren argued that since LTV Steel was coming out of bankruptcy, it should not have to pay into the coal fund. Mineworkers, of course, were opposed to her position, fearing that if LTV did not pay its fair share, it would allow other coal companies to get out of their obligations. “That’s what the people who didn’t want to pay always wanted to say,” said Peter Buscemi, a lawyer who represented the retirees in the case. “They wanted to say someone else will pay and the benefits won’t be in jeopardy. But if one employer doesn’t pay then another and then another, then who knows what will happen?”51
When asked publicly about her work on the LTV matter, Warren tried to obscure her role in the case, arguing through a spokesperson that she was simply standing up for “bankruptcy principles.”52 In 2006, she actually gave an interview with the Public Broadcasting System (PBS) where she attacked the company for treating employees “like paper towels. You use them and you throw them away.” She never disclosed in that interview that the company paid her to help them avoid some of their liabilities.53
Warren was paid $10,000 for her work, but she was just getting started.54
In the same PBS interview, Warren tried to distance herself from the rules she had helped write. Now, after she had made large sums of money helping corporations, she denounced the rules. “Congress [wrote] the rules, and the rules say the employees don’t come first.” She wanted new rules quite different from those she had helped to write a decade earlier and that had benefited her financially. “What we need is a new set of rules that does not permit corporations to put their short-term immediate profits ahead of the employees that have invested in these businesses for 20 and 30 years.” However, she continued to represent corporations in bankruptcy proceedings even after this interview.55
Warren also did legal work for Fairchild Aircraft Corporation (FAC), which produced small aircraft. The company went into bankruptcy in 1990, and a group of investors bought it and formed Fairchild Acquisition Incorporated (FAI). The asset purchase was supposed to be free and clear of any liabilities. In 1995, the families, estates, and/or businesses of four people who had died tragically in a plane crash sued FAC and FAI. The victims’ families believed that the aircraft was “defectively manufactured by FAC.” FAC hired Warren to argue to a Texas court that the families could not legitimately sue the companies. The bankruptcy court rejected her legal theory.56
Warren claims that her motive in defending the company was to save jobs. In fact, though, the company hired her to protect their assets, not jobs. Their worry was that the case would affect future claims that others might have against them. In addition, there is no evidence to indicate that the suit would result in lost jobs. Instead, she essentially argued that these families did not have legal recourse against these companies.57
Warren’s legal consulting work radically contradicts the claims she makes that she is a fighter for the middle class and against corporate America. Indeed, she was well compensated for more than a decade providing legal testimony for corporations attempting to avoid pension obligations and payin
g victims.
Consider the work Warren did as a legal consultant for Southwest Electric Power Company, a utility in Louisiana. A large power company wanted to shut down a rural energy cooperative, Cajun Electric Power, and acquire its major asset, a large coal-fired electric plant. When asked about her work for the utility during her 2012 Senate campaign, Warren claimed that she “represented a company that offered a plan to help save a bankrupt rural power cooperative.” The opposite was true, according to a New Orleans lawyer involved in the case. The power company was looking to use bankruptcy to liquidate the rural cooperative. As a bankruptcy expert, she provided legal assistance.58
In 1995, Warren also provided expert legal advice to Dow Chemical. The chemical giant owned 50 percent of Dow Corning, which was in a bankruptcy case. The bankruptcy followed lawsuits involving reportedly faulty silicone breast implants causing health problems. Dow was seeking to shield itself from taking any responsibility. As law professor William Jacobson of Cornell University puts it, “in the early days of the Dow Corning breast implant litigation Elizabeth Warren was providing legal advice to Dow Chemical, which was denying liability and [would be] fighting breast implant claims for many years to come.”59 As one lawyer involved in the case put it, “Warren’s expertise was used by a company fighting in court to limit its liability and payments to women.”60
Her involvement in the Dow case is clearly something she has tried to avoid having in the public light. During her 2012 campaign for the U.S. Senate, Warren avoided including the Dow case in a list of her legal consulting work that she provided to the media.61
In 2009, she defended insurance giant Travelers against the claims of asbestos victims. Travelers was fighting to gain immunity from some asbestos-related lawsuits by establishing a $500 million trust for victims, but on the precondition “that other insurers [would] give up their claims against Travelers.” Warren worked to protect the settlement for victims that other insurance companies would invalidate if they were able to retain their claims. Travelers avoided paying the $500 million settlement by losing the fight with the other insurers. Warren claimed that she was working on behalf of asbestos workers, but her client was the insurance giant; they were paying her fee for advice on protecting their interests. For her services, Travelers paid Warren a whopping $212,000. As Professor Jacobson puts it, “Warren got paid, Travelers got to keep its settlement money, and the asbestos workers were left out in the cold.”62
Her husband, Bruce Mann, a law professor who focuses on bankruptcy in American history, also did legal work on the case. According to the couple’s 2009 financial disclosure, Travelers paid him an undisclosed sum.63
Warren worked similarly with Armstrong World Industries, a massive producer of wall and ceiling products for construction, which was also dealing with asbestos liabilities. The company used a reorganization plan to establish a trust and avoid direct payments to asbestos claimants.64 Warren was their paid consultant, and she helped them navigate rule 524(g), which she had helped to write.65
Warren’s legal consulting work was on behalf of large corporations who were using bankruptcy laws or bankruptcy trusts to avoid liabilities.
