Never one to shy away from a fight, Elizabeth Warren had found a new sparring partner. She had only recently started teaching at the University of Texas School of Law, but her colleague Calvin H. Johnson already knew her well enough to brace for a lively exchange as they commuted to work.
Indeed, on this morning in 1981, Ms. Warren again wanted to debate, this time arguing on the side of giant utilities over their customers.
Her position was “savagely anti-consumer,” Mr. Johnson recalled recently, adding that it wasn’t unusual for her to espouse similar pro-business views on technical legal issues.
Then something changed. He calls it Ms. Warren’s “road to Damascus” moment.
“She started flipping — ‘I’m pro-consumer,’” Mr. Johnson said.
That something, as Ms. Warren often tells the story, was her deepening academic research into consumer bankruptcy, its causes, and lenders’ efforts to restrict it. Through the 1980s, the work took her to courthouses across the country. There, she said in a recent interview, she found not only the dusty bankruptcy files she had gone looking for but heart-wrenching scenes she hadn’t imagined — average working Americans, tearful and humiliated, admitting they were failures:
“People dressed in their Sunday best, hands shaking, women clutching a handful of tissues, trying to stay under control. Big beefy men whose faces were red and kept wiping their eyes, who showed up in court to declare themselves losers in the great American game of life.”
Nearly 40 years after she began her bankruptcy research, Ms. Warren is among the leading candidates for the Democratic presidential nomination. Along with Bernie Sanders, her fellow senator, she represents a progressive wing whose profound ideological division from their moderate rivals have turned this primary into a contest over the future of the party.
Ms. Warren’s political awakening didn’t simply happen all at once. Her road to Damascus was a long one. But over several decades, she transformed from a largely pro-business and politically disengaged academic — a sort of default Republican — to a fierce consumer advocate and bankruptcy expert whose advice was sought on Capitol Hill, and then, finally, to a Democratic force on the Hill herself.
Her bankruptcy work with two Texas colleagues, Jay L. Westbrook and Teresa A. Sullivan, resulted in a 1989 book, “As We Forgive Our Debtors,” regarded as a landmark among many bankruptcy lawyers and academics for its depth and conclusions. One central finding — that bankrupt debtors represented a social cross-section of society — dispelled the popular narrative at the time. Even more controversial was the book’s uncompromising criticism of the credit card industry for enticing consumers to take on ever more high-interest debt.
Ms. Warren, who said she began the study on the lookout for “cheaters and deadbeats,” quickly realized that the people she was studying seemed familiar. Her own family in Oklahoma had teetered on the brink of financial ruin. It is a part of the biography she discusses in folksy speeches across the country — her father’s unemployment, her mother’s effort to save the family home with a minimum-wage job, and how that wouldn’t be possible today, with minimum wage paying below the poverty rate.
The revelations from her bankruptcy research, by her account, became the seeds of her worldview, laid out in her campaign plans for everything from a new tax on the wealthiest Americans to a breakup of the big technology companies.
Yet as Ms. Warren’s candidacy has gained traction, critics have complained that she is too rigid and radical in her liberal ideas, dug in to a polarizing degree against others with differing views, and can come across as dogmatic and intellectually strident at times. Mr. Johnson, who admires Ms. Warren, describes her as “hard as nails.” Some Democrats worry that such perceptions make her seem too left-wing and hard to work with, and could make it difficult for her to build an Electoral College majority if she is the nominee.
But a look at Ms. Warren’s philosophical and political metamorphosis provides yet another perspective on her personality, revealing a woman who searched for answers and found something she had never expected, then altered her thinking accordingly.
As Mr. Westbrook put it, “She is really someone who is willing to learn and willing to be persuaded.”
Law and Economics
In 1979, Ms. Warren recruited her parents from her native Oklahoma to her home in the Houston suburbs to help babysit her two young children.
Then a professor at the University of Houston, she would be spending several weeks at a luxury resort near Miami, one of 22 law professors selected to study an increasingly popular discipline known as “law and economics.’’ One of its central ideas is that markets perform more efficiently than courts.
Mr. Johnson, Ms. Warren’s former Texas commuting partner, believes that it was an important influence on her early thinking.
“Before Liz converted, she came to us from the decidedly anti-government side of law and economics,” he said.
The summer retreat was colloquially known as a “Manne camp,” after its organizer, the libertarian legal scholar Henry G. Manne. With financial support from industry and conservative foundations, Mr. Manne had formed a Law and Economics Center at the University of Miami. (He would later move operations to Emory University and then to George Mason University.)
The mission of the retreat was to spread the gospel of free-market microeconomics among law professors. One participant, John Price, a former dean of the law school at the University of Washington, described it as “sort of pure proselytizing on the part of dedicated, very conservative law and economics folks,” with an emphasis on an anti-regulatory agenda. One faculty member, he recalled, suggested eliminating the Consumer Product Safety Commission.
