Senator Elizabeth Warren on The Fight to Ban Stock Trading in Congress (Pt 1)

0:00I once interviewed the CEO of a credit bureau and he confessed that his assistant has a better credit score than he does. Why? Because she's more organized. Yep, even the head of the credit bureau can use a little help in the credit score department. If you can too, then listen up because Chime has a card that can help you do just that. Chime turns everyday spending into real rewards and progress. Not like old school banks that charge you overdraft and monthly fees. Built for you, not the 1%. Imagine cash back and credit building with your own money finally on the same card. No annual fees, no interest, and no strings attached.

0:34And when you get qualifying direct deposits, you get 1.5 % cash back on eligible Chime card purchases. Chime is not just smarter banking. It is the most rewarding way to bank. Join the millions who are already banking fee-free today. It just takes a few minutes to sign up. Head to Chime.com slash MNN. That is Chime.com slash MNN. Chime is a financial technology company, not a bank. Banking services, a secured Chime Visa credit card, and MyPay line of credit provided by the Bancorp Bank N.A. or Stride Bank N.A. MyPay eligibility requirements apply, and credit limit ranges$20 to$500.

1:15I recently went on a quick beach trip with my husband for a little couple's time, and it was perfect. We sat in the sun, swam in the ocean, and generally just tried to get to that place of deep relaxation where your shoulders actually drop a few inches. Do you know what else can give you that feeling? Co-hosting with Airbnb. Trust me on this one. Hosting your home on Airbnb while you're away from home is a great way to make some extra cash and make sure your home is working as hard as you do. But knowing where to start can feel overwhelming. That's where co-hosts come in. These are local experts who can help make hosting even easier by taking care of all the little details back home while you're off enjoying yourself.

1:56Co-hosts can handle everything from staging your space to communicating with guests to offering on-site support so nothing interferes with your time away from home. Whether you're living the digital nomad life or just taking a well-deserved reset, I love this for you. Looking to get started? Find a co-host at airbnb.com slash host. It's 2026, you guys, and if you're still paying rent without Bilt, it's time for a change. Built is the loyalty program for renters that rewards you for your biggest monthly expense, rent. Let me explain. With Built, every rent payment earns you points that can be used toward flights, hotels, lift rides, Amazon.com purchases, and so much more.

2:37I can't tell you how obsessed I am with this business. You know how I'm always sharing money tips for people who are renting. And in my opinion, there is no smarter financial move for renters than using Built. And here's something I'm really excited about. Starting in February, Built members can earn points on mortgage payments for the first time. So homeowners, don't worry, you are not getting left out. Soon, you'll be able to get rewarded wherever you live and unlock exclusive benefits with more than 45 ,000 restaurants, fitness studios, pharmacies, and other neighborhood partners. Personally, I'd redeem my points for GoPuff Home Delivery.

3:14As the mom of a one-year-old, I need a lot of stuff. And when I need it, I need it now. It's simple. Paying rent is better with Bilt. And soon, owning a home will be better with Bilt, too. Earn rewards and get something back wherever you live. Join the loyalty program for renters at joinbilt.com slash moneyrehab. That's J-O-I-N-B-I-L-T dot com slash moneyrehab. Make sure to use our URL so they know we sent you. I'm Nicole Lappin, the only financial expert you don't need a dictionary to understand. It's time for some money rehab.

3:54Today, we're going to get into a topic that I am so, so heated about, insider trading in Congress. And to break it all down, I have a very special guest who has long advocated for congressional stock trading to be banned, Senator Elizabeth Warren. You've seen Senator Warren in the headlines. She's been the senator of Massachusetts since 2013. and in 2020, she ran for the Democratic nomination for president, but withdrew. And as we know, President Biden got the spot on that ticket. But before she was in Congress, she was one of the fiercest watchdogs for consumers during the 2008 financial crisis.

