When I started out, my
film was going to be about other people’s economic woes. Pretty soon I
realized I was part of this story of how the credit industry targets poor
and middle-class Americans. Not only was I a target, too, but all of us are.
There is a credit divide
in America that fuels our economic divide. Put another way, the
globalization of our economy is about more than outsourcing of jobs. There
is a deeper shift underway from a society based around production, with the
factory as the symbol of American economic prowess, to a culture driven by
consumption, with the mall as its dominant icon.
My film, titled “In
Debt We Trust,” combines story telling, often in a voice laced with
outrage, with investigative inquiry. It’s about a nation where our credit
score is the only score many people and institutions care about, and where
vast data bases record our every purchase and consumer choice. Ours has
become a nation in which the carrot of instant affluence is quickly menaced
by the harsh stick of bill collectors, lawsuits, and foreclosures. And yet,
this bubble can burst: The slickest of our bankers and the savviest of our
marketers have not been able to undo the law of gravity, that what goes up
must come down.
Viewers of our film will
be transported behind the scenes to meet the biggest scammers of them, the
engineers and operators of the billion dollar credit card industry who have
researched the details and minutiae of consumer needs and our fantasies so
that they can deploy the deceptive art of seductive marketing and modern
usury. We will scrutinize a carefully conceived but stealth electronic Web,
designed to entrap, cajole, and co-opt the most powerful consumer culture on
earth. It teases us with a financial advance when we want it, then sucks it
away from us with more force than we realize.
Reporting These Stories
In the old days the poor
couldn’t qualify for loans. Today, they are considered among the better
risks because unlike the rich many feel an obligation to pay back. Steve
Barnett, who worked in the credit card industry and will appear in our film,
explains: “These are the perfect customers. They need credit, so they’re
not all that concerned about interest. They’ll take a higher interest if
you will grant them credit.
They’ll pay off a small amount each month so they’re in a sense ‘on
the hook.’ And because of their own sense of values or because of their
own background, their family background, they’re not likely to declare
bankruptcy again. Given the change of laws that’s more difficult
anyway.” And manufacturers now know they can spur sales by lending money
to buyers up front and then get them to pay twice—first, at the register,
then with credit card payments, big interest rates and compounded interest.
Given the ubiquitousness
of these practices – and the reasons why they exist and persist that
stretch from corporate America into the halls of government and revolve
around issues of corporate greed and political favors – the expanding gaps
between those who have (and then have more) and those who don’t (but pay
anyway) need to be explored and exposed by journalists. I am raising this
issue, and suggesting ways that it can be reported, because I believe this
is an essential story for us to tell.
• Report more
regularly on these credit issues; billions of dollars are involved, not to
mention millions of lives.
• Identify the key
corporate institutions and contrast the compensation of their executives
with the financial circumstances of their customers.
• Shine a spotlight on
how special interests and lobbyists for financial institutions contribute to
members of Congress and other politicians, across party lines, to ensure
their desired policies and regulations.
influence affected by campaign contributions. Some reporting about this took
place during the bankruptcy debate, but there has been little follow-up.
• Examine the
influence credit card companies have on media companies through their
• Take a hard look at
the predatory practices in poor neighborhoods – and crimes committed
against poor and working class people, who are least able to defend
themselves. Legal service lawyers tell me that they are overwhelmed by the
scale of mortgage scams involving homes whose value have been artificially
• Focus attention on
what consumers can do to fight back. Robert Manning, author of “Credit
Card Nation,” explains: “If ten percent of American credit cardholders
withheld their monthly payments, it would bring the financial services
industry to a standstill. At a larger issue, what we have to do is to get
people involved at the state level, get their state attorney generals
involved, aggressively filing class action lawsuits and then putting
pressure on key legislators to say, ‘This is unacceptable that they're not
representing and balancing the issues of commerce with consumers. The
balance is tilted dramatically against the average American.’”
The Story’s Key
Class struggle is
assuming a new form in the conflict between creditors and lenders that
reaches into many Americans’ homes, where each month bills are juggled and
rejuggled with today’s credit card bills paid by tomorrow’s new card.
