New book takes shady lenders to task for their part in nation's debt trouble
She hooked me with the word "debt."
"The word alone causes people's blood pressure to rise. It's a hard-sounding word, phonetically in synch with its impact on people's lives," writes Tamara Draut in the foreword to "Up to Our Eyeballs: How Shady Lenders and Failed Economic Policies Are Drowning Americans in Debt."
Draut is director of the Economic Opportunity Program at the research and advocacy organization Demos, which copublished the book. "Up to Our Eyeballs" has a mission: to slam the folks who have pushed credit on US households for decades with little accountability for what it could do to borrowers or our nation.
Given current conditions, "Up to Our Eyeballs" is a timely choice as the May selection for the Color of Money Book Club. This book provides a historical perspective on how we got into our current jam.
For example, you may be able to handle your monthly mortgage payment. But if your neighbors can't, their eventual foreclosure may affect your property values and your ability to sell or refinance.
"Up to Our Eyeballs" was written by Jose Garcia, James Lardner, and Cindy Zeldin, all researchers who work on issues of economic opportunity and security.
The book looks at the government policies and business practices that have allowed many financial institutions to help people dig their own debt grave. The authors don't just point a finger at lenders, they poke them in the eye.
"Set free by two decades of deregulation, today's creditors have cooked up products that are so complicated, deceptive, and trap-laden that even the most sophisticated borrowers can't tell a good loan from a bad one," the authors write.
Some stories are heart-wrenching and all too familiar, such as the 70-year-old retiree who was persuaded to refinance into an adjustable-rate mortgage that grew to more than the woman's monthly income.
Seriously, I want to throw the person who made that loan in jail.
Relaxed lending standards have helped more families become homeowners and more people to attend college. But lenders and regulators have failed to keep the debt spiral from getting out of control.
Too often, too much blame falls on consumers, who are depicted largely as materialistic spendthrifts. That's only part of the problem, the authors say.
Consumers aren't just buying big-screen televisions with all that debt. They are using it to get a college education, pay for medical services, or buy groceries.
"Americans are borrowing more because incomes have failed to keep up with the cost of healthcare, housing, and other basic needs," the authors write.
The book is not just a rant. It also contains practical solutions. But what makes it worth the read is how angry it should make you. And ticked-off people tend to help facilitate change.
I'll have a live discussion with the authors on May 22 at noon at www.washingtonpost.com.
Michelle Singletary is a columnist for The Washington Post. She can be reached at singletarym@washpost.com.
