DEBT
this is general category
see warren below: debt leads to economic instability eg recessions/depression?
see fed deficit debt
see crytpo bitcoin grift
see debt collector extraction
student , etc
cash bail
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New from GPAHE: Betting Your Future: Crypto Casinos Radicalizing Young Men into Hate
Crypto casinos are becoming a new pipeline into far-right radicalization. Largely unregulated gambling platforms such as Duel, Stake, and Rainbet use influencers with millions of followers, including neo-Nazis and manosphere figures, to promote gambling while amplifying hate. As gambling debt and financial instability increase vulnerability, the industry is creating a dangerous convergence of addiction and extremist recruitment.
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OMG RWW 9 26
- Sarah Kliff @ The New York Times: A Doctor Sued 700 Patients for Debts; 81 Were Arrested. Now He’s a Senator.
Patients sued by Senator Roger Marshall of Kansas were routinely charged 18 percent interest, The Times found. Some had bank accounts garnished.
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bb 6 24
As if dealing with COVID-19, conflicts, and climate change wasn't enough, emerging nations are now suffocating under a colossal $29 trillion in public debt.
According to a new UN report, the debt crisis is so bad that "15 countries are spending more on interest payments than they do on education" and "46 spend more on debt payments than they do on health care."
As the NY Times' Patricia Cohen reports, "Unmanageable debts have been a recurring feature of the modern global economy, but the current wave may well be the worst so far. Overall, government debt worldwide is four times what it was in 2000."
Who is cashing in on poor countries debts? According to the Times: old school development banks and major Western banks, shady private lenders, official creditors like China, "as well as a variety of sometimes secret loan agreements governed by different national regulations."
These lenders rake in extra money with usurious surcharges, too:
Martin Guzmán, a former finance minister of Argentina who also experienced the devastating impact of his native country's debt crisis, was at the Vatican meeting last week. In his view, I.M.F. help is sometimes counterproductive, offering bailout loans, now with high interest rates, that end up increasing a country's already burdensome debt
He has also railed against the extra fees, or surcharges, that the fund imposes on struggling high-risk debtors, siphoning precious funds that could be used to provide health care and rebuild an economy.
The five largest borrowers — Ukraine, Egypt, Argentina, Ecuador and Pakistan — paid $2 billion alone in surcharges last year, according to the Center for Economic and Policy Research. On average, surcharges ended up raising the cost of borrowing for all affected countries by nearly 50 percent.
Until the global financial system is fundamentally reformed, this cycle of debt and misery for emerging nations will keep spinning.
Previously:
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https://www.alternet.org/medical-debt-2663079787/
not credit report
big basis for occupy, esp student?
We moved quickly into starting to have general assemblies, having more and more people come out, trying to figure out what this looks like in the context of a midsize Southern town. Durham at the time had, you know, just over 200,000 people. But it was also beginning to go through some serious economic struggles, gentrification, housing displacement. There were a lot of people in Durham who were really struggling. And so, we really resonated with the message that was coming out of New York and with the same conversations that people were having about income inequality, about housing inequality.
I ran for office just four years after Occupy, in 2015. And I think at first it was kind of a leap of faith. I didn't really have a sense that I was going to be able to change things from an elected position. I was hoping that there was an opportunity there. And I think our movement was started to turn more and more toward the idea that electoral politics could provide some opportunities for us to make change and to leverage resources for the benefit of working-class and communities of color.
And I've been able to do that in ways that I didn't expect. I think the transition has been — it's been difficult in ways, but it's also been very empowering and exciting to be able to put my organizing skills and movement skills to work in a different context. And I think bringing more people into the electoral world, through some of the work I'm doing with a national organization called Local Progress and just folks in my community talking to other movement people, younger people who might be interested in moving into the electoral realm someday, I've felt like I've been able to gain skills and knowledge and then pass those skills and knowledge on to other people within the movement. So, it feels — it's felt really rewarding — difficult, of course, at times, but ultimately I feel like I've been able to do something good in this position, and I'm excited about passing the torch on to somebody else.
AMY GOODMAN: I want to go to a few months later, November 2011, during the Occupy protests, about a thousand students marching in New York City outside a meeting where CUNY trustees — that's City University of New York trustees — voted to authorize annual tuition increases. This is Julian Guerrero of Students United for a Free CUNY.
JULIAN GUERRERO: [echoed by the People's Mic] Me, myself, I'm in debt $70,000. I actually got a letter from Sallie Mae saying that if I don't start paying today $900 a month, they're going to have more aggressive attempts at collecting my debt. And so, I'm going to burn this right here and now.
AMY GOODMAN: So, that's Julian Guerrero of Students United for a Free CUNY, using the whole idea of the mic check and the open mic and the mic repeats that we've come to see that are so familiar. Astra Taylor, you are a key member of the Debt Collective. Talk about how that movement has evolved to today.
ASTRA TAYLOR: Now, the Debt Collective is an organization for debtors that fights for the cancellation of all kinds of debt and the provision of the services, the public goods we all need to survive and thrive. It has its roots directly at Occupy Wall Street.
So, just like Nelini felt that space to talk about her condition honestly, you know, for many of us who were in debt, Occupy was a similar space, where we could see that we were not alone — and that is actually the Debt Collective's slogan: "You are not a loan" — A space L-O-A-N, right? — a space where we could come together. And debt was actually part of the protests around the world at the time. Tuition hikes sparked protests in Latin America. And later, in Quebec, there was a wave of protests.
And so, you know, we followed the threads of debt, once the parks were cleared, because how we were thinking about it at the time was, you know, "Yes, we're occupying Wall Street, but Wall Street occupies our lives. And how does it do that? Often in the form of debt. We're forced to debt finance things that should be publicly provided." And it was at Occupy Wall Street that we had the collective epiphany. We started to recognize that our debts, which were so burdensome, could actually be a potential source of power, a source of leverage.
And by consistently organizing, we've moved the needle on that issue. I think, you know, we now are in a world where leading politicians talk about student debt cancellation. The Debt Collective has won billions of dollars of student loan cancellation for debtors. And that demand started at Occupy Wall Street. And the media was very skeptical. They mocked the demand. They said, "It's never going to happen. Isn't Occupy so naive?" Well, look where we are today. We've really moved the debate. And so, I think that's a really concrete, concrete result of this movement.
AMY GOODMAN: I want to go to the issue of police repression of Occupy protests across the country. On November 18th, 2011, campus police officers at the University of California, Davis pepper-sprayed peaceful student protesters. Video of the police attack went viral.
PROTESTERS: Don't shoot students! Don't shoot students!
The whole world is watching! The whole world is watching! The whole world is watching! The whole world is watching! The whole world is watching! The whole world is watching!
Shame on you! Shame on you! Shame on you! Shame on you! Shame on you! Shame on you!
ELLI PEARSON: I wasn't aware I was going to be pepper-sprayed until people told me to protect myself. And then I have friends who were pepper-sprayed who said they did not know that that was happening and that that was coming. And we were actually expected — we were expecting to be shot in the back with something, because they were behind us. And we really had no idea what was going to happen.
AMY GOODMAN: That's UC Davis student Elli Pearson speaking on Democracy Now! after she was pepper-sprayed. And you have the whole coordination. It later came out — I remember that piece in The Guardian by Naomi Wolf, "Revealed: how the FBI coordinated the crackdown on Occupy," the destruction of Occupy Wall Street and other places all over the country, well over a dozen cities. Nelini Stamp, if you can talk about what you understand took place, and how the police dealt with you?
NELINI STAMP: Yeah. I mean, you know, it was interesting, because the first — very early on, that first weekend, I remember going to an officer and saying, "Can my friend's car be there?" And they were like, "Yeah. Y'all will be gone by Monday."
And increasingly, as soon as we started — one of the first direct actions, regular direct actions, we did at Occupy Wall Street was the opening and closing bell. We would march for the opening bell and closing bell of the Stock Exchange and Wall Street. And that first Monday, we started getting shoved and pushed. And every single day that we were out there, things escalated to then a few arrests, to then a few more arrests. And I think things really changed on the Saturday.
There was a few things that I feel like people don't understand, what happened those first two weeks, also in the nation. Troy Davis was executed by the state of Georgia — a huge case of misjustice and racial reckoning again. There was a huge debate in the city of New York around stop-and-frisk. And so, all of these tensions were underlying. But there was also this idea and original, you know, sentiment to say that the cops are the 99%, too, because most of them were not making — if we were really a uniting movement. So, it was this really interesting juxtaposition that was happening those first two weeks.
And that Saturday — we did weekly actions on Saturday, and I don't remember if it was the 24th or the — I usually used to remember all of the dates in my mind. We took the streets. And it was civil disobedience like New York hasn't seen in a really long time. And I remember getting to Union Square, and all of a sudden they had this orange netting all around us, which I think is now illegal in the city of New York for cops to do. But they had orange netting, and pepper spray was just going everywhere.
And that was kind of the — I think that was a radicalizing moment for a lot of our white comrades at Occupy Wall Street, who never had to deal with the police as those of us who come from communities of color in New York had to, or those of us who have a history of — when I was younger, I remember seeing Amadou Diallo's murder on every single thing, and people marching on the Brooklyn Bridge. And so, for those who didn't have that background or that personal experience, they finally did have that. And that's when I think there was this awakening of a lot of young white folks or more affluent folks who didn't come from overpoliced communities actually saying and trying to hold the police accountable.
So, what you see is, right after Occupy Wall Street, you see Ramarley Graham gets killed in the city of New York, and then Trayvon Martin gets killed in Florida, and people start to act up, you know? I flew down to Florida, because they wanted somebody to train them in direct action, and helped co-found the Dream Defenders. We marched for miles to Sanford. And then you see a big march in June of 2012 with 50,000 people that said, "End stop-and-frisk." And I don't think that would have been — that would have had the new people involved as it did, if we didn't have so much, like, repression from the state. And I think part of it was to make people not come out, to make — people were really threatened by Occupy at that time. And I think that that's what ended up happening, and it was really beautiful to see people get involved and actually call out police brutality after that.
AMY GOODMAN: Nelini Stamp, I want to thank you for being with us. This has to end this discussion today. Nelini Stamp of Working Families Party in Philadelphia; Astra Taylor of the Debt Collective, speaking to us from Asheville; and Jillian Johnson, mayor pro tem of Durham, North Carolina — all three involved in the Occupy movement 10 years ago. And we continue to cover it when we look at the bills that are in Congress right now and so much more. I'm Amy Goodman. Thanks so much for joining us
https://www.alternet.org/2020/10/debt-collectors-have-made-a-fortune-this-year-now-theyre-coming-for-more/
Earlier this year, the pandemic swept across the country, killing 100,000 Americans by the spring, shuttering businesses and schools, and forcing people into their homes. It was a great time to be a debt collector.
