Thursday, September 23, 2004

Corporate Arrogance & The Myth of the Sub-Prime Borrower

Creditoris Squaliformes as an order has a lot going for it.

First, the family believes it is legitimate business to take advantage of people who may not know or understand complex financial issues involving credit and debt.

Secondly, they have a lot of help. Their partners-in-crime who market products, cars and homes turn to the lenders to keep themselves in business because the vast majority of people don't save before they buy. Everyone wants it now and Creditoris Squaliformes are ready to make that happen.

Let's face the fact that there are people who are not well educated and have lower incomes. Some of them aren't ever going to make six figures. Whether they should own a giant screen television and a $35,000 SUV and a $100,000 home is not something lenders want to think about.

To Creditoris Squaliformes those people are just a large and growing demographic market segment, ripe with opportunity and conveniently labeled as sub-prime.

The mask of convenience helps defray questions about mistreatment. After all, who would a judge be more likely to believe, a large, well established business represented by highly-qualified counsel or a consumer/borrower that has been painted as being inherently questionable because they're having "credit problems."

After all, to those who currently don't have "credit problems," the only people who do must be deadbeat low-lifes that can't pay their bills and spend irresponsibly. Only until the unaffected run into the credit data scam themselves will they get a taste of what it can be like to be called something you're not.

The lending industry operates against consumers with a level of arrogance that would not be possible if they didn't wield absolute power over who they want to call "borrowers with less than perfect credit." They are unchallenged for the most part, and the correlation between lower credit scores and supposedly higher risk, higher interest rate loans works perfectly in their favor.

Since the usury laws were done away with back in 1980, Creditoris Squaliformes have deliberately and diligently worked to create millions of sub-prime borrower/victims.

Consider that just the errors in credit data negatively effect at least 30% of people who apply for credit. The opportunity to charge nearly twice as much for a loan for that many people is just too tempting to ignore.

Abuse in reporting by collections firms alone is rampant. The fact that credit card companies get to raise their rates based on changes in your credit score (that they can easily manipulate) only helps enlarge the target market of victims.

The arrogance required on the part of executives and managers also finds its way down into the ranks of supervisors and employees. To perpetuate the scheme, everyone in the life cycle of a loan has to firmly believe three things:

1 - The borrower is wrong but won't admit it.
2 - The company and its computers are always right.
3 - The victim will lose the fight and there's no limit to the litigation budget.

This innate position of arrogance creates an operational environment that attracts people who can function without regard to truth or any concern for right and wrong as long as the company is there to reinforce the above three tenets. The collections and customer service call center environment is often conditioned to measure performance in what most normal people would consider emotionally as well as morally bankrupt.

Like Homer Simpson once said: "De fault! De fault! The two sweetest words in the English language! Woohoo!"

Until the leadership of these giant companies admits there is a problem, they're not going to fix it, and they are doggedly trying to avoid admitting there is anything at all wrong.

The Honorable Judge Roy Bean

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