Broke, USA

I spoke with Martha Clay and Rachel Robinson, the attorney who rescued the Clays before they lost their home to foreclosure. The Columbus Dispatch’s Geoff Dutton and Doug Haddix also wrote a terrific profile of the Clays while the state legislature was debating a hard-hitting predatory lending bill. Reporter Bobby Warren told Peggy Daugherty’s story in the Wooster Daily-Record, and a report written by the attorney general’s office, along with interviews with attendees, served as the foundation for my write-up of the hearings into payday lending sponsored by the attorney general around the state. Aaron Marshall is the Cleveland Plain Dealer reporter who broke the story about Otto Beatty, the husband of Joyce Beatty, the House minority leader, and his ties to a payday lender. Data on registered lobbyists and their affiliations are listed at the website maintained by the Joint Legislative Ethics Committee and the Office of the Legislative Inspector General. Particularly useful in my depiction of the legislative fight over payday was Jim Siegel’s coverage of the wrangling, which appeared in the Columbus Dispatch and the political blog he maintains, and Laura A. Bischoff’s coverage of state politics in the Dayton Daily News.

Fourteen

Matt Fellowes, founder and CEO of a new company called Hello Wallet, is a former scholar at the Brookings Institution who studied the high cost of being poor; it was Fellowes who calculated how much the typical cash checking customer pays in fees over a year. The estimated size of the unbanked in the United States comes from the FDIC, via Fellowes.

Sixteen

The country was collectively $19.5 billion in credit card debt in 1975 compared to $587 billion in 1998, according to the Federal Reserve. Elizabeth Warren told the story of her meeting with bank executives in the 2006 documentary Maxed Out, James Scurlock’s entertaining investigation of debt in America.

At the Dayton Daily News, Lynn Hulsey and Ken McCall wrote a fine series of articles about the area’s foreclosure problem. An article by the Los Angeles Times’s E. Scott Reckard was the source of the revelation that Roland Arnall and his wife gave $12 million to Republicans between 2004 and March 2008, and it was Reckard and Mike Hudson, in the terrific piece they wrote exposing Ameriquest’s business practices, who checked on the volume of customer complaints to the Federal Trade Commission between 2000 and 2004—and discovered that Option One didn’t even make the top three.

Connie Bruck wrote a great piece, published in 2009, about Angelo Mozilo and Countrywide for the New Yorker. That built on a series of prize-worthy articles about Countrywide written the previous year by my former colleague Gretchen Morgenson at the Times. For rankings of the top subprime lenders, I relied on data provided by Inside B&C Lending. Glen Pizzolorusso was featured in an award-winning radio broadcast called “The Giant Pool of Money” by Alex Blumberg and Adam Davidson, broadcast on This American Life. (A longer version of the interview appeared in GQ.)

Epilogue

Sheryl Harris, a columnist for the Cleveland Plain Dealer, wrote at length about the ways payday lenders tried to repackage the payday loan so it remains legal under Ohio law, despite a legislative fight and a ballot initiative, as did Bob Driehaus in the New York Times. Larry Hauser, the payday entrepreneur who has his employees call customers every thirty days, explained his policy in an interview with the Wall Street Journal’s Easha Anand, and I found Alan Greenspan’s 2000 statement to the National Community Reinvestment Coalition in Shortchanged, a book published in 2005 and written by Howard Karger, a social policy professor at the University of Houston. An article by the Times’s Stephen Labaton in mid-October 2009 was the source for the claim that the financial services industry had spent $220 million lobbying against Obama’s proposed financial oversight board. Also at the Times, Peter Goodman and Sewell Chan kept close tabs on the federal government’s efforts to help homeowners facing foreclosures and Eric Dash kept tally of Citigroup’s post-crash job losses and selloffs. The data about the lucrative world of student loans was gleaned from a terrific article by Kathy Kristof appearing in Forbes in 2009 and called “The Great College Hoax.”

Acknowledgments

This project began with a conversation about the pioneers of subprime: What are the various ways they have devised to make money off those of modest means? So first and foremost I want to thank Hollis Heimbouch for broaching the topic, planting a seed, and then standing back as I ventured to make the idea my own.

I was fortunate to have worked on this book with two talented and committed editors, Hollis and Bill Strachan. This is my third book with Bill, and he more than earned his keep on this go-round. He read a thicker version of this work and then patiently helped me forge through what belongs inside these covers and what was better lost to the recycling bin. Once that was settled, he gave the slimmed-down manuscript I handed in a good buffing. I couldn’t imagine doing a book without Elizabeth Kaplan, my longtime agent and friend. She’s a source of support and good counsel and, not incidentally, keeps me in business. Tom Pitoniak belongs to that unsung breed known as the copy editor, who double-checks and fixes while adding that final coat of polish, and thanks again to my mother, Naomi Rivlin, proofreader extraordinaire. I also want to thank Cristina Maldonado and Stephanie Atlan, who both provided research help.

My friend and editor, John Raeside, read early chapters and late ones; his ideas and suggestions can be found throughout these pages. I married into a theater family and finally found the term for the role he plays in my writing life: John is my dramaturge.

Others read this book in various forms and I owe them my deep gratitude: Randy Stross, Peter Goodman, Mike Buchman, Alissa Quart, Sue Matteucci, Mike Loftin, and Mike Kelly.

This book might have been born during an expensive breakfast in midtown Manhattan but it was shaped in Wellfleet, Cape Cod, and then birthed there during an intense final five weeks. So thank you Aylette Jenness, for your hospitality on the front end of this project, and Dina Harris, my mother-in-law, on the back end. I also want to thank Kevin Morison, Ellen Leander, and Carl for their hospitality during my trips to Washington, D.C., and Sonia Resika for a special assist.

I’m indebted to the scores of people I spent time with in this investigation into the poverty industry. Many people were generous with their time and their knowledge yet their names don’t appear within the covers of this book. Others gave me hours of their time—and then end up with only a quote or two. That’s not to say the time I spent was any less important as it proved invaluable to my immersion in this world.

Which brings me last, but hardly least, to Daisy and Oliver. I was a new husband at the start of this project and then, ten months later (TMI?), a new father. There’s nothing like a newborn to keep a person focused and disciplined, at least when he’s not feeling cross-eyed from a lack of sleep. So often did Oliver Daniel see his father sitting in front of a computer that in one picture he seems to be posing his hands, as if at work at a keyboard. And, finally, Daisy Walker, my wife and companion, she of the big heart and kind soul and the sweet smile who never grew weary from this book even long after I had. She was a great sounding board when I received conflicting advice and a patient listener when I needed propping up. I’ll never be able to thank her enough, though I look forward to trying.