MAXED OUT—ONE MOVIE, TWO OPINIONS
Maxed Out–Take I
During my career I’ve had the opportunity to meet some gifted and caring people doing their best to bring about positive change in our society. On March 14 I met a number of these individuals in an unlikely setting, a documentary premier at Harvard Law School.
“You’ll laugh! You’ll cry,” but soon you’ll come to the realization that the life stories presented in director James Scurlock’s Maxed Out constitute a Greek tragedy for our times. I wish I could tell you that it is some kind of Hollywood melodrama starring Tom Hanks and Meryl Streep, but the “stars” are just ordinary people like Janne O'Donnell and Trisha Johnson, mothers of college students whose burdensome credit card debt drove them to suicide.
Maxed Out also features interviews with former lending industry employees, debt collectors, consumers, lobbyists, and experts such as Harvard law professor Elizabeth Warren, who hosted last night’s premier and conducted the panel discussion that followed. In the film, the professor recounts a story that struck a particularly resonant chord in me. Several years ago, she made a presentation to the executives of a major credit card issuer. During her remarks, Professor Warren emphasized that the majority of American bankruptcies could be prevented simply by restricting the offers of credit to consumers already teetering on the brink of financial ruin. Needless to say, the professor’s suggestion provoked quite a hubbub among the bank’s executives, after which a lull came over the room as the president of the organization rose and proclaimed, “Those consumers comprise the most profitable part of our business!” Perhaps that’s why eight billion offers of credit went out last year, including several to a severely disabled twenty-six-year-old woman confined to a bed in a nursing home and to the aforementioned college students who committed suicide. Beaten down and bewildered by the banks’ lack of compassion, the mother of one of the deceased can ask only, “You’ve already taken my son. Isn’t that enough?”
A colleague of mine once noted, “In life, people will give you two types of information; the type that will benefit you, and the type that will benefit them.” That point is especially evident in the film as director Scurlock pursues the notion that a bank’s ideal customer is an unsophisticated consumer. Unsuspecting individuals are lured into signing contracts they can’t understand, and at terms that would make a mobster blush. Why not provide education in advance or discuss the consequences of default in plain English? Because one-third of credit card bank profits are derived from late, over-limit, zero-balance, and related fees! In our society, in which the desire for profit reigns over common sense, the only people who will pay are consumers.
In a sad commentary within the film, Robin Leach declares, "Nobody would watch ‘Lifestyles of the Poor and the Unknown,’"but I disagree wholeheartedly. Maxed Out is a must-see for anyone who uses credit; in other words, nearly all of the three hundred million people living in our country. The film accounts of political and corporate chicanery, abused and confused consumers, and serpent-like banking regulators will have you running to your local bookstore to grab one of the many personal finance books available.
We pay for what we don’t know, robbing from our future to get through today. With the challenges posed by rising healthcare costs, housing, tuition, and the prospect of a working retirement, we owe it to ourselves to become financially literate.
After the film ended, there was a panel discussion with James Scurlock, Professor Warren, and Kirsten Keefe, a housing attorney who also serves as the executive director of Americans for Fairness in Lending, a consumer advocacy group launched recently. There was a good deal of discussion about the economic impact of consumer spending, the legal interpretations of contracts, and a heartfelt comment from Professor Warren that will live with me forever. “To the lending community, consumers are merely annuities.” I hope to prevent this attitude from being confirmed in reality, and I hope you’ll join me in helping more American consumers reclaim control of our hard-earned money.
Thom Fox is a writer, author, and contributor to The First-Time HomeBuyer magazine. He can be reached at thomjfox@comcast.net.