4:29In fact, she was the driving force behind the creation of the Consumer Financial Protection Bureau. And whether you think Doge had a point in slimming the CFPB or not, It is true that the CFPB has helped return over$20 billion to Americans who were cheated over by big banks or shady lenders. She's also a former Harvard Law professor. And a little-known fact, even though she's a very vocal advocate for liberal issues, she was a registered Republican until the mid-90s. Okay, let's address the elephant in the room here. No pun intended. I know that not all of you listening agree with Senator Warren politically, and that's okay.

5:05But here's why I think you should stay with me for this episode anyway. What we're talking about today is not red or blue. It is green. Because when members of Congress get to trade stocks on information the public does not have, that is not politics. That's a rigged system, and you deserve to know about it. And tomorrow you'll hear the second part of our conversation where we dig into whether stock trading should come with a warning label. So whether you lean right or left or somewhere in between, listen to this conversation with an open mind and let me know what you think. You can always send feedback at hello at moneynewsnetwork.com.

5:38I am always open to any and all conversations. All right, let's get into it. Senator Warren, welcome to Money Rehab. Thank you. I am delighted to be here with you. So excited to have you. I know we only have you for a short time, so should we just get into it? You bet. I'm ready. I would love to talk about something that is really boiling my blood these days, which is potential insider trading in Congress. We just get right into it because we had Senator Gillibrand on the show. And when she was here, she said one in three members of Congress trade stocks, but only one in seven disclose it. And they beat the market 17 percent.

6:16So I'm thinking either members of Congress are the greatest investors of our time or the system is rigged. That's right. I'm going to choose door two. Me too. Yeah. And this is just outrageous. just totally outrageous that members of Congress, I want to do this both ways. They not only get inside information, we absolutely do. We know what's going on. I sit on the Senate Armed Services Committee, for example. You want to trade in defense stocks, you've got an idea of what's happening. But it's not only the insider information, it's that you can actually affect outcomes. So go invest in crypto and then help move the crypto bill forward.

6:58So they are, in that sense, potentially the inside traders extraordinaire, absorbing information and actually changing the direction things go. And here's the deal. I have had legislation pending for years now just to shut this down. It's not even very fancy. It just says, you're a member of Congress? No. No buying, no selling, no trading on any individual stocks. You want to be in the stock market? Fine. Just get indexed funds so it's moving like everyone. And announce what they are. Make it all public. that you don't get this constant, well, here's a place I could help myself. We just knock that out.

7:49And then we get to stand in front of the American public and say, the one thing you can count on, we may get it right, we may get it wrong, but that nobody here is voting based on their financial interest. And right now it's a slap on the wrist, right? The violations of the Stock Act are only $200? Well, remember, the Stock Act, all it does is say tell. It doesn't stop it. And then the violation, as you say, just total slap on the wrist. That's insulting to American voters. Agreed. So what should it be? Right now, the Restore Trust in Congress Act, this is bipartisan. So it proposes a blind trust plus potential 10 percent penalty.

8:29Is that what you think? Yeah, I think it's the right direction. But like I said, I want to start, we'll hit, it's kind of like the 90-10 rule. We'll hit 90 % of the problems by just saying you cannot buy, sell, or trade individual stocks. Full stop, period, we're done. You'll have so many days after you're elected to divest and you're done. And then if you've got, I know, and there's some of this, well, you have business interests and a blah, blah, blah, set up a true blind trust, not a pretend blind trust. You put the money in, but you can kind of peek over the edge and see what's going on. You can set up a true blind trust.

9:09And that's where you start working down through the smaller and smaller details. You're part owner in a family business. How do you deal with that? And there are. There's some places at the margins you've got to work through it. But let's just do the basics. And if we still have a problem, we can always come back and tighten those up. And the basics are get Congress. And I want to be clear for me. Get Congress. Get every head of every agency. Get everybody who is named to the president's cabinet or deputies, these people in policymaking decisions. And, drumroll please, the president of the United States.

