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Broke, USA: From Pawnshops to Poverty, Inc. - How the Working Poor Became Big Business
From the author of the New York Times Notable Book of the Year Drive By comes a unique and riveting exploration of one of America’s largest and fastest-growing industries—the business of poverty. Broke, USA is a Fast Food Nation for the “poverty industry” that will also appeal to readers of Barbara Ehrenreich (Nickel and Dimed) and David Shipler (The Working Poor).
373 pages, Kindle Edition
First published May 25, 2010
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April 17, 2019
Rivlin has pulled together a lot on information on several types of enterprises that exist to exploit the poor people of our country. Although pawnshops are noted in the sub-head, they receive little attention. Of far greater concern here are check cashing stores, (tax) Return Anticipation Loans, or RALs, rent-to-buy shops and predatory sub-prime lending. It is quite clear that small loans make huge profits. You will be shocked when you learn what actual APRs are being charged.
I was not unaware, in general, of the issues Rivlin covers, but he goes into this range of businesses in serious detail and I learned a lot. He interviewed many players from businesses to consumer advocates to clients. I was reminded of the recent Michael Lewis release, The Big Short. Here also we get to meet people who had the prescience to see what was possible, on both sides, before the enterprise became mega. There are heroes and villains in Broke, USA, and some who shade towards gray, but you will never look at your neighborhood check-cashing place the same way again.
I was most intrigued by a section in which Rivlin shows that at the same time that a major bank was denying loans in a particular neighborhood, and closing its branches, it was buying up sub-prime lending shops in the same area, without attaching the familiar corporate logo to them, so was more than willing to lend, but only at usurious rates. Rivlin demonstrates that there is no economic basis for the extreme rates charged to poor people for loans. Lenders can make money by charging only a modest amount above the rates available to people with good credit.
This is a hard-hitting and important work, and deserves a prominent place in every discussion of the Consumer Financial Protection Bureau, and a hearing in every state and locality with an interest in protecting its citizens from the jaws of predators. It will make you angry. It should.
=============================EXTRA STUFF
January 24, 2012 - Another way in which predators feed on the poor and middle class in my owed private Idaho - Zombie debt creeps onward in Idaho courts
May 17, 2012 - A Barbara Ehrenreich article on how local governments and the private sector are squeezing the poor. Dickens would find 21st Century America far too familiar.
October 22, 2014 - A NY Times report on the increasing impact of foxes in hen-houses, States Ease Interest Rate Laws That Protected Poor Borrowers
January 24, 2018 - Barbarians inside the gates - The CFPB Is Now the Predatory Lender Protection Bureau
April 16, 2019 - Mick Mulvaney’s Master Class in Destroying a Bureaucracy From Within - By Nicholas Confessore - As so often happens at the NY Times, the headline offers a tilt that is a bit misleading. Use of the buzzword bureaucracy in the title suggests that Mulvaney is out to reduce that other oft-cited, rarely-justified bête noire, waste and mismanagement. The article is actually a blow-by-blow look at how Mulvaney is dismantling the agency that was set up specifically to protect consumers from predatory financial institutions. Mulvaney is more than happy to side with wolves over sheep. It is well worth checking out how the destruction of our democracy is being implemented.
I was not unaware, in general, of the issues Rivlin covers, but he goes into this range of businesses in serious detail and I learned a lot. He interviewed many players from businesses to consumer advocates to clients. I was reminded of the recent Michael Lewis release, The Big Short. Here also we get to meet people who had the prescience to see what was possible, on both sides, before the enterprise became mega. There are heroes and villains in Broke, USA, and some who shade towards gray, but you will never look at your neighborhood check-cashing place the same way again.
I was most intrigued by a section in which Rivlin shows that at the same time that a major bank was denying loans in a particular neighborhood, and closing its branches, it was buying up sub-prime lending shops in the same area, without attaching the familiar corporate logo to them, so was more than willing to lend, but only at usurious rates. Rivlin demonstrates that there is no economic basis for the extreme rates charged to poor people for loans. Lenders can make money by charging only a modest amount above the rates available to people with good credit.
This is a hard-hitting and important work, and deserves a prominent place in every discussion of the Consumer Financial Protection Bureau, and a hearing in every state and locality with an interest in protecting its citizens from the jaws of predators. It will make you angry. It should.
=============================EXTRA STUFF
January 24, 2012 - Another way in which predators feed on the poor and middle class in my owed private Idaho - Zombie debt creeps onward in Idaho courts
May 17, 2012 - A Barbara Ehrenreich article on how local governments and the private sector are squeezing the poor. Dickens would find 21st Century America far too familiar.
October 22, 2014 - A NY Times report on the increasing impact of foxes in hen-houses, States Ease Interest Rate Laws That Protected Poor Borrowers
January 24, 2018 - Barbarians inside the gates - The CFPB Is Now the Predatory Lender Protection Bureau
The Consumer Financial Protection Bureau (CFPB) was once an agency dedicated to preventing banks and credit-card companies from scamming ordinary Americans. Now, it is an agency dedicated to protecting potential financial scammers from legal penalties.February 7, 2019 - Truthout - Trump Moves to End Consumer Protections From Payday Lenders - by Jake Johnson - The sort of horror we know to expect from this administration
April 16, 2019 - Mick Mulvaney’s Master Class in Destroying a Bureaucracy From Within - By Nicholas Confessore - As so often happens at the NY Times, the headline offers a tilt that is a bit misleading. Use of the buzzword bureaucracy in the title suggests that Mulvaney is out to reduce that other oft-cited, rarely-justified bête noire, waste and mismanagement. The article is actually a blow-by-blow look at how Mulvaney is dismantling the agency that was set up specifically to protect consumers from predatory financial institutions. Mulvaney is more than happy to side with wolves over sheep. It is well worth checking out how the destruction of our democracy is being implemented.
July 29, 2019
Great journalism on a really shady industry. I write about this industry also, but I focus on the structures. Rivlin focuses on the humans. It was a great read for me.
December 15, 2011
Given the plethora of books with lofty top-down stories about the 2007 - 2008 financial crash, this book comes as a welcome reality check. It's a ripping yarn of greed, injustice, debt slavery, white knights and dark knaves... without, so far, a happy ending.
Rather than focusing on the glamorous boardroom battles of the 0.001%, it dwells on the financial affairs of the bottom 75% - those who meet some or all of the following criteria:
wages have fallen;
make less than the median income;
have poor credit or no established credit;
live paycheck-to-paycheck or have fixed incomes;
stuck in depressed communities;
burdened with medical expenses and school loans;
unemployed, erratically employed or underemployed;
lack decent education and marketable skills;
have unfavorable skin colors, gender, age, disabilities, etc...
If you're wondering why the Obama administration is choosing to spend its scarce political capital on a Consumer Financial Protection Agency, most of your answers lie within these pages. There are some manipulative anecdotes, and the patterns of exploitation in each specialized loan industry (payday lending, pawnshops, tax refund loans, sub-prime mortgages, etc.) get repetitive, but Rivlin draws a clear picture of a financial system that exists to help only those who don't need more money.
