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Living Beyond Our Means, Putting Americans Back Into Debt

Published 10/25/08 Craig Harrington - Print Article
E-mail - editor@economyincisis.org

Bankrupt Americans climbing their way out of insolvency are now being preyed on by lenders and institutions hoping to put them back into debt as quickly as possible, according to The New York Times.

Credit rating agencies like Equifax, Experian and TransUnion – which collect meticulous information about hundreds of millions of Americans – have begun selling their information to lenders hoping to regain lost customers. Using a process called “data mining,” the lenders are able to garner information regarding potential borrowers' spending habits and leisure activities. This allows them to specifically target impressionable individuals in a desperate attempt to get them stuck on the same credit cards that led to their personal downfalls.

The lenders don't want customers who regularly pay off their balances, they want customers who charge more than they can afford. This ensures that they will continue paying down the interest and remaining balance, guaranteeing steady revenue for the credit company. Credit companies profit off of the excesses of American consumption and on the ignorance of their customer base. They seek customers who are financially inexperienced, as these people tend to send back more revenue than fiscally responsible individuals.

This is precisely what is wrong with the United States economy. We are living beyond our means, and there is very little chance of reversing this trend. The higher we live, the more debts we incur. Too many people want to convince us to spend beyond our means. This culture of debt started at the top and has filtered through every part of life. College is a necessary tool for higher employment, but the average student will spend the remaining productive years of his or her life paying off mountains of collegiate debt. Health care is an inherent need for our survival and personal well-being, yet the cost of treating illnesses – or merely staying healthy – is so high that only the rich can afford the best care and coverage. The rest of us have to spend our lives paying down the constantly increasing premiums.

There are many well-to-do elites and corporations, not all wealthy companies and individuals are looking for ways to exploit everyone else. Unfortunately, there are too many instances when exploitation is the goal. There is no corporate accountability for a life destroyed by financial downturns. No credit company has ever apologized for misleading advertisements which promise stability and “rewards” for continued use. It is considered perfectly acceptable to direct tailor-made sales pitches to citizens who do not realize they are being targeted. Americans do need to show restraint and act responsibly, but at some point the institutions must do the same.

Source New York Times:

"It's like I've got some big tag: target this person so you can get them back into debt," said Ms. Jerez, of Jersey City, who still gets offers, even as it has become clear that loans to troubled borrowers have become a chief cause of the financial crisis. One letter that arrived last month, from First Premier Bank, promoted a platinum MasterCard for people with "less-than-perfect credit."

Singling out even struggling American consumers like Ms. Jerez is one of the overlooked causes of the debt boom and the resulting crisis, which threatens to choke the global economy.

…

Countrywide Financial, one of the most aggressive companies in the selling of subprime loans during the housing boom, says it sent out between six million and eight million pieces of targeted mail a month between 2004 and 2006. That is in addition to tens of thousands of telemarketing phone calls urging consumers to either refinance their homes or take out new loans.

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