A few months ago, I was standing in a crowded elevator when
Jamie Dimon, the chief executive of JPMorgan Chase, stepped in. When he saw me,
he said in a voice loud enough for everyone to hear: “Why does The New York
Times hate the banks?”
It’s not The New York Times, Mr. Dimon. It really isn’t. It’s the country that
hates the banks these days. If you want to understand why, I would direct your
attention to the bible of your industry, The American Banker. On Monday, it
published the third part in its depressing — and infuriating — series on credit
card debt collection practices.
You can’t read the series without wondering whether banks have learned anything
from the foreclosure crisis, which resulted in a $25 billion settlement with the
federal government and the states. That crisis was the direct result of shoddy,
often illegal practices on the part of the banks, which caused untold misery for
millions of Americans. Part of the goal of the settlement was simply to force
the banks to treat homeowners with some decency. You wouldn’t think that that
would be too much to ask. But it was never going to happen without the threat of
litigation.
As it turns out, this same kind of awful behavior has been taking place inside
the credit card collections departments of the big banks. Records are a mess.
Robo-signing has been commonplace. Collections practices hurt primarily the poor
and the unsophisticated, just like foreclosure practices. (I sometimes wonder if
banks would make any profits at all if they couldn’t take advantage of the poor
and unsophisticated.)
At Dimon’s bank, JPMorgan Chase, according to Jeff Horwitz, the author of the
American Banker series, the records used by outside law firms to sue people who
had defaulted on credit card debt “sometimes differed from Chase’s own files at
an alarming rate, according to a routine Chase presentation.” It sold debt to
so-called “debt buyers” — who then went to court to try to collect — from one
Chase portfolio, in particular, “that had long been considered unreliable and
lacked documentation.”
At Bank of America, according to Horwitz, executives sold off its worst credit
card receivables for pennies on the dollar. Its contracts with the debt buyers
included disclaimers about the accuracy of the balances. Thus, if there were
mistakes, it was up to the borrowers to point them out — after the debt buyer
had sued for recovery. Most such contracts don’t even require a bank to provide
documentation if it is requested of them. (Bank of America says that it will
provide documentation.) Horwitz found a woman who had paid off her balance in
full — and then spent three years trying to fend off a debt collector. Sounds
just like some of the foreclosure horror stories, doesn’t it?
The practices exposed by The American Banker all took place in 2009 and 2010. In
response to the problems, JPMorgan shut down its credit card collections, at
least for now, and informed its regulator. (It also settled a whistle-blower
lawsuit.) Bank of America says that its debt collection practices are not unique
to it. Which is true enough.
But lawyers on the front lines say that credit card debt collection remains a
horrific problem. “Most of the time, the borrower has no lawyer,” says Carolyn
Coffey, of MFY Legal Services, who defends consumers being sued by debt
collectors. “There are terrible problems with people not being served properly,
so they don’t even know they have been sued. But if you do get to court and ask
for documentation, the debt buyers drop the case. It is not worth it for them if
they have to provide actual proof.”
Karen Petrou, the managing partner of Federal Financial Analytics, pointed out
another reason these practices are so unseemly. In effect, the banks are
outsourcing their dirty work — and then washing their hands as the debt
collectors harass and sue and make people miserable, often without proof that
the debt is owed. Banks, she said, should not be allowed to “avert their gaze”
so easily.
“In my church, we pray for forgiveness for the ‘evil done on our behalf,’ ” she
wrote in an e-mail. “Banks should do more than pray. They should be held
responsible.”
When I was at the Consumer Financial Protection Bureau a few weeks ago, I heard
a lot of emphasis placed on debt collection practices, which, up until now, have
been unregulated. So I called the agency to ask if people there had read The
American Banker series. The answer was yes. “We take seriously any reports that
debt is being bought or sold for collection without adequate documentation that
money is owed at all or in what amount,” the agency said in a short statement.
“The C.F.P.B. is taking a close look at debt collection practices.”
When you heard the terrible news from Arizona, were you completely surprised?
