This last weekend, I was in Chicago attending the American Bar Association conference on Technology. While in Chicago, I saw the movie, Maxed Out. It is the only feature movie that I am aware of that deals with consumer credit. The movie was a documentary about consumers that got into trouble with their loans and credit cards. I left the movie shaken and I am a collection attorney.
Maxed out was a documentary that pointed the finger for consumer woes on the credit granting policies of the the likes of Citibank and MBNA. For example, two mothers spoke of how their children, new to college campuses, arrived to find the credit card companies signing up college kids who have no income and are probably drowning in student loans. These two mothers found out that their kids received several credit cards and could not pay them back. These kids committed suicide. Extreme? Probably. Is it the credit card company’s fault? Who knows. Should credit card companies target college kids that generally have no income to repay debt? Absolutely not!
Professor Elizabeth Warren, from Harvard, commented throughout the movie. She stated that the credit card companies make their money by putting people deep into debt so that people spend the rest of their lives making the minimum payments. In other words $1 loaned usually equals $2 repaid. The credit card companies and banks make their money targeting lower to middle income people. It was absolutely nauseating. I highly recommend Maxed Out. I think it should be required viewing before someone takes out a credit card.
The movie had a lot to say and really exposed the soft slimey underside of predatory lending. In fact, this movie has led me to create a new topic category on this blog that I will call Disturbing Trends in Lending. There has been a lot of controversy regarding predatory lending as of late and I think it is high time that we all discuss it. More to come….