October 10, 2017 • 46 mins
Everyone thought it was the pits that banks were bailed out by taxpayers in 2008 while those same people weren't given any relief by the banks. So some Occupy Wall Street members did something about it.
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Speaker 1 (00:00):
Attention celebrity listeners, I hope pick out your attention. Hey everyone,
this is Chuck And as some of you have heard,
I have announced that I have a new solo podcast
coming out in November called Movie Crush. UH. The show
where I interview your favorite people about their favorite movie.
And that's along and short of it's really cool. I've
(00:21):
had a bunch of guests in the studio uh and
just had a nice chat about movie fandom in general
and what their favorite movie is and why. And I
need more guests. So if you are a stealthy celebrity listener,
if you're an actor, or a writer or a producer,
uh director, if you're a musician, if you are a
(00:44):
book author. I've had all kinds of people in the studio,
and that's kind of the point, is to hear from
from neat folks of all walks of life. If you
were out there and you want to be on Movie Crush,
I would love, love, love to have you. Um. If
you're in Atlanta or going through it Anna with a
movie project, that's great. If not, we had partner studios
in l A and New York, UH, and we can
(01:05):
work it out. If you live in uh a fly
over state even let's say so, hit me up to
send me an email to movie Crush at how stuff
works dot com and put in the subject line movie
Crush guest, and I'll know it's you and I appreciate it.
It's a lot of fun, trust me and um, here's
(01:27):
two recording podcast together. Thanks. Welcome to Stuff you Should
Know from house stuff Works dot com. Hey, and welcome
to the podcast. I'm Josh Clark, and there's Charles W. Bryant.
There's Jerry over there, and this is stuff you should know.
(01:52):
Come on aboard the Rolling Jubilee guests, not to be
confused with the Jamboree, which is what the boy Scouts do. Yeah,
Rolling Jubilee sounds hope one, and for a lot of
people it is. Yeah, unless you're like a Wall Street
shark who hates seeing lower income people get out from
under debt miraculously. It's a great time for everybody. I
(02:13):
honestly didn't know much about this thing, so I didn't either. Yeah,
I actually I saw I Um, I saw it in
the sidebar while I was looking for an article to do. Um,
and I was like, I have no idea what that is,
So let me check it out, and it was just
one of those hidden gems, if you will. Should we
talk Let's talk about debt, baby, Yeah, And I want
(02:35):
to say, like this is largely about the rolling jubilee,
but we're gonna scratch the surface of the consumer debt
secondary market. I would love to do one on just
debt and debt collection and just this this the the
whole industry and the I guess, the whole massive ball
of wax on the business of debt. Yeah, and like
(02:58):
you know, how in what case is it's actually good
to have? And like how it kind of powers the
economy all that stuff. Did we ever do one on bankruptcy? No?
All right, well we should put one of those in
there too. Yeah. We got a lot to do, lest
we have a lot left to do, more work to
be done, all right, So let's in this case we're
talking about consumer debt. AH in the United States, it
(03:20):
is a um an astounding number and problem. Is that
fair to say? I would say that's yes, I think
that might even be an understatement. Although so as of
this when this article was written, which appears to be
about December of two thousand twelve, it was a bigger
(03:41):
problem than that. It is now from what I'm seeing. Uh,
well I have an higher number now than then. Okay,
go ahead. Well the number I see, well, the original
number from two thousand twelve was eleven point four four
trillion trill trillion. Number I got today was twelve point
seven three trillion. I saw twelve point two nine trillion,
(04:06):
which is still I mean, that's years. Is almost a
trillion dollars more in four years. I'm sure those are.
So that's two thousands seventeen numbers. Yeah, okay, well that
would explain. Mine was Q two of two thousand sixteen.
So it's the distant past, a trillion dollar increase in
five years. That's all of the household debt, credit cards, mortgages,
(04:29):
UM car loans, uh old, medical bills, all that student
loans a big part of it. Yeah, that's a big
one too, that all households have in the United States. Right. Yes,
as of two thousand fifteen, I'm hats off to you, man,
I could not find two thousand seventeen numbers. Yeah. So
here's the thing, debt. If you talk to someone who
(04:50):
knows finance, they will say, like, that is not the
worst thing in the world. It's not like being in debt.
It's got to be the right kind of debt, Like
owing a ton of money to high interest credit cards
is not good by any measure. Um, Emily and I
got smart when we Uh, I think I've told the
story when we bought our house, we had a bunch
(05:11):
of stupid credit card debt and this was she's twelve
or so years ago. And what we did, because they
were given away money back then foolishly uh. And this
could have bought us in the butt, I guess if
we hadn't have, you know, gotten jobs and been able
to afford payments. But we rolled all that credit card
debt into our homeland. So we literally paid off every
(05:34):
cent of it and told each other We're never gonna
go into credit card debt again. And since that day,
and it was tough, we have never not paid off
a credit card in full at the end of every month. Yeah.
We we um almost always pay them off too. And
it's like just just the best feeling to be able
(05:56):
to look at that stuff and be like, oh, wow,
I'm not like dying here. Well yeah, And to be
able to kind of give the finger to a credit
card company and say I'm using you for what you're
supposed to be used for, which is to pay for
things easier, but to not mortgage my life away with
ridiculous interest rates because I'm buying stuff I don't need
(06:18):
and can't pay for. And thanks, thanks for the sky
miles chumps. Yeah for real. All right, So that's bad debt.
They're all kinds of bad debt. But you know that's
not the worst thing in the world to have. What's
bad is delinquent to debt, right and yeah, so there is,
like you were saying, I think good debt to have
if you live in a consumer based economy, right, that
(06:41):
kind of makes makes the world go round. But yes,
delinquent debt is is across the board bad debt for
almost everybody involved. Yeah, and about ten of the debt
in the US is delinquent debt. See, this is where
I saw a major drop. Actually, okay, so is it
not that high anymore? No? Man like by half? Wow? Yeah,
as again I found Q two of two thousand and sixteen,
(07:04):
but it was in this article that was written in
two thousand twelves. Is one point oh six trillion is delinquent?
I saw in two thousand and sixteen. It was five
and eighty nine billion. Oh well, that's in the right direction.
And then about three quarters of that was um, super delinquent,
although I think they call it seriously delinquent, I like
super delinquent more or way delinquent or oh my god,
(07:27):
which means three months ninety days late or more. Probably
not in all cases, but probably delinquent to the point
where you're you're not going to pay it, right. But
but so there are in there the banks, as anyone
who's ever owed a bill longer than ninety days knows,
banks and lenders of any sort will just be like here, here, here,
(07:52):
collection agency, go take this and if you can get
something out of them, will split what you get right um,
And you're you're in the cycle because collection agencies that's
their business, right, lenders lend of money. Collection agencies try
to go get money that's owed right there like a
different ilk altogether. And there's actually different kinds of levels
(08:15):
of that, as we'll see. But you're you're in the machine,
and your life is going to be made unpleasant by
the people who are trying to collect on those bills. Right.
What the rolling jubilie, which we're talking about today, What
that does is they have entered the debt collection industry,
but rather than trying to collect on debt, they are
(08:38):
buying debt and forgiving it. Yeah, so here's what can happen.
Back up a second. Let's say you owe a ton
of money on a bad credit card and you have
been delinquent for a little while, and you call up
that credit card company and you say, you know what,
I want to pay this I spent this money, but
your interest rate is really bad, and can you work
(09:01):
with me on this interest rate and get it down
to a point. And they'll stop you right there and say, oh,
sir or ma'am, I'm sorry, but we don't own your
debt anymore. And you go huh. And you say no, no,
no, no no, no. We sold that debt to an investor
and you go huh. And if you don't know that
this is how this works, then well you didn't pay
(09:22):
attention during the mortgage crisis, because that's basically what that was,
bundling debt to an investor, bundling loans, um mortgages, bad
debt into securities that are then sold to those investors
who buy it really really cheap, with the idea that
they can then go out and collect on a portion
of that to make a big profit. And we'll like,
(09:44):
we'll get into the details a little a little more
in a minute, but the Jubilee itself the idea of
buying debt, entering that industry and buying debt, but rather
than trying to make a profit like you were saying,
but just to forgive that debt so that the people
who owe the money don't have that burden any longer. UM.