In the reputational pecking order of those attending its 10th annual edition that summer in Key Biscayne, Ms. Warren, with her law degree from Rutgers, was near the bottom.
The group included such legal luminaries as Abraham D. Sofaer, a Columbia law professor who had just been named a federal judge in Manhattan, and Frank Iacobucci, a professor at the University of Toronto who would later serve on the Canadian Supreme Court. Ms. Warren was one of only two women in attendance, along with Grace Ganz Blumberg, then a professor at the State University of New York at Buffalo.
While some in the group have said Ms. Warren expressed skepticism at the libertarian ideology, Ms. Blumberg remembers someone very much developing the early stages of her career, who was “far more captivated than I” with the theories.
Afterward, Ms. Warren remained in contact with Mr. Manne, writing periodically to update him on her life and career, appreciative notes that suggest something of a mentor-mentee relationship.
In November 1979, during a visit by Mr. Manne to Houston, Ms. Warren confided that she was going through a divorce from her husband, Jim Warren, an IBM mathematical wizard who had chafed at Ms. Warren’s pursuit of a career outside the home.
Two months after her divorce was finalized, in a letter dated March 7, 1980, Ms. Warren thanked Mr. Manne for providing “lots of advice and comfort” during that Houston visit. She also shared another development in her life: She was engaged to be married again — to Bruce Mann, a Brown- and Yale-trained scholar in the history of law who had become her frequent tennis partner at the Florida retreat.
“You even provided (indirectly) my husband,” she wrote. “Can I ever thank you enough, or should I just request that in lieu of wedding gifts guests just send a donation to LEC?”
Ms. Warren again wrote to Mr. Manne in 1981, attaching a copy of her latest published article. She was sending him one article a summer, she wrote, and each “increasingly reflects my time at LEC.”
The exact topic of the article is not reflected in the correspondence, which was released to The New York Times by the Manne Center at George Mason University. (Mr. Manne died in 2015.) Based on the letter’s date, however, it was probably a 68-page treatise on judicial interpretation of contracts published in the University of Pittsburgh Law Review.
“This is really hard-core law & econ analysis,” Todd J. Zywicki, a law professor at George Mason who formerly served as executive director of the Manne Center, wrote in an email. “If you had given me this article with the author anonymized and asked me who wrote it, I would have answered that it was one of the leading scholars in the law & economics of commercial and contract law. Never, in a million years, would I have thought this article was written by EW.”
Several articles Ms. Warren wrote during that period, on utility regulation, promote a pro-industry position, experts said.
A 1978 article in the Rutgers Law Review — which would inspire some of her early debates with Mr. Johnson — argued in favor of a utility rate-setting model that Mr. Johnson said would allow utilities to charge customers for taxes that hadn’t yet been paid. A piece in 1980 for Public Utilities Fortnightly, an industry magazine, took a similar position, according to its editor, Steven Mitnick, who added, “It’s quite surprising that this was written by the person we know as Elizabeth Warren.”
But Mr. Price, the former University of Washington dean who became friends with Ms. Warren in Key Biscayne and is a supporter and contributor to her presidential campaign, sees nothing unusual in what he describes as Ms. Warren’s “reasonable evolution from what they were espousing” at the retreat.
Reflecting on his own shift from “Rockefeller Republican” to Democrat, he added, “I believe we just go through an educational process.”
As Ms. Warren sees that process, her early interest in law and economics revealed a period of “learning another tool, but then coming to understand the values that underlie that system.”
Traveling With R2-D2
By 1981, Ms. Warren and her husband had secured temporary teaching posts at the University of Texas, where she agreed to teach bankruptcy law. She quickly earned a reputation for lively lectures, putting students on the spot and peppering them with questions and follow-up questions — the consummate practitioner of the Socratic method.
Even visitors to her class got the treatment. One of them was Stefan A. Riesenfeld, a renowned bankruptcy professor who had come to lecture on the Bankruptcy Reform Act of 1978. The law, which had expanded bankruptcy protection for consumers, was already under attack by the credit industry, which argued that it made personal bankruptcy too attractive.
Even so, Mr. Riesenfeld explained to Ms. Warren’s class, those who filed personal bankruptcy were “mostly day laborers and housemaids who had lived at the economic margins and always would,” she wrote in her 2014 memoir.
“I asked the obvious follow-up question: ‘How did he know?’” Ms. Warren wrote. After more questioning, it became clear that not only did Mr. Riesenfeld have no real answer, he was irritated by Ms. Warren’s probing.
