councilor.org
| Source | Michael Hoover |
| Date | 03/07/21/00:01 |
| July 2003
"NEW LOAN SHARKS" MAKING BIG PROFITS BY PREYING ON LOW-INCOME AMERICANS New issue of Southern Exposure looks into the burgeoning "poverty industry" of subprime home lenders, payday check-cashers and other financial institutions that take advantage of the economically vulnerable DURHAM, N.C.? "Subprime" home lenders, payday check-cashers, pawnshops, and other financial businesses that target consumers made vulnerable by discrimination and financial need are no longer "fringe banking" * they are one of the fastest growing and most profitable sectors of Wall Street. That's the conclusion of a special issue of Southern Exposure released this week. "The dramatic rise of predatory finance institutions doesn't make front-page news, but it's hitting millions of ordinary people where it hurts most, in the pocketbook," says Gary Ashwill, Southern Exposure managing editor. "This issue of Southern Exposure is one of the most comprehensive looks at how the new loan sharks gouge consumers * and how they get away with it." The special edition, guest-edited by acclaimed journalist Michael Hudson, features four investigations into the fast-growing poverty industry: *** "Banking on Misery: Citigroup, Wall Street, and the Fleecing of the South," by Michael Hudson, which shows how millions have been ensnared by "subprime" home lenders who target the neediest, most vulnerable consumers. Hudson uncovers the shady and exploitative practices at the heart of one of Citigroup's most lucrative affiliates, CitiFinancial. *** "Perpetual Debt, Predatory Plastic," by Dr. Robert Manning, author of Credit Card Nation, reveals how credit card companies lock borrowers in a cycle of debt through exorbitant late fees and over-limit penalties. *** "From Pawnshops to 'Financial Supermarkets'," by Mary Kane, a look at how fringe banking?payday lenders, check cashers, and pawnshops?have gained a foothold in the mainstream. *** "Simple Courtesy," by Taylor Loyal, an investigation into how banks increasingly use overdraft fees to boost profits at customers' expense. The special issue also features "Seven Signs of Predatory Lending," and other tools for consumers on how to know when they're being targeted by predatory lenders. The cover section ends with several inspiring stories of grassroots activists who have challenged the new loan sharks to win improvements for consumers. According to Hudson, the marginal banking industry has expanded dramatically in the past decade. Subprime mortgage lending, for example, has grown more than 500 percent in just a few years, from $34 billion in 1994 to $213 billion in 2002. Payday lenders?storefront operations that offer small loans at interest rates as high as 400 percent?have grown from an uncounted scattering in the mid-1990s to a 25,000-strong multitude today. Some of corporate America's biggest names, including Citigroup, through its subsidiary CitiFinancial, a subprime mortgage lender, have pushed their way into the fringe market, using their capital and clout to sustain investor enthusiasm and legal sanction for unfair and unsavory practices. They've found a rich market in the South, where economic inequality, racial discrimination, weak consumer laws, and pliable regulators create a ripe atmosphere for abuse. Southern Exposure, now in its 30th year, is published by the nonprofit Institute for Southern Studies. Southern Exposure's 1993 investigation into the newly-emerging predatory lending industry, "Poverty, Inc.," was a finalist for the National Magazine Award and winner of the John Hancock Award for Business Journalism. Copies of the summer 2003 issue are available for $5 at www.southernstudies.org or by writing to Southern Exposure, P.O. Box 531, Durham, NC 277702. Yearly subscriptions are $21. |
Copyright (c) 1998, Joongpil Cho