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The Disgusting Business of Milking the Working Poor
The working poor make great victims. They are often trusting and financially unsophisticated, and with wages stagnant, they're desperate for cash. These folks hold jobs, so they have a money stream and possibly equity in their homes - all ripe for plunder.
Corporate America has decided there's gold in draining the low-income masses of what little they have. Loan sharks and con artists once dominated this territory, but big businesses have moved in and are proving to be far smoother than the mugs who break legs. Their legal fine print can trap the uneducated in outrageous debt contracts without rousing the authorities.
You've all heard of J.D. Byrider, the used-car chain with the jaunty jingle. In 2005, Roxanne Tsosie, a home health-care aide in Albuquerque, N.M., went there and bought a Saturn with 103,000 miles for $7,922. She borrowed the entire amount at an interest rate of nearly 25 percent.
The Navajo mother of four thought that her $150 installments were to be made on the usual monthly basis, but actually the contract demanded payments every two weeks. After three months, she gave up.
No problem for Byrider. It took the car back to sell to the next chump and kept Tsosie's $900.
This story comes from BusinessWeek's splendid report, "The Poverty Business." Byrider doesn't post prices on the windshields. Instead, the salespeople figure out the maximum they can squeeze from the working-class buyer, then charge it - financing courtesy of Bank of America. The practice is called "opportunity pricing."
As BusinessWeek notes, the thing being sold doesn't matter. It's just the "bait" to saddle someone with punishing loan terms. Companies can now assess the financial wherewithal of potential victims with special software called Automated Risk Evaluator.
No Goodman Ellen Goodman is on vacation. Her column should return next Friday.
Payday lenders offer workers cash advances on their next paycheck. Wells Fargo and U.S. Bancorp have entered this booming business, charging annual interest rates of 120 percent. Five payday-lending chains are trading on the New York Stock Exchange and NASDAQ.
Jackson Hewitt is a tax-prep service that gloms onto low-income neighborhoods. Its specialty is lending money to low-income workers in anticipation of their IRS refund - while siphoning off more than 10 percent of it. The refunds usually involve the Earned-Income Tax Credit (aimed at the working poor), prompting some to dub Jackson Hewitt and its ilk "the new welfare office."
Milking America's poor is now a global opportunity. Subprime mortgages, which charge high rates and fat fees to people of modest means, are packaged into securities. Investors currently hold more than $1 billion in subprime loans from 22 ZIP codes in Detroit alone, according to The Wall Street Journal.
Some readers may say: "Tough. If they're too lazy to study the terms, they deserve to get soaked." So here's a question for you: What is Libor?
Libor stands for the London interbank offered rate (recently 5.42 percent). It is the short-term rate on top of which subprime lenders in Detroit were adding another 9.125 percentage points. True, the borrowers weren't careful, but how many people have ever heard of Libor?
Already deep in debt, Luisa and Rose Ajuria were surprised and pleased to be offered a Tribute Mastercard, the Chicago sisters told BusinessWeek. The card charged a 28 percent interest rate, $150 annual fee and a separate $6 monthly fee. Its pusher is CompuCredit, a giant Atlanta corporation that specializes in poor credit risks. The Ajurias may soon lose their home.
Dump a few of these loans on the working poor and see them spiral downward. Preying on vulnerable people is a disgusting business model. Does anyone in Washington have a conscience?
Providence Journal columnist Froma Harrop's column appears regularly on editorial pages of The Times. Her e-mail address is fharrop@projo.com
Copyright © 2007 The Seattle Times Company
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30 Comments so far
Show All"Does anyone in Washington have a conscience?"
No.
Watched Gary Coleman hawking "CashCall" loans on TV and blinked when I saw the fine print. Checked it on their website for verification - APR on a $2500 "loan"? 99.25%!
Runaway unregulated Reaganite corporate capitalism is ALWAYS about screwing the little guy. Every piece of legislation related to business and commerce in the past 25 years has been anti-labor and anti-American. Now we have a majority of corporate fascists on the supreme court to knock down individual's rights at the expense of the corporate "person" for the next quarter-century. Working Americans, with no electoral choices, have no way to stop it. Ultimately, the wealth gap will get so wide that the revolution the filthy rich fear and plan for will come to pass, their own self-fulfilling prophecy. Of course, they'll control the guns and the money...In the meantime they'll connive the poor whites into thinking their problems are caused by welfare Cadillac blacks and illegal Mexicans taking away their jobs and their country. How else could they convince a majority of the populace to vote for their own destruction?
So true! AND the working poor often do not have the best stores around either for bargain shopping, for groceries or anything else. Rent-to-own? Yikes.