In August, Encore Capital, the largest debt buyer in the country, announced that it had doubled its previous record for earnings in a quarter. It primarily had the CARES Act to thank: The bill delivered hundreds of billions of dollars worth of stimulus checks and bulked-up unemployment benefits to Americans, while easing pressures on them by halting foreclosures, evictions and student loan payments. There was no ban on collections of old credit card bills, Encore's specialty.
At the same time, the pandemic compelled households to cut spending. Finding themselves with enough money to settle old debts, people responded to collectors' calls and letters. Debt-buying executives couldn't help marveling at their good fortune. All this created “a perfect storm from a cash perspective," the CEO of Portfolio Recovery Associates, Encore's main competitor, told Wall Street analysts.
After its record second quarter, analysts expect Encore to blow past $200 million in profit this year and reward stockholders with 40% earnings growth compared with last year. Portfolio Recovery is set for similar growth. The share prices of both have soared off their early April lows.
:{Investors didn't even show much concern when, in early September, the Consumer Financial Protection Bureau sued Encore, saying that it had broken the terms of a consent agreement struck in 2015.:(style="background-color:#ffcc66ff"):}:**:{The agency had previously charged the company with “pressuring consumers with false statements and churning out lawsuits using robo-signed court documents," as it :(style="background-color:#ffffff;"):}::{:(style="background-color:#ffffff;;transition-property:color, background, opacity"):}:**:{said at the time. (In :(style="background-color:#ffffff;"):}:a statement:{, Encore said the CFPB's recent suit was unnecessary because it had fixed the alleged problems “years ago.")}:
In recent months, the only real bad news for debt buyers was that local courts across the country temporarily shut down. Debt collection lawsuits provide a key source of revenue for the companies, a way to extract payment from consumers, typically low-income, who don't offer it up.
But now even that hiccup is over. After a bit of a lull in the spring, Encore and other debt buyers are back at it, filing suits by the thousands every week, according to ProPublica's analysis of state court filings.
In August alone, Encore filed about 1,000 suits in Indiana and over 2,000 suits in the metro Atlanta area. Other debt buyers jumped back in as well. In Chicago, Portfolio Recovery filed over 3,000 suits in July, while LVNV, a major debt buyer privately owned by Sherman Financial Group, filed over 2,700 suits in Maryland in August. For all these companies, ProPublica found, thevolume was well above the number they'd filed before the coronavirus arrived, in January or February of this year. No national numbers on suits exist.
In statements, the companies said they have been actively working with consumers during the COVID-19 pandemic and only sue as a last resort on a small portion of accounts.
Elizabeth A. Kersey, a spokesperson for Portfolio Recovery, said the company's hardship program “allows for the suspension of collection efforts for ninety (90) days upon notification of a hardship event." The company is currently not seeking new orders to seize debtors' wages or bank account funds, she said.
Ryan Bell, an Encore executive, said, “We have consistently and proactively communicated to consumers the various relief options we've put in place in response to COVID-19, including temporarily stopping collections." The company said it had stopped seeking orders to garnish bank accounts. It is, however, seizing wages.
Sherman Financial did not respond to requests for comment.
If Congress is unable to pass any further stimulus , unemployment is likely to remain high. In that scenario, debt buying companies and the banks that sell defaulted accounts to them expect more Americans to fall behind on their credit card bills over the coming months.
Even that scenario turns out to be rosy for the debt buyers. While good times can mean that Encore collects on more debt than it expected, bad times typically bring a glut of people suffering under loans they cannot repay. The result is that Encore can scoop up the raw materials for its profit machine — defaulted accounts — more cheaply. Or as Encore CEO Ashish Masih put it to Wall Street: The company is “particularly excited about the prospects for increased supply in the future."
“The same giant debt buyers known for fighting consumer protection laws at every turn have been raking in cash during this pandemic," Sen. Elizabeth Warren, D-Mass, told ProPublica. “They are now licking their chops in anticipation of profiting even more off families who have their hours further cut or can't find a job, and can't keep up with their bills or their mortgage. This is disgraceful and reinforces the need for Congress to protect consumers and small businesses from this predatory behavior."
In recent years, Encore has bought around 2 million to 3 million U.S. accounts per year, according to public filings. Last year, on average, the company paid 8.6 cents on the dollar for each account. For a typical debt of $3,142, Encore paid $271.
To earn a profit on that investment, Encore and other debt buyers pursue debtors in near perpetuity. Encore is still collecting tens of millions of dollars each year from debts it bought in 2009 or earlier. The key to that persistence is the courts.
Since the early 2000s, debt buyers have flooded local courts nationwide with suits. The companies regularly account for more than a quarter of all debt collection cases in a given jurisdiction, according to ProPublica's review of collection filings over several states.
That disproportionate presence has been particularly apparent in recent months, as the banks themselves have mostly opted to suspend filing new suits. In normal times, Capital One files far more lawsuits than other banks, in numbers similar to those filed by Encore and Portfolio Recovery. But since March, although Capital One continued to seize pay via garnishments secured before COVID-19 struck, it has largely stopped filing new suits.
ProPublica did find one exception among the major banks that commonly file a significant number of suits: Citigroup, which resumed filing suits at its normal levels in July. The bank, for instance, filed over 200 suits in Oklahoma in August, more than it had filed there in January and February combined.
In a statement, Citi spokesperson Jennifer Bombardier said the bank has a special assistance program for customers impacted by COVID-19 and that it is not seeking to garnish the bank accounts of customers it has sued. The bank also did not sell charged-off accounts to debt buyers “for up to 120 days" in the states “most impacted by COVID-19," she said.
Encore sued Nicole Campbell of Brooklyn, New York, in July. Her first task was to figure out what to do. The suit was over $3,023.76 in debt she incurred years ago with CareCredit, a card offered by Synchrony Bank to people who need to cover medical costs, such as dentistry and eyecare. She knew she should answer the complaint by going to the courthouse, but she was wary of going there during the pandemic and wasn't even sure whether it was open.
Even attorneys have difficulty finding their way.“Courts have been returning to full operation, but there's so much confusion as to what's happening," said Susan Shin, legal director of the New Economy Project in New York City. “It's hard to know what to advise people on what to do with their case."
With help from an attorney with the New Economy Project, Campbell responded to the suit by mail. She's not sure what to expect next but said she doesn't have much time to worry about it. She cares for three boys, 5, 11 and 14, on her own and has to figure out how to get them to school on the city's part-time schedule while helping them with online lessons when they're home. She juggles this with her own job as a customer service rep: That also has a rotating, part-time schedule in order to minimize the number of people in the office.
“It's crazy to me they're filing all this during this time when there's so much going on," she said.
Such collection suits are most common among workers with income under $40,000 per year and particularly common in mostly Black neighborhoods. The suits routinely result in judgments, which in turn usually result in attempts at garnishment,according to a ProPublica analysis of Missouri court filings. Past studies have put the number of workers who have their wages garnished each year at around 4 million. In most states, plaintiffs can seize up to a quarter of a worker's take-home pay or clean out their bank account.
In recent years, when state legislatures have moved to protect more funds from garnishment, Encore has been there to oppose the measures. In 2018, a Connecticut bill proposed to automatically protect up to $1,000 in a bank account. An Encore executive, Sonia Gibson, argued against it, writing in a letter, “Since the average amount we collect through bank garnishments is typically around $700, an automatic exemption of $1,000 would leave us unable to use bank garnishments." The bill died.
Last year in California, Encore joined with other debt buyers to combat a similar bill that aimed to protect around $1,700.
“It was a really huge fight," said Ted Mermin, head of the California Low-Income Consumer Coalition and a professor at the University of California, Berkeley, School of Law. “And you've got to think, 'Why?' Who on earth thinks it's a good idea to take someone's last dollar? The only people who would do this are debt collectors who have no ongoing relationship with someone." The bill narrowly passed and became law.
In Washington state, lawmakers last year sought to protect more workers from wage garnishment. Under federal law, earnings above $217.50 in a week are eligible to be seized, a level that has remained the same since 2009 because it's tied to the $7.25 federal minimum wage. The Washington bill, which ultimately passed, aimed to tie the exemption to the state's much higher minimum wage, which this year is $13.50 an hour. In 2020, about $472.50 in weekly take-home pay would be protected. That wasmuch too high for Encore. Gibson argued in a letter that people earning that much shouldn't be “completely exempt from garnishment."
As an alternative to automatic protections, Encore generally argues that consumers should have to file exemptions in court to demonstrate they really can't afford to have their money taken.Consumer advocates say that such exemptions, which often exist in state laws, are rarely invoked by debtors because they either don't know about them or don't understand the process.
On paper, Randall Ward would seem to be well-insulated from garnishment. He lives in the small town of Marianna, Florida, and state law protects the wages of anyone deemed the “head of household," which is defined as someone who earns more than half the household's income and has dependents. Since Ward helps care for his 20-year-old son with Down syndrome and a granddaughter, his pay from his job as a manager at a Waffle House is eligible for protection.
But when Encore, after having won a judgment against Ward the previous year, sought to garnish his wages this past February, Ward didn't understand that he qualified for the “head of household" exemption. So, starting in March, Encore began taking a quarter of Ward's take-home pay. The size of the debt, a Citibank card that had ballooned to $5,220 with interest and court costs, meant that Ward, even with what he's proud to call a “good job," was in for many lean months.
The only way to make ends meet, he said, was to cancel health insurance for himself, his son and his wife, “because I could not pay the bills if I didn't do it."
Then the virus forced his restaurant to close for several weeks and his pay stopped altogether. The family was without income as he waited for his unemployment claim to go through. When, finally, he could go back to work, the garnishments returned. Encore has said in public statements that it looks to work with consumers, especially those who've been impacted by COVID-19. Ward said that was not his experience.
“They're just ruthless about it," he said. “I would hate to see that happen to anybody."
Encore declined to comment on individual accounts.
Collection suits can have a lasting negative effect on consumers. A recent study by economists from Dartmouth's Tuck School of Business and the University of California, San Diego, focused on debtors who, after being sued, agreed to pay in order to avoid garnishment. The settlements left consumers worse off: They were more likely to fall behind on other debts or end up in foreclosure or bankruptcy, the study found. The main reason was that paying up on one debt had drained those consumers' cash buffer and that left them vulnerable to falling behind on others.