A $500 payday loan or emergency second mortgage, taken by a family with no other means of securing credit, multiplies into tens of thousands over a few years based on usurious interest and falsely assessed fees, resulting in a foreclosure that (in a rising real estate market) could be quickly turned around for even greater profit.
Shady store-front lenders, as parts of large national franchises, wage legal and PR wars on community organizations and successful non-profit lenders to block restrictive legislation. The franchised store-front lending chains are so profitable that they get bought by the big national banks, who previously couldn't be bothered to maintain branches in depressed communities. The banks, in turn, enlarge the "innovative" practices of these small lenders, and work to distort the legislative and regulatory processes even further.
The big national banks start selling the collateralized debt from the store fronts... which goes sour when workers lose jobs in financially starved communities, and foreclosed homes can't be sold profitably any more. And the next thing you know, it's the fault of those irresponsible poor people [and the middle class, when the predators discovered that the suburbanites could be exploited just as easily in the absence of any laws to the contrary].
It will become much harder to give credence (let alone moral suasion) to those who blame families facing home foreclosures. Rivlin builds the historical narrative from the Reagan era onward to the present, laying the foundations for blame along the way. It's going to take a long time, a fundamental rethinking of American small finance (third-world microloans, anyone?) and the removal of the responsible political factions to fix.
Rather than focusing on the glamorous boardroom battles of the 0.001%, it dwells on the financial affairs of the bottom 75% - those who meet some or all of the following criteria:
wages have fallen;
make less than the median income;
have poor credit or no established credit;
live paycheck-to-paycheck or have fixed incomes;
stuck in depressed communities;
burdened with medical expenses and school loans;
unemployed, erratically employed or underemployed;
lack decent education and marketable skills;
have unfavorable skin colors, gender, age, disabilities, etc...
If you're wondering why the Obama administration is choosing to spend its scarce political capital on a Consumer Financial Protection Agency, most of your answers lie within these pages. There are some manipulative anecdotes, and the patterns of exploitation in each specialized loan industry (payday lending, pawnshops, tax refund loans, sub-prime mortgages, etc.) get repetitive, but Rivlin draws a clear picture of a financial system that exists to help only those who don't need more money.
A $500 payday loan or emergency second mortgage, taken by a family with no other means of securing credit, multiplies into tens of thousands over a few years based on usurious interest and falsely assessed fees, resulting in a foreclosure that (in a rising real estate market) could be quickly turned around for even greater profit.
Shady store-front lenders, as parts of large national franchises, wage legal and PR wars on community organizations and successful non-profit lenders to block restrictive legislation. The franchised store-front lending chains are so profitable that they get bought by the big national banks, who previously couldn't be bothered to maintain branches in depressed communities. The banks, in turn, enlarge the "innovative" practices of these small lenders, and work to distort the legislative and regulatory processes even further.
The big national banks start selling the collateralized debt from the store fronts... which goes sour when workers lose jobs in financially starved communities, and foreclosed homes can't be sold profitably any more. And the next thing you know, it's the fault of those irresponsible poor people [and the middle class, when the predators discovered that the suburbanites could be exploited just as easily in the absence of any laws to the contrary].
It will become much harder to give credence (let alone moral suasion) to those who blame families facing home foreclosures. Rivlin builds the historical narrative from the Reagan era onward to the present, laying the foundations for blame along the way. It's going to take a long time, a fundamental rethinking of American small finance (third-world microloans, anyone?) and the removal of the responsible political factions to fix.
August 4, 2010
I don't know why I can't stop reading books about the financial meltdown, but I can't. This one, though, is much richer and really gets going in the late 1980s. The historical depth is refreshing, and the author's style keeps it engaging. The history of legislative efforts to place interest rate caps on payday loans, for example, is comprised of statistics on rates, defaults, and testimony, but also extensive interviews with a few people who were heavily involved on both sides of an issue or battle at the time.
I was impressed and grateful for the sheer number of people Rivlin managed to find and interview at the depth he did. I am biased, because I'm a huge fan of books that rely on primary sources (like former payday loan store employees, transcripts, old 60 Minutes interviews and quotations, government statistics, and so on), but it lends weight to the story and, without the author having to even try to convince you, speaks for itself: you cannot read this book and walk away thinking that a 391% APR (no, really) is unintentional or "helps consumers."
The book is, like many others about our current crisis, stomach-turning for the myriad warning signs it contains that were ignored. Rivlin introduces us to people like Kathleen Keest, who picked up her first predatory mortgage case in 1984, what she calls "wave one" of the subprime debacle. Yes, 1984. As in The Big Short, Rivlin has found numerous harbingers who tried to save us from ourselves and were ignored but, worse than that, fought tooth and nail and, two years later, saw the president, Ronald Reagan, give lenders the latitude to sell "creative home loans," including adjustable rate mortgages.
Fortunately, Rivlin has also found some heroes who, as in any satisfying narrative thrust, succeed just often enough to keep us from giving up on the book or slitting our wrists. I was particularly inspired by the story of Ohio's victory over payday lenders, a true David vs. Goliath situation starring a Democrat and two Republicans who actually get together to act in the best interests of their constituents. Current members of Congress, you can learn from this chapter!
I was impressed and grateful for the sheer number of people Rivlin managed to find and interview at the depth he did. I am biased, because I'm a huge fan of books that rely on primary sources (like former payday loan store employees, transcripts, old 60 Minutes interviews and quotations, government statistics, and so on), but it lends weight to the story and, without the author having to even try to convince you, speaks for itself: you cannot read this book and walk away thinking that a 391% APR (no, really) is unintentional or "helps consumers."
The book is, like many others about our current crisis, stomach-turning for the myriad warning signs it contains that were ignored. Rivlin introduces us to people like Kathleen Keest, who picked up her first predatory mortgage case in 1984, what she calls "wave one" of the subprime debacle. Yes, 1984. As in The Big Short, Rivlin has found numerous harbingers who tried to save us from ourselves and were ignored but, worse than that, fought tooth and nail and, two years later, saw the president, Ronald Reagan, give lenders the latitude to sell "creative home loans," including adjustable rate mortgages.
Fortunately, Rivlin has also found some heroes who, as in any satisfying narrative thrust, succeed just often enough to keep us from giving up on the book or slitting our wrists. I was particularly inspired by the story of Ohio's victory over payday lenders, a true David vs. Goliath situation starring a Democrat and two Republicans who actually get together to act in the best interests of their constituents. Current members of Congress, you can learn from this chapter!
April 3, 2016
This book is a compelling account of the subprime mortgage lenders, payday-advance outfits, check-cashers, rapid-refund tax preparers and other multibillion-dollar industries that comprise what the author calls “Poverty, Inc.” (which would have been a more fitting title).
But Broke, USA doesn't really offer any governmental, social or economic solutions to the dilemma of what an "unbanked" (because there are often no "real" banks in low-income neighborhoods) working-class person should do when, say, their car breaks down or their kid gets sick between paydays. The payday-loan outfits actually come off seeming like not so bad an idea. Should lower-income workers be paid more often? Paid more, period, since their incomes obviously haven’t kept up with necessary expenses?