The subject struck close to home. When she was growing up in Oklahoma, her father’s heart attack had thrown their household into precarious financial territory, forcing her mother to take a minimum-wage job answering telephones at Sears.
She remembers being fearful as she lay in bed at night listening to her mother cry. “She thought I had gone to sleep. I didn’t know for sure the details of why she was crying, but I knew it was bad and that we could lose everything,” Ms. Warren said.
(Later, the oil glut of the 1980s would destroy her brother David’s once-thriving business delivering supplies to oil rigs. Her brother John, a construction worker, would also struggle after the oil market collapsed. Her family ended up in such dire straits that Ms. Warren and her husband would ultimately provide financial assistance to some relatives, including help buying their homes.)
She wanted answers, more than Professor Riesenfeld could provide. She began discussing her questions with colleagues.
“There was this new bankruptcy code, and nobody knew much about what was happening out there in the world,” Mr. Westbrook said. “We got to talking and decided it would be kind of interesting to go down and take a look at some of the cases on file in the Western District of Texas, San Antonio to El Paso. We literally went to the courthouses and talked to the judges.”
As the study expanded, the researchers began visiting other states to collect data from the court files — then available only on paper.
“We got two portable Xerox machines, which in those days were a big deal — high technology,” Mr. Westbrook remembers. “We had to buy a ticket for them. We didn’t trust them to baggage.”
They nicknamed the equipment R2-D2.
Dozens of people would eventually be involved in the effort, an analysis of a quarter million pieces of data gathered from bankruptcy cases filed from 1981 through 1985.
Among the researchers was Kimberly S. Winick, then a University of Texas law student and now a lawyer in Los Angeles. While Ms. Warren didn’t talk a lot about her views, Ms. Winick said she believed that the project’s initial theory was that, “If you filed bankruptcy, you must be cheating.”
“Liz was from a more conservative place,” Ms. Winick said. “And she was somebody who had worked very, very, very hard all her life. And she had never walked away from a debt. And I think she kind of started with the view — let’s see what people are doing and how they’re cadging on their debts and screwing their creditors.”
That was the conventional thinking of the day, promoted in a study by Purdue University researchers that was being widely circulated on Capitol Hill as evidence the 1978 bankruptcy law needed to be toughened, Ms. Warren said in the interview.
But when she and her colleagues analyzed the study, she said, they concluded not only that its methodology was flawed, but that it had been funded with a sizable grant from the credit industry.
“That’s where it starts to shift for me,” Ms. Warren said. “Once we figured out that this was a bought-and-paid-for piece of credit industry advertising, now I was a little more neutral.”
In the Fight
And there were the personal stories, voices from that cross-section of society forced into bankruptcy.
“There was an elderly couple who told the story of their child, an adult man, who had a drug problem,” Ms. Warren said. “And how they had sold everything, he’d fallen back in again, and they cashed out their retirement accounts to put him through rehab.”
Another couple had left their jobs in the previous year. Even though they had quickly found new ones — as a psychiatric aide at a state hospital and a manager at a state agency — their income dropped 25 percent. They fell behind on their $45,000 mortgage and other debts. Their experience illustrated the study’s crucial finding that lenders had extended an enormous amount of credit to people who were clearly bad risks.
While the files did not tell the whole story, they provided enough evidence for Mr. Warren and her co-authors to write, “Repeatedly, we have been surprised by the data and forced to rethink our own understanding of bankruptcy.”
The study’s findings, laid out in their 1989 book, also explicitly raised questions about a central tenet of law and economics: that individuals respond rationally to economic incentives. As applied to bankruptcy — the more generous the bankruptcy provisions, the more people would file — that idea had been the rationale behind the campaign that succeeded in toughening the bankruptcy code in 1984.
Over the years, the research elevated Ms. Warren’s status, from little-known Texas professor to sought-after lecturer, writer and consultant in bankruptcy law. It also set the stage for her career in politics.
In 1995, Mike Synar, a former Democratic congressman from her home state, asked Ms. Warren, by then a Harvard professor, to advise a special commission reviewing the bankruptcy system. She balked, fearing the Washington work would render her scholarship impure, but signed on when Mr. Synar promised to keep her insulated from politics.
It was during that period, in 1996, that she switched her party affiliation from Republican to Democrat, though she insists that her essential conversion was from “not political” to “political.”
“I didn’t come from a political family,” she said. “I hadn’t been political as an adult. I was raising a family, teaching school and doing my research,” she said.
Then she went to Capitol Hill.
“I quickly discovered that every single Republican was on the side of the banks and half the Democrats were,” she said. “But whenever there was someone who would stand up for those working families, it was a Democrat.”
She added, “I picked sides, got in the fight, and I’ve been in the fight ever since.”
Susan C. Beachy, Jack Begg and Kitty Bennett contributed research.