7 ms·
I Worked at Capital One for 5 Years. How We Justified Piling Debt on the Poor
- Mathnerd314 7y agoduplicate: https://news.ycombinator.com/item?id=21138418 https://news.ycombinator.com/item?id=21138418
- tlarkworthy 7y agoprevious discussion: https://news.ycombinator.com/item?id=21138418 https://news.ycombinator.com/item?id=21138418
- deleted 7y ago[deleted]
- undef238 7y agoAt least you can buy actual non-discretionary purchases with a credit card. I've recently become much more alarmed by the rise of these "buy now, pay later" companies like Affirm and Afterpay, which partner with merchants that most would categorically put in the discretionary bucket (shoes, makeup, jewelry, designer clothes) charging similar interest or fees.
- motohagiography 7y agoIt would be interesting to run the numbers on a jubilee for certain kinds of debt. I realize monetary policy of inflation is in-effect a debt jubilee, as it was applied to the boomer generation in the 70s and 80s. Since diminishingly few people keep their savings in cash (instead of putting into homes, durable goods, index funds, etc), inflating away debt seems like an inevitable policy outcome. In the US, if the democrats don't do it next term with MMT, the republicans will do it with negative interest rates. It's not just a partisan issue, and it seems like there is no alternative. The main problem is that without supporting the bottom end with a minimum wage increase to match inflation, it will just be a middle class debt bailout, and the precariat will remain as screwed as they always were. Approaching this by funding a minimum income with a new VAT doesn't improve the their situation since it just subsidizes exploitation by subsidizing disadvantaged wage levels. The horror is that it's going to come down to less of what's right, and more of finding people to screw who are less likely to vote. It's a grisly business. These Capital One people were just following orders, as the saying goes, but unsecured debt is a form of slavery. Not sure how long people will accept incremental quality-of-life improvements in slavery, but at least now we have entertainment, software, and high speed pizza delivery. Suddenly, those land parcels in New Zealand are looking more appealing.
- Synaesthesia 7y agoHave you wax economist Michael Hudson? One of his central theses is that we need debt forgiveness, as debt is piling up beyond the capacity for people to pay it. Debt grows exponentially, and it acts as a hindrance to the economy, while enriching the banking, finance and real estate sectors.
- Mountain_Skies 7y agoDebt forgiveness might be more palatable if it is accompanied by changes to the system that allowed an unsustainable amount of debt to be generated in the first place.
- jdsully 7y agoA recurring debt forgiveness schedule would do just that. If all debts expired after 10 years lenders would be much more cautious.
- Mountain_Skies 7y agoDon't many debts already have a statute of limitations? IIRC, the statute of limitations on credit card debt can be as short as three years depending on the state. I know that's not exactly the same as debt forgiveness but after seven years, the debt even falls off one's credit report, making it essentially worthless to the debt owner. Obviously things like student loans aren't so easily dismissed but there does seem to be a disjointed system of debt forgiveness already for certain types of debt.
- nearbuy 7y agoDoes that work with something like credit cards, where your old debt is paid off but you constantly have more new debt?
- malux85 7y agoI have a story similar to this. There was a profound moment in my career when I was working as a consultant for a company I wont name, but they were in Canary Wharf, which is the financial center of London, UK. I was in a glass high-rise building, and had been working there for about 4 weeks. The project I was working on was at heart, selling loans and credit to people who couldnt afford it - all hidden by opaque language and euphemisms like the article mentioned. After a few weeks it became clear to me that this is nothing other than programmers being told to use machines to steal from the poor, while the managers walked around like they were geniuses when really they were total frauds and liars. We were very high up, and I remember going on lunch break and overlooking the poorer areas of London. With knowledge that the algorithms I was writing were causing them misery. At that point I just quit, I told my boss I didn't want to be part of it. He just looked at me like I was crazy, then when I grilled him to the point of belittling his intellect, he admitted he knew what they were doing, but had an insane burn rate (wife, kids, expensive house and shit) so he couldn't just quit. If these institutions would die, I would be glad.
- faissaloo 7y agoAs someone who lives in one of those areas, thank you for doing the right thing.