I docked my review a star for the author not posing any even vague solutions like these to a very well researched problem.
But Broke, USA doesn't really offer any governmental, social or economic solutions to the dilemma of what an "unbanked" (because there are often no "real" banks in low-income neighborhoods) working-class person should do when, say, their car breaks down or their kid gets sick between paydays. The payday-loan outfits actually come off seeming like not so bad an idea. Should lower-income workers be paid more often? Paid more, period, since their incomes obviously haven’t kept up with necessary expenses?
I docked my review a star for the author not posing any even vague solutions like these to a very well researched problem.
February 21, 2023
May be a bit much, but you can chase the book with Michael Moore's film, Capitalism.
October 25, 2010
The info in this book deserve 4 stars, but my oh my it was such a dry read that I had to give it 3 stars. It would have been juicier if the stories ahd been about the people caught in the web of sub-prime and pay-day lending, but it was mostly about the actual industries.
The people who run these businesses to "serve" poor and low income argue that they are providing services that no one else will. And yes, they sure do. They provide quick, short term loans that sometimes go to feed a family or provide heat. A lot of people, myself included, can afford to give themselves a quick, short term loan by just charging something on a credit card. Not everyone has that luxury. And banks don't help people in those situations. If you want a loan it takes a week or two to apply and get approved and blah blah blah. I used to work at a small, community bank and we "helped" people by providing a service called "Bounce", which was automatically put on your account. Bounce meant that the bank would let you go in the hole up to $300, but you paid $19 for each transaction. So, if you bounced 10 checks/debit card swipes for $10 each, you would be in the hole not just the $100 for stuff you bought, but also $190 for fees. And we were told to explain how "helpful" this could be to our customers. I'm embarrassed to say that I was ever involved in that. In those situations my customers really would have been better off to get a pay-day loan for $300 and pay $25 or $50 in fees. I know that large banks have had similar programs, but with much higher fees. So, these "sub-prime" businesses are not soley to blame, but they do target people who can least afford things and they charge them out the wazoo.
Oh my. I just thought of another sub-prime thing I was involved in. I am super ashamed. Right after high school I got a job at a call center taking credit card applications for the 'Revelation Mastercard'. I wish that I had realized the damage that I was helping to inflict on people. The Revelation Mastercard was somehow affliated with a church, hence the 'revelation' reference. My job was to take their application over the phone and give them the "good news" that they had indeed been approved for a $350 credit limit. Most callers were overjoyed at that point because they had actually been approved for credit, so no one ever listened to the rest of the script in which I told them that there was a $249 application fee and a $50 annual fee which would automatically be charged to the card and would immediately begin accruing interest. Did you just do the math and realize that they were getting a credit card with $1 of available credit and with interest already growing? Sickening. At the time I laughed at their stupidity. Now I am just totally embarrassed that I was too stupid myself to stand up and point out that this was a completely unethical thing to do. I am embarrassed that I was so blinded because they were willing to pay me a whopping $8.50 per hour. I hope the minister of the affiliated church enjoys his limo and furs and various other riches now, because he is going to burn in hell.
The people who run these businesses to "serve" poor and low income argue that they are providing services that no one else will. And yes, they sure do. They provide quick, short term loans that sometimes go to feed a family or provide heat. A lot of people, myself included, can afford to give themselves a quick, short term loan by just charging something on a credit card. Not everyone has that luxury. And banks don't help people in those situations. If you want a loan it takes a week or two to apply and get approved and blah blah blah. I used to work at a small, community bank and we "helped" people by providing a service called "Bounce", which was automatically put on your account. Bounce meant that the bank would let you go in the hole up to $300, but you paid $19 for each transaction. So, if you bounced 10 checks/debit card swipes for $10 each, you would be in the hole not just the $100 for stuff you bought, but also $190 for fees. And we were told to explain how "helpful" this could be to our customers. I'm embarrassed to say that I was ever involved in that. In those situations my customers really would have been better off to get a pay-day loan for $300 and pay $25 or $50 in fees. I know that large banks have had similar programs, but with much higher fees. So, these "sub-prime" businesses are not soley to blame, but they do target people who can least afford things and they charge them out the wazoo.
Oh my. I just thought of another sub-prime thing I was involved in. I am super ashamed. Right after high school I got a job at a call center taking credit card applications for the 'Revelation Mastercard'. I wish that I had realized the damage that I was helping to inflict on people. The Revelation Mastercard was somehow affliated with a church, hence the 'revelation' reference. My job was to take their application over the phone and give them the "good news" that they had indeed been approved for a $350 credit limit. Most callers were overjoyed at that point because they had actually been approved for credit, so no one ever listened to the rest of the script in which I told them that there was a $249 application fee and a $50 annual fee which would automatically be charged to the card and would immediately begin accruing interest. Did you just do the math and realize that they were getting a credit card with $1 of available credit and with interest already growing? Sickening. At the time I laughed at their stupidity. Now I am just totally embarrassed that I was too stupid myself to stand up and point out that this was a completely unethical thing to do. I am embarrassed that I was so blinded because they were willing to pay me a whopping $8.50 per hour. I hope the minister of the affiliated church enjoys his limo and furs and various other riches now, because he is going to burn in hell.
October 5, 2024
Broke, USA is a well-reported look into many interrelated industries that serve the working poor: payday loan companies, subprime finance, pawn shops, furniture and home-goods rental firms, and so on. (The book, written in the immediate wake of the 2007-08 subprime mortgage crisis, naturally focuses on the first two categories.) I learned a few surprising things from reading the book, namely that subprime home mortgages were chiefly an invention of a small credit union of last resort in North Carolina, Self-Help, whose dogmatic founder (Martin Eakes) eventually ended up fighting the massive abuse of the product by shady finance companies in his state and ultimately succeeded in getting the most usurious of them banned. I’m glad Rivlin included some truly good people like Eakes in his book, because with so many financial greaseballs running around like Allan Jones, it’s hard to remember that there are still certain bankers and financial professionals in the world who truly want to help and not fleece customers — particularly those who can least afford to be fleeced.
I was, unfortunately, disappointed with Rivlin never once touching on the root causes of why there is such a massive pool of poor people ripe for the picking. Not once does he mention that systemic poverty (or living paycheck-to-paycheck) is also a function of extractive capitalism, so the working poor get it from both ends. Sure, they could also be more financially literate and responsible, but that’s just gravy on top that yes, happens to disproportionately impact them more, but I bet most poor people are not recklessly spending their money — they are just trying to survive on whatever meager scraps “trickle down economics” has seen to dole out to them. I really wish Rivlin had called out a bit more that a home heath aide’s $8/hr pay is not sustainable regardless of their level of spending, and if problems like this were addressed at the source, it would be more effective at driving exploitative lenders out of business than any measures (like APR caps) that are essentially treatments of the symptoms and not the disease. (He also doesn’t address any legislative efforts to reduce the number of “unbanked” despite the well-known fact that many of the usurious lenders are ultimately owned by the Big Four banks who refuse to maintain conventional branches in poor neighborhoods.)
