09 June 2007

"Maxed Out"

This evening I sat down to put a dent in my Netflix queue by watching "Maxed Out," a documentary about the state of consumer credit in the United States. This documentary mixed the standard fair of expert interviews with personal testimonials. I found the movie as a whole to be interesting and informative, but a little bit one sided. There certainly are lenders who target people with bad credit expecting they will carry a balance and incur interest + fees. However in many of the testimonials people seemed to be of the notion that if the credit card company was offering to give them credit they must be able to afford it. The credit card company didn't force a single purchase upon the card user, they took the responsibility of credit and abused it.

I was absolute appalled by the practices of CitiFinancial who targeted low income homeowners with the promise of lowering people's monthly mortgage payment only to have the payments actually go up once they became CitiFinancial customers. An enterprising investigative reporter uncovered many examples of deceptive refinancing practices by Citi in states from Alabama to New York. It was definitely not a case of a few over zealous employees, but an corporate policy.

The second thing that really struck me was the existence of a VIP list maintained by the credit reporting bureaus (Equifax, Experian, and TransUnion) which contains the list of elected officials, business leaders, and celebrities. The purpose of this list is to insure that no one on the list has an issue with their credit report (and credit score) which might prompt them to enact legislation regulating the industry. One women (not on the VIP list) was mistakenly listed as deceased by a credit bureau and need to be disposed twice under oath to prove she was alive.

Finally I was struck by the shear size of the financial hole America is in. An American's average share of the national debt is $30,000 and the average household has over $9,000 in credit card debt. I question reasons for this debt (a war machine and iPods, respectivly) and wonder how long until the vacuum implodes. Maybe I should take up subsistence farming?

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