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The United States of Debt

Jen Chien
Hello My Debt Is ...

Upon entering the Eastside Arts Alliance in East Oakland, it’s clear that this a special kind of conference. On the welcome table is a stack of name tag stickers, the kind that usually read “Hello, My Name Is…” But these stickers read: “Hello, My DEBT Is…”

These badges are stuck onto the shirts of many of the 70-some people here, filled in with dollar amounts or words like “terrifying.” They’re participating in something called a Debtors' Assembly. It’s organized by Strike Debt Bay Area, the local chapter of a larger movement that came out of Occupy Wall Street.

Economic anthropologist Hannah Appel is one of the main organizers. She says there were a lot of seemingly disparate issues coming together under the Occupy banner that started to coalesce. “There were groups organizing around student debt. There were, you know, the health care for the 99%,” she says. “Even though they seem separate, the effect of all of these is the same: the effect is debt.”

One reason it's been hard to unite around this issue is that people often feel ashamed and isolated when it comes to their debt -- even though it’s something that most people have in common. To make this point, the Oakland’s Debtors' Assembly starts with an exercise where people close their eyes, and then stand up if they have certain kinds of debt. By the time the exercise is over and people open their eyes, they can see that almost every single person in the room is on their feet. “All of us feel this pain of this debt,” the exercise facilitator says. “We are not alone by ourselves, and we are not ‘a loan’ to these banks.”

After everyone sits back down, there’s a kind of “big picture” Power Point presentation to explain different systems of debt, and debt statistics from around the country. The presenter is Claire Haas, a staff organizer with ACCE, the Association of Californians for Community Empowerment. She got involved with Strike Debt through her work helping homeowners facing foreclosure. Even though her organization focuses on individual people in economic trouble, she says if you go up the financial food chain, you see how debt can cripple entire communities.

She talks about budget cuts to schools, libraries, public transit, and other services that people depend on every day. “At the same time, we see millions of dollars every year being paid out to Wall Street by our city governments,” she says. “They've given them bad deals. And we shouldn't even be talking about cutting another penny from our communities until we actually get the money back that the banks stole from us.”

When Haas talks about banks stealing and giving bad deals, she has specific examples in mind. GE, Wells Fargo, and JP Morgan Chase have all officially acknowledged illegal activities by now-former employees, after being sued by the federal government. They've already paid billions of dollars in restitution and penalties. A growing number of these cases are now being brought to the courts in the quest to find answers to what -- or who -- caused the financial crisis. The problem, Haas says, is that these cases can get pretty confusing. “We talk about LIBOR, we talk about interest rate swaps, letters of credit, et cetera. And most of us say: ‘I have no idea what that is’.”

But she says it’s not necessary to know the finer details of the LIBOR scandal, for example, to understand how it impacts regular people. So with some visual aids—including an image from The Daily Show, of lion with a boar’s head—Haas breaks down the  scandal for the assembly.

LIBOR is an acronym for the London Interbank Offering Rate, which is the interest rate at which the major banks decide to trade with each other. It’s decided every day in London, but this rate actually affects trillions of dollars worth of financial products and services worldwide, such as mortgages, pensions, student loans, car loans, and credit cards.

Now for the scandal: for at least the past five years, several big international banks had been manipulating LIBOR, and then lying about it -- claiming artificially lower or higher rates to give themselves bigger profits. This means that millions of people were paying more interest than they should have. Many city governments were earning less from their investments than they should have -- which means having less money to spend on things like schools, police, and hospitals.

Haas tells the assembly that this is unprecedented. “This is unlike any of the other kinds of debt stuff,” she says. “Because they’ve admitted they were wrong. They’ve admitted that they cheated, they broke the law, what they did is illegal. And, we can sue them for it.”

Organizer Hannah Appel says that once people are armed with this kind of knowledge, they can take action. She says that once people feel empowered and come together, they can do things like renegotiate interest rates or default en masse on debts.

While the idea of mass defaulting on debts may strike some people as irresponsible, Appel says it’s something that banks themselves are already doing. “Banks know that they can renege on contracts or renegotiate contracts or renegotiate interest rates. But we as citizens have not sort of taken that power into our own hands, or realize that it can be ours,” she says.

The Strike Debt Movement is trying to make that happen. Last year, Strike Debt New York came up with a creative strategy to erase people’s debt. They called it the Rolling Jubilee. Basically, the organization became a debt collector. Debt collectors buy unpaid, or “distressed” debt, at a big discount, and then try to make a profit by going after the original amount.

The Rolling Jubilee raised money through donations, which they used to buy distressed medical debt for pennies on the dollar. Instead of collecting on that debt, they simply forgave it. Strike Debt recently announced they have successfully abolished over 1 million dollars worth of medical debt belonging to about a thousand people whom they chose at random.

At the end of the Debtors' Assembly people break out into smaller groups to share ideas, tips and personal experiences. Many of the stories sound like they could happen to anybody: graduating from college with a student loan and no job, getting into a car wreck with no insurance, owing more on a house than what it’s worth. When the participants walked into the room a few hours ago, they may have felt their debt issues were insurmountable. But by the end, many are smiling, or listening intently to each other’s stories. Although their problems may not all be solved today, at least they know they’re not “a loan.”

This story originally aired on April 24, 2013.