categories, from those who have only visited you once or twice to those who come in at least a couple of times a month. Devise a targeted mailer for each. Send out “Welcome!” mailers to each new customer and sweeten the hello with a cash incentive to return. For those who are semi-regulars offer a “cash 3, get 1 free” deal. “These are people not used to getting anything free,” Higgins said. “These are people not used to getting anything, really.” Use these tried-and-true methods, he advised, and you can “turn your store into an effective selling machine.”
It’s not hard, he reassured them. Pens scribbled furiously as he tossed out specifics such as various ideas for contests and giveaways and other come-ons that have worked for the big boys. Raffle off an iPod or consider a scratch-and-win contest. Do whatever it takes to turn someone into a loyal customer, he counseled them. “Get a customer coming to you regularly,” Higgins said, “and they could be worth $2,000 to $4,000 a year.”
I had the good fortune to have knocked on the door of the people at FiSCA—and on the doors of any number of swashbuckling entrepreneurs who have figured out how to get very rich off those with very little—at a time when many of the pioneers of this industry felt misunderstood and under public attack. A few harbored resentment toward the press and declined to talk, but most proved eager to meet with me. FiSCA was typical. The check cashers don’t normally allow outsiders to attend their events, Stephen Altobelli, who works for an agency that does public relations for FiSCA, had told me. But I was granted an all-access pass that allowed me to roam the halls freely and chat with whoever was willing to talk with me. I had told Altobelli that I would be spending time with critics such as Martin Eakes, whose name had come up any number of times in Las Vegas as the crusader the people in the room most love to hate. I told him, too, that I would be meeting with people, such as Tommy Myers, who consider themselves victims of the poverty industry. He didn’t care. “Our people want to get their stories out there,” Altobelli said.
That seemed fine by me. Our country was experiencing the worst economic times since the Great Depression and his people resided in an upside-down world in which people with little money in their pockets boded well for their bottom lines. There’s something undeniably brilliant about the person who figures out how to make a 150 percent markup on a $500 television by renting it by the week, or a person like Allan Jones who sees the potential to become a triple-digit millionaire several times over by loaning people $200 or $400 at a time. Who are these people who one day wake up and decide that they’re going to make their mark and their millions charging potentially confiscatory interest rates to the working poor?
These were jittery times inside the Mandalay conference center. Less than one month earlier the government had allowed Lehman Brothers to fail while helping to arrange a shotgun marriage between Merrill Lynch and Bank of America. The financial industry’s future looked tenuous and even if those in this room could expect to see demand for their products go up, so too would defaults rise. If nothing else, the deep credit freeze that had descended on much of the world meant the end, at least temporarily, of the days when a small entrepreneur could dream of the inflated payout from a chain anxious to grow big fast. And then there were the normal competitive pressures of running a business in twenty-first-century America. The big threat in 2008 was Walmart, which was moving aggressively into a couple of the poverty industry’s more lucrative areas. Other giant retailers were starting to nibble around the edges of their market as well.
Yet all these seemed minor concerns compared to changes in the political climate. From the podium, in the corridors, in breakout sessions, and in the bars you could hear the fear and also the rage. They were blameless for the current financial meltdown, they told themselves, victims of a crazy housing bubble just like everyone else. But of course that wasn’t quite true. They, like the country’s subprime mortgage lenders, had taken advantage of the same deep and restless pools of capital looking for a high return. The fall of real wages among working Americans had created an artificial demand for expensive credit and the people gathering in meeting rooms on the grounds of the Mandalay Bay were among those who had moved in to meet the need, amassing fortunes in the process. And even if they didn’t buy the idea that they were partially responsible for the nation’s financial woes, they recognized that others would blame them. The country’s biggest banks and Wall Street’s best-known financial houses had belly-flopped into the subprime soup and the members of FiSCA knew they were in danger of being swamped by the wash. “You better hurry on down to Cleveland [Tennessee] if you want to meet with me,” Allan Jones, the man who invented the modern-day payday industry, drawled over the phone when we spoke a few weeks before the FiSCA meeting. “I’m not sure I’ll have any business to still visit next year.” Even as people were commemorating their twentieth meeting, there were already those who were anticipating a much smaller crowd for the twenty-fifth. The obsession in Las Vegas that weekend was Ohio, where, in three weeks, voters would be asked to greatly restrict the fees a payday lender could charge on a loan. Ohio was a top-five payday market and in fact prime territory for any number of Poverty, Inc. businesses.
“Believe me, Ohio was the wake-up call for a lot of us,” Joe Coleman said.
All these major corporations, chain franchises, and newly hatched enterprises specifically catering to the working poor—were they financial angels to the country’s great hardworking masses, by making homes and cars and emergency cash available to those otherwise shunned by the mainstream financial institutions? Or were these businesses tilling the country’s working-class neighborhoods so aggressively that they endangered the very survival of these communities? Were they vultures carelessly adding to the economic woes of a single mother of two working as a chambermaid at the local Holiday Inn? This question, which preoccupied me in my time on the subprime fringes—the morality of making a much higher profit on the working poor than on more prosperous citizens—was also one the country would need to ask once the new administration was out of crisis mode and legislators could turn their attention to various bills addressing the profits being earned by the poverty industry.
“When someone makes a profit in low-income communities, the presumption is that they must be doing something wrong,” Joe Coleman had said to me in Las Vegas when I ran into him in the hallway between events. An excitable man, Coleman got so revved up during our talk that he told me that if his life were a movie, he wouldn’t be Mr. Potter in
The Birth of the Predatory Lender
If you think that if only there had been some warnings, the subprime lenders could have been stopped before they practically destroyed the world economy, then you should avoid the office of the Atlanta public interest lawyer Bill Brennan. It would be too upsetting.
Since that day in 1991 when eighty-year-old Annie Lou Collier sat across from his desk because a bank was threatening to take her home of thirty-eight years, William J. Brennan, Jr., has been talking about virtually nothing else but the need for people in power to impose some basic regulatory standards on the country’s lenders. A staff attorney for the Atlanta Legal Aid Society, Brennan has paid his own way to Washington, D.C., numerous times to testify before Congress and the Fed. He has spent more than he wants to admit doing reconnaissance work at industry-sponsored subprime lending conferences. Over the years he’s put so many flights and hotel stays and subscriptions and overnight deliveries on credit cards that for a time he put himself and his spouse, Lynn Simmons, a schoolteacher, in debt. “My wife wasn’t happy with me but we don’t need to get into that,” he says sheepishly. His collection of subprime-related material began small: some articles, a few key memos, a legal brief somebody had sent him. But when Brennan reached twenty or so cartons, Simmons put her foot down. She banished every last box from their home, so on top of everything else, Brennan now spends around a hundred and fifty dollars each month on a storage locker.
“Ninety-eight percent of everything good that’s happened in the fight against predatory lending is because of Bill,” his friend Howard Rothbloom told me. Back in the early 1990s, Rothbloom, then a young bankruptcy lawyer, called Brennan hoping to get up to speed on a new rash of predatory lending he was seeing in Atlanta. “Bill offers to send me a couple of articles he thought I’d find interesting,” Rothbloom said—and the next day a FedEx van was delivering a heavy box to his office. “Just quickly…,” Brennan will say when leaving a voice mail for his boss, Steve Gottlieb, the executive director of Atlanta Legal Aid. But it’s never quick. The Legal Aid voice mail system gives callers five minutes to leave a message but Brennan invariably needs to call again to finish a message and