And how about the way banks are putting the squeeze on the poor, with their outrageous new systems that make sure there are more bounced checks, etc? This is true, look it up, activist movements are slowly gaining momentum in the fight against UNFAIR BANKING PRACTICES (Kucinich is on top of this issue).
Plus, they don't even want the poor IN the banks. Now, at least some banks have made many accounts ATM accounts .
Banks nowadays also profile the poor in numerous ways, and treat them accordingly, and not just regarding service, but they will hold deposits, etc, for longer if one has a record of well, being poor, and this (I think illegal) withholding of funds results in even more bounced checks for the poor- big money maker that, bounced checks fees, the banks are really raking it in. It's kind of hard to get out of a financial rut, for the poor struggling day to day, especially if banks are doing their part to keep them in that rut. This "Banks vs. The Poor" issue is picking up steam- feel free to bring it up, LOUDLY, next time you are waiting in line at the bank.
wcdevins- why did you edit then remove your last remark, about how the way the people are manipulated into division, in order to divert their attention away from the real culprits responsible for their demise- 'cause that is so true!
The working poor have always been the cash cow of our ruling class. When there is no more to milk there is always prison labor -- a growing "industry."
One thing I've been noticing in my city is the increase in the number of those "check cashing" places. They're almost everywhere now. What kind of person do you have to be to own and operate a business like that?
That's easy, iwarrior, a Republican.
Check cashing places, car and house loans to people that shouldn't get them (due to their income potential and existing bill load), credit cards, college loans AND telephone service. These are all examples of ways to exploit the poor.
I would think that if Ralph Nader even returned to doing some good old-fashioned consumer education and activism (what he was really good at) that this would be a good hue and cry for the Democratic party to pick up on. This is an activity that is hurting a lot of people.
But I am afraid that in too many cases the Democratic Party has gone over to the "dark side"; they too have been purchased by corporate campaign dollars.
You know, it's funny, I avoided getting a credit card for a long time and instead used a debit card. I hated the idea of oweing anyone money. I finally got one because I was told that I needed to build a credit history. Well I got one. A few years later I'm 8 grand in the hole.
But I got misself a credit history! Which means I can "buy" a car, and a house! Y'know, those things ya gotta have so that people will like ya. In other words, I got myself into debt, so that I can go into even more debt.
"That's easy, iwarrior, a Republican."
:) Oh I don't doubt that.
This is precisely what this ludicrous limmigration bill was intended to do: milk the working poor US citizen. And it's expanding to the upper middle class. Besides importing slave labor from Mexico, this government (who is supposed to be working for us) pushes for increased H1B visas for skilled positions, provides incentives for exporting jobs overseas, and protects a runaway health care system.
These, coupled with astronomical housing costs, usurious homeowners insurance costs, gouging at the gas pump, an enormous deficit to fund an occupation without end, and endless tax breaks for the wealthy, and the picture is bleak for the middle class and working poor that have made America what it is today.
Either you're a pig fornicating CEO in today's America, or you ain't. It's really that simple.
I believe that we've all forgotten about the Ad industry. They're the group responsible for convincing us that we really need these unaffordable things, which caused people to buy, buy, buy, and get into financial difficulty in the first place.
trippin, it's even worse when you consider that we're stealing the educated labor of poor countries after they spend their limited resources on these people while we refuse to spend money educating our own people. The stealing of third world healthcare workers is especially egregious.
collingrivers - As you can see, it's back - sometimes when I try to edit twice I don't get the finished product until later. I couldn't even remember exactly what I said (you must have been reading it while I was editing) and gave up, but apparently the newest iteration appears now on the forum. Thanks for the feedback.
What barriers are there in the US to outright slavery making a comeback? I do belive that there is nothing in your constitution (our ours, for that matter) that simply states that persons are not property and cannot be owned.
These are small Korporate Sharks. Just look at the billion people trying to live on a dollar a day. Zoellick, if confirmed in the job, said he would continue outgoing bank president Paul Wolfowitz's "focus on Africa programme." A billion dollars a day is real money, even for the World Bank.
Paul M: Read the Thirteenth Amendment of the US Constitution.
To the ruling class, the working class poor are just another natural resource to be exploited for selfish profit. In the 60s, this was common knowledge. But then the right-wing used the power of the corporations to take control of the mainstream media and began dissing any such claims as "socialist", "communist", and therefore, "anti-American.
