The Daily - Barney Frank on His Role in the Banking Crisis

Episode Date: March 22, 2023

Barney Frank was one of the people most responsible for overhauling financial regulation after the 2008 economic crisis. After retiring from Congress, he supported a change to his own law that would benefit midsize banks, and joined the board of such a bank. Last week, that bank failed. David Enrich called Mr. Frank and asked him to explain.Guest: David Enrich, the business investigations editor at The New York Times.Background reading: Officials with Signature and Silicon Valley banks, which regulators seized in recent days, had called for looser financial requirements for midsize banks.Here’s why people are worried about banks.For more information on today’s episode, visit nytimes.com/thedaily. Transcripts of each episode will be made available by the next workday.

From The New York Times, I'm Michael Barbaro. This is The Daily. When he retired from Congress, Barney Frank's legacy was a piece of legislation designed to prevent another financial crisis. Now, because of what he's done since, many are asking if Frank helped cause another financial crisis. Now, because of what he's done since, many are asking if Frank helped cause another financial crisis. Today, my colleague David Enrich talks to Frank about the banking crisis and the unexpected role that he played in it. laid in it. It's Wednesday, March 22nd.

David, as you have been sorting through the causes and the fallout of this banking crisis that we are still very much in the middle of. Why is it that you wanted to talk to former Congressman Barney Frank? Well, Barney Frank has been in the middle of so much that has been going on. So back in 2008, after the global financial crisis, he was one of the people most responsible for overhauling the system of financial regulation that was in place. And that was a real landmark achievement that he had. And then in the years to come, he kind of switched gears a little bit. He began to support a plan to roll back some of those requirements. And then right around the same time they started doing that,

he joined the board of a bank that stood to benefit from those rules being weakened. And a few years after that, now we're in the present day, that bank was one of the first to fail. A lot of people are concerned that it's one of the bellwethers that is setting off this global banking panic. And so he's gone from being the guy who created the rules to the guy who supported weakening them to the guy whose bank falls victim to this budding financial crisis.

Right. A kind of hero to villain, perhaps, journey in a pretty short period of time. That's right. So I was really hoping to get a chance to ask him whether he thinks he made some wrong decisions along the way and whether he thinks the decisions he made in some ways contributed to the mess that we're now in. Hello? Hi, Congressman. Can you hear us? Hello? Hello?

Hi, Congressman. Can you hear us? Hello? So I arranged to speak to him last Thursday, and we originally planned to do it by video chat. It turned out he was in the Caribbean. His Wi-Fi wasn't great. We had some issues with, I think, his cell phone and his iPad and his iPhone. Hang on, let me make this louder.

Is you calling on a 627 number? Yeah, it does call on... Okay, hang on. I'm going to make this louder. Is it you calling on a 627 number? Yeah, it's us calling. Okay, hang on. I'm going to make it louder. And ultimately, we decided to skip the fancy technology and just call him on his cell phone. This is obviously, I'm sure it's been a tough week for you. Yeah. Oh, the toughest thing has been trying to get this connection established. And just remind us, David, who was Frank when he becomes involved in the post-financial crisis regulatory work that defines his career? Well, first of all, in his telling, he's not someone who has any particular interest or experience in bank regulation. Barney Frank was someone who'd been in Congress for, I think, 27 years, all of them representing Massachusetts. And he was one of the most progressive members of the House Democratic Caucus. He was also, or at least I thought he was also, the first openly gay member

of Congress, although that's something he corrected me on. I was not the first openly gay member. I was the second. I was the first to volunteer it. My colleague, Gary Studs, had been outed, but he was the first who was eligible. Three or four members had been outed, but they all claimed that they really weren't gay. They had just been too drunk. My view was, if you're too drunk to remember what you're doing, you're too drunk to do it. And he was a very outspoken proponent of gay rights at a time when not everyone was doing that. The reason he got into kind of the financial space in the first place is that he wanted to do more to promote fair housing and affordable housing for people. And he thought that the House Financial Services Committee, that that would be a good perch from which to push that. Then, of course, the banking system starts to unravel in 2007 and 2008.

Take a look at the stock trading. It was fast and furious. That is a whopping loss of three and a half5 billion in market value. In 2008, when J.P. Morgan has to take over Bear Stearns, that's when it starts. Lehman Brothers is going bankrupt. Merrill Lynch sold in haste. The shit started to hit the fan with the failures. And the committee that he's on becomes instead a very powerful and important place from which he can start tackling the work of trying to stabilize the financial system and then fix it so that a crisis like that won't happen again.