9:49all out of the business of trying to make money personally at the same time that they are serving in public office. And it's a no-brainer. Yep, should be. You said that you invest in mutual funds. I'm glad that you made the distinction of index funds because there's a lot of different kinds of mutual funds, of course. So you could be on the Armed Services Committee, but you could have defense mutual funds, or you could have sector-specific energy funds or agriculture funds, and that seems like a conflict as well. broadly held. S &P 500. That's right. S &P 500 approach. But we've seen this on both sides of the aisle, though.

10:25That's been interesting in this. There are people who want to see the law go in place on both sides, and there are people who are resistant. And that's been a hard part about this. And part of what's made it harder has been Donald Trump. And whether you want to go into the politics or not. I'll just start with the opportunities here for buying, selling, and trading, particularly in crypto, has given Donald Trump the position, in effect, of being able to take what sure look like bribes out in public. Someone just goes out and buys$400 million worth of his crypto coin. He knows that, boosts the price up, and then asks for a presidential pardon or asks for better treatment for your country on a tariff deal or asks for approval of a merger.

11:28All those things that it becomes a way to influence the decisions that the person in power, who's supposed to be working on behalf of the American people, but to influence those decisions to help those who line the pockets of the public official. And I just think that's wrong. We got to put a stop to that. Yeah. And we've seen it with the president. We've seen it with Marjorie Taylor Greene. We've seen it also with Speaker Pelosi. And so we've seen... Just stop it. Yep. This bipartisan approach to literally, say, restore trust in Congress. This feels like if this doesn't pass, then is Congress basically admitting its own corruption?

12:15You know, look, I'm the one banging the drum over and over and over, pass this thing, pass this thing, pass this thing. But I want to put it this way. If it doesn't pass, it does not mean that people like me should just give up. It means we got an election coming up in another 14 months. Ask that question. Have you supported the bill that would stop trading and insider trading among public officials? I want to see us keep building the pressure, building the pressure, building the pressure. I do what I can on the floor of the United States Senate. But what I want to see is I want to see more people asking that question back home.

12:57because it's only if we get the temperature high enough under this pot of water that we're actually going to get enough people to say, yep, time for some change. Got to talk about the Fed. Okay. Haven't seen this much drama with the Fed in quite some time. I think the Fed was going to turn into a major motion picture. Right? Wow. Feels like a reality show. The president has been leaning hard on J-Pow to cut rates. Put that diplomatically. Come on. He has gone after the Fed. Was just an all-out assault last February, March. Threatened to fire him. Said he had the power. Said he was going to fire him.

13:41And then when the markets blew up, kind of backed that one up. Then went after him again over how much he was spending on repairs at the Federal Reserve's old building. and then trying to knock off Lisa Cook, one of the governors of the Fed, and not just tried to fire, he has fired. Now, a court has said, no, you haven't. And then they took it up on appeal, and the second court said, no, you haven't. And now he's taking it to the Supreme Court so he can try to get her pushed out of that job. And there was an opening on the Fed, just to make this rounded on out. He puts in a guy who is the head of the Council of Economic Advisors.

14:28Okay, that means economic credentials. Works literally in the White House. And here comes the best part. The guy is not giving up the option to return to the White House and continue working for Donald Trump. So he's going over to the Fed to be, I'm going to put this one in quotes, independent. And at the same time, he's holding on to, please, Donald Trump, let me continue to be the head of the Council of Economic. There's nothing like it in history. So I would say, with four major assaults on the Fed, Donald Trump has made it clear he wants to own the central bank in this country. Do you think that could happen?

15:18Well, he's sure moving in that direction. What worries me is what the consequences would be. So Donald Trump's not the first person to figure out that if you could control the central bank, you could change your political fortunes. In Turkey, when the strong-arm guy in charge grabs control of the central bank, inflation goes to 80%. In Argentina, when the same thing happens, inflation goes to 200%. And the reason for that, for everybody who's listening to this thinking, oh my gosh, is that we have fed independence. We built it into our system because sometimes the Fed has to make really unpopular decisions.