Or were you, at some level, expecting something like this atrocity to happen?
Put me in the latter category. I’ve had a sick feeling in the pit of my stomach
ever since the final stages of the 2008campaign. I remembered the upsurge in
political hatred after Bill Clinton’s election in 1992 — an upsurge that
culminated in the Oklahoma City bombing. And you could see, just by watching the
crowds at McCain-Palin rallies, that it was ready to happen again. The
Department of Homeland Security reached the same conclusion: in April 2009 an
internal report warned that right-wing extremism was on the rise, with a growing
potential for violence.
Conservatives denounced that report. But there has, in fact, been a rising tide
of threats and vandalism aimed at elected officials, including both Judge John
Roll, who was killed Saturday, and Representative Gabrielle Giffords. One of
these days, someone was bound to take it to the next level. And now someone has.
It’s true that the shooter in Arizona appears to have been mentally troubled.
But that doesn’t mean that his act can or should be treated as an isolated
event, having nothing to do with the national climate.
Last spring Politico.com reported on a surge in threats against members of
Congress, which were already up by 300 percent. A number of the people making
those threats had a history of mental illness — but something about the current
state of America has been causing far more disturbed people than before to act
out their illness by threatening, or actually engaging in, political violence.
And there’s not much question what has changed. As Clarence Dupnik, the sheriff
responsible for dealing with the Arizona shootings, put it, it’s “the vitriolic
rhetoric that we hear day in and day out from people in the radio business and
some people in the TV business.” The vast majority of those who listen to that
toxic rhetoric stop short of actual violence, but some, inevitably, cross that
line.
It’s important to be clear here about the nature of our sickness. It’s not a
general lack of “civility,” the favorite term of pundits who want to wish away
fundamental policy disagreements. Politeness may be a virtue, but there’s a big
difference between bad manners and calls, explicit or implicit, for violence;
insults aren’t the same as incitement.
The point is that there’s room in a democracy for people who ridicule and
denounce those who disagree with them; there isn’t any place for eliminationist
rhetoric, for suggestions that those on the other side of a debate must be
removed from that debate by whatever means necessary.
And it’s the saturation of our political discourse — and especially our airwaves
— with eliminationist rhetoric that lies behind the rising tide of violence.
Where’s that toxic rhetoric coming from? Let’s not make a false pretense of
balance: it’s coming, overwhelmingly, from the right. It’s hard to imagine a
Democratic member of Congress urging constituents to be “armed and dangerous”
without being ostracized; but Representative Michele Bachmann, who did just
that, is a rising star in the G.O.P.
And there’s a huge contrast in the media. Listen to Rachel Maddow or Keith
Olbermann, and you’ll hear a lot of caustic remarks and mockery aimed at
Republicans. But you won’t hear jokes about shooting government officials or
beheading a journalist at The Washington Post. Listen to Glenn Beck or Bill
O’Reilly, and you will.
Of course, the likes of Mr. Beck and Mr. O’Reilly are responding to popular
demand. Citizens of other democracies may marvel at the American psyche, at the
way efforts by mildly liberal presidents to expand health coverage are met with
cries of tyranny and talk of armed resistance. Still, that’s what happens
whenever a Democrat occupies the White House, and there’s a market for anyone
willing to stoke that anger.
But even if hate is what many want to hear, that doesn’t excuse those who pander
to that desire. They should be shunned by all decent people.
Unfortunately, that hasn’t been happening: the purveyors of hate have been
treated with respect, even deference, by the G.O.P. establishment. As David
Frum, the former Bush speechwriter, has put it, “Republicans originally thought
that Fox worked for us and now we’re discovering we work for Fox.”
So will the Arizona massacre make our discourse less toxic? It’s really up to
G.O.P. leaders. Will they accept the reality of what’s happening to America, and
take a stand against eliminationist rhetoric? Or will they try to dismiss the
massacre as the mere act of a deranged individual, and go on as before?
If Arizona promotes some real soul-searching, it could prove a turning point. If
it doesn’t, Saturday’s atrocity will be just the beginning.
