Money and banking the effect on the poor

Essay by jmoneylawUniversity, Bachelor'sA+, May 2006

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The exploitation of America's poor

The exploitation of the poor and elderly is an age-old social problem that is being taken to disturbing extremes by some of America's biggest conglomerate companies. In the article, "Fringe banks exploit the poor" written by Michael Hudson, Hudson reveals some of the United States larger corporations Ford, ITT Corp, Fleet financial services, Citicorp, And American Express have been the benefactors of aggressive lending practices through their subsidiary companies. Furthermore, these tactics have targeted the elderly, minority, immigrants, and the financially less fortunate with gargantuan interest rates and unneeded refinancing of home mortgages. Hudson informs us that all one has to do is take a drive through an inner city or a rural community and take a look at the pawn shops and large amounts of check cashing firms that charge upwards of 300% interest on a $150 loan to see it first hand.

Hudson asserts that if a white person and black person with the same credit score walk into a bank or S&L for a loan, the chances are the white individual will get the loan while the black individual will only get discouraged.

Why are these Fringe banks as Hudson calls them so lucrative that fortune 500 companies would be willing to lose lawsuits of upwards of $280 million as Fleet financial did? Two reasons of many reasons are the U.S.'s falling real wage, and increased legal and illegal immigration, which have lead to a shrinking middle class and increasing poverty-stricken class. Hudson questions the scruples of companies like Rent a center and cash America, Hudson informs us that firms like these engage in contracts were they know that the person has a 75-80 chance of default, meaning rent a center reposes their good and the customer loses all of their...