Even in good economic times, low-income consumers live on the edge, so the CARES Act aid was particularly helpful to them. According to a Federal Reserve survey, the temporary $600 boost to weekly unemployment insurance benefits actually resulted in higher pay for about 40% of those who received them. On top of that came the $1,200 stimulus checks ($2,400 for married couples) with an additional $500 for each child.
In July, the Fed found households with income under $40,000 a year had significantly more savings than normal: Whereas last year just 39% said they would have covered an unexpected $400 expense with cash, this summer, 48% said they would.
Debt collectors were a clear beneficiary of those extra funds. According to a survey by the Bureau of Labor Statistics, while most people used the stimulus payments to buy food and other essentials, about 25% used at least some of the money to pay down debts.
But Felipe Severino, a Tuck School of Business professor and one of the authors of the paper on debt collection settlements, said there may be negative long-term consequences for households who used the extra money to settle older debts. The companies say they do not charge interest on the old, charged-off debts they collect so the debts are not growing.
“I would argue it's not a very good use of their money," he said. With less of a safety net, those households are more likely to find themselves behind on their bills again.
Furthermore, he said, stimulative government aid like the CARES Act is meant to be “spent and magnify across the economy" in the near term by, for instance, leading to increased purchases at local businesses. That doesn't happen when the money goes to debt collectors.
The flood of government aid, along with the sudden contraction in spending due to COVID-19, has led to an unpredictable economy, one where unemployment has shot up without the usual tide of delinquencies, bankruptcies and foreclosures. But now, banks are predicting that tide to finally arrive in the coming months.
In July, Capital One reported a loss for the quarter despite delinquencies actually going down. The reason was the bank set aside $2.9 billion as a provision for future credit losses, a kind of safety net for the future.
Encore did not appear to need such precautions. “Our liquidity puts us in a strong position to capture the substantial purchasing opportunity, which we believe is sure to follow," Masih, the CEO, told analysts.
no lnx
Vulture capitalists are picking us dry: Why consumer debt buyers are on the rise
The great recession laid waste to the U.S. economy. Now debt collectors are feasting on the carrion
JIM HIGHTOWER
MARCH 22, 2015
Good news, people: The "boom" is back! Yes, good times are here again, thanks to an economic boom that's being generated by (of all things) bad times.
As you might know from your own experiences, tens of millions of Americans have been hit hard, knocked down and held down in recent years by the collapse of jobs and wages. This calamity has led to a second blow for millions of the same families, who find themselves suddenly buried in piles of overdue bills for credit card charges, student loans and other consumer debt.
But the good news is that there's a bright silver lining in that dark financial cloud. Only, it's not for the indebted families, but for a booming breed of finance hucksters known as consumer debt buyers. Believe it or not, in the warped world of high finance,"There's gold in them thar hills" of bad debt, and where there's gold, there are diggers.
Whenever a corporation issues a statement declaring that it's committed to "treating consumers fairly and with respect," chances are, it's not.
After all, why say such a thing, when actually practicing it would make a statement unnecessary? Indeed, with names like Encore Capital Group and Sherman Financial, these miners of human misery buy bales of these unpaid bills from banks and other lenders, paying pennies on the dollar. Then they unleash packs of their hard-nosed, aggressive collectors on the families. If they still can't extract payment, the corporate debt profiteers turn to their meanest dog: The courts.
Debt firms routinely file thousands of lawsuits a day against financially devastated Americans. They know that most debtors can't understand the legal gibberish filed against them, can't afford a lawyer, can't take time off to go to a court hearing and can't mount an effective defense against the corporate lawyers. So, some 95 percent of these lawsuits produce default judgments against hapless borrowers -- meaning debt buyers can then confiscate the wages of borrowers or freeze their bank accounts.
This boom in vulture capitalism is disgusting -- but, worse, it's subsidized by us taxpayers! We pay for the judicial system -- the judges, courtrooms and endless rounds of hearings. Predatory debt corporations have perverted our so-called justice system into their own subsidiary for squeezing profits out of destitute debtors.
This is why New York Attorney General Eric Schneiderman has started going after these for-profit corporate debt collectors. He found that Encore, based in San Diego, filed nearly 240,000 lawsuits against debtors in a recent four-year period, using the courts as its private collection arm. Problem is, Encore's bulk filing of lawsuits against the hard-pressed borrowers are rife with errors, out-of-date payment data, fabricated credit card statements, etc. With debt buyers scooping up millions of overdue bills each year from lenders, tons of them are missing original loan documents, payment histories and other proof of debt.
Debt predators, however, scoot around this lack of facts by simply having their employees sign affidavits asserting that the level of money owed is accurate. Judges, overwhelmed by the unending flood of lawsuits filed by Encore et al, have accepted those affidavits as true, thus ruling in favor of the corporations. But Schneiderman found that -- Surprise! -- affidavits were simply being rubber-stamped by company employees, with no effort to ensure the truth of the information. An employee of one large debt-buyer testified that his corporation ran an assembly-line scheme in which he signed about 2,000 affidavits a day.
This is no minor scam -- 1 in 7 adults in the U.S. is under pursuit by debt collectors. It's hard enough for struggling families to claw their way out from under the economic crash without having lying, cheating predator corporations twist the court system to pick their pockets and shut off their hope of recovery.
JIM HIGHTOWER
Jim Hightower's most recent book is "Let's Stop Beating Around the Bush." He produces a monthly newsletter, The Hightower Lowdown, and a syndicated daily radio commentary.
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https://www.alternet.org/2020/02/as-household-debt-hits-14-trillion-economists-say-fed-solution-for-next-recession-is-insufficient/
Thousands of poor patients face lawsuits from nonprofit hospitals that trap them in debtMaya Miller, Beena Raghavendran / ProPublica
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aha: matthew effect, dark money lobby corruption and financialization funnels money to the top; thus low and Middle class ppl go into debt; everything is more expensive relatively if you're poor /working class (eg no bank acct means cash check at walmart they take a cut or payday loan that takes a big one); worse are predatory capitalist who prey/extract (pay phones on street but esp in prison).
see Liz warren on how debt (personal and banksters) creates systemic risk and instability.
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https://www.alternet.org/2019/07/why-elizabeth-warren-thinks-the-warning-lights-are-flashing-and-a-new-financial-crisis-is-looming/
[bunch of other art'l i ignored on predictor curve last few weeks' OTOH i have been tracking weaken dodd-f and cfpb for a while]
no lnx twt
Why Elizabeth Warren thinks the ‘warning lights are flashing’ and a new financial crisis is looming
Written by Andrea Germanos / Common Dreams July 23, 2019
“Warning lights are flashing,” Sen. Elizabeth Warren wrote Monday, predicting an economic crisis within two years unless federal regulators and Congress take swift action.
The Democratic presidential contender outlined the reasons for her concerns and plans to address them in a Medium post entitled “The Coming Economic Crash—And How to Stop It.”
Team Warren
?
@TeamWarren
.@ewarren warned us about the 2008 crisis years before it hit. Now she's seeing serious warning signs again—and she's calling for action. Read, share, and join the fight: https://medium.com/@teamwarren/the-coming-economic-crash-and-how-to-stop-it-355703da148b …
The Coming Economic Crash?—?And How to Stop It - Team Warren - Medium
By Elizabeth Warren
medium.com
As she did in the years leading up to the 2008 economic crisis, Warren now sees “a lot to worry about again.” According to the Massachusetts Democrat, there are “a number of serious shocks on the horizon that could cause our economy’s shaky foundation to crumble.”
“The country’s economic foundation is fragile. A single shock could bring it all down,” she wrote. “And the Trump administration’s reckless behavior is increasing the odds of just such a shock.”
Among the potential triggers she laid out is thelevel of household debt.Warren referenced recent data showing that household debt is now $869 billion higher than the $12.68 trillion peak it hit in 2008.
To remedy that, she cued up several of her already-released plans, including raising the minimum wage to $15 an hour, canceling most student loan debts, offering free public higher education, and making child care affordable.
She also called on federal regulators to swiftly address the potential shock that lies in leveraged corporate lending.“Leveraged lending—lending to companies that are already seriously in debt—has jumped by 40 percent since Trump took office, spreading ‘systemic risk’ throughout our financial system,”wrote Warren.
Federal regulators, she wrote, should “enforce leveraged lending guidance that is intended to stop banks from issuing these risky loans in the first place.”
Warren also cited the current manufacturing recessions—a problem she said could be flipped by enacting her Green Manufacturing Plan.
Inoculating the economy from “potential shocks” also will happen by “strengthening critical American industries, instead of undercutting American companies” and eliminating the debt ceiling, she wrote.
A crisis could be averted, wrote Warren, “if we take bold action now to address the underlying problems in the economy.”
Warren’s new plan rollout came the same day as Democracy for America’s latest straw poll showed her closing in on Bernie Sanders’s lead among the progressive group. The Vermont senator notched just over 32 percent to Warren’s roughly 26 percent, both well ahead of third place Kamala Harris’s 12 percent. The group’s previous survey in April showed Sanders as the frontrunner and with a 30-point lead over Warren.
https://www.alternet.org/2019/06/how-post-offices-can-beat-payday-lenders/
The fight to curb payday loans has reached one of America’s oldest institutions: the Postal Service. Democratic representativesBill Pascrell of New Jersey and Ayanna Pressley of Massachusetts recently introduced an amendment to the Financial Services and General Government Appropriations Act authorizing post offices to provide small loans, savings accounts, and other financial services. The amendment sets aside $1 million to cover any overhead. It passed the House of Representatives on June 25.
Pascrell is a longtime supporter of the Postal Service. In an April 2019 article for this magazine, he argued that the USPS is an essential institution that has been bogged down by privatization efforts. Rather than take away money from the agency, Pascrell said that Congress should expand its functions. Post offices, he noted, could bring loan and ATM access to unbanked Americans, many of whom rely on payday lenders that charge exorbitant interest rates. problem ... ;in the United States. In 2017, 6.5 percent of U.S. households were “unbanked” (no bank access), and 18.7 percent were “underbanked” (reliant on financial institutions that were not banks). Almost half of the country could not pull together $2,000 within thirty days in the event of an emergency (or at least they would struggle greatly to). Many of these people would have to take out payday loans to deal with such a shock.