That is the whole point behind it. And if you're like,
(10:06):
wait a minute, wait a minute, this sounds like some
sort of plot out of maybe Occupy Wall Street, well
then you would be correct, because at Zukkati Park and
I think two thousand and eleven, the idea for doing
this was bandied about and there was a guy named
Thomas Gorker who was there at one of these conversations,
(10:28):
and he went on to found this thing called Strike Debt,
which is an offshoot organization from Occupy Wall Street and
Strike that has this project called Rolling Jubilee. UM. So
it's a direct outcropping of Occupy Wall Street. Yeah, this
is when UM Strike Debt was finally launched and the
(10:49):
whole deal with Occupy Wall Street was basically protesters getting
together and saying, well, you'll bail out banks to the
tune of billions and trillions of dollars. But the banks
don't then turn and turn say well, we're gonna forgive
consumer debt as well, since we were bailed out. They'll
bail out the big banks, but the consumer is still
(11:10):
uh in big trouble. And so the idea of of
the Rolling Jubilee and Project Strike debt was a bailout
of by Yeah, and there was there's one facet to that,
um lopsided bailout situation to that I think you left out,
which is the banks are getting the bailouts from the government,
(11:33):
but the government's getting that money from the taxpayers, and
very frequently those taxpayers who actually gave the money to
bail out the banks are the same ones that the
banks are turning the thumbscrews on. So they're basically saying,
thanks for the bailout money, give us the money you
actually owe us individually now. And Yeah, Occupy had a
(11:53):
big problem with that, and I think for good reason. Frankly,
if I can go on record for saying that, yeah,
so um, I agree the Rolling Jubilee as far as
structure goes, Uh, they have and we're not gonna get
too much in the weeds on this, but they have
a board of directors and then volunteers who are not
paid assent. Originally they had um brokers in while they're
(12:14):
still brokers and web developers who have been paid but
well well below market value. They're not completely donating their
time in all cases, but they're getting paid apendance for
this cause of what they normally would right like um
pre wrapped cooler sandwiches money, you know what I mean,
(12:34):
Like the kind not even like like a recognizable brand
of sandwich that you buy in like a Bow Dagger
convenience story, just you know, somebody's last name with like
a poorly drawn like logo next to it that's overprinted
so it's mudgy. You can't even really see what the
logo is supposed to be. That is the kind of
(12:54):
sandwiches these people are able to buy with the money
they're getting from the Rolling Jubilee. Yeah, where there is
no discernible difference between the meat and the bread. They've
just coalesced into one lumpy, moist unit. I know it
grows so many people out there with that word combination
moist Yeah, moist unit, moist lumpy units. That what I said, Um,
(13:18):
should we take a break so soon after moist lumpy unit. Yeah,
all right, let's do that, and we'll come back and
talk a little bit about the origins of the word jubilie.
(13:52):
All right, josh Uh, I kind of thought jubilie meant
jamboree because I'm a big dumb dump sometimes. Hey, I'm
right there with you. But it's not true. It actually
comes from the Bible, specifically the Book of Leviticus. Um.
I'm not sure which one I used to know all
those in order I could rattle them off. Genesis, a
third book of the Bible, I think, right, I know Genesis, Exodus, Leviticus, Germedy,
(14:15):
Joshua Judges Ruth first and seconds, Samuel Man the Book
of Ruth. Yeah, some of that stuff really just comes
right back into my my p brain. I didn't know that.
So anyway, in Lebticus and the Old Testament, um, jubilee
is actually an English variation of the Hebrew word joe
bell jo j o b e l, which means ram's horn.
(14:37):
And this is how you would you would blow in
this horna and announce the signal of the year of
the jubilee, right, which came I saw every forty nine years.
Apparently this article says every fifty years, roughly every half
of a century, let's just say, right. And so they
blow the rams horn and that was a big deal.
(14:59):
So a acording to Leviticus levig Kiss twenty five, I
guess which is uh some section the section or verse
or what chapter? Chapter A chapter? Okay, chapter verse okay?
So um. The chapter of Leviticus basically says, um, here's
how you do uh jubilee and everyone who is a
(15:21):
member of the House of Israel, all the Israelites, right, um,
are to have their debts forgiven. So if you are
an indentured servant, you were freed. Or if you said,
I'm a farmer, but I can't pay this debt, um,
I really I lost all my all my um. I
(15:41):
lost the farm on a bunch of magic beans. Because
this is you know them. For the common era, people
thought magic beans were a real thing. You would give
that person who who sold you the magic beans your
farm um as as collateral basically, and you would lose farm.
But during Jubilee year you could get that farm back.
(16:03):
You were given that farm back, restored your land, like
all debts were forgiven. Yeah, it's basically God saying I'm
a liberal hippie. Every fifty years, we're gonna wipe the
slate clean. Here's what we don't know for sure is
if this really happened, right, you can tell like the
Israelites were like, oh yeah, good idea. Yeah wait, that's
a great one. Nice idea, God, and then just we're
(16:26):
just kind of didn't bring it up again. Yeah, do
you think you noticed? Right? Uh? So we're not sure
if that actually happened, but there are records in history
of other cultures that did this sort of clean slate tradition,
uh that have records under Hammerabi and Babylonia, uh in
Egypt under Ptolemy, and even the Rosetta Stone has a
(16:49):
jubilee proclamation recorded from right, So it did happen. Which
think about this, Chuck, that is really heartening that like
pretty early on, I guess in the agrarian system, once
people settle down and all of a sudden you had
like surpluses and income inequality and economic strata. Um, you
(17:15):
you also had the idea that debts should be forgiven
to Like it was a natural outcropping of that because
they're they're that thing would that wouldn't exist prior to
those things, because if you're a hunter gatherer, you can't
go into debt. It's not possible. You're responsible for your
own you know, food gathering and all that. So the
idea that it just kind of naturally emerged out of it,
(17:36):
I find that heartening. It makes me. It gives me
faith in humanity again, or at least humanity from hundreds
and thousands of years ago. Right. Uh So the idea
with those jubilees, it was, like we said, once every
forty fifty years, the idea of a rolling jubilee. The
word rolling just means it's an ongoing thing. Uh, and
so therefore they named it rolling Jubilee, which just to
(17:58):
me still sounds like a party on a on a
farm with people selling uh whippets out of plastic bags
on exta. See, hence the rolling part. That's right. So um,
this is how it works. Right, You've got the rolling
Jubilee started. I think they started with a benefit concert
and they managed to raise like five grand like pretty
(18:19):
pretty quickly. Back in two thousand twelve. And what they
did was they looked around and they identified like how
this was happening. They knew that there were people who
were in debt, and that the people that they owed
the money to weren't even collecting any longer, that there
was that what had developed was a secondary consumer debt market. Right,
(18:44):
And you kind of went over a little. But I
think it bears like like fleshing out. Yeah. I mean
it's a little hard to wrap your head around if
you're not in this world. No, but I don't mean
if you live on a different planet. But in the
world of finance, if you're rolling on a farm, you
you may have time wrapping your head around this. But
but the the basis of it is this, Right, So
(19:04):
you go to a lender and you say, UM, lend
me some money. And if you fall behind on your payments, um,
after a certain amount of time, I think you would
you say three months. Well, it kind of varies, but
sure it could be you're in you have reached this level,
like a new level of delinquency, and banks say that's it,
(19:27):
You're done. We're we're not collecting from you anymore. You're
a loss and we're writing you off. And they do
this actually because back in the nineteen eighties up to
the savings and loan crisis, which were you know, the
savings and loan banks were the place you went to
go get a mortgage in America, and because they were
overregulated from the interest rates they could charge, the banks
(19:50):
started engaging in like risky investment behavior because in that
sense they were underregulated and they lost a bunch of money. Well,
one of the outcroppings of the savings and loan crisis
was that there were some really really shady accounting going on,
and it was actually one of the first one of
the early bailouts. It was like a hundred billion dollar bailout,
(20:12):
which was an astounding amount of money. You chump changed today,
sure it is, but at the time that was a
huge deal. So it's a taxpayer bailout of these banks
that had engaged in risky behavior and stopped me if
this is starting to sound familiar, but it was largely
because there was they were able to get away with it.
And the problem gets to be so big because the
(20:33):
accountants were keeping these bad assets on the books. So
debt to you is an asset to the bank. It's
something that they've got, they've got money they can collect
on from you, right, But these delinquent assets that they
had um were being kept on the books to make
it look like there was a lot that the banks
were a lot more flushed than they were. So after
(20:56):
the savings a loan crisis, the government stepped in and said,
you guys can't do that anymore. If you have a
delinquent account on your books after say ninety days, you
have to write it off. But whoa wa, Well, you're
the banks and we love you and we want you
to be happy and prosperous at all times, so we're
gonna give you a tax deduction for that too. And
they say, well, okay, what do we have to do
(21:17):
after we write it off? And the government says, do
whatever you want, sell it. We don't care, but you
have to write it off and you can take a
tax deduction. And then yeah, if you want to sell it,
do And that's where the secondary consumer debt market was born. Yeah.
And if you think that sounds like a pretty sweetheart deal,
it gets even better because sometimes when they bundle this
(21:38):
debt together and sell it to people who think they
can go out, earth firms usually who can go out
and make money by just recovering, like we said, just
a portion of the stuff of these debts. Uh. They
will then do the loan deal with that firm as
well and make an additional amount of money as a lender. Yeah,
they financed the purchase of that debt that they're selling
(22:00):
to the person. It's crazy, man, So weird how things
work in this country. And the weird is one way
to put it, for sure. And the um the you
said it, you said that they bundle this stuff right
like they did with mortgage backed securities. They bundled mortgages
together and then sliced them up and sold like basically
them as shares. Right, this is a little different, but
(22:22):
there's also bundling going on. But rather than just sell
each debt individually, the banks will take, say, you know,
all of the ones that they they're doing that day
or that week or that month or whatever that they've
written off, and they'll bundle it together into what's called
a portfolio, and then they'll sell that portfolio for pennies
on the dollar. Yeah, we're talking like it can be.
