Monday, July 2, 2018

The Revenge Of Timmy And The Paydays

In the Trump era where the Consumer Financial Protection Bureau has been all but shut down, Dodd-Frank legislative provisions have been rolled back, and the Trump tax bill has put billions upon billions more in the pockets of Wall Street, it should be no surprise that the same guys who got us into subprime housing are now going into the payday lender business.

Meet Mariner Financial, who will literally give money away to customers...and then use its crushing corporate power to take twice the loan back, plus interest.

Mass-mailing checks to strangers might seem like risky business, but Mariner Finance occupies a fertile niche in the U.S. economy. The company enables some of the nation’s wealthiest investors and investment funds to make money offering high-interest loans to cash-strapped Americans.

Mariner Finance is owned and managed by a $11.2 billion private equity fund controlled by Warburg Pincus, a storied New York firm. The president of Warburg Pincus is Timothy F. Geithner, who, as treasury secretary in the Obama administration, condemned predatory lenders. The firm’s co-chief executives, Charles R. Kaye and Joseph P. Landy, are established figures in New York’s financial world. The minimum investment in the fund is $20 million. 

That's right, our old friend Timmy is back, and he's in the legal loan shark business.

And business is booming.
Dozens of other investment firms bought Mariner bonds last year, allowing the company to raise an additional $550 million. That allowed the lender to make more loans to people like Huggins. 
“It’s basically a way of monetizing poor people,” said John Lafferty, who was a manager trainee at a Mariner Finance branch for four months in 2015 in Nashville. His misgivings about the business echoed those of other former employees contacted by The Washington Post. “Maybe at the beginning, people thought these loans could help people pay their electric bill. But it has become a cash cow.” 
The market for “consumer installment loans,” which Mariner and its competitors serve, has grown rapidly in recent years, particularly as new federal regulations have curtailed payday lending, according to the Center for Financial Services Innovation, a nonprofit research group. Private equity firms, with billions to invest, have taken significant stakes in the growing field. 
Among its rivals, Mariner stands out for the frequent use of mass-mailed checks, which allows customers to accept a high-interest loan on an impulse — just sign the check. It has become a key marketing method. 

Just sign on the dotted line and cash the check.

And then the goon squad shows up to break your neck.

The company’s other tactics include borrowing money for as little as 4 or 5 percent — thanks to the bond market — and lending at rates as high as 36 percent, a rate that some states consider usurious; making millions of dollars by charging borrowers for insurance policies of questionable value; operating an insurance company in the Turks and Caicos, where regulations are notably lax, to profit further from the insurance policies; and aggressive collection practices that include calling delinquent customers once a day and embarrassing them by calling their friends and relatives, customers said.

Finally, Mariner enforces its collections with a busy legal operation, funded in part by the customers themselves: The fine print in the loan contracts obliges customers to pay as much as an extra 20 percent of the amount owed to cover Mariner’s attorney fees, and this has helped fund legal proceedings that are both voluminous and swift. Last year, in Baltimore alone, Mariner filed nearly 300 lawsuits. In some cases, Mariner has sued customers within five months of the check being cashed.

And all of this is 100% legal thanks to Trump and the GOP.  Oh, and Obama's Treasury Secretary, who definitely landed on his feet.

There are tons of these Wall Street-funded "finance companies" around.  Just here in NKY, there's Eagle Finance, One Main Financial, Heights Finance Corporation, Regency Finance Company, Republic Finance, and of course Mariner Finance, all within 5 miles of where I live.

Oh, and it's Kentucky, so the payday lenders are still there too.

But remember, the economy is doing great, right?

No comments:

Related Posts with Thumbnails