How Can We Get the “Rip Us Off Now” Sign Off Our Back?

student_debtNew Orleans    I just have to wonder why when we are in a period of historic wealth and income concentration at the top, there are so many outfits trying to rip off low-and-moderate income families at the bottom? The hustles keep rolling down on our people like an avalanche.

The Student Debt Project issued a report saying that the average graduate is now leaving school with $29400 worth of debt. Ok, maybe colleges and universities are not rip-off artists, but the evidence is piling up that even if so many of our folks signed the loans willingly, the institutions were predatory, waving a dream with one hand, while pulling out the rug of reality with the other.

Everyone is finally discovering how predatory payday lending is on low-and-moderate income families, as if it were news. Some hope the relatively new, Elizabeth Warren promoted, Consumer Finance Protection Board may zero in on these companies. Their reports are devastating and worth repeating:


…of about 12 million payday loans issued across more than 30 states only 15 percent of borrowers could raise the money to repay the entire debt without borrowing again within 14 days. Twenty percent of these borrowers eventually defaulted. Nearly two thirds renewed a loan and were on the hook for fees that could put them on the road to financial ruin; three out of five payday loans were made to people whose loan fees exceeded the amount borrowed.


Yes, like student loans, there is no benchmark of affordability being used here.

And, how about auto loans.

Capital One is leading the pack with Wells Fargo right behind in pushing these loans out the door, and, low-and-moderate families are gobbling them up. We made it through the recession on repairs and now in 2014 the old buckets of bolts are just past repair, and people have to have the wheels under them to get to work, school, and wherever. Flooded with money, since banks were not making loans, we have the home financing bubble and securitization schemes coming back along with no interest teasers and high interest balloons creating a new subprime market in auto loans.


Wells Fargo, for example, made $7.8 billion in auto loans in the second quarter, up 9 percent from a year earlier with $52.6 billion in outstanding car loans. 17 percent of the total auto loans went to borrowers with credit scores of 600 or less.


And, yes, like student loans and payday loans, there is no benchmark of affordability, meaning ability to pay back the loans, being used here.

What does it take to get some real action by the government at the local, state, and federal level to take the “Rip Us Off Now” sign of the back of working families?