We are not the Securities Exchange Commission or the control of the currency. We are not ourselves regulators. We formulate regulatory policy. Understanding what happened, why it happened, what didn't happen, those are essential elements of formulating policy going forward. And of course, that crisis really stemmed from a downturn in the housing market, which revealed that many of the country's biggest banks had invested a huge amount of their money in the housing market in the form of mortgages and mortgage-backed securities. And when the downturn started, these banks lost so much money that the entire financial system was suddenly at risk. Right. Well, and keep in mind, though, it wasn't just about the banks making bad decisions. One

of the real revelations of this crisis was that regulators were completely asleep at the wheel. And so one of the things that Barney Frank starts to look at in the immediate aftermath of this crisis is how do we empower regulators to act more swiftly, more decisively, and to not just them set out to enact this absolutely sweeping set of financial reforms that's going to do everything from empower regulators to require banks to hold greater financial resources. It creates a Consumer Protection Bureau. But one of the biggest parts of it is that for the 30 or 40 biggest banks in the country, so that's banks with $50 billion or more of assets, There's this much more intense system of federal regulation and other requirements those giant banks face. And so they have to undergo stress tests. They have to have much thicker capital and liquidity cushions.

They need to be in a position where regulators can look at them very quickly and have zero doubts about their ability to survive a really intense economic or financial storm. And David, what was so special about banks bigger than $50 billion? Well, basically, these were the types of banks that had caused the 2008 crisis. And so this cutoff was meant to ensure that banks like that got especially intense supervision and had especially high levels of financial stability, so that when the next crisis came around, banks like this would not be on rickety financial freedom soon after taking office i proposed a set of reforms to empower consumers and investors to bring the shadowy deals that caused this crisis into the light of day

and to put a stop to taxpayer bailouts once and for all. So do you remember the day that President Obama signed the bill into law? Of course. Thanks to a lot of people in this room, those reforms will become the law of the land. For the last year, Chairman Barney Frank and Chris Dodd have worked day and night. So the emotional response when the president thanked both me and Chris and how our staffs were so enthused. And yeah, it was a very nice day, a great day.

And arguably, this is the crowning achievement of Congressman Frank's career. I mean, the bill literally bears his name. It's called Dodd-Frank. Yeah, that's exactly right. And about two years later, Congressman Frank, who's 72 at the time, decides he's going to retire from Congress. When I quit, I want the question to be, why are you quitting? Why did you stay so long? And so what was your plan? What were you going to do in your retirement?

Well, one, I got married and I planned to write mostly and speak. I had decided I wouldn't lobby, not so much ethically. I just didn't feel comfortable going back, frankly, to people who had been my colleagues as a supplicant. Maybe it was an American. But, you know, I just didn't want to do that. And then in 2014, he gets invited to return to Capitol Hill. And why is he invited back? Well, he was invited back by his former colleagues in the House Financial Services Committee. Thank you very much, Mr. Chairman. I'd like to welcome

the former chairman and longtime veteran of this committee, Mr. Barney Frank. Barney, I've had your portrait hanging over me for just about a year now. And during that time, I've concluded that just seeing Barney Frank without hearing him is no Barney Frank at all. And at this point, Dodd-Frank has come under intense, sustained assault, not just from the banking industry, but also from Republicans on Capitol Hill. The Republicans at this point control the House, and they were doing everything in their power to make a public case against Dodd-Frank. I'm pleased we all will be able to hear you today, and I hope to hear you remind my Republican colleagues about just how close to the brink we came in 2008, and about why Congress and the president responded forcefully with your namesake legislation, the Dodd-Frank Wall Street Reform and Consumer Protection Act.

The Democrats on the committee are trying their best to defend the law, but are struggling, especially because they're in the minority. And so Congressman Frank is invited to come back to Capitol Hill to testify in defense of the law that he helped write. Chairman, it said that the financial reform bill is as damaging as the health care bill. Well, my recollection is that this Republican Congress votes on a fairly regular basis to repeal the health care bill. Well, where's your bill to repeal the financial reform bill?