- JansjoFromIkea 7y agoI spoke to a guy from there (probably the same company) before who said they were swept up by some kind of drive towards goals, no clue if it was financially incentivised or what but the impression I got was that the targets were sufficiently high pressure to distract them from the ethical issues of the core product? I imagine it's very easy to suppress workers feelings by the right balance of workload and above average pay until they've gotten used to that pay level and can't back out.
- jacquesm 7y agoI have a similar one: A bank I once worked at - long since absorbed by other banks, a Dutch daughter company of Chase Manhattan - had an internal project specifically targeting people in mental institutions. These were typically fairly wealthy because they couldn't spend their money but were paid a monthly stipend by the government. All that money just sitting there was too much of a temptation and they made a special project around relieving those people of their funds.
- twblalock 7y agoIt's easy to call this kind of lending predatory, but when you leave the problem of poverty to private businesses to solve you end up with high-interest loans and payday loans. If the government banned this kind of lending and didn't provide an alternative, poor people would have no lending options. Regulating this kind of lending (e.g. by tightening the already regulated limits on interest rates) can only go so far before the products become unprofitable and will be discontinued. There is not a market solution for this.
- faissaloo 7y agoIn a world without interest the poor seldom need loans.
- xhkkffbf 7y agoThat's not really so. If you have a bunch of bad luck in one month, you sometimes need a line of credit to get to the next. Did you have a flat tire? Did the baby need three trips to the doctor because of croup? Banks exist to make our life better when we need extra spending cash. If we ban lending to the poor than it will be one more thing that only the rich will have. I agree that the lending rates are insanely high, but that's largely because of defaults. The rates for secured goods (car, house) are insanely low, even when the defaults are taken into account. Car loans from credit unions are below 2% because they're secured. The real problem is that the easiest way to cure defaults is to start saying "No" more often. But no one likes to be told "no" and that's unpopular too.
- boring_twenties 7y agoUh, car loans are below 2% only for people like you and me with excellent credit scores. "The other half" can only get financing directly from shady used car lots, where good luck even getting them to tell you the interest rate (or the purchase price) -- they focus instead on the monthly payment (and try to downplay the fact that it's for 72 months).
- 7y ago
- Simulacra 7y agoDebt is just another business. So long as the poor keep paying on the debt, it makes business sense to keep pushing debt to them. It seems the idea is to squeeze the rock just to the point it bleeds, but not kill it.
- cemregr 7y agoCapital One’s secured card helped me build credit when I arrived in the US years and years ago. Interest rates were high but I wasn’t shocked by that given I was someone with no credit history.
- Rapzid 7y agoCap One gave me credit when I probably shouldn't have had it and I ruined it lol. A decade+ out I have rebuilt my credit to excellent and secured cards were instrumental in that. Ironically my two secured cards from when the rebuild started have both been aquired by Capital One ;D
- breakbread 7y agoI defaulted on my student loans a while back and royally screwed my credit. When I decided I was going to get my shit together it started with a Capital One card with a $300 limit and I’m sure a really high interest rate. But my plan was to, of course, not carry a balance, which I didn’t. These days my credit score is ~780 and I do some casual churning for travel points.
- xhkkffbf 7y agoI hate to be cynical, but it's a bit rich to keep cashing the checks for five entire years and then having some come-to-Jesus moment. Did the change of heart go alongside some new boss who didn't like the work product? Or perhaps a plan to just move? It's easy to dis something on the way out the door.
- jstewartmobile 7y agoMcKinsey Syndrome: delayed-onset morality triggered by life changes and/or career obstacles
- 0xcde4c3db 7y agoThis sort of moment is sometimes called a "crisis of faith", and it's probably been part of the human experience since before recorded history. People sometimes have them after decades of genuine belief.
- tasty_freeze 7y agoThe article does spend a fair amount of time talking about why this happened, the euphemisms and mindset used by the corporate culture to avoid inspecting what they were really doing. I don't think the cynicism is warranted. In fact, it takes a fair amount of introspection then courage to put your name on an article saying you spent so much time doing something you now find morally repugnant. The easy path is to either (a) not ever recognize you were taking advantage of poor people or (b) sweep it under the rug and go on with your life.