Nearly fifteen years later, it would be interesting to know if Elizabeth Warren’s brainchild, the CFPA, has actually positively impacted the sorry state of affairs that Rivlin leaves us with. Obviously, payday loans and subprime mortgages still exist, and many of the brand names mentioned in the book are also still in business, so what, if anything, has changed?
I was, unfortunately, disappointed with Rivlin never once touching on the root causes of why there is such a massive pool of poor people ripe for the picking. Not once does he mention that systemic poverty (or living paycheck-to-paycheck) is also a function of extractive capitalism, so the working poor get it from both ends. Sure, they could also be more financially literate and responsible, but that’s just gravy on top that yes, happens to disproportionately impact them more, but I bet most poor people are not recklessly spending their money — they are just trying to survive on whatever meager scraps “trickle down economics” has seen to dole out to them. I really wish Rivlin had called out a bit more that a home heath aide’s $8/hr pay is not sustainable regardless of their level of spending, and if problems like this were addressed at the source, it would be more effective at driving exploitative lenders out of business than any measures (like APR caps) that are essentially treatments of the symptoms and not the disease. (He also doesn’t address any legislative efforts to reduce the number of “unbanked” despite the well-known fact that many of the usurious lenders are ultimately owned by the Big Four banks who refuse to maintain conventional branches in poor neighborhoods.)
Nearly fifteen years later, it would be interesting to know if Elizabeth Warren’s brainchild, the CFPA, has actually positively impacted the sorry state of affairs that Rivlin leaves us with. Obviously, payday loans and subprime mortgages still exist, and many of the brand names mentioned in the book are also still in business, so what, if anything, has changed?
January 24, 2011
The book didn't change the general disdain I already had for those engaged in predatory lending (e.g. payday loans, refund anticipation loans). However, this knowledgeable book provides readers with numerous facts to support their positions rather than relying on emotions. For example, a $100 payday loan that carries a surcharge of $15 over a 2-week duration is equivalent to an APR of 391%. And though there may be some merit in the lenders' argument that payday loans help the working people who cannot otherwise obtain a short-term loan (e.g. from a bank) get back on their feet in times of an emergency, do they really need to charge 391% interest, especially when studies indicate that over 50% of its customers rollover their loans to subsequent months? I'd like to believe that in the court of public opinion morality is more important than legality.
I had a hard time understanding people's attraction to "refund anticipation loans" - the payment of tax refunds by firms such as H&R Block and Jackson Hewitt 2 to 4 weeks sooner at an APR of 100% to 200% - until my 8-year-old made the case for its seduction this weekend. He wanted to spend some of his money to purchase a Wii video game at Target rather than buying from Amazon and saving himself about $5. Why? Instant gratification. I was going to calculate the APR for giving up $5 for a 4-day period for him, but even if I succeeded in explaining to him that such a large percentage is bad for him, he's 8-years-old and the brain is wired differently at that age ;) By the way...it works out to an APR of 1,825%.
I had a hard time understanding people's attraction to "refund anticipation loans" - the payment of tax refunds by firms such as H&R Block and Jackson Hewitt 2 to 4 weeks sooner at an APR of 100% to 200% - until my 8-year-old made the case for its seduction this weekend. He wanted to spend some of his money to purchase a Wii video game at Target rather than buying from Amazon and saving himself about $5. Why? Instant gratification. I was going to calculate the APR for giving up $5 for a 4-day period for him, but even if I succeeded in explaining to him that such a large percentage is bad for him, he's 8-years-old and the brain is wired differently at that age ;) By the way...it works out to an APR of 1,825%.
March 17, 2011
If the information in this book had been available earlier, the economic mess of the past few years could well have been avoided.
That's one lesson from this book. Another is that while rich people have been gorging on an ever larger share of the pie, they have been doing so not merely by cutting wages, shipping jobs overseas and making sure their taxes reach ever lower levels. They've also acheived their goals by making money off the poor through loan sharking in a variety of forms.
Gary Rivlin brings a cool eye to his subject. It could have done with somewhat tighter editing, but overall, it's quite good.
It's no secret that the subprime loan situation combined with the housing bubble to bring the US to its economic knees. He demonstrates quite clearly that there is no end to their greed. Unchecked by regulations thanks to 30 years of trickle-down economics, the unscrupulous financiers pushed more and more people out of their homes and into poverty.
What next? It's hard to imagine that the US can once again become a prosperous country when one in four children are growing up in poverty and when the American dream has become the American nightmare.
As for those who foisted this tragedy on the rest of us, one would hope that they can stop thinking only of themselves and whether to vacation in the Caribbean or Tahiti this year and instead focus on undoing the damage they've done.
That's one lesson from this book. Another is that while rich people have been gorging on an ever larger share of the pie, they have been doing so not merely by cutting wages, shipping jobs overseas and making sure their taxes reach ever lower levels. They've also acheived their goals by making money off the poor through loan sharking in a variety of forms.
Gary Rivlin brings a cool eye to his subject. It could have done with somewhat tighter editing, but overall, it's quite good.
It's no secret that the subprime loan situation combined with the housing bubble to bring the US to its economic knees. He demonstrates quite clearly that there is no end to their greed. Unchecked by regulations thanks to 30 years of trickle-down economics, the unscrupulous financiers pushed more and more people out of their homes and into poverty.
What next? It's hard to imagine that the US can once again become a prosperous country when one in four children are growing up in poverty and when the American dream has become the American nightmare.
As for those who foisted this tragedy on the rest of us, one would hope that they can stop thinking only of themselves and whether to vacation in the Caribbean or Tahiti this year and instead focus on undoing the damage they've done.
February 8, 2017
The stories of how industries the poor utilize often lead them to financial ruin. Payday loans, car title loans, subprime mortgages, check cashers, pawn shops and their exorbitant interest rates. It's also a story of the organizations trying to help the poor by loaning them money at reasonable rates and trying to get the legislative branch to care.
The problem is a combination of financial illiteracy and outright fraud against people who can least afford it. Kind of a bummer of a read. Books about poverty are almost always bummers to read. I can't think of any that I've read that weren't.
The problem is a combination of financial illiteracy and outright fraud against people who can least afford it. Kind of a bummer of a read. Books about poverty are almost always bummers to read. I can't think of any that I've read that weren't.
August 10, 2010
Timely book on more ways to get rich by screwing the poor! Excellent review of the people behind the pawnshops, check cashing and payday loan industries. We used to have usury laws, but these industries have been able to get around them and charge unbelievably high apr rates on short term loans! How's 391% sound to ya?????
The perfect customer for a subprime lender "would be an uneducated woman who is living on a fixed income - hopefully from her deceased husband's pension and Social Security - who has her house paid off, is living off credit cards and having a difficult time keeping up with her payments."
"It may sound like loan sharking, but in most of America, it's perfectly legal." "A typical loan shark only charges an APR of around 150 percent."
Hmmmmmm, if you are ever tempted to use one of these predatory businesses, RUN down to your local library and borrow a copy of this book instead!
