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New Black Slavery For The New Millennium

Apr 7th, 2002 by James Breedlove | 0

Sound the alarm.  Dial 911.  Call out the national guard.  But especially hold tight to your wallets.  It seems that corporate predators have not only discovered but perfected a diverse system of  “fringe banks” to legitimately squeeze huge profits out of poor consumers; with special focus on Blacks and other minorities.

These “fringe banks” consist of an integrated network of businesses like:  finance companies making small loans at rates of 30 – 300 percent, pawnshops lending at 200 percent, check-cashing outlets charging 3-6 percent fees, mortgage companies focusing on high interest-high fee loans, home repair predatory lending, used car lenders that entice borrowers with 25 percent loans, rent-to-own stores with monthly rates that equate to 100-300 percent interest, and sham trade schools that do little educating but leave students holding big loans.

Most of these fringe businesses are bank-rolled by big names such as Ford, Citibank, NationsBank, American Express, Bank of America, Western Union, and Chrysler.  This shadow economy is raking in dollars at a dizzying pace by targeting people on the bottom rung of the economic ladder that are shut out by banks and conventional financial institutions. These businesses that bottom feed on the poverty economy have developed a market estimated at $300 billion a year and growing.

Typically, conventional banks and S&Ls publicize that poor people are bad risks.  While they shun low-income consumers of all races, Blacks are more likely to be targets of redlining because of subconscious bias and historical misperceptions. Banks will  close a branch in a neighborhood because of the so called risks but then provide the financing for the check cashers and pawn brokers who service the same customers that the bank would not service.

But what this “fringe financing” scheme amounts to is a method of squeezing 240 percent loans through pawnbrokers, 2,000 percent loans for a quick payday loan from check-cashing outlets, and 25 percent loans on second mortgages.  Something the banks and financiers can not do while operating under federal and state regulations.

The lack of conventional financial institutions in low-income neighborhoods is an obvious example of how poor minority consumers are locked out of access to mainstream financing. The impact on communities goes far beyond individuals being squeezed by higher prices and high interest rates.  Whole communities are decaying because discrimination and exploitation have stifled economic growth.

A U.S. News and World Report found that a typical white neighborhood averages 33 bank branches per 100,000 population while a minority neighborhood averages 11 per 100,000. Neighborhoods suffer when homeowners lose their homes to rip-off mortgage companies.  As banks and legitimate financial institutions leave minority communities they are replaced by pawnshops, rent-to-own stores, used car lots, and liquor stores.

These “fringe financiers” employ sophisticated marketing techniques to hook people accustomed to being snubbed by regular banks and financial sources. History has revealed in no uncertain terms what the chains of slavery can do to a people.  But even though the iron chains have been removed from Black wrists and ankles, the 21st Century chains of easy credit keep Blacks in bondage.

Consider the new couple, just married, with a potential for a grand future.  Even before they  complete the probation period on their new jobs, they succumb to the skillful tongue of Madison Avenue encouraging them to acquire new cars, the best of clothes, the finest apartment with the latest decorator designed furnishings.  And for what?  To experience the short lived envy of their friends.  They sign on the dotted line, volunteering to be shackled to six years of easy payments.

What they don’t realize is the cars, clothes, and furniture that requires 6 years of payments wears out in three years.  But that sly smiling massa, Mr. Easy Credit, is right there saying “turn it in for some more and we’ll just add on to the back of your bill while keeping  the same monthly payments”.

The couple naively resigns not knowing they are becoming slaves to Easy Credit.  They believe they can stop whenever they want to–but can they?  Psychologists know that when you get used to something it’s almost impossible to give it up.   Once the couple is hooked, the credit shysters have a life long customer.  Is this easy credit any different than the share cropper scheme used to keep freed slaves tied to the same farms on which they slaved?

History is full of great lessons if we would only learn them.

James W. Breedlove

Comments or opinions may be sent to the writer at jaydubub@swbell.net

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