IT IS NOT ANTI-AMERICAN TO SPEAK THE TRUTH AND THE TRUTH IS THAT THE WEALTHY CORPORATIONS AND THE RULING CLASS THAT RUNS THEM DO IN FACT EXPLOIT THE WORKING CLASS POOR AS JUST ANOTHER NATURAL RESOURCE FOR SELFISH PROFITS. DON'T LET THEM TELL US OTHERWISE. THEY LIE. THEY LIE BIG TIME.
THE TRUTH IS THAT MOST OF THE RULING CLASS ARE VAMPIRES AND VULTURES, AND THE WORKING CLASS POOR ARE THEIR PREY.
indijo, you are absolutely right, that the ruling-elite global corporate Empire --- which is hiding behind the facade of a two-party pimping "Vichy American" government --- is economically and politically screwing the vast, under-organized 'working class'.
This has been the norm historically, except for a brief, but fadingly short era of true American working class democracy, which followed the near-death of capitalism in the post-depression years up to 1970.
The most basic problem is that capitalism and the economic Empire system that depends on this canard is based on a negaitve externality pump --- whereas the system of democracy utilizes the positive externaltiy model of commonwealth.
Our whole system is built to prey on desperate & poor people to benefit the rich. I'm not surprised. It's capitalism at it's finest! God, I'm proud to be an 'merican.
I pity the school kids who must say the pledge of allegience everyday at school - especially the part about
"Liberty and justice for all"
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All of the politicians who voted for the 100 billion that they just gave Bush should be impeached.
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This is pretty cool:
The following is from:
http://mindprod.com/politics/iraqdontenlist.html#DONTENLIST
Please read & share this with others on as wide a scale as possible.
REASONS NOT TO ENLIST IN the US Military and join the Iraq war.
On average, a surgeon has to amputate the genitals of two wounded US soldiers each day in Iraq.
You may be killed. Your family, friends and people who love you will have a lifetime of heartache...
You may be maimed, have one or more limbs amputated or lose half your face or your penis and balls. You will live the rest of your life disabled. You may be so disfigured you will never have sex again. You will be stuck with the bulk of the medical bills. Modern medicine can resuscitate badly maimed people who would have died in previous wars. This means the Iraq war is cranking out an unusually high numbers of seriously maimed people.
Many returning from Iraq become mental basket cases unable to deal with the horrors of war and the guilt at what they have done. Friends and family reject them. They can't hold down a job. They become homeless. Look at the way American treats the homeless vets of the Viet Nam and Iraq wars begging on the streets.
Over half the soldiers who served in the Gulf War, died of Gulf War Syndrome or were treated for it. They were in Iraq for only weeks. You will be there years. Read the fine print. Bush is keeping soldiers in Iraq for years after their contract expires. To this day no one knows for sure what causes Gulf War Syndrome.
You will be exposed to DU (Depleted Uranium), as were soldiers in the first Gulf War. This may cause cancer later, or even more likely will cause your children and their children to be genetically deformed. Check out the middle part of this video that shows what sort of children are common to those exposed to the DU-laden winds in Iraq. Imagine explaining to your wife why you did this to her. Also pay attention to parts how can make your wife and family sick indirectly.
Iraq is no threat to the USA. You are not defending your country. There were no WMDs. Even Bush admits Iraq had nothing to do with the terrorist attacks on 9/11. "We have no evidence that Saddam Hussein was involved with the September 11th attacks." ~ George W. Bush, 2003-09-17, audio.
The USA illegally attacked an unarmed country under false pretenses. The war is about ignoble motives such as oil and world domination. There is utterly no point is you risking your life in Iraq.
reasons continue at:
http://mindprod.com/politics/iraqdontenlist.html#DONTENLIST
Corporate feudalism is a parasitic, cannibalistic blood feast. The only rules are the table etiquette. The only question is whether you're on menu or one of the diners. The result is always the same, vast misery and oppression for the benefit of the Few.
Is that how you want to live?
Humans are not food. I did say cannibalism.
Peace.
Sorry for the lack of compassion.
The woman is the "mother of four.
I'm sure she is a loving mother but she is irresponsible for having more children than she can raise out from poverty or, it is possible she is just perpetuating poverty. We must address the root cause of many societal problems and that is -overpopulation. This seems to be a taboo subject for the "progressive' as it is for other ideologies. I know on other threads when I addressed the immigration issue from this perspective I was called a bigot.
People here are willing to change the system to accommodate the poor or less fortunate. Yes, it needs changing but people have to change too.
The answer usually lies in the middle. A lot can be achieved when people take responsibility.