(22:45):
You can you can spend like one dollar to buy
thirty two up to thirty two dollars worth of debt.
Let's say, yeah, I think that's about as good as
you can get. That's the best I've seen. I've seen
anywhere from ten cents on the dollar to yeah one
a one to thirty two ratio. Yeah, which is I mean,
that's a great uh. On one hand's super cheap, but
(23:07):
it's very risky still, because what you're doing again is
buying debt that you may or may not be able
to collect on right exactly. And so like the whole
industry is based on the idea that you'll be able
to collect some of the um debts that are in
this portfolio, and that you'll probably only be able to
(23:29):
to um collect on a portion of the debts that
you do collect on. So some out of the gate,
the people just aren't gonna pay you, no matter how
much you call them and harass them. They're just not
gonna pay that debt. And if it's small enough that
it doesn't make any sense to spend the money taking
them to court, there's just nothing you can do about that.
If they're like, I'm on year six of this, this
(23:52):
debt being reported on my credit, I'm not about to
pay now. Because once they make it a year seven,
you guys can't do anything about it any longer except
they call me. They're not gonna pay um, But there's
gonna be some in that portfolio where either the people
just want to pay to get you to stop calling it.
The debt is big enough that you could conceivably take
(24:13):
them to court or for other reasons. So there's gonna
be some in there that you can collect on. And
then when you do collect on those, you're gonna collect
less usually than the full face value of the debt. Right, Yeah,
they'll offer a deal. Let's say, like, hey, you're behind
on your debt, and what they're what they're usually doing
is trying to target people who, um, we're maybe in
(24:34):
financial trouble and are now pulling themselves out of financial trouble,
rather than going after the debt that they, like you said,
just probably you have no shot at getting. But now
hey you've got a job again. You're making a little dough.
Um pay us back like fifty and we'll call it square.
And the people think, uh, well, you know that sounds
like a good deal to me. Um, I'll just go
(24:56):
ahead and take that fifty percent deal, right, exactly. Sometimes
they apparently people are are like, wow, that was a
really generous thing you're doing here by offering me to
just to to absolve my debt for just half of it,
you know. But again, those people may have paid three
cents on the dollar for that debt, but you're about
(25:16):
to give them fifty cents on the dollar. So they're
making out like bandits. And again there's something slippery and
eel like and clammy about the fact that you're having
to deal with these people who you never even borrowed
the money from. You don't know, these people from Adam,
if you'll forgive the biblical thing, right um, and and
(25:37):
now like you're you're they're inspiring the sense of like
gratitude and you for just you know, charging you fort
of that debt that they had nothing to do with
originally they just bought on some secondary market. Yeah. And
I mean, the whole thing is slippery to me because
on one hand, like targeting poor people who maybe lost
(25:59):
their job due to circumstances beyond their control, it's not
going to help any It's not gonna help anyone to
keep them poor. It's not gonna help the nation or
the economy. But then there are also people who were
very irresponsible with their money and bought too much stuff
and said, you know what, I don't want to pay
for this. You'll file for bankruptcy or I'll just I'll
(26:21):
just I don't care about my credit rating any longer.
I'll just go ahead and not pay it. Sure. The
thing is, though, is for years and years now, the
second group of people that you you pointed out have
been used to excuse mistreatment of that first group. Correct,
you know what I'm saying, Like there's no real separation.
(26:43):
It's like, oh, they're both debtors, so they you know,
unfortunately they all deserve it. Yeah, and here's the deal
with the Rolling Jubilee. They will uh, like we said,
the whole idea is they will try and purchase these
debt packages just like these firms do. Um I think
they give an example of on the firms, like there's
one called Encore Capital Group and here's just one example.
(27:05):
Um I think inelve they spent forty seven million dollars
to buy one point one billion dollars worth of debt
uh to make a lot of money on and they
you know, their aim and what they did in that
case was recovered about three times what they invested through
these settlements with the debtors. So let's say they made
you know, three point two or you know, three and
(27:26):
half billion bucks off that forty seven million dollar investment.
Oh no, they would have made like a hundred and
fifty million. They just bought a billion dollars with the
debt Okay, okay, yeah, but that's still I mean, that's
substantial for one quarter. Yeah, for basically just saying hey,
we'll take over the harassing phone calls from here everybody. Yeah,
and this is you know, they basically like the banks
(27:47):
have given up on this because they don't have they
would have to spend way too much money. Two not
become bankers any longer, and to become bankers slash debt
collection agencies. So they've just give up on trying to
collect with these other people like, no, we do this,
this is what we do, so we'll take it exactly.
And again they're required banks or lenders are required by
(28:08):
law to write off delinquent accounts after certain number of days,
So even if they wanted to keep collecting on it,
they can't. Yeah, that's right. So with the rolling jubilee
there and we'll talk about a little bit how they
do this. But they buy this debt forgive it, like
we said, But it's not like you can't if you're
someone who is in trouble, you can't contact the Rolling
(28:29):
Jubilee and say, please buy my debt because it's all
lumped together. Um. They do help people and families, but
a lot of times they don't even know who these
people are. Sometimes they do, and if they have their
personal information, they will then contact them and say You're
debt is forgiven. Um, but because it's a Rolling Jubilee,
(28:49):
what we would like you to do now is is
donate a little bit of money back to the cause
because you're debt is forgiven. And I'm not. I wonder
what they're numbers are for stuff like that. Extraordinarily low
for people donating then afterward. Yeah, so so not only
donating but like getting back in touch. Apparently, UM, I
read this interview with Thomas Gorky and they asked him
(29:12):
that very question, like you know, like how what kind
of response are you getting from people? And and so
they've got everybody's personal information, Um, they just don't have
it until they buy the portfolio, right, so they'll send
everyone in that portfolio a letter saying here's the amount
of debt that you no longer Oh we bought your
dead it's it's being abolished. And I think most people
(29:33):
are like, is this a scam? Are are you like
trying to get my Social Security numbers? And like that?
So they're just totally ignoring this letter and they say, no,
we're the rolling you believe do No, it doesn't because
they're like like the boy Scouts. But the but regardless
of whether those people get back in touch what, regardless
(29:54):
of whether they donate to the cause or not, they're
dead is still forgiven because the rolling you are strike
debt makes this point that this is not like they're
they're not. Their goal isn't to decide, well, who who
really do who who deserves this? They can't make that
judgment because when they buy a portfolio, they have no
(30:14):
idea who the individuals are in there. They just know
that these people um owe money, and that the likelihood,
since they're delinquent on their debt, that they either are
experiencing a time when they're down in their luck or
are getting out of a time when they're down in
their luck. That is enough that's that's good enough for
(30:34):
for Strike Debt to to justify buying their debt and
abolishing it. Well yeah, and not only that, but rolling
Jubilee and Strike Debt's goal isn't. They're not saying we're
gonna solve the consumer debt crisis, or even we're gonna
solve when we'll talk about student loans more in a minute,
but we're gonna solve the student loan problem. They're literally
just saying we're gonna solve a tiny fraction of this.
(30:57):
But what our real aim is is to raise awareness
because you just you can protest all you want, but
you simply can't ignore a real program like this right
exactly because it gets a lot of pressed too. You know. Sure,
So let's take one more break, Chuck, and then we'll
come back with more on this. Okay, we're back, We're back.
(31:41):
So um. Apparently, Chuck. Initially, they were really worried about
how they were going to be able to kind of
come into this industry because it was a pretty tight
knit industry. Yeah, like when a bank goes to sell debt,
it's not like they place a want ad and say, well,
who's out. They're like, they know who's out there. They
(32:02):
know who these firms are, and they have trusted which
is kind of a funny way to say it, working
relationships with these firms. Right, So they were thinking like, well,
we need to have people on the inside buying debt force.
It's the only way they're going to ever let us
do this. We have to we have to sneak around
and do it. The way this article puts it is, um,
they had sheep and wolves clothing, yes, buying debt for
(32:26):
them on behalf of this rolling jubilie. Right. So this again,
this article is written in two thousand twelve. Apparently that
did not pan out at all. So as they got
more into it, they almost became amazed at the willingness
of this uh secondary debt industry too to sell to
(32:46):
them knowing that they were going to abolish it or
not caring to find out whether they were abolishing or
who they were what they were doing, which means that, yeah,
this industry is so inscrupulous it doesn't even look out
for itself. Yeah, you know, so they they um, I
think as they got further into it too, and this
(33:08):
may have actually developed since two thousand twelve as well.
This is Um, this industry is is spread even more.
I think it's a little less tight knit than it
once was. There's a lot of brokers that are set
up where they're the ones that are dealing with the
banks and then turning around and selling it on behalf
of the banks and then taking a little cut of
(33:29):
whatever the portfolio goes for. Right. But then there's also
like websites that do the same thing. Just like you
have an online stock broker, there are websites where you
or I Chuck can put together a thousand dollars and
go buy a portfolio that was worth like ten to
thirty thousand dollars um. So if you want to really
(33:50):
stick it to your fellow man, um, go do that.