Our government should be ashamed of itself!
The perfect customer for a subprime lender "would be an uneducated woman who is living on a fixed income - hopefully from her deceased husband's pension and Social Security - who has her house paid off, is living off credit cards and having a difficult time keeping up with her payments."
"It may sound like loan sharking, but in most of America, it's perfectly legal." "A typical loan shark only charges an APR of around 150 percent."
Hmmmmmm, if you are ever tempted to use one of these predatory businesses, RUN down to your local library and borrow a copy of this book instead!
Our government should be ashamed of itself!
February 18, 2019
Written shortly after the financial fallout of sub-prime, this book covers the wide gamut of "poverty inc." businesses like payday lending, rent to own, and sub-prime lending. Rivlin lays bare the shady practices that these firms engage in; not only providing a service but in many cases actively entrapping people in cycles of use where they end up paying hundreds to thousands of dollars in annual fees.
As should be expected for anyone who knows the details of the crisis, only the credit unions end up coming out at the end looking anything like reasonable. The problem, stated but still not totally resolved even now, is finding a middle ground that allows people who are higher financial risks to access critical funds without also creating the potential for abuses that create cycles of debt that leave them in a worse place than they started.
As should be expected for anyone who knows the details of the crisis, only the credit unions end up coming out at the end looking anything like reasonable. The problem, stated but still not totally resolved even now, is finding a middle ground that allows people who are higher financial risks to access critical funds without also creating the potential for abuses that create cycles of debt that leave them in a worse place than they started.
June 26, 2022
Where do you go and what do you do when the unscrupulous loan industry takes your money and your house? Here’s where one middle-class couple wound up:
"73 year-old William Tommy Myers lives in a forlorn trailer park on the industrial outskirts of Dayton, Ohio. Pine View Estates, a tightly packed community of about 250 mobile homes, sits along a heavily-trafficked commercial thoroughfare battered by a non-stop, noisy parade of dump trucks, cement mixers, and other heavy equipment. Despite its name, Pine View Estates has no pine trees -- nor are there any views except those of a metal salvage yard and a large asphalt plant."
There was no limit to degradation when dealing with their fellow man during the mortgage and loan crisis in the 2000s. The details, and I do mean all, are in Rivlin’s book.
"73 year-old William Tommy Myers lives in a forlorn trailer park on the industrial outskirts of Dayton, Ohio. Pine View Estates, a tightly packed community of about 250 mobile homes, sits along a heavily-trafficked commercial thoroughfare battered by a non-stop, noisy parade of dump trucks, cement mixers, and other heavy equipment. Despite its name, Pine View Estates has no pine trees -- nor are there any views except those of a metal salvage yard and a large asphalt plant."
There was no limit to degradation when dealing with their fellow man during the mortgage and loan crisis in the 2000s. The details, and I do mean all, are in Rivlin’s book.
August 29, 2012
A book on the creation of the payday loan industry and the proliferation of the subprime loan industry, generally from the point of view of the victims of these industries and the people trying to represent them.
It covers an important topic, and does a good job of personalizing issues that some people may not otherwise be able to identify with. There were a number of times, however, where I was hoping the book would go into more depth with the societal impacts and consequences of the different industries. However, it did a good job of a setting a timeline and identifying a number of important people and organizations.
It covers an important topic, and does a good job of personalizing issues that some people may not otherwise be able to identify with. There were a number of times, however, where I was hoping the book would go into more depth with the societal impacts and consequences of the different industries. However, it did a good job of a setting a timeline and identifying a number of important people and organizations.
October 17, 2016
Rivlin does an excellent job of bringing to life the people who have made money in the poverty business-pawnshops, check cashing, pay day loans, subprime mortgages and debit cards and their opponents--nonprofits trying to protect poor, and increasingly, middle class people from predatory lending. He profiles the businessmen, the victims, and the crusaders as well as some who fall in grey areas with a sharp eye to their personalities and foibles. He subtlety lets some provide some prescriptions for solutions.
This book was published in 2010 and from my viewpoint reform has not moved ahead much since then.
This book was published in 2010 and from my viewpoint reform has not moved ahead much since then.
December 22, 2019
This book takes a potentially dry, economic topic-the subprime lending behind the Great Recession of 2008- and turns it into a fascinating morality tale of how entire industries exist to make money off of poorer Americans. An excellent history of the crisis, and some thought-provoking commentary along the way. It'll make you mad, and make you examine your thinking about how the poor should be protected financially, perhaps even from themselves.
February 8, 2014
Gary Rivlin has written an interesting book about poverty and the businesses that have arisen to feed on it. He tells compelling stories, and he profiles the people who own and run these businesses (in addition to those who have suffered) in a sympathetic way. He seems to intuitively recognize that the issue is complicated.
April 2, 2015
For years we've been hearing about the welfare queen and all the reasons why poor people just need to "pull themselves up by their bootstraps. This compelling book explains (in part) why we need poor people. Because without the poor who would these businesses exploit.
Important reading
Important reading
May 25, 2016
Interesting but repetitive.
May 19, 2018
Slightly old now (2010) the information holds true today nonetheless. Rivlin investigates what he calls Poverty, Inc, the predatory lending practices that eventually broke not just people, but the entire country, through endless greed in 2008.
You heard the names, but unless you used them, you had no idea. They’re as familiar as your television: Phil Rizzuto for The Money Store, Champion Mortgage (when your bank says no, Champion says Yes), City Corp, Rent a Center, H&R Block, Household Finance, CheckNGo, Cash America, Check Into Cash, Jackson Hewitt, and so many more – every last one a ripoff artist who preyed relentlessly on people who could not afford to pay, had poor credit, lived on fixed income, or fell on bad times, charging rates as high as 400% APR. Yes, Four Hundred Percent. And they got away with it for years, until some states, and then Congress, started stepping in, but too late to avoid the catastrophe of 2008.
Most of them arose as usury check-cashing schemes, though as they saw it (and rightfully so, if you paid back on time) they were cheaper than a bounced check – charging upwards of $20 for every $100 borrowed. But not everyone could, out of work, underemployed, or hit with a mega health or car bill. They looked for neighborhoods that were struggling, poor to lower middle class, and they’d set up check-cashing stores, and pawn shops, and instant-tax-refund (yes, that H&R Block scheme is really a payday loan at exhorbitant rates because you can’t wait 2 weeks for that cash). Then they started on home loans, seeking out elderly who had paid off or nearly paid off their houses, were on fixed incomes, and gouged them with fees, insurance-addons, “equity” loans on top of what they were borrowing, and when actual vs. payments came in, they were often $400 more than agreed on, and within months people would lose their homes to the agency – which also owned the collection department, and the insurance collector, and the home inspectors, a streamlined machine for robbing people of their homes.
All of this got rolled in with the sub-prime mortgage fiascos as banks tried to cash in on poverty services, selling risky loans through crooked means meant to defraud people and take their homes, then sell them again, through higher interest rates, balloon mortgages (after two years, the payments ballooned to rates the people couldn’t afford), and adjustable-rate mortgages (the mortgage payments fluctuated with the stock market). “Sub-prime” meant anyone with a credit rating under 630, and many times people who qualified for lower-interest rate mortgages of traditional means were sold sub-primes anyway, to reap more money off them.
