Loads of Learned Lumber

Monday, August 2, 2010

Gary Rivlin, _Broke, USA_

IF YOU ARE sated with accounts of the upper-tier financial scoundrels and their derivatives, hedge funds, tranches, credit default swaps, and so on, but nonetheless still looking for insight into our ongoing meltdown, you should take up Gary Rivlin's trawl through the bottom feeders of our financial system -- the pawnbrokers, the folks who bring us pay day loans, the rent-to-own people, the instant tax refund people. The poor you will have with you always, as Jesus is reported to have observed, so what more reliable source of profit could there be than bleeding the poor?

Rivlin apparently started with the assumption that the pay day loan industry, dealing as it does with people who don't qualify for credit cards and whom ordinary banks disdain, was at least serving a real need. That assumption may have been what gained him access to Allan Jones, Billy Webster, and a variety of other smaller operators, who come to life in the book with a Dickensian clarity. Turns out, however, that the pay day loan industry generates enormous profits by urging its customers to take another loan at the soonest opportunity, to borrow more than they had originally intended, and thus keep them hooked up to the milking machine at APR rates of between 300 and 400 per cent, the interest eventually doubling or tripling the amount of the principal.

And then there are the predatory lenders -- the folks who kept the market in sub-prime mortgage bundles moving by urging home-improvement loans on people who had small ability to repay and often wound up losing their houses.

Ugly, ugly, ugly. It's not an impartial book, but it's well-researched and well-written, and all the evidence anyone needs that American hucksterism continues to thrive in every corner of the republic.

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