FOR IMMEDIATE RELEASE
APRIL 15, 2008
Contact:
Timothy Rusch or Gennady Kolker, Demos
Tel: (212) 633-1405
Email: press@demos.org
NEW BOOK EXPLORES THE HIDDEN STORY BEHIND SKY-ROCKETING DEBT IN AMERICA
Up to Our Eyeballs: How Shady Lenders and Failed Economic Policies are Drowning Americans in Debt
By Jose Garcia, James Lardner, and Cindy Zeldin
http://www.uptooureyeballs.com
"A modern classic of financial reporting on the corrupt alliance between predatory lenders and free-market zealots in government&A well timed and lively guide to the wreckage created by financial deregulation and its destructive effect on both consumers and the broader economy."
--Robert Kuttner, co-editor of the The American Prospect and author of The Squandering of America
New York--Amid sky-rocketing credit card debt, depleted home equity, and historically low savings rates, America's households are facing a debt crisis, and many families are on the brink of financial collapse. A new book tells their stories, and describes how failures of politics and policy allowed the financial industry to run amok. Up to Our Eyeballs: How Shady Lenders and Failed Economic Policies are Drowning Americans in Debt, (Demos/The New Press; April 2008) is a lively and timely exploration of the causes and consequences of the explosive rise in consumer debt, and of the fast-spreading financial and economic crisis.
In an increasingly volatile American economy, where a decline in work-related benefits like health insurance and pensions has accompanied a rising cost of living and increased job instability, household debt has become the "de facto safety net." Ordinary people are borrowing to pay for the basics--transportation, energy, health care, higher education and housing. A typical two-earner family today spends about 80 percent more on housing, 74 percent more on health insurance, and 42 percent more on transportation than did a typical one-earner family in the early 1970's.
Up to Our Eyeballs illuminates the larger political and economic forces at work in today's financial crisis. In an era of deregulation, lax and negligent oversight and accountability of lenders has allowed the lending industry to write their own rules and aggressively market a succession of new loan products that are rigged to put people into near-perpetual debt. In 2005, hidden fees and penalties generated nearly $14.8 billion dollars in revenue for credit card companies' comprising nearly one-half of their annual profits.
While regulators and Congress looked the other way, fringe lenders, aggressive debt collectors, fraudulent debt counselors, and greedy Wall Street investors appeared on the scene. In 2005 alone, The Federal Trade Commission received more complaints about debt collectors than any other industry. Meanwhile, Wall Street invested $1.6 billion into the industry, often creating risky financial schemes that have proven disastrous for both debt-trodden consumers and the economy at large.
Up to Our Eyeballs is a critical look at how the financial industry became the aggressive and hyper-profitable giant it is today, and offers public policy and industry-reform solutions that will be of real relief to struggling households.
Woven together with insightful analysis and practical solutions, Up to Our Eyeballs offers both a recipe and prescription for the economic malaise facing today's average families. As Publisher's Weekly put it: "...persuasive and accessible... [Up to Our Eyeballs] offers an illuminating history of the financial-services industry and its political influence, as well as a strong argument in favor of reforms that protect consumers and curb abusive lending."
Key Debt Statistics:
Between 1989 and 2006, the nation's total credit card charges increased from about $69 billion a year to more than $1.8 trillion, and the average amount owed by households has increased by a staggering 88%--from $2,768 in 1989 to $5,219 in 2004.
Between 2001 and 2006, Americans cashed out an estimated $1.2 trillion in home equity. So while more people "owned" homes, most people owned less of their homes. (Total homeowner equity has been on a downward slide for decades, falling from 68.3 percent in 1973 to 55 percent as of 2004.)
In 2005, Demos and the Center for Responsible Lending surveyed some 1,150 low- and middle-income households with credit card debt. Nearly a third said they had used credit cards to pay medical expenses. Those households were also notable for having substantially higher levels of credit card debt--an average of $11,623 versus $7,964 for households without medical debt. Forty-four percent of medically indebted families had credit card debt of more than $10,000.About the Authors:
Jose Garcia is a Senior Research and Policy Associate for the Economic Opportunity Program at Demos, with over 10 years of experience working on Civil Rights, Census advocacy and Socio Demographic analysis.
James Lardner is Senior Fellow at Demos. His writing has appeared in the New York Review of Books, The New Yorker, and The Washington Post, among other publications.
Cindy Zeldin was the Federal Affairs Coordinator for the Economic Opportunity Program at Demos with several years of public policy experience at both the state and national levels. Her work on medical debt was covered by NBC Nightly News, The New York Times, Congressional Quarterly, and other publications.
Members of the Press: To schedule an interview with the authors, or obtain a review copy of "Up to Our Eyeballs" please contact Timothy Rusch at trusch@demos.org, (212) 389-1407 or Gennady Kolker at gkolker@demos.org, (212) 389-1408.
For research on household debt and industry practices, please visit www.demos.org.
###