Go start doing that because it's something you can do online.
Now that is correct, alright, So will the work is
the big question? Uh. It certainly will work with awareness.
But as far as we're all numbers go, as of today, um,
which is what October was it? Fourth fifth fourth October
(34:13):
four seventeen, they have raised uh seven hundred, one thousand,
three hundred seventeen dollars, which this is a few hours ago,
so it's more than that probably by now and they
have forgiven about thirty two million dollars total to date, which,
like we said, is a not even a fraction what's
below a fraction of infantismal amount? An infantismal amount. Did
(34:38):
I say infantismizable? I think it just made up a word,
but it kind of works. It's so infantismal it's invisible,
that's right. Uh, it's such a small amount that it
makes no dint in the problem really, except to those
individuals and families who are like, well this really worked
out for me. But U thirty two million bucks is
raising awareness, which is a good thing. Yeah, oh yeah, yeah. Again,
(35:01):
Like there was a huge thing in two thousand twelve
when they first announced it. It was everywhere, right, everybody
was talking about it. Uh. They got another bump in
two thousand fourteen. I can't remember what happened, um, but
then I think either this year or last year, they
made the rounds with media again by buying debt from
UM something called Corinthian Colleges, which is a for profit
(35:25):
college UM like company corporation. Yeah that and Thomas Gorky
called them. He said that they were quote the worst
of the worst, and they have just tons of lawsuits
against them, um for UM just all manner of activities. Uh.
And the Rolling JUBILEEUE got something like like three and
(35:49):
a half million dollars worth of debt from them, and
this would be student loan debt, yes, um. And the
reason that they were able to do student loan days
because these this is a for profit college. So this
would have been federal student debt, yeah, like of student
loans or from the federal government. And they, uh, the
federal government does not sell their debt. No, so if
(36:11):
you have a student loan, you're through the federal government,
like the Rolling Jubilee is never going to be able
to help you, at least not directly like that. But
that also raises one of the like long standing criticisms
against this idea. If you are against the entire like
predatory lending idea of UM, the banking industry and the
(36:35):
secondary market, that the whole thing, this whole ikey mess, Right,
you're gonna criticize UM. Strike debt for contributing to it.
They're they're throwing money into it, even though they're even
though they're like abolishing debt, they're still giving money for it. Right,
And so strike this whole thing is like, hey man,
the level that we're operating on is so small that
(36:58):
we couldn't possibly affect the market. Yeah, like in their
in their wildest dreams, they could uh affect the markets
such where they could drive up the price and really
compete as a as a as a top dog in
the industry and maybe even drive some of those other
firms out of business, and like that will never ever happen. No,
And they also point out that like banks have to
(37:20):
sell this stuff anyway, or they have to get rid
of it anyway. UM, by law, they have to write
it off. So this this debt was going to be
it was going to be sold one way or another.
And they also try to buy debt at that really
lucrative stage, lucrative for the debt collectors, where you you
have been more than ninety days delinquent for about a year,
(37:45):
so you probably went through that rough patch like you
were talking about, Chuck, But now you the likelihood that
maybe you've got a job again and you're starting to
like get your debt under control and are therefore amenable
to UM an offer of just paying off UM. That's
the kind of debt they're trying to buy because that's
the Those are the people who are most vulnerable to
(38:07):
this kind of um this industry, right, So they're saying,
all this is gonna happen anyway, and we're not affecting
the the the debt that people are are paying, and
we're not really helping the banking industry anymore than they
would have been helped anyway. The thing that sticks to
me though, is and I couldn't find this. Did you
see if they bought that debt from Corinthian Colleges directly? Oh?
(38:30):
I don't know, because if so, then they were they
were paying money to Corinthian Colleges UM. And I could
see that that criticism just being there because Corinthian College
UM or any for profit university UH isn't required to
write off bad debts, so they wouldn't be forced to
do that if they bought from them. They also work
(38:53):
with a lender. That's just a guess. I don't know. Yeah,
I don't want to speak to that. Well. I saw that.
I saw this one that basically was teaching individual investors
how to go get into this, and one of the
things they suggested was go hang out at small claims
court and when you when a company comes in and
they're taking some debt or to court to collect um
(39:14):
on a debt. Just go up to them after court
and be like, hey, let me handle this. Just sell
me all your debts, bundle them together, and I'll buy
it from you. So people do go directly to companies
that have have like bad debts on their books. Um,
so it's possible they did go to Corinthian College. I
didn't see that one one way or the other. Very interesting.
(39:36):
And then there was one other thing that was kind
of an early concern that apparently didn't pan out, and
that was that whether or not the government could consider
this debt abolishment as income for the person who owed
the debt and would therefore oh taxes on it. And
(39:57):
so apparently occupied Walster your strike debt with some lawyers,
and um, the lawyers said it is our professional opinion
that this would not qualify as income, and so they
these people should not owe any tax burden. And so far,
no one's, no one's had, no one's gotten a tax
bill for their tax being abolished by strike debt. It's
(40:18):
so convoluted, it's a little complied. Do you got anything else? No,
I think that's it. Man, Uh, let's see. If you
want to know more about the Rolling Jubilee, good, check
out this article on how stuff works. It's a good one.
Grab your ban Joe yep and um, since uh, keep
an ear out eventually for like just a larger debt
(40:41):
episode because it is interesting and weird. Um and since
I said weird, it's time for chuck administrative details beautiful.
This is part two where we thank people for their
lovely gifts and the kindnesses that they bestow upon us.
All right, I'm going start with Emily Winfield. She sent
(41:02):
a well, she sent me a reformed Bedwetters Society patch.
I'm on record as a late bed wetter and I've
always championed people not being ashamed of that. So apparently
Emily was and they she made a patch. It's really cool.
That's amazing. I gotta see that. Why I didn't see it? Uh,
let's see. Jackson Harder send us a Jigsaw puzzle postcard.
(41:24):
I appreciate that, Thanks Jackson. David Velasquez and Samantha Penna
sent another wedding invite. Oh yeah, muzzle top. Nick Sokol
sent us a bunch of great stuff from Korea. Thank you,
very much for that. Jonathan Beale sent us handmade copper
flasks from his company. Uh. Sara Toto dot com s
(41:46):
E R t O d O stuff. You should drink
copper flasks. They are to be beautiful. Terry M has
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thank you note about the HIV episode in we want
to say, Terry, we hope your friend's partner is doing well. Absolutely.
Chris Wecht of Carlton Brewery in New Jersey, well, he
(42:07):
sent us beer. Thank you. Ryan and Chloe sent us
a Montreal postcard. Thank you. Caroline Cross, she was very
moved by the M the MS episode because her mom
had MS, so she sent some sponge candy from Buffalo,
New York to make me feel better about my friend Billy. Nice.
(42:29):
That was very sweet, it was Uh. Connor g sent
us some candy, sent us some smarties and a nice letter.
Thanks Connor Te. Sarah van dong or Bean Dange d
O n g E send us her book I Love
Love Walla Walla. It's her book about loving Walla Walla, Washington.
(42:49):
Alexander Peppe, thanks for the thank you note, uh, and
you're welcome for helping you kick your diet coke habit.
That's right. Julia Decaman sent us uh, well, sent some
hand painted pictures for me. It was pictures of my
dear departed dogs, Buckley and Lauran. Uh. For you, she
sent you one Charleston Hospitality, which was a painting of
(43:11):
the Belmont and Queen Street grocery. And for Jerry sent
her one of a pink Peoni and uh, you can
go to buy b y j Deckman dot com uh
to check out her work. And since then we have
paid her. She's so sad. Paid her for portraits of
Lauren and we're about to commission another one for the Wizard.
(43:33):
So the core for will be represented by Julie Duckman's
art in our household Caroline. And I'm not even gonna
attempt your last name, Caroline. I'm just gonna spell it
s w I s z c Z. That's swizzle stick.
Put that together with a dot com and it will
take you to her site which has They're awesome zene
(43:55):
featuring us called the dread appropriately enough, Jordan Pearson from
Canada sen as some Canadian chips lace ketchup an old
Dutch ketchup chips sALS gluten is what it says because
it's French Canada. Uh. And also Jordan had the nicest
handwriting I think I've ever seen. Yeah, oh yeah, thanks
(44:15):
a lot for that. Nice handwriting these days is that'll
take you far in the past, um, let's see. And
then Katherine from Vello Drome sent us some CDs. Thanks
a lot for that. Captain Matthew Grubs and us his
first children's book called Tommy P. Tinker and the super
Duper Rare Bottle cap nice. And then we want to
(44:36):
thank Max from chirps Chips who sent us some chirps chips.
Remember in our our crickets episode Crickets um well eating
crickets basically, um, we mentioned chirps and they heard it
and they said, here, guys, try this. Did you try
hi yet? I have yet to try it. I think
we should try it like on Facebook Live or something
(44:56):
like that. That's a good idea, you know. Uh ja
more And that is with one oh send us his
hot sauce. Spank you very much is the name of
the hot sauce. I'm not just being cheeky, n And
then that's that's all I've got written down. You got anymore?
