As Low As You Can Go

Last night's Bill Moyers' Journal had heart-wrenching coverage of the growing industry that preys on the 25% of U.S. citizens who are living in poverty. The article concentrated on the angle of inveigling people into debt they can't afford by getting them to fill out forms that detail their financial circumstances, then matching what they can eke out with the price of what they're buying.

A major example was given, of a lady needing a car to perform the job she was paid for. After she told the salespeople all of her expenses and income, she was sold a car that cost more than what was left over after all her other bills were paid. Eventually, she had to return the car. In the Journal report, it was explained that most cars sold under this arrangement are returned, but the costs are covered by the amount of interest that the buyers have been socked with. It is this kind of tactic that has seen subprime lending burgeoning in many industries.

MATT FELLOWES:I've estimated in my research that among the bottom 25 percent of households, they're collectively bringing in about 650 billion dollars every year.

So you can imagine why an amount of money that large is attractive to a great variety of businesses, from large financial services companies to new, uh, to entrepreneurs looking for innovations to serve this market.

SILVIA CHASE:That the poor can be lucrative to big business was intriguing enough to the reporter. But Matt Fellowes' evidence for that case was even more so. The Fellowes report noted that wages have been stagnant for years; to compensate the working poor are buying items small and large by taking out loans from companies all too happy to lend them the money at a very high rate.

MATT FELLOWES:Lower income families tend to pay higher prices for nearly every basic necessity from groceries to the price of a car to the price of a mortgage.

MATT FELLOWES:Between 1989 and 2004, they borrowed about 240 percent more debt than they did in1989. So there is this enormous increase in the amount of debt held by low and moderate level income houses.

SILVIA CHASE:BUSINESSWEEK may be considered an unlikely publication to take on a poverty investigation — based in New York City, it is a magazine that, like the corporations it covers, has traditionally viewed the world from the top down. But the think tank report hinted at a story a business magazine could embrace: an industry based on poverty, serving 25 percent of the American population.

Inveigling another person to take on a debt she/he can't afford, for your profit, may seen like the bottomfeeder practice only a caricature like the mythical Fagan would commit. In an ending note, though, the report from Bill Moyers touched on an investigation that is now going on at MotherJones. If you've noticed, there are reports there of people associated with the very organizations that have grown up to defend the needy, that have begun taking a role in selling them new and abusive credit services.

BILL MOYERS: CFSA has been especially active in urban, African American communities — that's a primary target for predatory lenders. On our website at PBS.org, you can link to a startling investigation in the current online issue of MOTHER JONES.

The magazine reports that the CFSA and the subprime credit card company CompuCredit, have co-opted several prominent civil rights organizations to bolster their efforts to fend off stricter regulation. Seals of approval for payday lending have come from CORE — that's the Congress of Racial Equality, the National Conference of Black Mayors and local chapters of the National Urban League.

Even the WASHINGTON POST was caught off guard.

Charles Steele Jr., president of the Southern Christian Leadership Conference, invoked Martin Luther King Jr. as he argued against the proposed Credit Cardholders' Bill of Rights Act. He defended subprime credit card lending.

The POST later had to issue a clarification that the Southern Christian Leadership Conference has a partnership with CompuCredit that includes plans to market "SCLC-branded" credit cards. Shameful.

Shameful is definitely the word for betraying the trust you have won from the people you purport to serve.