5 Ways Corporate Scavengers Are Making Big Money Off Our Economic Pain
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The ruins of the American economy represent a massive crime scene. Wall Street built a house of cards on fraud and misrepresentation, it crashed, and Americans' aggregate net worth is now more than $12 trillion off of its peak. Unemployment remains sky-high and the prospects for a robust recovery anytime soon are dim.
But as Naomi Klein artfully laid out in her book, The Shock Doctrine , a catastrophe for you and I usually presents an opportunity for the Titans of capital. And the grievous economic crisis affecting so many American families is no exception -- big business has found a number of ways to profit, directly, from Main Street's economic pain. Like vultures descending on a rotting corpse, they've come up with a variety of innovative methods to pull the last scraps of meat off the bones of America's middle-class.
Here are five ways these scavengers are making coin from our economic devastation.
When Americans Go Hungry, JPMorgan Profits
It's been widely reported that 43 million Americans now require help meeting their basic nutritional needs. Less well known is that JPMorgan is the largest servicer of food-stamps in the U.S., offering benefit cards in 26 states. As Mary Bottari wrote for AlterNet, “The firm is paid per customer. This means that when the number of food stamp recipients goes up, so do JPMorgan profits.”
Perhaps that doesn't get your blood boiling. If not, Bottari adds: “JPMorgan is taking its responsibility to keep the U.S. unemployment rate high by offshoring the servicing of many of these contracts to India, according to ABC News.” Yes, they're profiting off of our pain, and offshoring the work required to do so.
JPMorgan was the recipient of $25 billion worth of taxpayer bailout, and its CEO, Jamie Dimon, took home $17 million in compensation last year – the biggest windfall on the Street.
Good Old-Fashioned Biblical Usury
When First Premier Bank first offered a credit card with a top interest rate of 79.9 percent, it evoked outrage. So they lowered it…to 59.9 percent. And, as Michael Snyder at the Economic Collapse noted, “Not only are the interest rates on those cards super high, but they also charge a whole bunch of fees on those cards as well.”
- $45 processing fee to open the account
- annual fee of $30 for the first year
- $45 fee for every subsequent year
- monthly service fee of $6.25
Some argue that anyone who would sign onto a deal like that must be " stupid." But these are cards pitched to those with bad credit – an ever larger group thanks to the recession. It's easy to scoff at such rubes until one realizes that the lion's share of these “stupid” people have no choice but to take on even very costly debt if they want to eat or pay the rent. 6.2 million Americans have been out of a job for 27 or more weeks; 3.9 million saw their benefits run out entirely last year.
CNN reported that 700,000 people have signed up for the card, and between 200,000 and 300,000 new applications are coming in each month. That's a lot of bread for First Premier.
Dunning the Desperate for Fun and Profit
One sector in this moribund economy is doing quite well: collection agencies. But they're not your father's collection agencies --the business is different today.
Across the country, savvy investors are buying up the debts of those who have run into difficulties for just pennies on the dollar. They then turn the screws on borrowers in order to get a return on their investments. As the Sarasota Post-Star reported, “Debt collectors often use threats and insults to intimidate consumers. But in recent years, collection has become more aggressive, more litigious and more prone to fraud.”