I just got one more Matthew for Minnesota, Sin. It's
his joke book, Uh, the River of Wahaha. Great. I
(45:19):
love a good joke book. Great. Well, thanks everybody for
sending us stuff, and if you want to send us stuff,
we always are grateful for it. Um You can get
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(45:40):
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Attention celebrity listeners, I hope pick out your attention. Hey everyone,
this is Chuck And as some of you have heard,
I have announced that I have a new solo podcast
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And that's along and short of it's really cool. I've
(00:21):
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(00:44):
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I would love, love, love to have you. Um. If
you're in Atlanta or going through it Anna with a
movie project, that's great. If not, we had partner studios
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(01:05):
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send me an email to movie Crush at how stuff
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Crush guest, and I'll know it's you and I appreciate it.
It's a lot of fun, trust me and um, here's
(01:27):
two recording podcast together. Thanks. Welcome to Stuff you Should
Know from house stuff Works dot com. Hey, and welcome
to the podcast. I'm Josh Clark, and there's Charles W. Bryant.
There's Jerry over there, and this is stuff you should know.
(01:52):
Come on aboard the Rolling Jubilee guests, not to be
confused with the Jamboree, which is what the boy Scouts do. Yeah,
Rolling Jubilee sounds hope one, and for a lot of
people it is. Yeah, unless you're like a Wall Street
shark who hates seeing lower income people get out from
under debt miraculously. It's a great time for everybody. I
(02:13):
honestly didn't know much about this thing, so I didn't either. Yeah,
I actually I saw I Um, I saw it in
the sidebar while I was looking for an article to do. Um,
and I was like, I have no idea what that is,
So let me check it out, and it was just
one of those hidden gems, if you will. Should we
talk Let's talk about debt, baby, Yeah, And I want
(02:35):
to say, like this is largely about the rolling jubilee,
but we're gonna scratch the surface of the consumer debt
secondary market. I would love to do one on just
debt and debt collection and just this this the the
whole industry and the I guess, the whole massive ball
of wax on the business of debt. Yeah, and like
(02:58):
you know, how in what case is it's actually good
to have? And like how it kind of powers the
economy all that stuff. Did we ever do one on bankruptcy? No?
All right, well we should put one of those in
there too. Yeah. We got a lot to do, lest
we have a lot left to do, more work to
be done, all right, So let's in this case we're
talking about consumer debt. AH in the United States, it
(03:20):
is a um an astounding number and problem. Is that
fair to say? I would say that's yes, I think
that might even be an understatement. Although so as of
this when this article was written, which appears to be
about December of two thousand twelve, it was a bigger
(03:41):
problem than that. It is now from what I'm seeing. Uh,
well I have an higher number now than then. Okay,
go ahead. Well the number I see, well, the original
number from two thousand twelve was eleven point four four
trillion trill trillion. Number I got today was twelve point
seven three trillion. I saw twelve point two nine trillion,
(04:06):
which is still I mean, that's years. Is almost a
trillion dollars more in four years. I'm sure those are.
So that's two thousands seventeen numbers. Yeah, okay, well that
would explain. Mine was Q two of two thousand sixteen.
So it's the distant past, a trillion dollar increase in
five years. That's all of the household debt, credit cards, mortgages,
(04:29):
UM car loans, uh old, medical bills, all that student
loans a big part of it. Yeah, that's a big
one too, that all households have in the United States. Right. Yes,
as of two thousand fifteen, I'm hats off to you, man,
I could not find two thousand seventeen numbers. Yeah. So
here's the thing, debt. If you talk to someone who
(04:50):
knows finance, they will say, like, that is not the
worst thing in the world. It's not like being in debt.
It's got to be the right kind of debt, Like
owing a ton of money to high interest credit cards
is not good by any measure. Um, Emily and I
got smart when we Uh, I think I've told the
story when we bought our house, we had a bunch
(05:11):
of stupid credit card debt and this was she's twelve
or so years ago. And what we did, because they
were given away money back then foolishly uh. And this
could have bought us in the butt, I guess if
we hadn't have, you know, gotten jobs and been able
to afford payments. But we rolled all that credit card
debt into our homeland. So we literally paid off every
(05:34):
cent of it and told each other We're never gonna
go into credit card debt again. And since that day,
and it was tough, we have never not paid off
a credit card in full at the end of every month. Yeah.
We we um almost always pay them off too. And
it's like just just the best feeling to be able
(05:56):
to look at that stuff and be like, oh, wow,
I'm not like dying here. Well yeah, And to be
able to kind of give the finger to a credit
card company and say I'm using you for what you're
supposed to be used for, which is to pay for
things easier, but to not mortgage my life away with
ridiculous interest rates because I'm buying stuff I don't need
(06:18):
and can't pay for. And thanks, thanks for the sky
miles chumps. Yeah for real. All right, So that's bad debt.
They're all kinds of bad debt. But you know that's
not the worst thing in the world to have. What's
bad is delinquent to debt, right and yeah, so there is,
like you were saying, I think good debt to have
if you live in a consumer based economy, right, that
(06:41):
kind of makes makes the world go round. But yes,
delinquent debt is is across the board bad debt for
almost everybody involved. Yeah, and about ten of the debt
in the US is delinquent debt. See, this is where
I saw a major drop. Actually, okay, so is it
not that high anymore? No? Man like by half? Wow? Yeah,
as again I found Q two of two thousand and sixteen,
(07:04):
but it was in this article that was written in
two thousand twelves. Is one point oh six trillion is delinquent?
I saw in two thousand and sixteen. It was five
and eighty nine billion. Oh well, that's in the right direction.
And then about three quarters of that was um, super delinquent,
although I think they call it seriously delinquent, I like
super delinquent more or way delinquent or oh my god,
(07:27):
which means three months ninety days late or more. Probably
not in all cases, but probably delinquent to the point
where you're you're not going to pay it, right. But
but so there are in there the banks, as anyone
who's ever owed a bill longer than ninety days knows,
banks and lenders of any sort will just be like here, here, here,
(07:52):
collection agency, go take this and if you can get
something out of them, will split what you get right um,
And you're you're in the cycle because collection agencies that's
their business, right, lenders lend of money. Collection agencies try
to go get money that's owed right there like a
different ilk altogether. And there's actually different kinds of levels
(08:15):
of that, as we'll see. But you're you're in the machine,
and your life is going to be made unpleasant by
the people who are trying to collect on those bills. Right.
What the rolling jubilie, which we're talking about today, What
that does is they have entered the debt collection industry,
but rather than trying to collect on debt, they are
(08:38):
buying debt and forgiving it. Yeah, so here's what can happen.
Back up a second. Let's say you owe a ton
of money on a bad credit card and you have
been delinquent for a little while, and you call up
that credit card company and you say, you know what,
I want to pay this I spent this money, but
your interest rate is really bad, and can you work
(09:01):
with me on this interest rate and get it down
to a point. And they'll stop you right there and say, oh,
sir or ma'am, I'm sorry, but we don't own your
debt anymore. And you go huh. And you say no, no,
no, no no, no. We sold that debt to an investor
and you go huh. And if you don't know that
this is how this works, then well you didn't pay
(09:22):
attention during the mortgage crisis, because that's basically what that was,
bundling debt to an investor, bundling loans, um mortgages, bad
debt into securities that are then sold to those investors
who buy it really really cheap, with the idea that
they can then go out and collect on a portion
of that to make a big profit. And we'll like,
(09:44):
we'll get into the details a little a little more
in a minute, but the Jubilee itself the idea of
buying debt, entering that industry and buying debt, but rather
than trying to make a profit like you were saying,
but just to forgive that debt so that the people
who owe the money don't have that burden any longer. UM.
That is the whole point behind it. And if you're like,
(10:06):
wait a minute, wait a minute, this sounds like some
sort of plot out of maybe Occupy Wall Street, well
then you would be correct, because at Zukkati Park and
I think two thousand and eleven, the idea for doing
this was bandied about and there was a guy named
Thomas Gorker who was there at one of these conversations,
(10:28):
and he went on to found this thing called Strike Debt,
which is an offshoot organization from Occupy Wall Street and
Strike that has this project called Rolling Jubilee. UM. So
it's a direct outcropping of Occupy Wall Street. Yeah, this
is when UM Strike Debt was finally launched and the
(10:49):
whole deal with Occupy Wall Street was basically protesters getting
together and saying, well, you'll bail out banks to the
tune of billions and trillions of dollars. But the banks
don't then turn and turn say well, we're gonna forgive
consumer debt as well, since we were bailed out. They'll
bail out the big banks, but the consumer is still
(11:10):
uh in big trouble. And so the idea of of
the Rolling Jubilee and Project Strike debt was a bailout
of by Yeah, and there was there's one facet to that,
um lopsided bailout situation to that I think you left out,
which is the banks are getting the bailouts from the government,
(11:33):
but the government's getting that money from the taxpayers, and
very frequently those taxpayers who actually gave the money to
bail out the banks are the same ones that the
banks are turning the thumbscrews on. So they're basically saying,
thanks for the bailout money, give us the money you
actually owe us individually now. And Yeah, Occupy had a
(11:53):
big problem with that, and I think for good reason. Frankly,
if I can go on record for saying that, yeah,
so um, I agree the Rolling Jubilee as far as
structure goes, Uh, they have and we're not gonna get
too much in the weeds on this, but they have
a board of directors and then volunteers who are not
paid assent. Originally they had um brokers in while they're
(12:14):
still brokers and web developers who have been paid but
well well below market value. They're not completely donating their
time in all cases, but they're getting paid apendance for
this cause of what they normally would right like um
pre wrapped cooler sandwiches money, you know what I mean,
(12:34):
Like the kind not even like like a recognizable brand
of sandwich that you buy in like a Bow Dagger
convenience story, just you know, somebody's last name with like
a poorly drawn like logo next to it that's overprinted
so it's mudgy. You can't even really see what the
logo is supposed to be. That is the kind of
(12:54):
sandwiches these people are able to buy with the money
they're getting from the Rolling Jubilee. Yeah, where there is
no discernible difference between the meat and the bread. They've
just coalesced into one lumpy, moist unit. I know it
grows so many people out there with that word combination
moist Yeah, moist unit, moist lumpy units. That what I said, Um,
(13:18):
should we take a break so soon after moist lumpy unit. Yeah,
all right, let's do that, and we'll come back and
talk a little bit about the origins of the word jubilie.
