The Poverty Business

[rumpel]

BusinessWeek

MAY 21, 2007
COVER STORY
By Brian Grow & Keith Epstein

The Poverty Business
Inside U.S. companies' audacious drive to extract more profits from the nation's working poor

Roxanne Tsosie decided in late 2005 to pull her life together. She was 28 years old and still lived in her mother's two-room apartment in a poor neighborhood in southeast Albuquerque known as the War Zone. She survived mostly on food stamps and welfare. The Tsosies are Navajo, and Roxanne's mother wanted to move back to a reservation in western New Mexico where the family has a dilapidated house lacking electricity and running water. Roxanne, unmarried and with four children of her own, could make out her future, and she didn't like what she saw.


With only a high school diploma, her employment options were limited. She landed a job as a home-health-care aide for the elderly and infirm. It paid $15,000 a year and required that she have a car to make her rounds of Albuquerque and its rambling desert suburbs. A friend told her about a used-car place called J.D. Byrider Systems Inc.

snip

In recent years, a range of businesses have made financing more readily available to even the riskiest of borrowers. Greater access to credit has put cars, computers, credit cards, and even homes within reach for many more of the working poor. But this remaking of the marketplace for low-income consumers has a dark side: Innovative and zealous firms have lured unsophisticated shoppers by the hundreds of thousands into a thicket of debt from which many never emerge.

Federal Reserve data show that in relative terms, that debt is getting more expensive. In 1989 households earning $30,000 or less a year paid an average annual interest rate on auto loans that was 16.8% higher than what households earning more than $90,000 a year paid. By 2004 the discrepancy had soared to 56.1%. Roughly the same thing happened with mortgage loans: a leap from a 6.4% gap to one of 25.5%. "It's not only that the poor are paying more; the poor are paying a lot more," says Sheila C. Bair, chairman of the Federal Deposit Insurance Corp.

http://www.businessweek.com/magazine/content/07_21/b4035001.htm?campaign_id=nws_insdr_may11&link_position=link1

[Warpy]

1. Most of those "friendly" loan places

are in that part of the city. It's so bad that the former AG ran PSAs about the "coincidence" of predatory lenders being located so close to the air base.

The lege has consistently refused to pass a predatory lending law. If Richardson wants to do something about that, he'd better get cracking since his time will be 100% taken up by campaigning by the end of the summer.

Kiva loans are at 16%. All the people I've lended to are paying down those loans, right on schedule, and they're third world poor.

There is no reason for predatory lending at astronomical rates, none at all. Poor folks with little debt and secure service industry jobs are less likely to default than middle class folks with huge debt loads and jobs vulnerable to offshoring, IMO. Risk is being assessed unfairly, to say the least.

I think we are all seeing the reasons why capitalism has to be regulated: adulterated food, unsafe medicines, predatory lending, the lack of labor rights, and so on down the line.

[Cleita]

2. Profiting off of the poor is a widespread practice.

There are places that will cash the unemployment checks of those who are out of work taking a processing fee usually 10%.

There should be laws that protect the poor from predators like this.

[bobbolink]

3. There should be *MANY* laws protecting poor folk!!

There are none.

Low-income apartments can be run down and dangerous, but nobody will enforce demands on the landlords. The building I'm in is very unhealthy, and they were ordered over a year ago by THE HEALTH DEPARTMENT to repair it, but.......

It goes on and on.

A big part of the reason is because poverty simply isn't important to liberals anymore.

If that ever changes--if once more liberals start caring about poverty issues, some of this mess can change.