16:10Back in the 1980s, when inflation in this country went up to about 16 percent, the Fed actually put the interest rate up at 14 percent as a way to signal to everybody in this country and everybody around the world, we will bring inflation down, which meant to people around the world, you can invest in the dollar. It meant to Americans, okay, I'm not going to see crazy price increases. You know, the price of eggs will go up by another dollar next week and the price of cars will go up by another$1 ,000 next week. I can calm down on prices and start to budget. And sure enough, it brought the economy under control.

16:55But wow, talk about politically unpopular. At the time, if the president of the time could have fired the head of the Fed, he would have. So when Donald Trump says he's going to seize the Fed and then use it to try to juice the economy, you know, push down interest rates, even if the numbers don't support it, What he's really playing with here is kind of medium term in the economy. What this is going to mean for prices for families, what this is going to mean for investment in jobs domestically, and what it's going to mean for the U.S. currency as the reserve currency around the world and the leader around the world.

17:49He's just burning all that down. And that means everybody in our country will pay a price if Donald Trump successfully seizes control over the Fed. That doesn't mean that all elected officials shouldn't talk to the Fed. You've written letters before he was renewed, right, as Fed chair. Oh, you bet. But there's a difference. Or where is the line between oversight and interference? It's a great question. So let me start with a distinction here because I have. I've gone after Jerome Powell. I mean, I just want to make clear, I'm out there defending the independence of the Fed when Donald Trump said he was going to fire Jerome Powell.

18:31I stood up and said, you cannot fire Jerome Powell. Can we just make clear here? I voted against him. I spoke against him. I can give you multiple reasons why I do not like him as the chairman of the Fed, but he retains his independence. So here's the deal. Independence doesn't mean they just get to hoop off and do anything they want. It means they are supposed to be focused on the economy and what the economic numbers tell them is best. Well, dual mandate. That's right. Employment and inflation. Employment and inflation. You've got it 100 percent right. In addition to that, they also do regulatory oversight of the giant banks.

19:13So that is what he's supposed to do. What my job is, I am now the ranking member on the Senate Banking Committee, is to push him back on the numbers, to say to him, as I did two years ago, loudly, hey, the direction on inflation is down. The arrows are clearly on the down slope, lower those interest rates. And yeah, I've dogged him and dogged him about that. Now, here's the interesting twist. He announced last month that he and the Fed would have lowered interest rates last February, but for the fact that Donald Trump's tariffs were just causing chaos in the economy, and were likely to cause even more chaos, likely to make everything even worse.

20:08So stop and let that soak into your brain for a minute. For everybody who has a credit card balance and paid higher interest rates, for everybody who took out a car loan, for anybody who had a variable rate mortgage of any kind, anybody who borrowed money over the last seven months, let's just be clear, you paid more because Donald Trump was creating so much economic noise, chaos. Uncertainty. Uncertainty, I like your word, uncertainty, the economy, that the Fed kept interest rates high. Now, the Fed finally just lowered interest rates, As you know, just a couple of weeks ago, modestly, they're talking about maybe lowering them some more.

20:58But now it's not because the news looks good. That is, inflation is coming down and employment stays strong. It's the other way around now. Inflation, not looking so great, ticking slightly. But historically, you mentioned the 80s. We're in a good range right now. But the Fed is always looking directions. Which way are the arrows pointing? But the part that's worrisome is the job market is looking weaker. So instead of a rate cut because the Fed says, woo-hoo, everything's going in the right direction, smooth sailing, this is a rate cut that's more along the lines of very worried about jobs. So we're trying to loosen up and get more money into the economy in the hopes that more businesses will survive, expand, and hire more people.