If you have the courage of your convictions, let's bring it on. I think the problem is that the public is, in fact, much more supportive of it, and particularly of the Consumer Bureau. Most of his testimony is spent defending the law. Nobody has pointed to any abuse of practice that I can see. No one has pointed to any unfair intrusion into the business models. And kind of shooting down many of the industry's arguments and the Republican arguments about the harm that the intense regulation has supposedly done to the banking industry

and to the economy. But partway through his testimony, he makes what I regarded as a really surprising concession. Should a bank's systemic importance be based strictly and solely on their asset size? Well, I don't think $50 billion is—look, any number is arbitrary, obviously, in the nature of the case. He said that the threshold at which the intense federal supervision really kicked in, so that's at $50 billion, he acknowledged that he thought now that that threshold was too low. That it was basically snaring too many banks that were not the very biggest of the big in just an unnecessarily complicated and onerous system of regulation. And he said that this threshold should be a lot higher than it currently was. Basically, I think what you ought to do is to set a fairly high number as the automatic cutoff.

You always have to pick a number and it will always be somewhat arbitrary. But yeah, I think that we should look at that $50 billion again. always be somewhat arbitrary. But yeah, I think that we should look at that $50 billion again. So he's opening the door to the possibility of rolling back what seems like a pretty key element of Dodd-Frank, this law that bears his name. That's right. And it's around this time that Barney Frank is invited to join the board of directors of a regional bank based in New York, is invited to join the board of directors of a regional bank based in New York, and it's called Signature Bank. And David, what should we know about Signature Bank at this moment that they ask Frank to join their board? Well, like a lot of other large regional banks in the country, it was growing very quickly, and it was rapidly approaching having $50 billion in assets,

which meant that as the rules were currently written, it was either going to need to really slam on the brakes and stop growing, or it was about to face a whole new intense level of federal oversight and all sorts of new financial requirements that it looked upon very unfavorably. And so at the time that this bank invited Congressman Frank to join its board of directors, Signature had a tremendous amount at stake in the debate over whether or not to raise this $50 billion threshold. So you were approached by Signature Bank. What was their pitch? They thought I was smart, knew a lot about banking, and had the right values. They also stressed to me that they were the leading user of the low-income housing tax credit.

They knew that housing had been my single biggest substantive policy concern. And in 2015, Frank joins the board of Signature Bank. This, of course, is both extremely common and extremely criticized, this phenomenon of former members of Congress or former regulators who have spent their careers championing or fighting an issue, later on getting hired by companies who want to use those lawmakers' expertise to navigate that very same issue. It's kind of known as the great revolving door in Washington between government and business. great revolving door in Washington between government and business. So what does Barney Frank say about this decision to join the revolving door system by being on Signature's board? Well, first of all, he's very candid about why he wanted to be on the board.

I wanted to earn money. I had no pension. I had voluntarily decided not to get into the pension plan in 81. I didn't want to lobby. So I was looking to earn money. I had been making money from speeches, and I had a good advance. I got a half-million-dollar advance to write my memoir. But I was planning to live for many more years, and I was looking for an ongoing source of income. Over the seven-plus years they served on Signature's board, he earned over $2 million. And this is someone who, as he puts it,

has devoted his whole life to public service. He's left an enormous amount of money on the table compared to what he could have made if he was in the private sector. And he pointed out to me that, look, he graduated from Harvard Law School. For about $325,000 a year, which I must say for, you know, in terms of a little arrogant, but for an honors graduate of Harvard Law School, for, you know, in terms of a little arrogant, but for an honors graduate of Harvard Law School, $325,000 a year is not an excessive salary. You look at most graduates of Harvard Law School, they go into big corporate law firms and they end up making millions and millions of dollars. So right, fair for him. This is just what he's kind of got coming and what he deserves. And the second thing, the broad point he makes is that he doesn't see any particular problem with the revolving door, at least not as it applies to him.

And so he doesn't think that there's any real issue with someone who had a very important hand in shaping financial regulation and who has recently switched stances and is calling for at least a slight weakening of those regulations. He doesn't think there's any conflict of interest or anything wrong with him going essentially to work for that company. I don't understand the argument that anything that I advocated as a member of Congress, I shouldn't join in trying to promote afterwards. And by the way, I was not on the payroll because I was not an employee. I was under no obligation to follow a party line. In fact, I was literally an independent director. So the argument that I was somehow for hire and that my opinion would be influenced, no. So David, what happens next?

What happens next is that Donald Trump gets elected president. And on the campaign trail and once in the White House, Trump has made a mission out of destroying Dodd-Frank. He hates it. And with Republicans in control of both Congress and the White House, the odds of Dodd-Frank not just being tweaked or relaxed, but being destroyed entirely,

go from being kind of a Republican dream into something that is a real possibility. And while he's no longer Congressman Frank, now he's just Barney Frank, he endorses a compromise. And the heart of it is to increase the $50 billion threshold after which a bank is subjected to extra intense oversight for that to go from $50 billion to $250 billion. So what that means is that the number of banks that are subjected to this extra scrutiny, it goes from a few dozen to just one dozen. Wow.