The crookedness and usury and plain monstrous feeding on the people barely scraping by will make your hair stand on end. You want to punch someone. I’m thrilled to never have been suckered into any of it, and that we steered clear of such tricks, though I know some who fell for it. It’s digusting, immoral, and just plain mean. And, like every type of decomposing of America, it seems to have started in Ohio, a place I’m liking less and less and less. Part of it is Ohio was heavily industrial, and all the jobs up and left, leaving a lot of people with no jobs and no hope (and hooked on Oxycontin), places like Dayton and Columbus, which were hit with the worst rate of foreclosures in the nation in 2007. Add in a ridiculous affinity for libertarianism, and there’s a whole lot of homeless and destitute people scratching their heads.
The book is thorough, but not dull. It’s easy to follow if a bit repetitive, simply because of the sheer numbers of predatory lenders, and how easy and fast it was to start one up with as little as 10,000$ in cash. No matter what your situation or income level, you will be a much wiser person for reading this book. Now I’m going back and rewatching The Big Short to see if any of it is mentioned there, and so far I’ve found one crossover, acknowledging Countrywide Financial as one of the worst of the offenders.
You heard the names, but unless you used them, you had no idea. They’re as familiar as your television: Phil Rizzuto for The Money Store, Champion Mortgage (when your bank says no, Champion says Yes), City Corp, Rent a Center, H&R Block, Household Finance, CheckNGo, Cash America, Check Into Cash, Jackson Hewitt, and so many more – every last one a ripoff artist who preyed relentlessly on people who could not afford to pay, had poor credit, lived on fixed income, or fell on bad times, charging rates as high as 400% APR. Yes, Four Hundred Percent. And they got away with it for years, until some states, and then Congress, started stepping in, but too late to avoid the catastrophe of 2008.
Most of them arose as usury check-cashing schemes, though as they saw it (and rightfully so, if you paid back on time) they were cheaper than a bounced check – charging upwards of $20 for every $100 borrowed. But not everyone could, out of work, underemployed, or hit with a mega health or car bill. They looked for neighborhoods that were struggling, poor to lower middle class, and they’d set up check-cashing stores, and pawn shops, and instant-tax-refund (yes, that H&R Block scheme is really a payday loan at exhorbitant rates because you can’t wait 2 weeks for that cash). Then they started on home loans, seeking out elderly who had paid off or nearly paid off their houses, were on fixed incomes, and gouged them with fees, insurance-addons, “equity” loans on top of what they were borrowing, and when actual vs. payments came in, they were often $400 more than agreed on, and within months people would lose their homes to the agency – which also owned the collection department, and the insurance collector, and the home inspectors, a streamlined machine for robbing people of their homes.
All of this got rolled in with the sub-prime mortgage fiascos as banks tried to cash in on poverty services, selling risky loans through crooked means meant to defraud people and take their homes, then sell them again, through higher interest rates, balloon mortgages (after two years, the payments ballooned to rates the people couldn’t afford), and adjustable-rate mortgages (the mortgage payments fluctuated with the stock market). “Sub-prime” meant anyone with a credit rating under 630, and many times people who qualified for lower-interest rate mortgages of traditional means were sold sub-primes anyway, to reap more money off them.
The crookedness and usury and plain monstrous feeding on the people barely scraping by will make your hair stand on end. You want to punch someone. I’m thrilled to never have been suckered into any of it, and that we steered clear of such tricks, though I know some who fell for it. It’s digusting, immoral, and just plain mean. And, like every type of decomposing of America, it seems to have started in Ohio, a place I’m liking less and less and less. Part of it is Ohio was heavily industrial, and all the jobs up and left, leaving a lot of people with no jobs and no hope (and hooked on Oxycontin), places like Dayton and Columbus, which were hit with the worst rate of foreclosures in the nation in 2007. Add in a ridiculous affinity for libertarianism, and there’s a whole lot of homeless and destitute people scratching their heads.
The book is thorough, but not dull. It’s easy to follow if a bit repetitive, simply because of the sheer numbers of predatory lenders, and how easy and fast it was to start one up with as little as 10,000$ in cash. No matter what your situation or income level, you will be a much wiser person for reading this book. Now I’m going back and rewatching The Big Short to see if any of it is mentioned there, and so far I’ve found one crossover, acknowledging Countrywide Financial as one of the worst of the offenders.
September 26, 2023
An informative look at the "poverty industry" in the United States, which basically amounts to predatory lending practices (or financial services, if you will) at the expense of people who have little to no credit. The venerable example of such a service would be that provided by a pawn shop: a small loan using some valuable as collateral. Other early examples are auto title loans (putting your car up as collateral) and rent to own (buy a TV for five times what it should cost because you can’t or won’t save money). The industry really took off in the 1980s with the rise of new services such as the payday loan, backed by the promise of future income, and the “early tax return,” more accurately termed a refund anticipation loan, a sure bet for the lender because there is about a 100% chance that the IRS will deliver the refund. These services profit from the yield spread between the high-interest loans to the poor consumers and lower interest loans from financial institutions, exploiting the fact that poor consumers do not have access to the lower rates. Though the money made off each loan is small, the whole enterprise is profitable because of volume. These practices were begun by entrepreneurs, who became millionaires, and then incorporated into major corporations, so that the billionaires could get in on the money, too. The book also covers the heinous practice of "equity stripping," probably the most exploitive form of predatory lending. This is basically tricking people into taking out home equity loans, often repeatedly, until they are forced out of their houses. It typically targets elderly retirees, who might be easily manipulated. I know of at least one person that had this happen to them. The book ends with subprime mortgages and the housing bubble, which had just recently burst at the time the book was published. It also briefly covers student loans, which might as well be considered predatory at this point. These various practices have their supporters, free market idealogues who argue that they expand consumer choise and give poor people access to credit they would not otherwise have. They also have detractors who have fought to regulate them. Personally, I doubt they will go away completely, America being the free-wheeling and capital-rich place that it is. I have summarized the points of this book pretty thoroughly in this review, but recommend that you read the book yourself, as it is highly educational.
May 29, 2023
Why pulling yourself up by the bootstraps is often a myth....
If we're fortunate enough not to be one of them, we see these people in the grocery line as they pick through their wallets, searching for one more dollar, or maybe swiping this card then that one, trying to find one that will accept another charge. Their faces are worn with exhaustion from working one too many jobs and worrying about where next month's rent is coming from.
Regardless of your politics and where you stand on today's state of the economy, many people struggle when inflation is low, employment is high, and rents are stable. Those people have hit on hard times: an unexpected health crisis, a job loss, a family emergency, maybe even a natural disaster for which they weren't entirely insured.
Not their fault.
Yet there they are: standing at the counter of the payday loan office, agreeing to pay exorbitant fees just to borrow a few hundred dollars for groceries or to keep the lights on.
Could be any one of us.
