Maxed Out....The book and film discusses the role of banks, of government, and of consumers in creating an industry that is, in the words of Harvard law professor Elizabeth Warren, “obscenely profitable”.
Credit Card Debt-It is affecting and some would say vexing the lives of multitudes of U.S. consumers during this economic downturn. Surely the country as a whole will pull out of this slump and rebound strongly as it always does. Yet in the meantime, credit card debt and the ways and means of debt relief are understandably on the minds of many.
How did we arrive at this juncture? There is much blame to be spread around. One could make the argument that the state of the economy in recession is to blame for the scenario. One could make the argument that the credit card issuers share much of the blame for the rise in credit card debt today. And one could also make the argument that the consumers themselves need to shoulder much of if not most of the blame for credit card debt becoming the issue that it has. In any case, we should look for solutions to the problem.
Maxed Out peeks into all corners of the credit industry. It shows us borrowers and lenders, payday lenders and pawnbrokers, commentators and collection agents.
We meet Chris and Bob, for example, the owners of People First, a Minneapolis debt collection agency. They claim their company takes a kinder, gentler approach, but then gleefully compare their tactics to those used by pirates. We also meet Lynn Stavert, a California woman whose husband recently died, leaving her unable to make the $4,000/month mortgage payment. (She used credit card cash advances for a while before giving up.) The various stories illustrate how our lifestyles have become thickly entangled with easy credit.
The film notes that lenders make money from poor credit risks. Banks don’t give you credit because they think you can repay it — they give you credit because they think you can’t. The film-makers follow an investigative reporter as he visits the Browns, a poor family in Aberdeen, Mississippi. John, the eldest son in the family, is 44 and severely retarded. The Browns had a low-interest government subsidized mortgage. A saleswoman from CitiFinancial convinced John to replace that loan with a longer, higher-interest product the family cannot afford. She led John to believe that the loan would benefit the family. She then helped him to sign his name to the contract in big block letters.
Maxed Out should be required viewing for young adults. People often complain about the lack of financial education in our schools — this film would be enlightening for many high school and college students. After watching it several times, I’m more convinced than ever to avoid credit. When I’ve paid off my debt a year from now, I will carry my mortgage. That’s it. I’ll even try to purchase my next vehicle with cash.