In the pursuit of prosperity, we have 'Maxed Out'

The American dream of easy credit has become a nightmare, this writer insists.

from the April 3, 2007 edition

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Mothers of two college students share heartbreaking stories of their children's suicide in the face of insurmountable credit card debts. Credit-card companies pay colleges and universities millions of dollars to gain access to vulnerable students.

For Scurlock, debt is more than a theoretical subject. In college he squandered a $250,000 inheritance from his grandfather in a failed fast-food venture. He experienced the terror of harassing calls from a debt collector named "Mr. Johnson." Calling the collections business the "underbelly" of the financial industry, Scurlock describes its nearly 3 million employees as masters of intimidation.

During the same period, he found himself entwined in the netherworld of "alternative banking" – pawnshops – when he pawned a watch his father had given him. "The largest pawnshop chain and the largest check-cashing outfit in the US are both largely financed by Wells Fargo, the fourth largest bank in America," he states. Ironically, pawnshops are more heavily regulated than banks.

Credit-card companies derisively call those who pay their bills on time "freeloaders" and "deadbeats." Their prized customers are the "revolvers" who pay heavy interest and fees. By one estimate, these companies collect $20 billion a year in fees that didn't exist two decades ago.

This is not just an American problem, Scurlock finds. And he offers a sober warning: "Sometime, maybe sometime soon, this house of cards is going to collapse." To prevent that he calls for nothing less than a revolution. As one solution, he urges Americans to stop believing "That doing without is immoral.... That wealth is spending, not saving, and that there will always be more credit coming, as long as one remains on the preferred customer list."

Smartly written and by turns funny, irreverent, serious, and angry, Scurlock's book is well timed, coming just as the sub-prime lending industry is collapsing and foreclosures are mounting. His documentary of the same title is playing in theaters nationwide.

Not all financial experts share Scurlock's pessimism about an indebted society. But he builds a persuasive case that deserves serious attention. As he cautions, the American dream can be a mirage.

• Marilyn Gardner is a Monitor staff writer.

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