It dramatically reduces the number of banks that are coming under this intense microscope. Even Barney Frank has had some misgivings over this law. The fact that Barney Frank was such a well-respected member, especially on the left, and had played such a pivotal role in writing this law to the first place,

meant that his endorsement of increasing this threshold carried an enormous amount of weight all over Capitol Hill. Even former chairman of the Financial Services Committee, Chairman Barney Frank, when he wrote about the threshold, he wrote that, quote, it is, quote, arbitrary. We're going to say this all day. Barney Frank even thinks the threshold is too low. It can be fixed.

Republicans started citing this. And on the $50 billion threshold, he said, I think it should be changed. Democrats started citing it. Congressman Barney Frank said about 95% of Dodd-Frank as it is written will remain intact after this bill passes. 95%. Again, this is former Chairman Frank of his own signature law said the $50 billion threshold was arbitrary and a mistake. And he's right. And in 2018, the legislation I'm signing today rolls back the crippling Dodd-Frank

regulations. President Trump signs it into law. And you see almost immediately the banks start to take advantage of this. Silicon Valley Bank, for example, goes from being right under this $50 billion threshold, it more than quadruples in size in the space of just a couple years. Signature, where Barney Frank is on the board, goes from right under the threshold, it more than doubles in the space of a few years. Wow. So with Barney Frank's help, two of the banks that will eventually help trigger this banking crisis that we're still living through are allowed to become much, much bigger with a lot less regulatory oversight. Correct.

We'll be right back. So, David, we all know what happened next. There is a run on Silicon Valley Bank based on fears that its finances are rickety. Customers pull tens of billions of dollars out of that bank. And then we start to see a run on Signature Bank. So how does Barney Frank describe what was happening inside of Signature Bank over the past two weeks or so from his vantage point as a member of its board. Well, in his telling, the problems really did not start until the Friday afternoon when regulators seized Silicon Valley Bank. And what happened inside Signature that day?

Friday afternoon, we started losing deposits. Signature faced essentially a bank run of its own. The bank officers are then working on trying to persuade people not to leave. That becomes clear at first that that's hard to do. Customers started yanking their deposits as fast as they could. And the leadership was concerned that they needed to, A, try to stem the deposits, and B, try to increase the liquidity

to make sure we could fund those deposits. So how bad was it on Friday? And do you have a sense of how many... What do you mean, how bad was it? Was it 1 to 10? And as I'm pushing him on the details of what happened, he got pretty testy at times. And it felt to me like he was really trying to distance himself from this whole mess. I was not at the bank.

Right, but what did they lose in terms of deposits? You want to know what it was like? What? How much deposits did they lose? I remember the number I got, but it was 12 to 14 billion. Something like 12 to 14 billion dollars of deposits fled the bank that afternoon, he says. And that put the bank in a very precarious financial position heading into the weekend. They began on Saturday, late Friday and Saturday, working on ways to get more liquidity. But there was no sense of impending doom. There was some confidence Sunday morning that we were stabilizing the deposits.

And it came as a big shock to everybody when the FDIC said, we're coming over Sunday afternoon. That was not good news. That afternoon, he gets a phone call from the bank's CEO saying that regulators have decided to seize the bank and shut it down. I mean, that must have been an extremely upsetting moment for both of you. Yes. Can you tell me a little bit more about how you were feeling, how you reacted? How did I react? I said, oh, that sucks. Somehow, knowing you, Congressman, I imagine you were a little more colorful.

David, I hope your chances at a pulitzer don't depend on your showing how we were upset when we were told our bank was closed. Yeah, I hope so, too. That's not a scoop. Yeah, I was disappointed. He claims that this is a terrible mistake, that this is overzealous regulators coming in to try to make an example out ofature publicly for having dabbled in cryptocurrencies. And that on the merits, the bank was on stable footing and should not have been shut down. And remind us, what was the government's case for taking over Signature Bank?

