“Taking our Country Back” … Before the Notion of Justice for All

Out of sight and out of mind by too many Americans are our fellow citizens who often find themselves on the other side of a legal system that our school children proclaim affords “justice and liberty for all”.  The government that Lincoln lifted up after a major battle to preserve the union at Gettysburg is not so much these day one that is “of, by and for the people” as much as it seems to becoming one almost exclusively for those  who have prioritized capital accumulation above common decency.

Debtor’s prison is something out of our history that was declared unconstitutional in the early part of the 19th century.  But there is evidence it is making its return in today’s tough economic times.  A report in the Wall Street Journal shows that some courts are bending the laws that prohibit debtors from being jailed

… the number of borrowers threatened with arrest … has surged since the financial crisis began.  The backlash is a reaction to sloppy, incomplete or even false documentation that can result in borrowers having no idea before being locked up that they were sued to collect an outstanding debt.

More than a third of all U.S. states allow borrowers who can’t or won’t pay to be jailed. Judges have signed off on more than 5,000 such warrants since the start of 2010 in nine counties with a total population of 13.6 million people …    SOURCE

 

The fact that some people can be thrown in prison today for failure to repay what they borrowed seems to be lost on some in our system of justice when it comes to wealthy financiers.  In his now popular outing of Wall Street and their abuses that caused our financial collapse in 2008, Matt Taibbi points out an obvious fact that seems to go unnoticed by too many who focus on “government overreach” and a “liberal, socialist agenda”

Nobody goes to jail. This is the mantra of the financial-crisis era, one that saw virtually every major bank and financial company on Wall Street embroiled in obscene criminal scandals that impoverished millions and collectively destroyed hundreds of billions, in fact, trillions of dollars of the world’s wealth — and nobody went to jail. Nobody, that is, except Bernie Madoff, a flamboyant and pathological celebrity con artist, whose victims happened to be other rich and famous people.

The rest of them, all of them, got off. Not a single executive who ran the companies that cooked up and cashed in on the phony financial boom — an industrywide scam that involved the mass sale of mismarked, fraudulent mortgage-backed securities — has ever been convicted.   SOURCE

Many of those executives worked for big banks like Citibank and Bank of America who were just two of those institutions “too big to fail” and that had to be saved by taxpayer bailouts after misappropriating the money they held for millions of savers and investors.  These are also some of the culprits who are now engaged in debt collection practices that wound up throwing some of their victims in jail for their failure to come up with their own bailout to cover the losses.

Matt Stoller, the former Senior Policy Advisor to Rep. Alan Grayson and a fellow at the Roosevelt Institute tells us in a post of his over at naked capitalism that though consumer debt is declining, delinquency rates with those who do remain in debt are increasing.

… ten years ago, one in fourteen Americans were pursued by debt collectors.  Today it’s one in seven.  I suspect this number will keep going up.  And though debt collection is a highly competitive field, it’s also a growth industry.


Debt collectors have been known to threaten borrowers and they do so fearlessly because there is no consequential oversight to punish these people who abuse laws that forbid them to intimidate debtors.  Many victims of this practice feel helpless in dealing with such abuse.

Back in 2007 ABC News did some investigative reporting on this subject and “found [that] many unscrupulous collectors routinely ignored the law.”   Taped conversations validated that abusive phone calls from collectors were being made late at night, using abusive language and threatening “to have people fired from work or thrown in jail.”

Debt collection has become a growth industry because of the vast numbers who found themselves jobless after they had already made large purchases and maxed out their credit cards and lines of credit.  This is a deplorable state many people have often put themselves in but the boom in numbers following the recession where more became jobless and their prospects for finding work less likely has created a need for lenders to “farm out” their debt collecting services.   The misfortunes of millions seems to have generated “job opportunities” for a certain breed within society

A large sector of this outstanding debt is property taxes.  People who have unpaid property taxes are likely targets for these predators in the debt collection field.  If you have lost your job then what financial resources you have at your disposal are more likely going to the immediate needs of food, gasoline, clothing and utilities.  Property taxes take a back seat under these tough economic conditions and this is where our modern day publicani swoop in for the kill.

[B]ig banks and hedge funds in the U.S. have been quietly collecting taxes on hundreds of thousands of homes. The process, called “tax farming,” is simple: A company goes to a local government and reimburses it for taxes that citizens aren’t paying. In return, the company gets to act like an old-fashioned tax thug — the kind rabbis condemn in the Bible — charging up to 18 percent interest and thousands of dollars in legal fees, simply because it can. As the District of Columbia attorney general told the HuffPost Investigative Fund, there’s “no oversight at all.”   SOURCE

As if this practice aimed at many disenfranchised citizens wasn’t bad enough, there is yet another category of people who are victims of debt collectors where the legal system itself has created the conditions that provide income opportunities for the mercenary debt collection field.