Meanwhile, with interest compounding at usurious rates, indebt ness grows
and people sink even deeper into debts they cannot manage. In this conflict,
companies function as well-organized machines while borrowers are forced to
react as individuals. Many are browbeaten with lectures about “personal
responsibility” by corporations that only pay lip service to any form of
Centuries ago, we had
debtors prisons. Today, many homes BECOME similar kinds of prisons, where
debtors struggle with personal finance issues. The scale of indebtedness is
staggering as consumers simply follow their government’s lead. As of
Christmas 2005 the national debt stood at: $8,179,165,267,626.42. Break that
down and each American’s share comes to $27,439.48, and our nation’s
debt increases $2.83 billion each day. Add to that two trillion more for
consumer debt including mortgages. That’s a lot of money.
Who is really
responsible for it? Few of us seem to know. And fewer appear to know what
can be done about it. “They’re never going to be repaid,” says
economic historian Michael Hudson who for many years worked at Chase Bank.
“Adam Smith said that no government had ever repaid its debts and the same
can be said of the private sector. The U.S. government does not intend to
repay its trillion dollar debt to foreign central banks and, even if it did
intend to, there’s no way in which it could. Most of the corporations now
are avoiding paying their pension fund debts and their health care debts.”
The government and big
companies might not have to pay, but regular people do, as our collective
consumer debt has doubled to the past ten years. With mortgage debt
included, it’s now reached seven trillion dollars. Hudson compares the
plight of millions of debtors in the United States to serfs of an age gone
by: “For many people, debts now absorb 40 percent of their income. So many
people are paying all of their take home wages over and above basic expenses
for debt service. And that’s rising. In effect, 90 percent of the American
population is indebted to the top 10 percent of the population.”
The coffers of creditors
– funded by the most prestigious banks and financial institutions – are
swelling with payments for arbitrarily imposed late fees and RISING interest
rates that seem to be largely unregulated. Borrowing is now a national
habit. Fueling this shift globally has been our national debt—now in the
trillions—as other countries finance our trade imbalances and keep our
economy strong. Without that influx of money, the U.S. economy would be in
crisis. Everyone in the know knows this, but they do little to deal with it,
relying on the theory that if it ain’t broke, don’t fix it. Occasional
warnings and lots of noise surface about cutting the government’s annual
deficit, including a devastating report by Comptroller General Davis Walker
who compares the United States today to Rome before its fall. He is
dismissed as a “prophet of gloom: and barely covere din the press our
debts keep growing. All of this borrowed money keeps people pacified and,
for the most part, politically complacent for now..
So many of us live
beyond our means. This is not news, but isn’t found in most news reporting
is how this shift has been engineered through corporate decisions that are
aided and abetted by government polices. Questions of by whom and for whom
need more and better investigation, as well as a look at who are the losers
and who are the winners.
Business reporting that
focuses on the upticks and downticks of the market provides little room for
explanation, analysis or connecting-the-dots journalism. In part, that is a
result of the fact that many of our major media companies don’t operate in
a world apart from these pressures. At least ten credit card solicitations
have arrived recently in my mail, and the Disney (owner of ABC television
network) card was in that pile. Many credit cards boast of partnerships and
discounts from media companies and entertainment providers, from
subscriptions to DVDs. Like car companies and airlines before them, the
media industry has discovered that there’s money to be made in the credit
business, and so credit card companies become big media advertisers. Why
This credit squeeze is
hitting the news business, too. Jobs are being cut and reporting trimmed.
Joe Strupp of Editor & Publisher observed in his 2005 media wrap up,
"Using the bizarre premise that newspapers can bring back lost
circulation and ad revenue by making their products worse, top executives at
major chains from The New York Times Company to Tribune took a butcher knife
to staffing with buyouts and layoffs that appeared almost epidemic."
What happens to news
business employees laid off in this environment? Like those in other
industries where cost-cutting leads to unemployment, they enter what
insiders in the credit business call “the turnstyle,” living on more and
more credit from cards, soon to be followed by a dip into home equity. Nor
have wages and benefits kept up with inflation, and many are being cut.
Health care extensions after a job ends are over within a year, and then
what? What’s the alternative? More debt is one of the few accessible
options. The turnstyle keeps turning as personal debt keeps growing.
These issues and scams
can be reported, and they must be not just in consumer advice columns and
soft features but with hard-hitting and serious investigative reports.
-- Filmmaker Danny
Schechter, a 1978 Nieman Fellow, is the author of two new books, “The
Death of The Media” and “When News Lies.” A former producer at CNN and
ABC News, he is now executive producer at Globalvision.Inc. E-mail address: email@example.com
For Nieman Reports: www.nieman.harvard.edu/reports/contents.html