NB also black kids get arrested at school in way higher numbers:
https://www.alternet.org/2019/07/school-district-threatens-parents-their-children-may-be-put-in-foster-care-over-unpaid-lunch-bills/
School district threatens parents their children may be put in foster care over unpaid lunch bills
Written by David Badash / The New Civil Rights Movement July 20, 2019
A Luzerne County, Pennsylvania school district is under fire for sending letters to parents who owe money for their children’s lunches. The letters threaten that if the bills remain unpaid their children could be removed from their homes and placed in foster care.
“Your child has been sent to school every day without money and without breakfast and/or lunch. This is a failure to provide your child with proper nutrition and you can be sent to Dependency Court for neglecting your child’s right to food,” the letter reads, as NBC News reported.
“If you are taken to dependency court, the result may be your child being removed from your home and placed in foster care,” the letter (below) adds.
Andy Mehalshick
Foster Care fallout! More reaction today to a letter sent to parents in the Wyoming Valley West School District threatening to send their kids to Foster Care unless they make good on delinquent lunch bills. A State lawmaker weighs in. Eyewitness News. http://PAhomepage.com
View image on Twitter]
The school district solicitor, Charles Coslett, appeared gleeful over the letter, saying, “Hopefully that gets their attention, certainly did, think about it,” he told NBC News.
Related: School Cafeteria Confiscates Lunches From Hands of 40 Kids for Insufficient Funds
PAhomepage reports many are upset over the letter, and not just parents.
“It’s just not true. We do not remove children from families for unpaid bills,” Luzerne County Children and Youth Services executive director Joanne Van Saun told the newspaper. “I found it very disturbing. Upsetting. It’s a total misrepresentation, a gross misrepresentation of what our agency does.”
Luzerne County Manager David Pedri called it “a gross misrepresentation as to what we do. What you are really doing is weaponizing the good things we are doing in Luzerne County. I’m asking the school district to retract the letter.”
The school district is facing $20,000 in unpaid school lunch bills.
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https://www.alternet.org/2019/04/many-people-are-too-broke-for-bankruptcy-heres-what-congress-and-bankruptcy-organizations-could-do-to-help/
It’s tax season. That also means it’s bankruptcy season. Every year, bankruptcy filings peak in March and stay elevated in April, as people use their precious tax refunds to finally purchase the thing they couldn’t afford before: bankruptcy.
All sorts of bad things happen when bankruptcy is out of reach for people, as we showed in a series of stories. People turn to unscrupulous operators who file phony bankruptcy cases, as happens often in Los Angeles. Particularly in the South, they turn to a form of bankruptcy that features a payment plan and that often ends in failure, leaving debtors worse off than when they filed. (African Americans are especially prone to that problem.) And finally, many people don’t file at all — and just hope that a debt collector doesn’t seize their wages.
In a report issued Thursday, the American Bankruptcy Institute, which counts 13,000 judges, attorneys and other professionals among its members, offered a range of fixes for the bankruptcy system. Chief among them were suggestions on how Congress could change the law to make bankruptcy more accessible.
The main cost when filing bankruptcy is paying an attorney (which typically runs around $1,000), but the laws essentially require debtors to come up with the money up front. That’s particularly hard for people who are being squeezed by debt, so the report by the ABI’s Consumer Commission recommended making it possible for debtors to pay their attorneys over time after filing. This would require a change of the law, because attorney fees are usually wiped out just like any other debt when someone files for bankruptcy.
The report also acknowledged widespread racial disparities in bankruptcy filings. As we showed in a story that focused on Memphis, Tennessee, the city with the highest bankruptcy filing rate in the country, black debtors are churned through a system that rarely results in debt actually being erased. We also published an extensive data analysisthat showed it’s a national trend. The ABI report cited our work alongside other academic studies demonstrating the problem. (The report also noted ProPublica Illinois’ work on how Chicago’s punitive traffic ticket system has pushed many black debtors into bankruptcy.)
In the “Racial Justice in Bankruptcy” section of the report, the authors recommended that bankruptcy organizations offer implicit bias training as part of their legal education offerings and that the courts begin to collect information about debtors’ race and ethnicity in order to more concretely show the disparities. But as we noted in our stories, making bankruptcy more affordable would do the most to curb this problem.
There are a host of other recommendations in the report. Some of them are rather technical. Some could have a major effect on the lives of millions of Americans. In particular, the commission recommended making it possible for debtors to wipe out student loan debt after a period of years. Currently, debtors have to demonstrate remarkable financial hardship in order to get relief, a standard that judges have criticized as unreasonable.
Of course, relying on Congress to get things done is never a sure path to change. And the last time Congress passed a big bankruptcy reform bill in 2005, the results were very damaging to low-income families. But the ABI is an influential organization on this topic, and some prominent Democrats, Sen. Elizabeth Warren, of Massachusetts, among them, have already endorsed the idea of making bankruptcy more accessible.
Filed under:
ProPublica is a Pulitzer Prize-winning investigative newsroom. Sign up for The Big Story newsletter to receive stories like this one in your inbox.
Chicago Task Force Will Take on Ticket and Debt Collection Reform
by Melissa Sanchez, ProPublica , and Elliott Ramos , WBEZ
The group is part of an effort to make vehicle ticketing less unfair
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It has been apparent for some time that the 20th Century US social contract is defunct beyond repair. Now the economic system faces the prospect of collapse as well. Not surprisingly, these developments are related. They did not come about overnight.
Looking back, it's easy to see that the system which emerged from the post-Bolshevik revolution, mass industrial production era of the 1920's, 30's and 40's was beginning to unravel by the end of the 1970's.
Union membership provides a helpful lens through which to view the process.
During the 1960's union membership bounced up and down within a narrow range ending the decade slightly higher than it began. But starting in 1970, it began a steady decline. In 1970 union workers were 29.6 percent of the work force. At those numbers, unions were able to exert considerable leverage over the wages, benefits and working conditions of all workers. By 1980 union workers were down to 23.2 percent of the total workforce. By the year 2000, union members represented just 13.5 percent of all workers. Today it is about 12.1 percent.
Conventional wisdom holds that Ronald Reagan caused the decline of unions by busting the air traffic controllers union (PATCO) in 1981. Not so. What Reagan and his advisors understood was that union power was already on the wane. Did they know for certain that they could attack PATCO and get away with it? Probably. But even if they didn't, they deemed it a risk--a "probe," if you will--worth taking.
Either way, they did bust PATCO. Consequently, the message that unions could be beat came through for all to see. Employers got the point and stepped up their already fierce resistance at the bargaining table. And they devoted new and effective resources to defeating organizing efforts by their workers.
Workers also got it that unions were weakening. That too made organizing tougher. Corruption scandals and other difficulties added to problems of unions. As the power of unions declined, real wages for workers declined too. Most economists agree that measured in constant dollars, wages in the US have been effectively stagnant since about 1975.
Unions were indisputably an effective instrument for building a broad "middle" class. They did so by applying sufficient power to assure that workers shared in the value that they were helping to create. As industrialization brought enormous innovation and productivity, workers waged epic struggles that won them the wages to buy what they were making. Working conditions improved. Home ownership, car ownership and college for the children of workers became widespread. Pensions and employer paid health care became the norm.
But. But. But. For many reasons unions were less effective at sustaining the newly huge middle-class than they had been at creating it. (The how and the why of the inability of US unions to perceive, let alone counteract, the new forces coming into play in the 1970's is an interesting and important but different topic.)
Declining union membership and power is, however, only one variable in the equation that has brought us to the white hot economic and political meltdown now dominating our news and our lives. Another critical variable is this: as the wallets of workers held fewer and fewer union cards, credit cards were filling up those very same wallets. Workers were in effect trading union cards for MasterCard's.
In the process workers became the proverbial frogs in the pot on the stove. The temperature kept getting closer to the boiling point. But the water felt just fine. Because even though worker power was in decline, worker consumptionwas going up. Color TV's replaced black and white TV's, only to be replaced again by bigger screen TV's and now LCD's and Plasmas. Vehicles got bigger and better and working families had more of them. Shopping malls proliferated and shopping itself became the national religion. Cell phones, computers, video games, boats, iPods and snowmobiles--workers had stuff, lots and lots of stuff. The whole economy grew.
How could this happen in the face of stagnant real wages? Three reasons. Technological political and economic forces made global production both possible and necessary. That in turn made it possible to stabilize and in many cases lower costs and prices for goods and services.
The social upheaval of the 60's helped create conditions that brought women into the workforce in great numbers. The added income helped to offset the decline in wages for men.
Last and anything but least, credit, not wages, came to drive purchasing and consumption. For workers, debt came from all over: credit cards; longer and longer terms for auto loans; huge college loans; "creative" financing for mortgages. A whole kit and caboodle of financial entanglements enmeshed workers, students, just about everybody. The "middle" class became the debtor class.
Between 1970 and 2000, according to the Bureau of Economic Analysis of the Federal Reserve Bank, household debt relative to disposable personal income nearly doubled. In 2006, David A. Gaffen reported in the Wall Street Journal that "households'...debt-to-income ratio reached an all time high 131.1%." (Exploding public debt is an important component of this dynamic too. According to Federal Reserve Board data, between 1957 and 2007 the inflation adjusted total debt load per person in the US increased $145,432, equivalent to an increase of $581,728 per family of 4. That number, of course, does not include long-term costs of the war in Iraq or of ongoing taxpayer funded bailouts of financial companies.)
That debt is bondage is a profound moral truth. But it is an important shaper of political and economic consciousness as well. The more you are in debt, the less likely you are to rock the boat. Take on your employer? Go on strike? Risk your job by trying to start a union? What, and miss a credit card payment? Don't you get it? I'm maxed out. Risk getting my car getting reposed? You've got to be kidding.
Some of this attitude is quite conscious. Much of is more below the surface. Either way, this kind of debt profoundly changes many things including the relationship of the worker to the employer. It's one thing to "owe my soul to the company store." But this debt is different. This debt creates a mindset by which the paycheck and the employer who provides it come to be seen as a protector from the demands of the lender. It is the credit card company and the collection agency that become the greatest source of worry and harassment.
To be sure, there are those who have felt little or no grief at all. Others have overcome financial challenges and setbacks. There is no denying that for quite a long time, this system seemed to work just fine. In garden variety daily life terms, living standards were going up. Millions of working class families had fulfilling and decent lives. Many still do.