Much of Warren’s legal work for these clients came through the white-shoe corporate law firm Caplin & Drysdale, which represented a myriad of large companies that were going through bankruptcies.66 Warren often provided legal advice to the corporations, which meant that her ethical and legal obligations were to look out for the interests of the corporation, not their employees or claimants.
Warren did do some legal work for nonprofit organizations such as AARP (formerly the American Association of Retired Persons). She also served as a consultant for lawyers who were suing major corporations.67 In all, most of her work outside Harvard was for the benefit of large corporate clients. And her corporate work provided the bulk of her legal income.68
Warren’s regular and lucrative work for major corporations continued even as she sought to position herself as a consumer advocate. Along with her daughter Amelia, she co-wrote two books that presented a more populist view of the economy. The first book, The Two-Income Trap, argued that middle-class couples, even with two incomes, had a hard time getting ahead. A key part of the problem was real estate prices—driven up by families looking to live in neighborhoods with good schools. The declining quality of public education had pushed up the price of housing in the best school districts, they argued. Parents had to overextend themselves to get a good education for their kids.69 The most radical solution they offered in the book was providing each family with a voucher that would allow parents to send their children to any public school regardless of where they lived. It would be, they said, “a shock to the educational system.” But the competition would be good, and it would allow parents to “take control over schools’ tax dollars.”70
Despite her claims to be a consumer advocate, Warren’s legal work for large corporations was helping to make both her and her husband rich. Financial disclosures by the time she ran for the Senate in 2012 showed that her net worth was as much as $14.5 million. Her house alone was worth $5 million. The couples’ investment stock portfolio was worth as much as $8 million, according to her own disclosures. Yet she steadfastly insisted that she was not “wealthy.” “I realize there are some wealthy individuals—I’m not one of them, but some wealthy individuals who have a lot of stock portfolios,” she told MSNBC’s Lawrence O’Donnell.71
A peek inside the couple’s investment portfolio also contradicts her public persona as a liberal reformer and populist. While Warren has been downright brutal in her criticisms of major corporations from Wall Street to the health care industry, the couple has the bulk of her wealth invested in the very same companies—Fortune 500 and other traditional corporations.
In 2008, for example, Warren and her husband held between $1 million and $5 million in global equities through their TIAA CREF retirement fund, and another $500,000 to $1,000,000 in a Vanguard 500 Index Fund. They had no investments in “socially responsible investment funds.” At the same time, Warren’s husband also held an interest in a gas well in Latimer County, Oklahoma.72
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Warren was teaching at Harvard Law School when the financial quake of 2008 struck. The financial crisis jolted even Harvard Law, with its massive endowment and storied halls. With the stock market plunging, the Harvard endowment was down 30 percent, although it was still tens of billions of dollars. In 2009, Harvard Law School officials had some financial decisions to make. The choice came down to salary reductions for the high-paid faculty or letting low-level employees at the Law School go. Warren made $349,375 in 2009.73
Reportedly, a petition was circulated among Harvard Law faculty that called for salary reductions to save jobs. When job cuts came, Harvard trimmed the staff by 10 percent. Harvard Magazine noted that “faculty and senior administration members” had agreed to waive some compensation to help with the job cuts, but according to Warren’s tax returns, she did not waive any compensation. Warren’s salary actually went up in 2009.74
In her memoirs, Warren recounts how tight she is with her daughter Amelia Warren Tyagi, and how they have worked so closely. Having written two books together, they are certainly still in regular communication. Supporters acknowledge that mother and daughter are not just close personally, but they are also “longtime accomplice[s]” professionally.75 While Elizabeth Warren moved from Harvard academic to government official and U.S. senator, Amelia has been involved in a business venture that has run parallel to her mother’s career like railroad tracks. As Warren came to play a central role in the regulation of the financial industry in the Obama administration, her daughter was seeking and securing partnerships and deals with some of those same investment firms. As Warren served in the U.S. Senate, she would take curious positions on a number of issues that would seem to benefit her daughter’s corporate clients.
The integrated relationship between Warren and her daughter is made apparent during a critica
l turning point in Warren’s career. In November 2008, then-professor Warren was at home in the evening when Senate Majority Leader Harry Reid called on the phone. Financial markets were in turmoil and Congress was in the process of creating mechanisms to inject huge sums of money into financial institutions. Reid had never met Warren before, but he knew her by reputation. He had read her book The Two-Income Trap. Congress was setting up a five-member congressional oversight panel to keep track of the government bailout that would make available $700 billion to investment banks and other financial institutions. Reid asked her to come to the capital to discuss the possibility of her serving as the chair. Warren agreed to meet, and then she asked Amelia to join her in Washington. Amelia was the cofounder of a business in 2007 called the Business Talent Group (BTG) and she was in search of capital investors, board members, clients, and partners. As Reid later recalled, Warren “came down to DC and met me with her daughter, and did the deal.”76
Warren became chair of the Troubled Asset Relief Program (TARP) oversight committee, which played a central role in the federal government’s bailout of financial firms. Time magazine described Warren as a new sheriff in town, who “wielded her clout like a cudgel.”77 Warren would hold highly publicized hearings, offer advice to Congress on the oversight program, and call out large financial institutions and Treasury Department officials. Warren turned her committee “into a tough, prosecutorial committee” and “issued blunt monthly reports demanding more accountability from banks.”78
At the same time that Elizabeth Warren was meeting and talking with major Wall Street investment firms, her daughter’s firm BTG was adding high-profile advisors with connections to the same companies who would benefit and face possible scrutiny from TARP. According to BTG’s website in late 2008 these included:
Profiles in Corruption Page 13