This is one of those "sign of the times" pieces that I suspect connects very well with the public.
The Chicago Tribune's Steve Franklin explored the new ways that people are getting into financial trouble:
- Signing up for payday loans with offshore lenders that carry interest rates of up to 2,000 percent. That is not a misprint: two THOUSAND percent.
- Leveraging their cars for car-title loans with 200 percent interest rates. Many lose their cars.
I interviewed Franklin via e-mail about the project.
Tompkins: What were you trying to accomplish with this project?Franklin: I write for the
Trib's
business section and after several meetings of fellow reporters in the section we came up with the idea of reporting on all the ways that the economy has changed, thereby making consumers more vulnerable. We felt it was important to focus on specific changes such as the growth in payday loans and zombie debt or the marked increase in the sale of debt and aggressive attempts to collect money owed years ago.
How is this project different from the hundreds of other stories about personal finance, troubles and hard times?
Franklin: We are trying to show that what makes these hard times different are the economic trapdoors that either didn't exist before or didn't exist at such levels. There is a lot of finger-pointing today about what's gone wrong with the economy, and this is one small attempt to show specifically why this cycle is different than before.
What surprised you most while reporting this story?
Franklin: In the early reporting, the lack of state laws or regulation dealing with high interest lenders helped make the stories more pertinent. And this seems to be a problem as the financial crisis grows and new industries are created that claim to offer solutions for troubled consumers. So, too, the donations flowing from the payday loan industry to Illinois officials was something that we hadn't explored in depth before.
If you had more time, more resources, what else would you have done to take the next step on this story?
Franklin: We do have more time and we intend to keep trying to look for new angles, new data, new ways of making the points compelling and important. For example, explaining the fallout from the mortgage crisis and problems that have only recently popped up seems quite important. From the rumble out there among groups interested in these issues, I think we may be making an impact. This week U.S. Sen. Dick Durbin [D-Ill.] introduced a bill capping "excessive" interest rates for payday loans and car title loans, and in doing so pointed to one our stories which talks about this.