But this arrangement changes politics too. Economically satisfied workers can "afford" political engagement on social issues such as gun ownership or abortion if they choose to be involved at all. And if you have a growing 401 K--which you have been led to believe is far more secure than Social Security--why wouldn't you have a literally "conservative" political outlook? Why not align with the politics that come with living in a "gated" community to defend against the less well off hordes? From that outlook, it's easy to imagine immigrants and/or "angry" African Americans as being seen as a much bigger threat than financial shenanigans on Wall Street. Thus are born "Reagan Democrats."
Moreover, from church, media and political pulpit alike comes a very sophisticated propaganda drumbeat. Relentlessly it pumps out the message that is that if you are on debt overload, you and you alone made bad choices. You didn't manage your money well. You should be contrite, even ashamed. The last thing you should do is think you have anything in common with any one else--even if millions are in exactly the same situation. Even less should you consider that you are a victim of extremely cynical and deliberate manipulation.
Did not the Credit Card Masters of the Universe barefacedly testify before Congress that it was they who needed protection from irresponsible borrowers? And did not a substantial majority of the "people's" representatives from both political parties in Congress agree with them? (As the righteous Elizabeth Warren has pointed out, those very same credit card companies routinely troll bankruptcy fillings to get names of bankruptcy filers to whom they then send credit cards solicitations! See here for terrific information on debt dynamics from Elizabeth Warren and her band of researchers. The New York Times recently published an excellent article on this subject as well.)
But credit card solicitations are not the only toxic Kool-Aid that's been on offer. The same institutions told us too that 401-K's are safer and better than either social security or a union negotiated pension. Why? Because private investments and personal responsibility are good and government and collective action are bad, that's why.
It's all enough to make your head swim. Partly that's because through it all You're On Your Own (YOYO). Even now, workers have some degree of union protection--whether they belong to a union or not. Unions and the threat of unions retain a small degree of leverage over some employer behavior.
Debtors have nothing. No one even pretends to care about them except lenders who will offer more credit at terms worse than what you have now or "credit counselors" who will help you--oh, and incidentally help themselves and help the lenders who got you into trouble in the first place too.
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The result is now before us. Absent any restraining force whatsoever, the financial masters of the universe went wild. They invented ways to make money out of whole cloth. They ENRONed the economy of the world.}:
Let's take a deep breath and go back to the beginning for a minute. The "cost" of forming or joining a union seems high. As a worker, you are told over and over again that you might lose your job because you'll get fired for being a union supporter or that your employer will close up shop altogether if it goes union. And enough employers do just that, so the threat is entirely credible.
:{And even if you get a union you'll pay dues. And you will hear again and again what a dumb thing that is. You will learn repeatedly about workers who go on strike only to settle for wages and benefits that are worse, not better. The media will tell you over and over about union companies that shrink or move all their work to Mexico or China or go out of business entirely.
At the same time workers get offers of "cheap" credit in the mail virtually every day. The choice seems clear. Union membership? Expensive. Risky. At least a little bit scary.
The credit that gets you your car(s), your plasma TV, your home and college tuition for your children? That seems "cheap." Isn't the word "free" the single most common word in credit solicitations?}:
Admittedly sometimes there can be a downside to all this credit. Well actually, more often than not the lenders, especially credit card companies do treat their customers like shit. They raise rates and add incomprehensible and ever more expensive fees. When you call them to argue or just get an explanation you enter voice mail hell. Or if you do reach someone they might respond by lowering your credit limit or adding yet another fee. Collection agencies can really make you life miserable.
And yes, politicians of both parties do keep changing the rules so that lenders can basically do whatever they want. Until just the last few weeks they were virtually all for "deregulation." (Suddenly they are all "born again" regulators. Hmmm.) Speak up as Dennis Kucinich, Danny Schecter and others have done and you will be marginalized as a kook, a whiner or an extremist.
And yes it can be annoying that the perpetrators of this economic bondage are living very large while you are struggling more and more every day.
But, hey, don't be ungrateful. You live in the "ownership society"!
Really? Do you own your stuff? Or is it in effect rented? Or is it maybe that the finance companies own you? And by the way, if they are so morally and otherwise superior, how are they doing at managing the system they created?
Sisters and brothers, the debt society truly is a house of cards. MasterCard's, VISA cards, Discover Cards, Debit cards. And it is built on sand at that. The whole damn thing rests on a foundation of credit default swaps and commercial paper and sub-prime mortgage bundles and hedges and leverage and god only knows what other hocus pocus.
But now. But now? Make no mistake about it--the financial equivalent of Hurricane Katrina is blowing that house down. Naturally, the very same people who built the house in the first place are trying to patch it up. Why wouldn't they? In the short term we should probably wish them the best. So far, however, the only solution they seem to have to the debt crisis is to create a more debt. A lot more debt.
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Clearly, we need to start designing and building a new house altogether. In the 20th century, the Flint sit-down strike and the Montgomery Bus Boycott stand as icons of successful struggles by working men and women to win economic and social justice against daunting opposition. It's time to do it again.}:
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https://www.alternet.org/economy/thank-gop-your-401k-losses
--> instability? 201K
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https://features.propublica.org/bankruptcy-inequality/bankruptcy-failing-black-americans-debt-chapter-13/
series
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wolff LA apr 20
debt gave 20 yr extension to broken system [debt bubble 2007-8 gt depression, but higher now 5/17]
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econ update 3/17
white flight, city must find $ as tax base shrinks, so write tickets
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4/17
AZ makes all students eligible, no dems; same day NY sez free college for under 100K$
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http://www.alternet.org/investigations/new-brave-new-films-bail-trap
http://www.alternet.org/video/how-bail-system-really-screws-you-if-you-are-poor
bail trap movie bnf
Money bail is what most of us think of—thanks to TV cop shows—as bail. The reality is, however, that bail is simply the temporary release of a person while they are awaiting trial. The money part is a modern invention—no doubt a way to make someone rich by taking advantage of someone else. Bail is a $14 billion a year business with its own trade association—the American Bail Coalition or ABC—made up of national bail insurance companies who underwrite the bonds and take a cut. This group lobbies hard for the policies that make it money and it shows. Before ABC began lobbying, in 1990, commercial, for-profit bail accounted for just 23 percent of pretrial releases, while release on recognizance accounted for 40 percent. Today, only 23 percent of those let go before trial are released on recognizance, while 49 percent must purchase commercial bail.
Money bail doesn’t work—at least it doesn’t work any better than a phone call reminding a person to show up for court, the same way a hairdresser or doctor’s office calls to remind you about an appointment. That has been proven.
, check out the first video in our series.
What money bail is good for is promoting a stratified race and class system. The system allows millionaires to go free without actually losing a dime, while low-income people like Tai’s family have to fork over 10 percent of their bail—$10,000 in Tai’s case—to a bail bonds company. It’s money that they will never get back. So, as we show in the film, Lindsay Lohan commits an offense, pays the full bail amount to the court, then re-pockets it after sentencing (plus whatever she makes from telling her story to a magazine) and walks out of jail unharmed.
Tai, by contrast, pleaded to a misdemeanor. Nonetheless, she is working full-time instead of going to college because she and her mother are struggling to pay the bail bondsman and still keep the lights on at home.
The good news is that money bail reform has a lot of momentum in California and has a good chance of happening this year …. even in the age of Trump.
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http://www.alternet.org/activism/there-national-growing-movement-release-people-indefinite-detention-us-jails
For
Matthew Effect: rich get richer. Debt is ultimate expression of this, as you make money on money. Extract it from the commons (poor ppl) and funnel it to the rich. The rich can buy lobbyists who can further rig the game in their favor.
Wages have been flat since the 70's. Women went to work, so two incomes became the norm. Unions beat down, pensions jettisoned, jobs outsourced. Plan was we all upgrade our skills and sell IP to world.
So college essential ticket to remain in a shrinking middle class; but tuitions spiralled. Obama rejiggered out worst excesses, but student debt eclipsed credt card (which is what economy had been running on, till 2007 crash forced us to stop? plus set off foreclosure wave. We had been using our houses as ATM, as the prices were rising b/c there was nowhere to put $ (what's wrong with stock mkt)
color of debt collection agency
https://www.propublica.org/atpropublica/item/propublicas-color-of-debt-named-a-finalist-in-nabj-awards
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DN?
prison van; arrest in CA for returning rental cart late in so state; no idea warraent existed
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https://www.propublica.org/article/in-bill-lawmakers-propose-new-limits-for-seizing-workers-pay-over-old-debts
....
For the first time in nearly 50 years, a new federal bill seeks to lower how much lenders and collectors can seize from debtors through the courts, revisiting caps set in 1968 by the landmark Consumer Credit Protection Act.
The Wage and Garnishment Equity (WAGE) Act of 2016, sponsored by Rep. Elijah Cummings, D-Md., and Sen. Jeff Merkley, D-Ore., would substantially reform protections for debtors by exempting many lower-income workers from garnishment and reducing what collectors can take from the paychecks and bank accounts of others.
As ProPublica has reported in a series of articles over the past three years, consumer debts such as medical or credit card bills result in millions of garnishments every year. But the scale of the seizures and their consequences for the poor have largely been ignored by lawmakers, in part because no one tracks how often they happen.
In their press release announcing the legislation, Cummings and Merkley cited ProPublica and NPR’s reporting that 4 million workers had wages taken for consumer debts in 2013. The garnishments hit low-income workers most frequently: Nearly 5 percent of those earning between $25,000 and $40,000 per year had a portion of their wages diverted to pay down consumer debts in 2013.
Under current federal law, even workers below the federal poverty line can have up to a quarter of their after-tax wages taken. But there is no limit on what collectors can take from bank accounts, so if a paycheck is deposited, all of the money in the account can be grabbed to pay down the debt.
“Every day, some Americans are having every penny in their paychecks garnished,” Cummings told ProPublica. “Congress should not sit on the sidelines and watch our constituents be kept in a cycle of poverty.”
The WAGE Act is “a long-overdue first step to correct the inadequate protections for working families,” said Carolyn Carter of the National Consumer Law Center.
ProPublica asked several representatives of the debt collection industry for comment on the bill, but all declined. With no Republican sponsors as of yet, the bill’s fate is uncertain, particularly in a Congress often beset by partisan deadlock.....
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https://www.aclu.org/news/aclu-and-brennan-center-reports-expose-resurgence-debtors-prisons
ACLU AND BRENNAN CENTER REPORTS EXPOSE RESURGENCE OF DEBTORS' PRISONS
October 4, 2010
FOR IMMEDIATE RELEASE
CONTACT: (212) 549-2666; media@aclu.org
NEW YORK – Poor defendants are being jailed at increasingly alarming rates for failing to pay legal debts they can never hope to afford, according to two new reports released today by the American Civil Liberties Union and the Brennan Center for Justice.
