The gods of irony must be alive and well at American Banker. It's hard to think of a better explanation for the April 30 tirade against "deadbeats" from Andrew Kahr — whose approach to the credit business was described this way in a front-page San Francisco Chronicle news story in 2002:
"In lending to the kinds of high-risk customers Providian specialized in, Kahr wrote, the 'problem is to squeeze out enough revenue and get customers to sit still for the squeeze' ... The Providian documents, including 10 Kahr memos plus strategy and training materials dating from the late 1990s, portray a company bent on misleading and manipulating its customers in order to soak as much money from them as possible."
In that context, it may not be worth paying too much attention to Kahr's scattershot collection of misleading stereotypes and right-wing talking points. Still, it's worth pointing out a few well-documented facts:
- Many, probably most, mortgage defaults were not by "deadbeats." Research by the Federal Reserve Bank of San Francisco shows that large numbers of Americans who qualified for prime loans were instead sold high-cost subprime loans that greatly increased the risk of default — and these victims were disproportionately African American and Latino. Blacks and Latinos with outstanding FICO scores were nearly five times as likely to receive subprime loans as white borrowers with comparable scores.
- Yes, poor people do pay taxes. As a proportion of their income, they often pay more in taxes than many affluent Americans, including some presidential candidates.
- Predatory practices aimed at low-income borrowers — sometimes perpetrated by the mortgage brokers Kahr bizarrely claims are "pretty close to being consumers" — have been thoroughly documented, and are a major reason CFPB was created.
One can only hope American Banker readers are savvy enough not to take someone like Kahr seriously.
Media Relations Coordinator
The Greenlining Institute