21:55hold on to your wallets money rehab will be right back and now for some more money rehab

22:08where do you think unemployment should be we're hovering around four percent which is pretty much the target historically i'm gonna be really nerdy here and see a place to be I know that we look just at the top line number, but it's important to pull the numbers apart. Unemployment for African-Americans has ticked way up, and that's always a canary in the coal mine. Unemployment goes up first for Black workers. That's happened in America for a long time. Second thing that's got me worried is young people coming out of college or other degree programs right now are having a much harder time getting a foot in the door.

22:54I don't know how much that connects with AI, where the workers who are the newest and least experienced are the ones, some people speculate, the ones most likely you could replace with AI. But the point is, those are two groups that are now in a more vulnerable jobs position. So, look, I don't want anybody to lose their job. I don't feel better if someone else does. But it makes me very uneasy, again, directionally on where we're going on jobs. I think the Fed is right to be concerned and to be digging through those data as fast as they can. So I think the headline number is what we've seen for inflation and jobs are right around the ideal targets.

23:44But you're saying double click, look beneath the headline number, which is the more concerning leading indicators potentially to economic turmoil versus a vibe. I think people have a vibe session. We're not seeing the recession in the numbers, but they're not feeling great about the economy. Yeah. And remember, the Fed doesn't think we're at the right inflation number. They think it needs to be markedly lower. They want to see the full point lower than it is on inflation as well as wrong direction. But you know, you go to a really interesting point here, and that is this question about averages versus calling through the data.

24:26On average, our incomes are going up every year. Yeah, but understand the billionaires are the ones who are looped into that average, and that makes it look a lot better. There was a time in America where the big gainers in incomes were the people who made the most modest incomes, and proportionately, they were getting more, and they were getting more out of GDP. The worrisome parts now are to look at the debt levels that families are carrying. Go back to your point that unemployment across the board is fairly low and inflation is not giant. It's not like it was 40 years ago, which was just wild.

25:10And yet, or even a couple of years ago, or even a couple of years. Absolutely. Absolutely. And yet, Americans are carrying more and more household debt. So between 2018 and 2024, we have seen just the total number of dollars of debt that the American public is carrying rise by$4 trillion. dollars. And a big chunk of that is more people having to borrow to make it to the end of the month or people who already have some debt. The debt is just ballooning on them. They can't manage the interest payments and the debt goes up and up. Those are worrisome signs. And for me, the most worrisome signs are the survey data about how confident families are about the economy and that it's headed in the right direction.

26:13And here, families are giving lower reports on the economy than they have at any time since the survey researchers first started collecting this back 45, 50 years ago. So where do you think interest rates should be? I think interest rates should be somewhat lower than they are now if inflation stays low enough to justify that. I want to see the interest rates come down, but it's got to come down in tandem with inflation. We cannot say to America, interest rates are going to be low. You can go borrow that money and inflation is going to shoot through the roof that will turn millions of families upside down economically in this country.

27:03I just worry it's such a slippery slope because we lived through 2008. Oh, I hear you. And rock bottom interest rates were very addicting. But we did that because we saw death in its eye. We were close to financial Armageddon. And so this idea that we keep trying to go back to rock bottom interest rates is dangerous. I very much take your point on this. I do not dismiss the point, but let me now do it the other way. When we talk about the stress on American families, do you know one of the biggest expenses that's out there? We don't count. And that is how much you're spending on credit cards? How much are you paying on debt on student loans?

27:43How much are you paying all your debt? It's actually left out of the calculation. That's nuts. And the difference between caring, as you know,$5 ,000 of debt at 5 % and$5 ,000 of debt at 36 % is the difference between whether you've got a shot at paying it down and whether or not you're just overwhelmed and you're going to be in debt for as far into the future as you can see.

28:17That's the first part of my conversation with Senator Elizabeth Warren. Stay tuned to tomorrow's episode where we talk about the line between democratizing investing and regulation when it comes to trading and whether Senator Warren will take another run at president. So stay tuned for tomorrow's episode.