The reports detail how states across the country, in the face of mounting budget deficits, are more aggressively going after poor people who have already served their criminal sentences, and in so doing undermining re-entry prospects, paving the way back to prison or jail and burdening the public with yet more costs.
"Incarcerating people simply because they cannot afford to pay their legal debts is not only unconstitutional but also has a devastating impact upon men and women, whose only crime is that they are poor," said Eric Balaban, senior staff attorney with the ACLU National Prison Project.
The ACLU report, "In for a Penny: The Rise of America's New Debtors' Prisons," and the Brennan Center report, "The Hidden Cost of Criminal Justice Debt," show how the resurgent phenomenon of imprisoning people who are unable to pay fines and court fees is in fact counterproductive. States and counties, hard pressed to find revenue to shore up failing budgets, see a ready source of funds in defendants who can be assessed financial penalties above and beyond their criminal sentences that must be repaid upon pain of imprisonment....
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series
:{https://www.propublica.org/series/unforgiven:(style="background-color:#ffffff;"):}:
o Sue Them: What We’ve Learned About the Debt Collection Lawsuit Machine
by Paul Kiel
ProPublica, Yesterday, 7:57 a.m.
ProPublica spent years gathering data to shed light on how debt collectors use the courts. Today, we run through the most important lessons we learned about a tactic that affects millions.
For Nebraska’s Poor, Get Sick and Get Sued
by Paul Kiel
ProPublica, April 28, 5 a.m.
Cheap court fees and looser rules make suing over medical debts as small as $60 easy. Every year Nebraska collection agencies file lawsuits by the tens of thousands.
Why Small Debts Matter So Much To Black Lives
by Paul Kiel
ProPublica, Dec. 31, 2015, 9 a.m.
Due to the racial wealth gap, black families have far less in savings than whites. The consequences can be far-reaching and often severe.
At Capital One, Easy Credit and Abundant Lawsuits
by Paul Kiel
ProPublica, Dec. 28, 2015, 6 a.m.
A ProPublica analysis of state court filings reveals that Capital One sues its customers far more than any other bank.
To Address Race Gap, Missouri AG Pushes Debt Collection Fixes
by Paul Kiel
ProPublica, Dec. 3, 2015, 2:32 p.m.
Citing ProPublica’s reporting, Missouri’s attorney general proposed reforms to the state court rules to address the prevalence of debt collection suits in black neighborhoods.
What Can Be Done Right Now to Fix the Legal System for Debt Collection
by Paul Kiel
ProPublica, Oct. 8, 2015, 11 a.m.
America’s out-of-date, unfair laws for collecting debts could be dramatically improved by these simple steps.
The Color of Debt
by Al Shaw, Annie Waldman and Paul Kiel
ProPublica, Oct. 8, 2015, 8 a.m.
The black neighborhoods where collection suits hit hardest
The Color of Debt: How Collection Suits Squeeze Black Neighborhoods
by Paul Kiel and Annie Waldman
ProPublica, Oct. 8, 2015, 8 a.m.
In a first-of-its-kind analysis, ProPublica reveals that the suits are far more common in black communities than white ones.
How We Analyzed Racial Disparity in Debt Collection Lawsuits
by Paul Kiel and Annie Waldman
ProPublica, Oct. 8, 2015, 8 a.m.
An explanation of how we analyzed whether debt collection lawsuits disproportionately impact black communities.
Company That Sued Soldiers Closes Its Stores
by Paul Kiel
ProPublica, Aug. 14, 2015, 8 a.m.
After a ProPublica investigation of USA Discounters’ lending practices last summer, a barrage of lawsuits, regulatory inquiries and changes to Defense Department policies followed.
Senator to Hospitals: Stop Suing Poor Patients
by Paul Kiel, ProPublica, and Chris Arnold, NPR, Jan. 22, 2015, 6 a.m.
Prompted by an investigation by ProPublica and NPR, Sen. Charles Grassley asks a Missouri nonprofit hospital to explain why it seizes the wages of thousands of its patients.
For Nonprofit Hospitals Who Sue Patients, New Rules
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https://www.propublica.org/article/so-sue-them-what-weve-learned-about-the-debt-collection-lawsuit-machine
illions of Americans live with the possibility that, at any moment, their wages or the cash in their bank accounts could be seized over an old debt. It’s an easily ignored part of America’s financial system, in part due to a common attitude that people who don’t pay their debts deserve what’s coming to them.
A couple of years ago, we set out to find out more about the growing use of the courts to collect consumer debts. How many lawsuits are filed? Who is filing them? Who is getting sued?
The suits are filed in state and local courts, and many states rely on antiquated systems or only keep data at the county level. We ultimately collected what details we could from a variety of states and large, urban counties. Then, we wrote a series of stories sharing what we found:
- Four million Americans had their wages garnished over consumer debts in 2013, and workers earning between $15,000 and $40,000 a year were the most likely to experience a garnishment.
- Black communities are hit much harder by debt collection lawsuits than white ones, even in places where black households and white households have similar incomes.
- One subprime lender with stores nationwide was seizing pay from active-duty soldiers when they fell behind on overpriced loans. (The company subsequently went out of business.)
- Some public and nonprofit hospitals use the courts to collect from patients who can’t pay their bills, even when those patients obviously qualify for financial assistance.
- Capital One sues its customers way more than any other bank and filed an enormous number of suits during the 2007–2009 recession.
But there’s a lot more to understand about the rise of this legal tactic — one that continues to alarm judges who see it firsthand.
“It seems to me that over the years I’ve become less of an authentic arbiter of disputes and more a processor of paperwork,” said Steven McMurry, a justice of the peace in Phoenix, Arizona, who has been presiding over such cases since 1998. “The thing that gets me so upset, I see all these cases and I question whether there might be some valid defense.”
Here are other important lessons we’ve learned:
Debt Buyers Are Primarily Responsible for the Rise in Lawsuits
So, what’s changed to trigger these suits? The most important difference since the late 90’s is relatively simple: the emergence of debt buying. Take New Jersey for example
...
ow banks handle delinquent accounts is largely shielded from public scrutiny. They aren’t required to disclose how many suits they file. And the role of debt buyers — companies that purchase accounts from banks at a steep discount, then try to collect — further obscures what happens to customers who don’t pay.
To generate a national estimate for Capital One’s suits, ProPublica looked to Encore Capital Corp., the nation’s biggest debt buyer, which voluntarily disclosed the number of suits it had filed nationally until 2010. That year, the company reported having filed 517,000 suits.
Capital One filed about 40 percent more collection suits than Encore in 2010 in the states for which ProPublica has data, indicating that the bank filed at least half a million suits that year nationally and potentially hundreds of thousands more. Our data showed even more suits in the two preceding years.
Capital One declined to respond to this comparison or provide a count of its suits.
After 2010, Encore Capital, under scrutiny for its litigation practices, stopped disclosing the number of suits it had filed. A spokesperson for Encore did not explain the decision beyond saying, “as we have diversified and grown as a company, we continue to evaluate what disclosures are appropriate for our investors.”
Because some banks sell their defaulted accounts to debt buyers like Encore, it is impossible to determine how many of their customers were ultimately sued. The three largest card issuers, Citibank, Bank of America, and JPMorgan Chase, have sold accounts to debt buyers in the past, according to court filings.
Capital Onehas also sold debt in the past. Stead, the bank’s spokeswoman, declined to provide detail on its debt-selling practices, but said the bank’s “strong preference” is to do its own collecting.
The lack of transparency leaves both borrowers and policymakers in the dark, said April Kuehnhoff, an attorney at the National Consumer Law Center. “We need more data about debt-collection practices by both debt buyers and original creditors so that we can improve debt collection laws,” she said.
ProPublica contacted the six largest card issuers for this story, and all were guarded when it came to details about their approach to collections.
Citibank and Bank of America declined to respond to questions. Chase stopped filing lawsuits or selling its debt in 2011, after a whistleblower identified flaws in the bank’s collection practices. Those problems led to a consent agreement with regulators in 2013.
Discover filed the second-most suits, according to ProPublica’s analysis. It, too, declined to comment. Like Capital One, Discover’s volume of suits was also disproportionately large given the bank’s relatively small market share — Discover is the sixth-largest card issuer.
American Express, the fifth-largest issuer, filed relatively few suits. Spokeswoman Sonya Conway said the bank has not sold its debt in the past six years and had no plans to do so.
Federal regulators say they are alert to the potential for abuse through debt collection lawsuits, but it’s unclear that consumers should expect any more transparency in the near term.
Banks should “consider the risks of excessive litigation,” said Bryan Hubbard, spokesman for the Office of the Comptroller of the Currency. The regulator has also publicly urged banks, when selling debts to buyers, to “consider selecting debt buyers who limit their use of litigation.”
While the agency says it closely monitors banks’ collection practices, that scrutiny does not extend to tracking the number of lawsuits each bank files. Hubbard said the agency does not consider the number of lawsuits “an effective indicator of bank safety and soundness or compliance.”
The federal Consumer Financial Protection Bureau is in the process of writing new rules for debt collection that are expected to cover a wide range of activities, including the filing of lawsuits. A spokeswoman declined to comment on whether the CFPB tracked the number of collection lawsuits filed by banks or planned to in the future.
A number of the bureau’s past enforcement actions have centered on debt collection litigation practices. It filed suit against the largest collections firm in Georgia, Frederick J. Hanna & Associates, which counts Capital One among its clients. Calling the firm a “debt collection lawsuit mill,” the CFPB alleged attorneys often filed suits with faulty information. The law firm disputes the allegations, and the suit is ongoing.
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series: http://www.propublica.org/series/unforgiven
http://www.propublica.org/article/thank-you-for-your-service-how-one-company-sues-soldiers-worldwide USA Discounters predatory
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jim h
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Whenever a corporation issues a statement declaring that it is committed to "treating consumers fairly and with respect," chances are it's not.
After all, if the outfit was actually doing it, there would be no need for a statement. Indeed, this particular claim came from Encore Capital, one of our country's largest buyers of bad consumer debt – and it definitely has not been playing nice with the people it browbeats to collect overdue credit card bills, car loans, etc.