The Brennan Center for Justice released a report in October, 2010 that found many states were “imposing new and often onerous ‘user fees’ on individuals with criminal convictions.”  The user fees were financial obligations “imposed not for any traditional criminal justice purpose such as punishment, deterrence, or rehabilitation but rather to fund tight state budgets.” (emphasis mine)

So it seems that such actions necessary to collect revenue lost to the state through recent spending cuts, cutting personal  and corporate taxes, especially on the wealthiest, and eliminating tax breaks for profitable corporations has given rise to such practices that go after some of the most vulnerable amongst us.  Our legal system it appears is becoming one that reflects more the feudal period of human history than the republican form of government we established for ourselves after severing our allegiance with the British monarchy.

The Brennan Center for Justice report found that:

Across the board, … states are introducing new user fees, raising the dollar amounts of existing fees, and intensifying the collection of fees and other forms of criminal justice debt such as fines and restitution. But in the rush to collect, made all the more intense by the fiscal crises in many states, no one is considering the ways in which the resulting debt can undermine reentry prospects, pave the way back to prison or jail, and result in yet more costs to the public.  SOURCE

Man’s inhumanity to man has always been an issue at some level throughout human history.  We tend to view it occurring on a large scale in those countries where despots and ruthless oligarchies rule.  Our own civilization of course has been guilty of this failure by those who supported the institution of slavery at one time in our history.  But even in today’s society it appears there is still an oppressive, inhumane class of people who find ways to insure that the very wealthy are not encumbered from accumulating wealth while those of  more common means are inhibited to rise above their struggling financial circumstances.

Extending credit in our economy is vital and enables many to achieve a comfortable lifestyle, not only for themselves but for their posterity.  Yet there are risks involved with extending credit and those who do so too easily invite those who would abuse and overuse it.  Using the court system in this country to collect what perhaps should not have been made available in the first place is an abuse of our justice system.  Furthermore, it is tyrannical to devise ways within our system of jurisprudence to lay the burden of financing needed infrastructure and vital public services on the backs of those who can least afford it, giving a pass instead to those few people who hold the vast amount of the nation’s capital.

“Is it not outrageous that society should treat with such rigid precision those of its members who were most poorly endowed in the distribution or wealth that chance had made, and who were, therefore, most worthy of indulgence?”  – Victor Hugo

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15 responses to ““Taking our Country Back” … Before the Notion of Justice for All

  1. This is a most disturbing post. Here’s an example of twisted laws that exist today:

    In Pennsylvania, which is a “recourse state” for foreclosures, a foreclosed upon homeowner may not only lose the home and all the equity he or she had invested in it. In addition to losing those thousands, the homeowner may be sued to pay any “deficiency.” The deficiency is the difference of the mortgage amount and the market value of the home. So, if a house is taken back by the mortgage company, that company can sue to get the amount that the house was underwater. Historically, the mortgage companies haven’t come after people much, but they are doing it more and more. Why should the homeowner bear all of the burden of the poor housing market? Shouldn’t that deficiency be the problem of the mortgage company, since they now own the home, and they were the party that took the risk of lending to the consumer? Hasn’t the consumer lost enough already?

    • Egad Joan! This is a sad state of affairs but seems to follow the path where the merchants of Wall Street have rigged the system in their favor.

    • Actually Dr. Chuq, not paying our taxes is a violation of the Constitution so this is on a different plain than debts incurred through the private sector. One of the responsibilities we have as citizens is to pay our fair share of taxes. The problem however has become that “fair share” is not the operative model anymore.

  2. You are very thorough and I do thank you for that. The economic equality in this country pales with the judicial inequality that exists. Sometimes I wonder just how much we have progressed from the days of serfdom. It seems not so much some times.

    • “Sometimes I wonder just how much we have progressed from the days of serfdom”

      Actually we progressed pretty well Sherry once we came out out of the Gilded Age era with progressive reforms in labor, women’s rights and income distribution thanks to a progressive tax. We are now regressing however as pre-Gilded Age realties begin to materialize.

  3. Nothing has changed. Everything is tipped in favor of the banks and mortgage companies. There is no American Dream anymore. I’m sorry that sounds so negative, but I have come to the point that I don’t see any change coming down the path.

  4. The thought of a debtor’s prison disgusts me. Especially when the big bankers who tanked the economy are the ones who should be locked up (and aren’t).

    😡

  5. This is a blazing example of class warfare. It is becoming more and more apparent there are 2 sets of laws…one for the 1% that is nonexistant, and then another set of laws for the rest of us.

    Very disturbing.

  6. Pingback: If a Highway Robber Has to Go to Jail, Why Does the Elite on Wall Street Get to Stay Home? - Pilant's Business Ethics | Pilant's Business Ethics·

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