Well, the government has not very clearly articulated the exact rationale, but what they have said with both Signature and Silicon Valley Bank is that part of what the government was trying to do was protect the stability of the broader financial system. And what I and I think most people have taken that to mean is that both of these banks had grown so big so quickly that their uncontrolled collapses really posed a pretty serious threat to the stability of the entire American banking system. Right. And I think that brings us to the heart of why it is you wanted to talk to Frank in the first place. So what does he say about the unique role he played in rolling back the original Dodd-Frank financial limits, rolling back the original Dodd-Frank financial limits, which encouraged signature to grow so fast with less regulatory oversight than it would have had under the law's original rules. Does he think that any of the rules that were in place from the beginning might have stopped

a bank like Signature or Silicon Valley from ending up where it did, under government control, failing as a bank? The short answer is no. He does not think it would have made a whole lot of difference at all. There's nothing, the stress test would not have predicted the problem of Silicon Valley. I don't know how to do it. No, that was going to be a case. And to review,

the rules that these biggest banks are subjected to, they have to conduct these annual stress tests to make sure that they can withstand a severe financial storm. They have to hold more liquidity so they're better positioned

in the event of a bank run. Paperwork. You have a significant paperwork increase. Well, and a significant... The paperwork is not paperwork for paperwork's sake, right? It's paperwork because... $50 billion did not trigger any higher liquidity requirement or valuables.

And what Barney Frank said to me, which I found kind of surprising and not very precise, is that the additional requirements that were rolled back, they basically amounted to a lot of extra paperwork. He said they didn't really affect the underlying financial health of these banks and that they wouldn't have prevented this current crisis. I mean, can I just ask you, David, do you think he's right? Based on my reporting, I don't think that he is. And the stress tests, for example, the big banks were supposed to be subjected to are meant to detect situations kind of like the one we're in now, to basically make sure that the biggest banks are able to withstand really intense financial crises.

The extra liquidity requirements that the biggest banks face are supposed to help a bank avoid a bank run, which is exactly what just killed Signature and Silicon Valley Bank. So I think, actually, that Barney Frank is being a little bit dismissive about the importance of these rules that he had helped write and the potential that they could have really made a big difference. But here's the thing. Even if we grant that these extra regulations wouldn't have made a lick of difference in this current situation,

nobody disputes the fact that in 2018, when the cap got lifted from $50 billion to $250 billion, that set off an arms race among big regional banks like Signature and Silicon Valley, where they doubled or quadrupled in size in the space of a few short years. And that is how you've got these banks that are potentially posing a risk to the stability of the overall financial system. And what does Frank say about that? This seemingly indisputable reality that the change he endorsed to his own law

allowed for, even encouraged, this rapid growth. He acknowledges it. The $50 billion acted as a deterrent to some banks for organic growth. No question. And I don't think that was a good idea. I don't think it's bad for a bank to be at $80 rather than $50. I think banks are basically good things. They do good things for the economy.

They're essential. And if a bank is prospering by playing a good role, I think it's a good thing that they get bigger. But the thing that surprised me coming from Barney Frank, who had spent years blasting the big banks, was that he thought it was actually totally fine and in fact, positive. And I'm saying that I don't see a harm in a bank having 80 billion. You seem to have an any bank bias. Big banks, they're bad things. I don't think I think I guess that's what you're saying. Congressman, my starting point on this is that these two big banks failed and that that's caused a lot of stress in the financial system and is scaring a lot of people about what might happen. And so, but no, I take it back. That's not the point I was responding to yet. He did not engage really when I pushed him on the fact that had these banks not grown as large as they did,

as quickly as they did, they wouldn't pose the same risk to financial stability that regulators cited when they had to shut down these two banks. Yeah, as I said, though, the point I'm trying to get across, maybe not very effectively, is that the reason that SVB and signatures collapses have been problematic and scary for the financial system, I think, is because they were big, because they had grown so quickly. And... Oh, no question. But that doesn't mean no bank should get bigger than it was then. And by the way, my prediction is that in two weeks, this will have been shown to be not a systemic issue, that it will have been resolved by what the federal regulators did. Well,

you think I'm too optimistic. Call me back in two weeks. Seriously, let's write about this two weeks from now. Basically, where we ended up is a disagreement about the severity of the current crisis we're in. And his prediction was that this is something, it's kind of a blip, this is not a real financial crisis. And two weeks later, no one will even be talking or thinking about this. Yeah, there were two, three bank failures, but they didn't trigger anything like the threat of 2008 and 2009, nor did they require remedies anywhere near as extensive. Yeah, although I think a skeptic or a pessimist might say that this financial crisis, if we can call it that, is not over yet. Does it occur to you, Davis, that same skeptic might say