Sign here. Initial there. Thanks, here's your money.
Wait... can't pay this month? That's going to cost you extra. More fees. Higher price on the loan next time -- because you *will* have to borrow again to cover the cost of the first loan you couldn't repay.
No problem. Refinance. Re-mortgage the house.
Gary Rivlin introduces us to many of these people. Hard-working, often minority individuals who end up owing six figures on a $18,000 original loan. Fees and Adjustable Prime Rates (APRs) of 300% or more. No kidding. How is that possible?!?!
And entirely legal.
If you don't believe me, read this book. Hand it out to any young person you know who might be thinking of taking out a car title loan or a payday loan, or getting an advance on their income tax refund, or pawning an item or two, just to tie themselves over (AKA a "bridge" loan) till times are better.
Businesses making billions of dollars on the backs of those who can barely afford to cover their own expenses (or they wouldn't need these services in the first place) might be legal, but they sure aren't ethical.
Like I said, read the book. You won't see your neighborhood Jackson Hewitt or Cash-N-Go the same way again.
If we're fortunate enough not to be one of them, we see these people in the grocery line as they pick through their wallets, searching for one more dollar, or maybe swiping this card then that one, trying to find one that will accept another charge. Their faces are worn with exhaustion from working one too many jobs and worrying about where next month's rent is coming from.
Regardless of your politics and where you stand on today's state of the economy, many people struggle when inflation is low, employment is high, and rents are stable. Those people have hit on hard times: an unexpected health crisis, a job loss, a family emergency, maybe even a natural disaster for which they weren't entirely insured.
Not their fault.
Yet there they are: standing at the counter of the payday loan office, agreeing to pay exorbitant fees just to borrow a few hundred dollars for groceries or to keep the lights on.
Could be any one of us.
Sign here. Initial there. Thanks, here's your money.
Wait... can't pay this month? That's going to cost you extra. More fees. Higher price on the loan next time -- because you *will* have to borrow again to cover the cost of the first loan you couldn't repay.
No problem. Refinance. Re-mortgage the house.
Gary Rivlin introduces us to many of these people. Hard-working, often minority individuals who end up owing six figures on a $18,000 original loan. Fees and Adjustable Prime Rates (APRs) of 300% or more. No kidding. How is that possible?!?!
And entirely legal.
If you don't believe me, read this book. Hand it out to any young person you know who might be thinking of taking out a car title loan or a payday loan, or getting an advance on their income tax refund, or pawning an item or two, just to tie themselves over (AKA a "bridge" loan) till times are better.
Businesses making billions of dollars on the backs of those who can barely afford to cover their own expenses (or they wouldn't need these services in the first place) might be legal, but they sure aren't ethical.
Like I said, read the book. You won't see your neighborhood Jackson Hewitt or Cash-N-Go the same way again.
December 30, 2019
Every which way to stiff the poor and the working poor is here-subprime mortgage loans, payday lenders, check cashing storefronts, auto title loans, rapid tax refunds, and rent-to-own joints. Chapter eleven-The Great What-If- is a great primer on the subprime predatory travesty of the early 2000's. Banks- Wells Fargo, Bank of America, etc- closed shop in Atlanta's black sections, then reopened with their subprime subsidiaries. They trolled for poor and old homeowners and sold them refinances for home repairs that were never done. And these refinances were infected with outrageous fees, predatory- and lied about- interest rates and hidden credit insurance that accrued that same interest. Georgia passed a partial predatory lending bill, but a Republican governor-Sonny Perdue (now our Secretary of Agriculture), along with legislators frightened by dire predictions of credit rating companies (the same companies that for a price later gave AAA ratings to toxic mortgage bundles and thus was a major player in the 2008 recession) gutted the law. Thus, foreclosures skyrocketed in those Atlanta areas. Triple digit apr's (391 to 680), the inaction of Ayn Randian Alan (the Sgt. Schulz "I see nothing" of the Federal Reserve) Greenspan, the refusal of other federal regulators to regulate, state Republican legislators who not only did nothing for the most vulnerable of their citizens but prevented cities from legislating themselves, all are discussed. And the toxicity of the other predatory schemes-payday lenders, check cashing, etc- Rivlin examines, primarily through interviews. Greed is everywhere, but what struck me most is its combination with shamelessness, heartlessness and pure meanness. And as one person says, if you try to screw the rich, they have friends. If you try to screw investors, they also have friends. But you can always screw the poor, because nobody cares about them.
February 25, 2020
It's expensive to be poor, not just because you lack resources, but the system is set up to keep you afloat forever.
Imagine you are drowning and someone offers you a lifejacket for a price. They didn't tell you that if you don it, it limits your ability to swim to the shore. Additionally, the life jacket only works for 4 hours and you need to buy it again to keep yourself from drowning. If you ever heard of such a business you would be alarmed and would push for legislation to get such exploitative tactics banned. Next up the businesses would run ads accusing you of being against lifejackets "Jimmy Stallone wants the government to ban handing out lifejackets to drowning people". Not exactly what you were championing. The profits would be so handsome that honesty doesn't exist and lies swamp the news cycles. You would claim such a thing can't happen.
Enter, Poverty Industry. Poor people need credit, they need check-cashing services, they need a lot of financial industry services. Nothing inherently wrong with subprime loans, as poor people need money at the last moment just like all of us, in fact, their urgency is more severe than the rest of us. The problem is when the subprime industry becomes predatory and exploitative. The issue is when subprime loans' primary goal is to keep the people stuck in poverty and milk them dry.
I still gave a three-star review since the book is a tad too verbose. Sometimes I was confused if it was a story of characters or story of the society. Reading till the end it was indeed the story of our society and the superfluous explanations of characters were just a waster of time. The book could be just 2/3rd of the current length.
Overall a good book if you want to understand what goes on outside our prime lending bubble and how the topic is lots of nuances and probably the last place where you can ever draw a sharp black-white line,
Imagine you are drowning and someone offers you a lifejacket for a price. They didn't tell you that if you don it, it limits your ability to swim to the shore. Additionally, the life jacket only works for 4 hours and you need to buy it again to keep yourself from drowning. If you ever heard of such a business you would be alarmed and would push for legislation to get such exploitative tactics banned. Next up the businesses would run ads accusing you of being against lifejackets "Jimmy Stallone wants the government to ban handing out lifejackets to drowning people". Not exactly what you were championing. The profits would be so handsome that honesty doesn't exist and lies swamp the news cycles. You would claim such a thing can't happen.
Enter, Poverty Industry. Poor people need credit, they need check-cashing services, they need a lot of financial industry services. Nothing inherently wrong with subprime loans, as poor people need money at the last moment just like all of us, in fact, their urgency is more severe than the rest of us. The problem is when the subprime industry becomes predatory and exploitative. The issue is when subprime loans' primary goal is to keep the people stuck in poverty and milk them dry.
I still gave a three-star review since the book is a tad too verbose. Sometimes I was confused if it was a story of characters or story of the society. Reading till the end it was indeed the story of our society and the superfluous explanations of characters were just a waster of time. The book could be just 2/3rd of the current length.