(13:52):
All right, josh Uh, I kind of thought jubilie meant
jamboree because I'm a big dumb dump sometimes. Hey, I'm
right there with you. But it's not true. It actually
comes from the Bible, specifically the Book of Leviticus. Um.
I'm not sure which one I used to know all
those in order I could rattle them off. Genesis, a
third book of the Bible, I think, right, I know Genesis, Exodus, Leviticus, Germedy,
(14:15):
Joshua Judges Ruth first and seconds, Samuel Man the Book
of Ruth. Yeah, some of that stuff really just comes
right back into my my p brain. I didn't know that.
So anyway, in Lebticus and the Old Testament, um, jubilee
is actually an English variation of the Hebrew word joe
bell jo j o b e l, which means ram's horn.
(14:37):
And this is how you would you would blow in
this horna and announce the signal of the year of
the jubilee, right, which came I saw every forty nine years.
Apparently this article says every fifty years, roughly every half
of a century, let's just say, right. And so they
blow the rams horn and that was a big deal.
(14:59):
So a acording to Leviticus levig Kiss twenty five, I
guess which is uh some section the section or verse
or what chapter? Chapter A chapter? Okay, chapter verse okay?
So um. The chapter of Leviticus basically says, um, here's
how you do uh jubilee and everyone who is a
(15:21):
member of the House of Israel, all the Israelites, right, um,
are to have their debts forgiven. So if you are
an indentured servant, you were freed. Or if you said,
I'm a farmer, but I can't pay this debt, um,
I really I lost all my all my um. I
(15:41):
lost the farm on a bunch of magic beans. Because
this is you know them. For the common era, people
thought magic beans were a real thing. You would give
that person who who sold you the magic beans your
farm um as as collateral basically, and you would lose farm.
But during Jubilee year you could get that farm back.
(16:03):
You were given that farm back, restored your land, like
all debts were forgiven. Yeah, it's basically God saying I'm
a liberal hippie. Every fifty years, we're gonna wipe the
slate clean. Here's what we don't know for sure is
if this really happened, right, you can tell like the
Israelites were like, oh yeah, good idea. Yeah wait, that's
a great one. Nice idea, God, and then just we're
(16:26):
just kind of didn't bring it up again. Yeah, do
you think you noticed? Right? Uh? So we're not sure
if that actually happened, but there are records in history
of other cultures that did this sort of clean slate tradition,
uh that have records under Hammerabi and Babylonia, uh in
Egypt under Ptolemy, and even the Rosetta Stone has a
(16:49):
jubilee proclamation recorded from right, So it did happen. Which
think about this, Chuck, that is really heartening that like
pretty early on, I guess in the agrarian system, once
people settle down and all of a sudden you had
like surpluses and income inequality and economic strata. Um, you
(17:15):
you also had the idea that debts should be forgiven
to Like it was a natural outcropping of that because
they're they're that thing would that wouldn't exist prior to
those things, because if you're a hunter gatherer, you can't
go into debt. It's not possible. You're responsible for your
own you know, food gathering and all that. So the
idea that it just kind of naturally emerged out of it,
(17:36):
I find that heartening. It makes me. It gives me
faith in humanity again, or at least humanity from hundreds
and thousands of years ago. Right. Uh So the idea
with those jubilees, it was, like we said, once every
forty fifty years, the idea of a rolling jubilee. The
word rolling just means it's an ongoing thing. Uh, and
so therefore they named it rolling Jubilee, which just to
(17:58):
me still sounds like a party on a on a
farm with people selling uh whippets out of plastic bags
on exta. See, hence the rolling part. That's right. So um,
this is how it works. Right, You've got the rolling
Jubilee started. I think they started with a benefit concert
and they managed to raise like five grand like pretty
(18:19):
pretty quickly. Back in two thousand twelve. And what they
did was they looked around and they identified like how
this was happening. They knew that there were people who
were in debt, and that the people that they owed
the money to weren't even collecting any longer, that there
was that what had developed was a secondary consumer debt market. Right,
(18:44):
And you kind of went over a little. But I
think it bears like like fleshing out. Yeah. I mean
it's a little hard to wrap your head around if
you're not in this world. No, but I don't mean
if you live on a different planet. But in the
world of finance, if you're rolling on a farm, you
you may have time wrapping your head around this. But
but the the basis of it is this, Right, So
(19:04):
you go to a lender and you say, UM, lend
me some money. And if you fall behind on your payments, um,
after a certain amount of time, I think you would
you say three months. Well, it kind of varies, but
sure it could be you're in you have reached this level,
like a new level of delinquency, and banks say that's it,
(19:27):
You're done. We're we're not collecting from you anymore. You're
a loss and we're writing you off. And they do
this actually because back in the nineteen eighties up to
the savings and loan crisis, which were you know, the
savings and loan banks were the place you went to
go get a mortgage in America, and because they were
overregulated from the interest rates they could charge, the banks
(19:50):
started engaging in like risky investment behavior because in that
sense they were underregulated and they lost a bunch of money. Well,
one of the outcroppings of the savings and loan crisis
was that there were some really really shady accounting going on,
and it was actually one of the first one of
the early bailouts. It was like a hundred billion dollar bailout,
(20:12):
which was an astounding amount of money. You chump changed today,
sure it is, but at the time that was a
huge deal. So it's a taxpayer bailout of these banks
that had engaged in risky behavior and stopped me if
this is starting to sound familiar, but it was largely
because there was they were able to get away with it.
And the problem gets to be so big because the
(20:33):
accountants were keeping these bad assets on the books. So
debt to you is an asset to the bank. It's
something that they've got, they've got money they can collect
on from you, right, But these delinquent assets that they
had um were being kept on the books to make
it look like there was a lot that the banks
were a lot more flushed than they were. So after
(20:56):
the savings a loan crisis, the government stepped in and said,
you guys can't do that anymore. If you have a
delinquent account on your books after say ninety days, you
have to write it off. But whoa wa, Well, you're
the banks and we love you and we want you
to be happy and prosperous at all times, so we're
gonna give you a tax deduction for that too. And
they say, well, okay, what do we have to do
(21:17):
after we write it off? And the government says, do
whatever you want, sell it. We don't care, but you
have to write it off and you can take a
tax deduction. And then yeah, if you want to sell it,
do And that's where the secondary consumer debt market was born. Yeah.
And if you think that sounds like a pretty sweetheart deal,
it gets even better because sometimes when they bundle this
(21:38):
debt together and sell it to people who think they
can go out, earth firms usually who can go out
and make money by just recovering, like we said, just
a portion of the stuff of these debts. Uh. They
will then do the loan deal with that firm as
well and make an additional amount of money as a lender. Yeah,
they financed the purchase of that debt that they're selling
(22:00):
to the person. It's crazy, man, So weird how things
work in this country. And the weird is one way
to put it, for sure. And the um the you
said it, you said that they bundle this stuff right
like they did with mortgage backed securities. They bundled mortgages
together and then sliced them up and sold like basically
them as shares. Right, this is a little different, but
(22:22):
there's also bundling going on. But rather than just sell
each debt individually, the banks will take, say, you know,
all of the ones that they they're doing that day
or that week or that month or whatever that they've
written off, and they'll bundle it together into what's called
a portfolio, and then they'll sell that portfolio for pennies
on the dollar. Yeah, we're talking like it can be.
(22:45):
You can you can spend like one dollar to buy
thirty two up to thirty two dollars worth of debt.
Let's say, yeah, I think that's about as good as
you can get. That's the best I've seen. I've seen
anywhere from ten cents on the dollar to yeah one
a one to thirty two ratio. Yeah, which is I mean,
that's a great uh. On one hand's super cheap, but
(23:07):
it's very risky still, because what you're doing again is
buying debt that you may or may not be able
to collect on right exactly. And so like the whole
industry is based on the idea that you'll be able
to collect some of the um debts that are in
this portfolio, and that you'll probably only be able to
(23:29):
to um collect on a portion of the debts that
you do collect on. So some out of the gate,
the people just aren't gonna pay you, no matter how
much you call them and harass them. They're just not
gonna pay that debt. And if it's small enough that
it doesn't make any sense to spend the money taking
them to court, there's just nothing you can do about that.