New York Attorney General Eric Schneiderman found that Encore, based in San Diego, filed nearly 240,000 lawsuits against debtors in a recent four-year period, using our courts as its private collection arm. Problem is, Encore's bulk filing of lawsuits are rife with errors, out-of-date payment data, fabricated credit card statements, etc. Tons of them are missing original loan documents, payment histories, and other proof of debt.
Debt predators, however, scoot around this lack of facts by simply having their employees sign affidavits asserting that the level of money owed is accurate. Judges, overwhelmed by the unending flood of lawsuits filed by Encore et al, have accepted those affidavits as true, thus ruling in favor of the corporations. But Schneiderman found that – Surprise! – affidavits were simply being rubber-stamped by company employees, who didn't have time to check for accuracy. An employee of one large debt-buyer testified that he was having to sign about 2,000 affidavits a day!
This is no minor scam – one in seven adults in the U.S. is under pursuit by debt collectors. It's hard enough for struggling families to claw their way out from under the economic crash without having lying, cheating, predator corporations twist the court system to pick their pockets and shut off their hope of recovery.
"Debt Buyer Faces Fine In Doubtful Lawsuits," The New York Times, January 9, 2015.
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bs
*Kenneth A. Vecchione
President and CEO*
Kenneth A. Vecchione is Encore Capital Group’s President and Chief Executive Officer.
During his more than 35-year career, Mr. Vecchione has held a number of senior positions at large financial services companies, including Chief Operating Officer of Western Alliance Bancorporation from 2010-2013, Chief Financial Officer at Apollo Global Management, LLC from 2007-2010 and Executive Vice President and Chief Financial Officer at AT&T Universal Card Services from 1997-1998.
Between 1998 and 2006, Mr. Vecchione served in a number of positions at MBNA Corporation, including three years as Vice Chairman and Chief Financial Officer. Before being acquired by Bank of America in 2005, MBNA was the 10th largest U.S. bank and the world’s largest independent credit card lender.
Mr. Vecchione has deep and diverse experience in areas essential to Encore’s ongoing success, including operations, corporate strategy, risk management and regulatory affairs. He is highly respected within the financial services industry and brings to Encore high-level relationships in the banking and credit card sectors.
Mr. Vecchione sits on the Boards of Affinion Group, the International Securities Exchange and Western Alliance Bancorporation. He earned his Bachelor of Science in Accounting from the State University of New York – Albany in 1976.
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Encore Capital Group, Inc. purchases portfolios of defaulted consumer receivables from major banks, credit unions, and utility providers, and recovers collectable debt from these accounts. The firm is a publicly traded NASDAQ Global Select company, a component stock of the Russell 2000, the S&P SmallCap 600, and the Wilshire 4500.
Contents
- 1 History
- 2 Business
- 3 Locations
- 4 Leadership team
- 5 Financials
- 6 "Robo-signing" lawsuit
- 7 Consumer "Bill of Rights"
- 8 Subsidiaries
- 9 References
- 10 External links
History:{:(style="margin-right:0px;margin-left:0px"):}:[edit:{]}:
Encore Capital Group’s wholly owned operating subsidiary, Midland Credit Management, Inc., was founded in 1953 and was incorporated in Kansas in September 1953. In 1998, an investor group led by Nelson Peltz and Peter May (members of Triarc Companies, Inc. management) and Kerry Packer of Consolidated Press International Holdings Limited, acquired a majority interest in its operations. In 1999, the group formed a holding company, MCM Capital Group, Inc., later renamed Encore Capital Group, Inc. in April 2002. The company was incorporated inDelaware in April 1999 as MCM Capital Group, Inc. and changed its name to Encore Capital Group, Inc. in April 2002. The company completed its initial public offering of 2,250,000 shares of common stock in July 1999.[2]
Business:{:(style="margin-right:0px;margin-left:0px"):}:[edit:{]}:
The firm purchases portfolios of defaulted consumer receivables at deep discounts to face value and uses a variety of channels to maximize collections from these portfolios. In addition, the firm provides bankruptcy support services to some companies in the financial services industry through their wholly owned subsidiary, Ascension Capital Group, Inc. ("Ascension").
Locations:{:(style="margin-right:0px;margin-left:0px"):}:[edit:{]}:
Encore Capital Group is based in San Diego, California, with additional sites in Arizona, Minnesota, Texas, India, and Costa Rica It employs about 2,300 people (as of September 30, 2011) across these locations, and also has a large third-party network of collection agents and litigators in the United States.
Leadership team:{:(style="margin-right:0px;margin-left:0px"):}:[edit:{]}:
Kenneth A. Vecchione is Encore Capital Group's President and Chief Executive Officer.Financials:{:(style="margin-right:0px;margin-left:0px"):}:[edit:{]}:
In 2010, the firm paid $362 million, to purchase $10.9 billion in face value of debt. In 2011, it paid $386.9 million to purchase $11.7 billion in face value of debt,[1] Of this $386.9 million, $346.3 million was credit card portfolios, $1.6 million consumer bankruptcy accounts, and $38.9 million telecom accounts.
The Company's revenue increased 22.5% in 2011 to $467.4 million.[1] Gross collections increased to $761.2 million in 2011, a 26% increase from 2010. Collection sites accounted for $336.0 million, while legal collections accounted for $377.5 million. External collection agency forwarding accounted for $47.7 million in gross collections.
"Robo-signing" lawsuit:{:(style="margin-right:0px;margin-left:0px"):}:[edit:{]}:
The case Vassalle v. Midland Funding LLC, 11-3814, U.S. Court of Appeals for the Sixth Circuit (Cincinnati) was held to determine if Encore Capital Group used illegal collection tactics to collect funds from 1.44 million consumers.[3] The suit alleged that Encore's Midland Funding unit's used affidavits approved by staff without personal knowledge of their validity, a process commonly known as "Robo-Signing."[4] A negotiated settlement of $5.2 million was objected to by the FTC,[5] American Association of Retired Persons (AARP), the National Consumer Law Center and 38 U.S. state attorneys general. In February 2013 the settlement was overturned by the 6th circuit court of appeals, who described the final payout of $17.38 per litigant as "perfunctory at best." The court also objected to the negotiated one year injunction on the grounds that the firm's subsidiaries would then be "free to resume its predatory practices."[6] The ruling reversed the decision of Judge David Katz of Toledo and returned the case to him for further proceedings.[7]
On 4/16/14 the Attorneys General of 32 states objected to the revised proposed class settlement, stating that it was "a thinly veiled attempt to revive the original settlement" and that it "provides no meaningful value to unnamed class members, and, in fact, it leaves them in a significantly worse position."[8]
Consumer "Bill of Rights":{:(style="margin-right:0px;margin-left:0px"):}:[edit:{]}:
Encore Capital has promulgated a "Consumer Bill of Rights",[9] that codifies the company's commitment to ethical and respectful business practices.
Subsidiaries:{:(style="margin-right:0px;margin-left:0px"):}:[edit:{]}:
- Cabot Credit Management Limited - Ireland ^[10]
- Midland Credit Management, Inc. - Kansas]
- MRC Receivables Corporation - Delaware
- Midland Funding NCC-2 Corporation - Delaware
- Midland Portfolio Services, Inc. -[Delaware
- Midland Funding LLC - Delaware
- Ascension Capital Group, Inc. - Delaware (Bankruptcy Servicing) ^[11]
- Midland India LLC - Minnesota
- Midland Credit Management India Private Limited - Delhi, India
- Midland International LLC - Delaware]
- Midland Credit Management (Mauritius) Ltd - Mauritius
References:{:(style="margin-right:0px;margin-left:0px"):}:[edit:{]}:
- ^ :{Jump up to::(style="top:-99999px;clip:rect(1px 1px 1px 1px);overflow:hidden;position:absolute !important;padding:0px !important;border:0px !important;height:1px !important;width:1px !important;-webkit-user-select:none"):}:^a b(http://en.wikipedia.org/wiki/Encore_Capital_Group#cite_ref-secdatabase.com_1-1) c(http://en.wikipedia.org/wiki/Encore_Capital_Group#cite_ref-secdatabase.com_1-2) d(http://en.wikipedia.org/wiki/Encore_Capital_Group#cite_ref-secdatabase.com_1-3) "ENCORE CAPITAL GROUP, INC. - Form 10-K - February 9, 2012". secdatabase.com. Retrieved 2012-05-15.
- :{Jump up:(style="top:-99999px;clip:rect(1px 1px 1px 1px);overflow:hidden;position:absolute !important;padding:0px !important;border:0px !important;height:1px !important;width:1px !important;-webkit-user-select:none"):}:^ [1], Encore Capital Group - Investor FAQs
- *:{Jump up:(style="top:-99999px;clip:rect(1px 1px 1px 1px);overflow:hidden;position:absolute !important;padding:0px !important;border:0px !important;height:1px !important;width:1px !important;-webkit-user-select:none"):}:^ http://www.ballardspahr.com/~/media/Files/Alerts/2013-03-11-Midland.pdf*
- *:{Jump up:(style="top:-99999px;clip:rect(1px 1px 1px 1px);overflow:hidden;position:absolute !important;padding:0px !important;border:0px !important;height:1px !important;width:1px !important;-webkit-user-select:none"):}:^ http://www.businessweek.com/news/2013-02-26/encore-capital-falls-after-robo-signing-accord-scuttled*
- *:{Jump up:(style="top:-99999px;clip:rect(1px 1px 1px 1px);overflow:hidden;position:absolute !important;padding:0px !important;border:0px !important;height:1px !important;width:1px !important;-webkit-user-select:none"):}:^ http://www.ftc.gov/os/2011/06/110621midlandfunding.pdf*
- *:{Jump up:(style="top:-99999px;clip:rect(1px 1px 1px 1px);overflow:hidden;position:absolute !important;padding:0px !important;border:0px !important;height:1px !important;width:1px !important;-webkit-user-select:none"):}:^ http://www.fool.com/investing/general/2013/02/26/why-encore-capital-group-shares-slumped.aspx*
- :{Jump up:(style="top:-99999px;clip:rect(1px 1px 1px 1px);overflow:hidden;position:absolute !important;padding:0px !important;border:0px !important;height:1px !important;width:1px !important;-webkit-user-select:none"):}:^ http://www.forbes.com/sites/danielfisher/2013/03/12/court-rejects-robosigning-settlement-that-would-pay-borrowers-17-38-each/?utm_campaign=forbestwittersf&utm_source=twitter&utm_medium=social
- *:{Jump up:(style="top:-99999px;clip:rect(1px 1px 1px 1px);overflow:hidden;position:absolute !important;padding:0px !important;border:0px !important;height:1px !important;width:1px !important;-webkit-user-select:none"):}:^ http://www.michiganconsumerlaw.com/ags-vassalle.pdf*
- :{Jump up:(style="top:-99999px;clip:rect(1px 1px 1px 1px);overflow:hidden;position:absolute !important;padding:0px !important;border:0px !important;height:1px !important;width:1px !important;-webkit-user-select:none"):}:^ [2], Bloomberg Businessweek Press Release, dated March 21, 2011
- :{Jump up:(style="top:-99999px;clip:rect(1px 1px 1px 1px);overflow:hidden;position:absolute !important;padding:0px !important;border:0px !important;height:1px !important;width:1px !important;-webkit-user-select:none"):}:^ "Encore Capital Group Closes Acquisition of Controlling Stake in Cabot Credit Management". Yahoo! - ABC News Network. Retrieved 3 October 2013.