Overall a good book if you want to understand what goes on outside our prime lending bubble and how the topic is lots of nuances and probably the last place where you can ever draw a sharp black-white line,
February 8, 2020
I absolutely trudged through this book, but it’s hard to rate it, because I’m not sure that my trudgery was the book’s fault. It was a mistake to read a book about lending money to the poor while writing a thesis about lending money to the poor. I read this book 5 pages at a time and didn’t retain too much.
The book is mostly a story of the industry that makes money off American poverty: pawn shops, pay day lending, subprime mortgages, etc. It was interesting on several fronts.
First, it was interesting because of how it relates to the 2008 financial crisis - how did the loans contained in all this MBSs actually come to be?
Second, it makes you think about the ethics of lending to people in poverty. Should lenders be expected to have compassion and forgiveness when they are truly running a business. Should interest rates be capped if it decreases access to credit when the borrowers are willing to borrow at the original rates?
Third, it makes you realize the importance of financial literacy, and challenges you to not take it for granted. So many people have their lives ruined because they don’t understand how a loan works. Yes, we should regulate what loans are offered and how they are advertised, but at the end of the day, someone will always be out there trying to exploit someone for a dollar. It’s better to prepare the traveler for the road than the road for the traveler.
Obviously this book was thought provoking and informative. I simply give it 3 stars because I never really enjoyed reading it. Much like this genre tends to do, several characters were followed through the book to tell the story, and I never wound up caring about the characters. Maybe this wasn’t a very good book, or maybe I just didn’t feel like reading it. Tough to say!
The book is mostly a story of the industry that makes money off American poverty: pawn shops, pay day lending, subprime mortgages, etc. It was interesting on several fronts.
First, it was interesting because of how it relates to the 2008 financial crisis - how did the loans contained in all this MBSs actually come to be?
Second, it makes you think about the ethics of lending to people in poverty. Should lenders be expected to have compassion and forgiveness when they are truly running a business. Should interest rates be capped if it decreases access to credit when the borrowers are willing to borrow at the original rates?
Third, it makes you realize the importance of financial literacy, and challenges you to not take it for granted. So many people have their lives ruined because they don’t understand how a loan works. Yes, we should regulate what loans are offered and how they are advertised, but at the end of the day, someone will always be out there trying to exploit someone for a dollar. It’s better to prepare the traveler for the road than the road for the traveler.
Obviously this book was thought provoking and informative. I simply give it 3 stars because I never really enjoyed reading it. Much like this genre tends to do, several characters were followed through the book to tell the story, and I never wound up caring about the characters. Maybe this wasn’t a very good book, or maybe I just didn’t feel like reading it. Tough to say!
May 16, 2024
I listened to the audiobook, published in 2010, during the height of the economic collapse which began in 2007 and it is pretty good.
The author presents both sides of the argument about payday loans, check loans, title loans, cash advance loans, tax refund loans, etc. and that if these businesses did not exist many in the communities (called the unbanked) they reside and target to use that term would not be able to pay bills. The flip side is that these businesses, mostly started by entrepreneurs, charge exorbitant rates.
Ultimately, these businesses and their practices became a political issue and the lobbyist firms probably made out better than the businesses themselves with all of the fees they charged for lobbying and campaign advice and management and some states via laws passed by the legislature have capped the APR or the number of loans that any one person may take per year.
This is definitely an interesting topic that has been hotly debated in the past and likely will continue to be an issue for decades to come.
I highly recommend this book
The author presents both sides of the argument about payday loans, check loans, title loans, cash advance loans, tax refund loans, etc. and that if these businesses did not exist many in the communities (called the unbanked) they reside and target to use that term would not be able to pay bills. The flip side is that these businesses, mostly started by entrepreneurs, charge exorbitant rates.
Ultimately, these businesses and their practices became a political issue and the lobbyist firms probably made out better than the businesses themselves with all of the fees they charged for lobbying and campaign advice and management and some states via laws passed by the legislature have capped the APR or the number of loans that any one person may take per year.
This is definitely an interesting topic that has been hotly debated in the past and likely will continue to be an issue for decades to come.
I highly recommend this book
May 19, 2021
Broke USA: How the Working Poor Became Big Business examines the rise of check-cashing firms, pay-day & title loan joints, tax return loans, and the like — as well as the efforts of those who have checked their growth in places like Ohio. One of the more depressing aspects of managing a computer lab used by the public is witnessing people getting into debt spirals by applying for these things: I’ve tried to run interference over the years by casually pointing out how much they’ll actually be paying at those interest rates, but many people just…plug ahead. Although the book is largely critical of what the author calls “Poverty, Inc”, he does attempt to give some of the proprietors their fair shake, because much of their business does fill holes in the market overlooked by traditional banks — so much so that traditional banks have started getting into this business, and even closing down conventional branches to allow their shadier subsidiaries to move in with the title loans and such. Pleasingly, the book also covers the growth of an alternative-financing credit union that fills that same need without the predatory fees and aggressive collection racket. The book has a faint connection to the subprime collapse of ’07-08.
February 23, 2023
DNF @~40% Jan-Feb 2023
A great overview of a number of industries that arose on exploiting poor people's poverty. Like taking 20% interest on a short-term debt from those who need a bridge loan a week before their paycheck. Or mortgages on predatory conditions to those who do not have a high enough credit score to take a mortgage from a regular bank (conducted by subsidiaries of the same regular banks...)
DNF'ed because it started to be a bit repetitive, also I am not sure why I would need so much information about what his elementary school teachers think about a certain guy who created an empire of payday loans. The idea that chapters should be of specific length sometimes works against nonfiction books, and here as well.
Sure, the remainder of the book would still shock me with other horrific ways of exploiting the working poor, but I am ready to move on to the other books waiting for my time and attention at the moment.
A great overview of a number of industries that arose on exploiting poor people's poverty. Like taking 20% interest on a short-term debt from those who need a bridge loan a week before their paycheck. Or mortgages on predatory conditions to those who do not have a high enough credit score to take a mortgage from a regular bank (conducted by subsidiaries of the same regular banks...)
DNF'ed because it started to be a bit repetitive, also I am not sure why I would need so much information about what his elementary school teachers think about a certain guy who created an empire of payday loans. The idea that chapters should be of specific length sometimes works against nonfiction books, and here as well.
Sure, the remainder of the book would still shock me with other horrific ways of exploiting the working poor, but I am ready to move on to the other books waiting for my time and attention at the moment.
December 29, 2018
Challenge 17 on the BookRiot 2019 Read Harder Challenge list is "A business book." For this challenge I read Gary Rivlin's Broke, USA: from pawnshops to Poverty, Inc,: how the working poor became big business. Published in 2010, the book documents many of the factors that led to the 2008 recession, but, of couse, could not predict what has happened in the ten years since. Certainly the hardest read I have experienced in these challenges, the book is a depressing tale of preditory lending practices including pawn, payday loans, car title loans, instant tax refunds which should more properly be known as refund anticipation loans, and the subprime mortgage loans that by 2008 virtually all major banking institutions were supplying.
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