If they're like, I'm on year six of this, this
(23:52):
debt being reported on my credit, I'm not about to
pay now. Because once they make it a year seven,
you guys can't do anything about it any longer except
they call me. They're not gonna pay um, But there's
gonna be some in that portfolio where either the people
just want to pay to get you to stop calling it.
The debt is big enough that you could conceivably take
(24:13):
them to court or for other reasons. So there's gonna
be some in there that you can collect on. And
then when you do collect on those, you're gonna collect
less usually than the full face value of the debt. Right, Yeah,
they'll offer a deal. Let's say, like, hey, you're behind
on your debt, and what they're what they're usually doing
is trying to target people who, um, we're maybe in
(24:34):
financial trouble and are now pulling themselves out of financial trouble,
rather than going after the debt that they, like you said,
just probably you have no shot at getting. But now
hey you've got a job again. You're making a little dough.
Um pay us back like fifty and we'll call it square.
And the people think, uh, well, you know that sounds
like a good deal to me. Um, I'll just go
(24:56):
ahead and take that fifty percent deal, right, exactly. Sometimes
they apparently people are are like, wow, that was a
really generous thing you're doing here by offering me to
just to to absolve my debt for just half of it,
you know. But again, those people may have paid three
cents on the dollar for that debt, but you're about
(25:16):
to give them fifty cents on the dollar. So they're
making out like bandits. And again there's something slippery and
eel like and clammy about the fact that you're having
to deal with these people who you never even borrowed
the money from. You don't know, these people from Adam,
if you'll forgive the biblical thing, right um, and and
(25:37):
now like you're you're they're inspiring the sense of like
gratitude and you for just you know, charging you fort
of that debt that they had nothing to do with
originally they just bought on some secondary market. Yeah. And
I mean, the whole thing is slippery to me because
on one hand, like targeting poor people who maybe lost
(25:59):
their job due to circumstances beyond their control, it's not
going to help any It's not gonna help anyone to
keep them poor. It's not gonna help the nation or
the economy. But then there are also people who were
very irresponsible with their money and bought too much stuff
and said, you know what, I don't want to pay
for this. You'll file for bankruptcy or I'll just I'll
(26:21):
just I don't care about my credit rating any longer.
I'll just go ahead and not pay it. Sure. The
thing is, though, is for years and years now, the
second group of people that you you pointed out have
been used to excuse mistreatment of that first group. Correct,
you know what I'm saying, Like there's no real separation.
(26:43):
It's like, oh, they're both debtors, so they you know,
unfortunately they all deserve it. Yeah, and here's the deal
with the Rolling Jubilee. They will uh, like we said,
the whole idea is they will try and purchase these
debt packages just like these firms do. Um I think
they give an example of on the firms, like there's
one called Encore Capital Group and here's just one example.
(27:05):
Um I think inelve they spent forty seven million dollars
to buy one point one billion dollars worth of debt
uh to make a lot of money on and they
you know, their aim and what they did in that
case was recovered about three times what they invested through
these settlements with the debtors. So let's say they made
you know, three point two or you know, three and
(27:26):
half billion bucks off that forty seven million dollar investment.
Oh no, they would have made like a hundred and
fifty million. They just bought a billion dollars with the
debt Okay, okay, yeah, but that's still I mean, that's
substantial for one quarter. Yeah, for basically just saying hey,
we'll take over the harassing phone calls from here everybody. Yeah,
and this is you know, they basically like the banks
(27:47):
have given up on this because they don't have they
would have to spend way too much money. Two not
become bankers any longer, and to become bankers slash debt
collection agencies. So they've just give up on trying to
collect with these other people like, no, we do this,
this is what we do, so we'll take it exactly.
And again they're required banks or lenders are required by
(28:08):
law to write off delinquent accounts after certain number of days,
So even if they wanted to keep collecting on it,
they can't. Yeah, that's right. So with the rolling jubilee
there and we'll talk about a little bit how they
do this. But they buy this debt forgive it, like
we said, But it's not like you can't if you're
someone who is in trouble, you can't contact the Rolling
(28:29):
Jubilee and say, please buy my debt because it's all
lumped together. Um. They do help people and families, but
a lot of times they don't even know who these
people are. Sometimes they do, and if they have their
personal information, they will then contact them and say You're
debt is forgiven. Um, but because it's a Rolling Jubilee,
(28:49):
what we would like you to do now is is
donate a little bit of money back to the cause
because you're debt is forgiven. And I'm not. I wonder
what they're numbers are for stuff like that. Extraordinarily low
for people donating then afterward. Yeah, so so not only
donating but like getting back in touch. Apparently, UM, I
read this interview with Thomas Gorky and they asked him
(29:12):
that very question, like you know, like how what kind
of response are you getting from people? And and so
they've got everybody's personal information, Um, they just don't have
it until they buy the portfolio, right, so they'll send
everyone in that portfolio a letter saying here's the amount
of debt that you no longer Oh we bought your
dead it's it's being abolished. And I think most people
(29:33):
are like, is this a scam? Are are you like
trying to get my Social Security numbers? And like that?
So they're just totally ignoring this letter and they say, no,
we're the rolling you believe do No, it doesn't because
they're like like the boy Scouts. But the but regardless
of whether those people get back in touch what, regardless
(29:54):
of whether they donate to the cause or not, they're
dead is still forgiven because the rolling you are strike
debt makes this point that this is not like they're
they're not. Their goal isn't to decide, well, who who
really do who who deserves this? They can't make that
judgment because when they buy a portfolio, they have no
(30:14):
idea who the individuals are in there. They just know
that these people um owe money, and that the likelihood,
since they're delinquent on their debt, that they either are
experiencing a time when they're down in their luck or
are getting out of a time when they're down in
their luck. That is enough that's that's good enough for
(30:34):
for Strike Debt to to justify buying their debt and
abolishing it. Well yeah, and not only that, but rolling
Jubilee and Strike Debt's goal isn't. They're not saying we're
gonna solve the consumer debt crisis, or even we're gonna
solve when we'll talk about student loans more in a minute,
but we're gonna solve the student loan problem. They're literally
just saying we're gonna solve a tiny fraction of this.
(30:57):
But what our real aim is is to raise awareness
because you just you can protest all you want, but
you simply can't ignore a real program like this right
exactly because it gets a lot of pressed too. You know. Sure,
So let's take one more break, Chuck, and then we'll
come back with more on this. Okay, we're back, We're back.
(31:41):
So um. Apparently, Chuck. Initially, they were really worried about
how they were going to be able to kind of
come into this industry because it was a pretty tight
knit industry. Yeah, like when a bank goes to sell debt,
it's not like they place a want ad and say, well,
who's out. They're like, they know who's out there. They
(32:02):
know who these firms are, and they have trusted which
is kind of a funny way to say it, working
relationships with these firms. Right, So they were thinking like, well,
we need to have people on the inside buying debt force.
It's the only way they're going to ever let us
do this. We have to we have to sneak around
and do it. The way this article puts it is, um,
they had sheep and wolves clothing, yes, buying debt for
(32:26):
them on behalf of this rolling jubilie. Right. So this again,
this article is written in two thousand twelve. Apparently that
did not pan out at all. So as they got
more into it, they almost became amazed at the willingness
of this uh secondary debt industry too to sell to
(32:46):
them knowing that they were going to abolish it or
not caring to find out whether they were abolishing or
who they were what they were doing, which means that, yeah,
this industry is so inscrupulous it doesn't even look out
for itself. Yeah, you know, so they they um, I
think as they got further into it too, and this
(33:08):
may have actually developed since two thousand twelve as well.
This is Um, this industry is is spread even more.
I think it's a little less tight knit than it
once was. There's a lot of brokers that are set
up where they're the ones that are dealing with the
banks and then turning around and selling it on behalf
of the banks and then taking a little cut of
(33:29):
whatever the portfolio goes for. Right. But then there's also
like websites that do the same thing. Just like you
have an online stock broker, there are websites where you
or I Chuck can put together a thousand dollars and
go buy a portfolio that was worth like ten to
thirty thousand dollars um. So if you want to really
(33:50):
stick it to your fellow man, um, go do that.
Go start doing that because it's something you can do online.
Now that is correct, alright, So will the work is
the big question? Uh. It certainly will work with awareness.