- :{Jump up:(style="top:-99999px;clip:rect(1px 1px 1px 1px);overflow:hidden;position:absolute !important;padding:0px !important;border:0px !important;height:1px !important;width:1px !important;-webkit-user-select:none"):}:^ [3]
External links:{:(style="margin-right:0px;margin-left:0px"):}:[edit:{]}:
- Companies based in San Diego, California
- Companies established in 1953
- Companies listed on NASDAQ
- Financial services companies of the United States
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http://www.alternet.org/subprime-lending-car-buyers-fueling-bubble
...
ontinue on your way, yourcar shuts down.You’ve got enough gas in the tank and no mechanical problems. But you’re stranded far from home because you’re a few days late on your car payment and the lender won’t let you drive until the debt is paid.
If this sounds like part of a dystopian future in which repo men are now cyborgs, it’s not. It’s happening today and becoming a big part of the new automotive landscape. Car dealers and automotive lenders are targeting those with poor credit by installing GPS-based kill switches, or starter-interrupt devices, on the cars that they sell.
The New York Times recently reported that about 2 million cars are now outfitted with such kill switches in the U.S., which is about one-quarter of subprime car loans, and creditors are not shy when it comes to remotely disabling cars whose owners are behind on their payments:
"Some borrowers say their cars were disabled when they were only a few days behind on their payments, leaving them stranded in dangerous neighborhoods. Others said their cars were shut down while idling at stoplights. Some described how they could not take their children to school or to doctor’s appointments. One woman in Nevada said her car was shut down while she was driving on the freeway.
"Beyond the ability to disable a vehicle, the devices have tracking capabilities that allow lenders and others to know the movements of borrowers, a major concern for privacy advocates. And the warnings the devices emit — beeps that become more persistent as the due date for the loan payment approaches — are seen by some borrowers as more degrading than helpful."
Subprime automotive-loan borrowers, those with FICO credit scores below 660, debt-to-income ratios of more than 50% or a bankruptcy in the past 60 months, are a growing segment of automotive borrowers. This phenomenon has been buoyed by auto dealers trying to continue a strong sales rebound after years of weak sales and by securities investors who buy bonds backed by those loans and see them as a way to get ample returns when other interest rates remain low......
Company That Sues Soldiers Pledges Reform, Changes Name
by Paul Kiel | @paulkiel
:{
More coverage: }:Unforgiven: The Long Life of DebtUSA Discounters, promising to change how it pursues military debtors, will now be known as USA Living.
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http://www.propublica.org/article/thank-you-for-your-service-how-one-company-sues-soldiers-worldwide debt
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see new bail bonds in PIC
also npr court fees the new poorhouse http://www.npr.org/2014/05/19/312158516/increasing-court-fees-punish-the-poor
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Debt, The First 5000 Years, by noted anthropologist David Graeber. This 2012 book explores the relationship between money, debt, and economic systems over the vast eras of recorded history and all across the globe.
Graeber, who is an anarchist, was one of the key architects of the Occupy Wall Street movement and originally coined the slogan, "We are the 99%
http://www.alternet.org/print/economy/new-financial-scam-driving-workers-deep-debt
http://www.youtube.com/watch?v=G49q6uPcwY8 story of broke
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ppl who lost homes in crash now rent, but now same banks are selling rent futures derivatives. blackstone
http://www.ritholtz.com/blog/2013/12/blackstones-big-bet-on-rental-homes/
great systems infographic
From Bloomberg:
The Blackstone Group LP, the world’s largest private equity firm, became the largest owner of rental homes in the U.S. , acquiring 41,000 homes in the past two years. In October,Blackstone offered the first-ever “rental-home-backed” security on Wall Street. The bond is backed by just a fraction — 3,207 — of the rental properties owned by Blackstone. Monthly rent checks from the properties will be used to service the $479.1 million security.
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http://www.alternet.org/economy/how-wall-streets-greedy-tentacles-sank-schools-trapping-them-massive-debts
fliers touted new ballfields, science labs and modern classrooms. They didn’t mention the crushing debt or the investment bank that stood to make millions.
— Melody Peterson, Orange County Register, February 15, 2013
Remember when Goldman Sachs – dubbed by Matt Taibbi the Vampire Squid– sold derivatives to Greece so the government could conceal its debt, then bet against that debt, driving it up? It seems that the ubiquitous investment bank has also put the squeeze on California and its school districts. Not that Goldman was alone in this; but the unscrupulous practices of the bank once called the undisputed king of the municipal bond business epitomize the culture of greed that has ensnared students and future generations in unrepayable debt.
n 2008, after collecting millions of dollars in fees to help California sell its bonds, Goldman urged its bigger clients to place investment bets against those bonds, in order to profit from a financial crisis that was sparked in the first place by irresponsible Wall Street speculation. Alarmed California officials warned that these short sales would jeopardize the state’s bond rating and drive up interest rates. But that result also served Goldman, which had sold credit default swaps on the bonds, since the price of the swaps rose along with the risk of default.
In 2009, the lenders’ lobbying group than proposed and promoted AB1388, a California bill eliminating the debt ceiling requirement on long-term debt for school districts. After it passed, bankers traveled all over the state pushing something called “capital appreciation bonds” (CABs) as a tool to vault over legal debt limits. (Think Greece again.) Also called payday loans for school districts, CABs have now been issued by more than 400 California districts, some with repayment obligations of up to 20 times the principal advanced (or 2000%).
The controversial bonds came under increased scrutiny in August 2012, following a report that San Diego County’s Poway Unified would have to pay $982 million for a $105 million CAB it issued. Goldman Sachs made $1.6 million on a single capital appreciation deal with the San Diego Unified School District.
Green Light to Exploit
In a September 2013 op-ed in SFGate.com called “School Bonds Are a Wall Street Scam,” attorney Nanci Nishimura wrote:
. . . AB1388, signed by then-Gov. Arnold Schwarzenegger in 2009, [gave] banks the green light to lure California school boards into issuing bonds to raise quick money to build schools.
Unlike conventional bonds that have to be paid off on a regular basis, the bonds approved in AB1388 relaxed regulatory safeguards and allowed them to be paid back 25 to 40 years in the future. The problem is that from the time the bonds are issued until payment is due, interest accrues and compounds at exorbitant rates, requiring a balloon payment in the millions of dollars. . . .
Wall Street exploited the school boards’ lack of business acumen and proposed the bonds as blank checks written against taxpayers’ pocketbooks. One school administrator described a Wall Street meeting to discuss the system as like “swimming with the big sharks.”
Wall Street has preyed on these school boards because of the millions of dollars in commissions. Banks, financial advisers and credit rating firms have billed California public entities almost $400 million since 2007. [State Treasurer] Lockyer described this as “part of the ‘new’ Wall Street,” which “has done this kind of thing on the private investor side for years, then the housing market and now its public entities.”
Gullible school districts agreed to these payday-like loans because they needed the facilities, the voters would not agree to higher taxes, and state educational funding was exhausted. School districts wound up sporting shiny new gymnasiums and auditoriums while they were cutting back on teachers and increasing classroom sizes. (AB1388 covers only long-term capital improvements, not daily operating expenses.) The folly of the bonds was reminiscent of those boondoggles pushed on Third World countries by the World Bank and IMF, trapping them under a mountain of debt that continued to compound decades later.
The Federal Reserve could have made virtually-interest-free loans available to local governments, as it did for banks. But the Fed (whose twelve branches are 100% owned by private banks) declined. As noted by Cate Long on Reuters:
The Fed has said that it will not buy muni bonds or lend directly to states or municipal issuers. But be sure if yields rise high enough Merrill Lynch, Goldman Sachs and JP Morgan will be standing ready to “save” these issuers. There is no “lender of last resort” for muniland.
Debt for the Next Generation
Among the hundreds of California school districts signing up for CABs werefifteen in Orange County. The Anaheim-based Savanna School District took on the costliest of these bonds, issuing $239,721 in CABs in 2009 for which it will have to repay $3.6 million by the final maturity date in 2034. That works out to$15 for every $1 borrowed.
Santa Ana Unified issued $34.8 million in CABs in 2011. It will have to repay $305.5 million by the maturity date in 2047, or $9.76 for every dollar borrowed.
Placentia-Yorba Linda Unified issued $22.1 million in capital appreciation bonds in 2011. It will have to repay $281 million by the maturity date in 2049, or $12.73 for every dollar borrowed.
In 2013, California finally passed a law limiting debt service on CABs to four times principal, and limiting their maturity to a maximum of 25 years. But the bill is not retroactive. In several decades, the 400 cities that have been drawn into these shark-infested waters could be facing municipal bankruptcy – for capital “improvements” that will by then be obsolete and need to be replaced.
Then-State Treasurer Bill Lockyer called the bonds “debt for the next generation.” But some economists argue that it is a transfer of wealth, not between generations, but between classes – from the poor to the rich. Capital investments were once funded with property taxes, particularly those paid by wealthy homeowners and corporations. But California’s property tax receipts were slashed by Proposition 13 and the housing crisis, forcing school costs to be borne by middle-class households and the students themselves.
The same kind of funding shift has occurred in college education nationally. Tuition at public universities and colleges was at one time free. But in successive economic downturns, states have made up for shortfalls in educational budgets by raising tuition. By 2012, tuition was covering 44% of the operating expenses of public higher education. According to a March 2014 report by Demos, 7 out of 10 college seniors now borrow, and their average debt on graduation is over $29,000. The result nationally is a student debt that has grown to $1.5 trillion.
The State that Escaped: North Dakota ...
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http://www.propublica.org/series/debt-inc