Your Debt, But Not All Your Fault
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 sync with its impact on people's lives," writes Tamara Draut in the foreword to the compelling "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 co-published the book with the New Press. The book has a mission: to slam the folks who have pushed credit on American households for decades with little accountability for what it could do to borrowers or our nation.
Given current economic conditions, "Up to Our Eyeballs" is a timely choice as the May selection for the Color of Money Book Club. The title alone will start a debate that could go on for hours.
This well-researched book provides a historical perspective on how we got into our current financial jam. And I say "we" because all of us are feeling the ramifications of a heavily leveraged population.
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 ultimately your ability to sell or refinance your home.
"Up to Our Eyeballs" was written by José García, James Lardner and Cindy Zeldin, all researchers who work on issues of economic opportunity and security.
Lardner is a senior fellow at Demos and editor of Inequality.org. Garcia is a senior research and policy associate at Demos. Zeldin formerly worked in federal affairs for Demos and is pursuing a doctorate in health policy at Emory University.
Rather than launch an attack on consumers, who admittedly signed up for their debt burden, the book looks at the government policies and business practices that have allowed many financial institutions to help people dig their own debt grave.
Garcia, Lardner and Zeldin 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 of the stories in the book are heart-wrenching and all too familiar, such as the 70-year-old retiree who was persuaded to refinance her home into an adjustable-rate mortgage that started at $832 a month and eventually jumped to more than $1,400. The mortgage was more than the woman's monthly income.