that Elvis is alive and is behind all this? Anybody could say anything. Of course, this conversation takes place on a Thursday. While we're on the phone, another big bank, First Republic, got bailed out by other banks. Right. And then 48 hours later, over the weekend, Credit Suisse, which is one of the biggest banks in the world, essentially has to be rescued by the Swiss government in this huge deal in which they get taken over by another giant bank. So there's a quality of Frank burying his head a little bit in the sand around just how big a deal this has all become and the role that the growth of banks that he helped happen played in this crisis. Yeah, I don't know if he's burying his head in the sand, and he might turn out to be right. And it might be the case that by mid-April,

no one is thinking about this as a huge crisis, and this might turn out to be a blip. It's hard to predict the future. But it felt to me like he was contorting himself a little bit to make an argument that the changes that he had endorsed really did not have any effect at all. And so I asked him at one point in the interview, you were the author of this very important legislation. You then support rolling back portions of that legislation. And then you end up sitting on the board and

getting paid by a company that is a beneficiary of those legislative changes. And then, you know, that bank fails. And that has caused a lot of concern about the stability of the financial system. So what's your question? I mean, I knew all that. My answer is that nothing I did was in any way positive of the failure. That the failure was not as systemic as people thought. In fact, it was a failure mostly confined the damage to that institution. And Frank really, at the end of the day, kept pointing to the political reality that he and other Democrats were facing back in 2018 when Dodd-Frank was under attack in Congress. importance of the bill and its impact and were helpful to support politicians who were under pressure to vote for more serious rollbacks. And that's why I supported the notion of removing the politically most inflammatory parts of it that did not interfere with its impact. So that's my

answer. And I think I feel vindicated by that. He says that at the time, the decision to kind of make this concession on the $50 billion threshold was actually a very savvy political move. It was basically made to save Dodd-Frank in its entirety. And his argument was that by making this concession, Democrats and Republicans would both support it and would kind of take the momentum away from some of the Republicans who were most intent upon completely gutting or destroying Dodd-Frank. And so in his view, this compromise, even if it's imperfect, it still preserved Dodd-Frank for the most part in its entirety. for the most part, in its entirety. Hmm. So the story he's telling you,

the story perhaps he's telling himself, is that in order to save Dodd-Frank, he had to weaken it. And saving Dodd-Frank was worth it because that will theoretically prevent a much larger financial crisis than whatever it is we're now in the middle of. That's how he's thinking about what has happened here. That's right.

Look, there is no question that had Dodd-Frank been rolled back entirely, I think the financial mess that we're now in would probably be a lot worse. But I also think at the same time that this is a bit of an ex post facto justification by him for doing something that clearly has put him in a really bright and uncomfortable spotlight. But he says he just does not really care what other people have to say about him. One of the great pleasures of leaving elected office is that you are no longer subject to an impact from the opinions of people who you do not respect and do not know. You know, at this point in my life, I don't care. So, David, I'm curious, what happens to Barney Frank's job

on the board of Signature now that Signature kind of is no more? It was vaporized the moment regulators seized it. The board was dissolved, and Barney Frank was out of his job. He seemed okay with that, though. He told me that he was scheduled to have a board meeting for signature in New York the day before our interview. That meeting was canceled, B's signature was done. And instead, he was able to get an earlier flight down to the Caribbean

and just get back to being a private citizen. Well, David, thank you very much. Thank you for having me. We'll be right back. Here's what else you need to know today. We know a strike will be a sacrifice. But we also know that our families have been sacrificing for far too long on poverty wages. In the richest state, in the richest country of the world.

America's second largest public school system ground to a halt on Tuesday as 30,000 school workers in Los Angeles began a three-day strike over what they say is low pay in a city where the cost of living has surged. What do we want? Justice! What do we want? Now! What do we want? The union representing the workers is demanding a 30% overall raise. City officials have countered with a 23% raise

and say that the strike will hurt students and their families. One day out of school is one day too many. Two days out of school are two days too many. Three days is too much. During the strike, classes will be canceled for more than 420,000 students. students. Today's episode was produced by Will Reed, Mary Wilson, Diana Nguyen, and Ricky Novetsky. It was edited by Lisa Chow, contains original music by Mary Lozano, Dan Powell, Brad Fisher, and Alicia Baitu, and was engineered by Chris Wood. Our theme music is by Jim Brunberg and Ben Landsberg of Wonderly. That's it for The Daily. I'm Michael Barbaro.

See you tomorrow.