Monday, August 11, 2008

Subprime Lending and the American Ideal

Well, maybe the title is too pedantic. Nevertheless, what I mean by "Ideal" is the way of happiness. Most of the people I dealt with while selling loans at HFC/Beneficial were just like the rest of Americans: they were Consumers. Now, they were a different class of Americans, for the most part; they were working class, primarily of low educational background, particularly unhealthy and overweight, and just plain dirty a lot of the time. This is due to the fact that most of them were laborers and workers in factories and shops dedicated to the automotive industry.

In these people, there is no desire to read, and if they do read, it's dime store rubbish. Some of them go to church, but not many. But it's fair to say they all pretty much were of lower, working class background, highly steeped in ignorance, Marlboro Reds, huntin', fishin', and bike ridin'.

I'm an elitist, you say. Perhaps. But these people are simply following the pattern set for them by the automotive corporations who long ago influenced schools like the University of Chicago, Stanford and others to rewrite public school curriculum so that students followed one simple rule: memorize data, regurgitate data. This produces consumers, which the big corporations wanted. See and take. Observe and hold. Perceive and receive. Get stuff.

That's the customer base at HFC/Beneficial. Of course, they didn't buy all of our products (thank goodness). But I mention all of this to point out just one of the reasons why we are in this housing market fiasco: because too many Americans consume, consume consume. The spend, spend, spend, and they have no concept of saving money.

I have seen countless credit reports where a family makes anywhere from 50 to well-over 100k between husband and wife (or whatver combination manifests itself in our culture--"I've seen it all, man!").
And these people have:

1) mortgage payment
2) car payment
3) 2nd car payment
4) multiple personal loans
5) consumer loans (catch the title there: "consumer" loan. That's right, folks).
6) Multiple credit card bills.

7) and then there are just basic staples of insurances, taxes, food, utilities, phone, cable, internet, cell phone...

8) Sometimes they have a 2nd mortgage payment. And even a 3rd! If this is the case, you are a likely customer of HFC/Beneficial. :) Don't forget our consumer loans at 22.98% We can give you up to $20,000 at this glorious rate! Unsecured, too! And the Home and Auto Plan. Make sure that loan has plenty of credit insurance on it: unemployment, disability and life. Only an extra hundred bucks on average. Don't foget we can refinance your car payment. Average rate is 15%. Sign up.

Each of 1-6 listed above on a credit report is called a "trade line." You owe Citibank 5K on your credit card? That's a trade line. Now imagine these people with 17 different trade lines. Or 25, or more. I have seen this. I have seen this! Now, my job was to refinance their mortgage, pay off all their bills, and give them extra cash (for that dream vacation, or that new, desirable car). And at times, I offered people a great deal. I reduced their total monthly debt obligation by $500. How would you like to have no bills, except one and have $500 back in your pocket every month? And it worked.

Until the credit cards ran back up again. It happened quite frequently. These people refinance, I give them money, I save them money, and they run their credit cards back up again. Now they have one huge mortgage payment, and a bunch of credit cards, and they hand the keys of their house to us. Nice.

These are stupid people. They are bent on consumerism. They have to have things now. They fail to get their act together. They take no thought for the future, for saving money, for investing, for setting up retirement, for leaving a financial legacy for their children and their children's children. This is a terrible shame!

It boils down to covetousness, greed and idolatry. I worked for greedy people who wanted me to sell loans to ignorant people. These ignorant people were also greedy--for material. I was actually forbidden to take the role of financial counselor with these people. I was forbidden to recommend another place of business or counseling center. I could tell people, "Now won't your life be easier without all these bills?" But that was about it. I may recommend cutting up the credit cards, but I'm just a salesman. I sell.

D.A. Carson laments our culture's consumerism in his book, The Gagging of God:

In a former age, insatiable desire was understood to be a principal source of frustration, something to be opposed. Now it is to be cultivated as the engine that drives economic development. The endemic consumerism of the age feeds our greed, and even defines our humanity: we are not primarily worshipers, or thinkers, or God's image-bearers, or lovers, but consumers. "Consumerism itself has become a kind of addiction. The more toys we acquire the more frequent and expensive they need to be to produce the old high. the shift from finding identity in what we produce to what we possess, from a work ethic to a consumption ethic, at once exalts the pursuit of happiness and guarantees its ultimate futility."

Carson quotes John Ortberg, "Happy Meal Spirituality," Christianity Today 37/6 (May 17,1993): 40.

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