But as far as we're all numbers go, as of today, um,
which is what October was it? Fourth fifth fourth October
(34:13):
four seventeen, they have raised uh seven hundred, one thousand,
three hundred seventeen dollars, which this is a few hours ago,
so it's more than that probably by now and they
have forgiven about thirty two million dollars total to date, which,
like we said, is a not even a fraction what's
below a fraction of infantismal amount? An infantismal amount. Did
(34:38):
I say infantismizable? I think it just made up a word,
but it kind of works. It's so infantismal it's invisible,
that's right. Uh, it's such a small amount that it
makes no dint in the problem really, except to those
individuals and families who are like, well this really worked
out for me. But U thirty two million bucks is
raising awareness, which is a good thing. Yeah, oh yeah, yeah. Again,
(35:01):
Like there was a huge thing in two thousand twelve
when they first announced it. It was everywhere, right, everybody
was talking about it. Uh. They got another bump in
two thousand fourteen. I can't remember what happened, um, but
then I think either this year or last year, they
made the rounds with media again by buying debt from
UM something called Corinthian Colleges, which is a for profit
(35:25):
college UM like company corporation. Yeah that and Thomas Gorky
called them. He said that they were quote the worst
of the worst, and they have just tons of lawsuits
against them, um for UM just all manner of activities. Uh.
And the Rolling JUBILEEUE got something like like three and
(35:49):
a half million dollars worth of debt from them, and
this would be student loan debt, yes, um. And the
reason that they were able to do student loan days
because these this is a for profit college. So this
would have been federal student debt, yeah, like of student
loans or from the federal government. And they, uh, the
federal government does not sell their debt. No, so if
(36:11):
you have a student loan, you're through the federal government,
like the Rolling Jubilee is never going to be able
to help you, at least not directly like that. But
that also raises one of the like long standing criticisms
against this idea. If you are against the entire like
predatory lending idea of UM, the banking industry and the
(36:35):
secondary market, that the whole thing, this whole ikey mess, Right,
you're gonna criticize UM. Strike debt for contributing to it.
They're they're throwing money into it, even though they're even
though they're like abolishing debt, they're still giving money for it. Right,
And so strike this whole thing is like, hey man,
the level that we're operating on is so small that
(36:58):
we couldn't possibly affect the market. Yeah, like in their
in their wildest dreams, they could uh affect the markets
such where they could drive up the price and really
compete as a as a as a top dog in
the industry and maybe even drive some of those other
firms out of business, and like that will never ever happen. No,
And they also point out that like banks have to
(37:20):
sell this stuff anyway, or they have to get rid
of it anyway. UM, by law, they have to write
it off. So this this debt was going to be
it was going to be sold one way or another.
And they also try to buy debt at that really
lucrative stage, lucrative for the debt collectors, where you you
have been more than ninety days delinquent for about a year,
(37:45):
so you probably went through that rough patch like you
were talking about, Chuck, But now you the likelihood that
maybe you've got a job again and you're starting to
like get your debt under control and are therefore amenable
to UM an offer of just paying off UM. That's
the kind of debt they're trying to buy because that's
the Those are the people who are most vulnerable to
(38:07):
this kind of um this industry, right, So they're saying,
all this is gonna happen anyway, and we're not affecting
the the the debt that people are are paying, and
we're not really helping the banking industry anymore than they
would have been helped anyway. The thing that sticks to
me though, is and I couldn't find this. Did you
see if they bought that debt from Corinthian Colleges directly? Oh?
(38:30):
I don't know, because if so, then they were they
were paying money to Corinthian Colleges UM. And I could
see that that criticism just being there because Corinthian College
UM or any for profit university UH isn't required to
write off bad debts, so they wouldn't be forced to
do that if they bought from them. They also work
(38:53):
with a lender. That's just a guess. I don't know. Yeah,
I don't want to speak to that. Well. I saw that.
I saw this one that basically was teaching individual investors
how to go get into this, and one of the
things they suggested was go hang out at small claims
court and when you when a company comes in and
they're taking some debt or to court to collect um
(39:14):
on a debt. Just go up to them after court
and be like, hey, let me handle this. Just sell
me all your debts, bundle them together, and I'll buy
it from you. So people do go directly to companies
that have have like bad debts on their books. Um,
so it's possible they did go to Corinthian College. I
didn't see that one one way or the other. Very interesting.
(39:36):
And then there was one other thing that was kind
of an early concern that apparently didn't pan out, and
that was that whether or not the government could consider
this debt abolishment as income for the person who owed
the debt and would therefore oh taxes on it. And
(39:57):
so apparently occupied Walster your strike debt with some lawyers,
and um, the lawyers said it is our professional opinion
that this would not qualify as income, and so they
these people should not owe any tax burden. And so far,
no one's, no one's had, no one's gotten a tax
bill for their tax being abolished by strike debt. It's
(40:18):
so convoluted, it's a little complied. Do you got anything else? No,
I think that's it. Man, Uh, let's see. If you
want to know more about the Rolling Jubilee, good, check
out this article on how stuff works. It's a good one.
Grab your ban Joe yep and um, since uh, keep
an ear out eventually for like just a larger debt
(40:41):
episode because it is interesting and weird. Um and since
I said weird, it's time for chuck administrative details beautiful.
This is part two where we thank people for their
lovely gifts and the kindnesses that they bestow upon us.
All right, I'm going start with Emily Winfield. She sent
(41:02):
a well, she sent me a reformed Bedwetters Society patch.
I'm on record as a late bed wetter and I've
always championed people not being ashamed of that. So apparently
Emily was and they she made a patch. It's really cool.
That's amazing. I gotta see that. Why I didn't see it? Uh,
let's see. Jackson Harder send us a Jigsaw puzzle postcard.
(41:24):
I appreciate that, Thanks Jackson. David Velasquez and Samantha Penna
sent another wedding invite. Oh yeah, muzzle top. Nick Sokol
sent us a bunch of great stuff from Korea. Thank you,
very much for that. Jonathan Beale sent us handmade copper
flasks from his company. Uh. Sara Toto dot com s
(41:46):
E R t O d O stuff. You should drink
copper flasks. They are to be beautiful. Terry M has
a daughter named Chuck, who wrote us a very kind
thank you note about the HIV episode in we want
to say, Terry, we hope your friend's partner is doing well. Absolutely.
Chris Wecht of Carlton Brewery in New Jersey, well, he
(42:07):
sent us beer. Thank you. Ryan and Chloe sent us
a Montreal postcard. Thank you. Caroline Cross, she was very
moved by the M the MS episode because her mom
had MS, so she sent some sponge candy from Buffalo,
New York to make me feel better about my friend Billy. Nice.
(42:29):
That was very sweet, it was Uh. Connor g sent
us some candy, sent us some smarties and a nice letter.
Thanks Connor Te. Sarah van dong or Bean Dange d
O n g E send us her book I Love
Love Walla Walla. It's her book about loving Walla Walla, Washington.
(42:49):
Alexander Peppe, thanks for the thank you note, uh, and
you're welcome for helping you kick your diet coke habit.
That's right. Julia Decaman sent us uh, well, sent some
hand painted pictures for me. It was pictures of my
dear departed dogs, Buckley and Lauran. Uh. For you, she
sent you one Charleston Hospitality, which was a painting of
(43:11):
the Belmont and Queen Street grocery. And for Jerry sent
her one of a pink Peoni and uh, you can
go to buy b y j Deckman dot com uh
to check out her work. And since then we have
paid her. She's so sad. Paid her for portraits of
Lauren and we're about to commission another one for the Wizard.
(43:33):
So the core for will be represented by Julie Duckman's
art in our household Caroline. And I'm not even gonna
attempt your last name, Caroline. I'm just gonna spell it
s w I s z c Z. That's swizzle stick.
Put that together with a dot com and it will
take you to her site which has They're awesome zene
(43:55):
featuring us called the dread appropriately enough, Jordan Pearson from
Canada sen as some Canadian chips lace ketchup an old
Dutch ketchup chips sALS gluten is what it says because
it's French Canada. Uh. And also Jordan had the nicest
handwriting I think I've ever seen. Yeah, oh yeah, thanks
(44:15):
a lot for that. Nice handwriting these days is that'll
take you far in the past, um, let's see. And
then Katherine from Vello Drome sent us some CDs. Thanks
a lot for that. Captain Matthew Grubs and us his
first children's book called Tommy P. Tinker and the super
Duper Rare Bottle cap nice. And then we want to
(44:36):
thank Max from chirps Chips who sent us some chirps chips.
Remember in our our crickets episode Crickets um well eating
crickets basically, um, we mentioned chirps and they heard it
and they said, here, guys, try this. Did you try
hi yet? I have yet to try it. I think
we should try it like on Facebook Live or something
(44:56):
like that. That's a good idea, you know. Uh ja
more And that is with one oh send us his
hot sauce. Spank you very much is the name of
the hot sauce. I'm not just being cheeky, n And
then that's that's all I've got written down. You got anymore?
I just got one more Matthew for Minnesota, Sin. It's
his joke book, Uh, the River of Wahaha. Great. I
(45:19):
love a good joke book. Great. Well, thanks everybody for
sending us stuff, and if you want to send us stuff,
we always are grateful for it. Um You can get
in touch with us via Twitter. I'm at josh um
Clark and the official handle is s y s K podcast.
You can join us on Facebook dot com slash stuff
you Should Know or slash Charles W. Chuck Bryant. You
(45:40):
can send us all an email to Stuff Podcast at
how stuff Works dot com and has always joined us
at our home on the web, Stuff you should Know
dot com for more on this and thousands of other
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