Habanero--the above cited "mother of four" is a Navajo woman. Relative to her, it is more likely that you and I are the illegal immigrants :-)
But you are correct to bemoan the state of women who have and raise children with no visible support from the fathers--sperm donors--whatever you want to call it. This is a disconcerting problem and one that is often seen as a "woman's issue" when it is really a social issue that can only be impacted by men and women.
Restraining factors _include_ access to contraceptive services but also a culture that has made it okay for men to father children and walk away. Admittedly, this is a prime case of women teaching others how to treat them. There is no getting around that. And for all women, but perhaps particularly poor women, the capacity to become impregnated and bear a child for a man is still part of her over-all value in society. So we have successions of children who are loosely connected to family structures. I have seen it so often that I know this exists; all too often the children from yesterday's relationships _know_ they are yesterday's news. Not very important and perhaps even an impediment to the parents new relationship. Cultures do not promote marriage because it is a perfect relationship; they promote because it gives the best chance at creating a protective environment to raise children in. So that fact has brought us to the ham-fisted efforts by this administration to promote marriage (I guess for marriage's sake).
I do not necessarily think this is an issue best addressed by government but churches and families would do well to simply point out to their children, and to live by example, that children are best raised in the committed structure of a permanent relationship.
Failing that, society owes it to help the children who fall out of this protective structure as much as we reasonably can.
Since I live north of ABQ, have all my life, the question of Tsosie's heritage or "immigrant" is not in question for me.
I know plenty of single woman who raised a child without a partner. In most cases they did well. Here again is the key word "a (one) child.
And, what does the whole single parent/woman thing have to do with the issue anyway. I'm talking about commited couples with little or no means bringing 3 and 4 children into the world. I see it everyday.
Well, Habanero, I agree with you that some poor couples have moe children than _I_ think they should have but I think this is a very scary discussion to have. As someone who has worked in the family planning field, I do not envision a pretty world when I think about a world where someone can tell you how many kids to have. But statistically, even a poor child living with two parents often has it "better" than a single mom; the child benefits optimally from being raised by two people who have a vested interest in his/her survival. And rich or poor, I think when couples reproduce beyond the level of two kids, I think there needs to be some discussion about whether that is right, even at the same time I deplore having the discussion. Whether you are POOR and have a passle of kids or RICH and have a passle, your family may disproportionately stress the resources of the world.
Because of the red-hot abortion debate, there is almost no sane discussion of how over-population stresses the world's resources. This is a conversation the world needs to have with itself. And trust me, for many people discussion of birth control is THE SAME as abortion. (Go figure on that!)
The world population is, in fact, exceeding the earth's capacity to feed and house itself and that fact remains whether the newborn is from a well-to-do or culture poverty family.
You know the economy is FUBAR when half of the ads on television concerns instant check cashing, debt consolidation, bankruptcy lawyers, mortgage refinancing of variable rate loans, or credit counseling.
Pharma ads take up the other half of the ads.
Too many kids...too few kids, whatever. Let's talk about per capita resource use. Take the United States which accounts for 5% of the world's population yet consumes 35% of annual worldwide output. So in America, having even one child is akin to having 15 children in China by way of global consumption of EVERYTHING.
I'd like to add that one of the ulterior motives that the Bushites have for ignoring illegal immigration is becuz illegals are being given one of the oldest American opportunities known to the federal govt: instant citizenship for military service.
Exploitation is the name of the game.
This is another problem brought to us by the fine folks in the open borders movement. The sheer numbers of immigrants lowers wages substantially. And the lack of familiarity with American ways makes immigrants especially vulnerable to economic traps few Americans would venture into.
I don't think that passing more laws is the answer to these problems; people will once again resort to the criminal loan sharks. No, the answer to helping the most vulnerable among us is to ensure that their full-time jobs pay enough to live on. And the best way to ensure a living wage is to stop immigration.
Adamsrw, I like the points you make about advertising. I would add that in many parts of the country, prisons are the real growth industry. The vision of the open borders elites is everybody else's nightmare.
PhatJay,
The expression goes, "think globally, act locally".
People who have little or nothing don't even consider how much of the resources they use. They'll take without consideration to get what's their's. You and I know we can't go on like this.
We're poised for change and those that have the best chance to implement will be aware, as you are, and educated. You and I have a better chance of working together than some social economic under-class you advocate for. I wonder about the contempt some of the open-border folks have for their own community.
"And the lack of familiarity with American ways makes immigrants especially vulnerable to economic traps few Americans would venture into."
There ya go, they're being exploited also.
Overpopulation is a taboo subject that shouldn't be. Our planet can only sustain so many people. EVERYONE imo, should stop having kids. At least for a while anyway.