ONTD Political

One Year Later, Occupy Has A Brilliant New Plan for a People's Bailout

1:37 pm - 11/13/2012

Occupy Wall Street has a great new answer to all the doubters who ripped on them over the past year for not having a specific enough plan.

It took a while, but a new offshoot group that grew out of Occupy called Strike Debt has a highly specific, highly brilliant plan for how to improve the lot of the 99%: It’s called Rolling Jubilee, and it’s basically a crowd-funding campaign to buy up big swaths of people’s debt and simply cancel it. It’s sort of like the economic equivalent of buying slaves to free them.

Here’s how it works: All kinds of debt, from student loans to credit card to mortgages, are sold by the people who originally made the loans to collectors eager for the chance to take the interest payments on those loans for years to come. Loans get bundled into big groups and sold as securities on the open market. Rolling Jubilee will raise money through crowd-funding and use that money to buy bundled loans like any other institution—but once they own the debt, rather than collecting on it they’ll simply cancel it.





You’ve probably heard of a simliar thing happening when Freddie Mac and Fannie Mae buy mortgages from banks or debt collectors buy debt from credit card companies—one day in the mail you get a notice saying, Your debt is now owned by this guy—please keep paying. In this case, however, you’d get a note saying, Your debt is now owned by Strike Debt, and they’ve voided it—your balance is now $0.

Sound too good to be true? Well, there are a couple ways this doesn’t work: First, you can’t ask the Rolling Jubilee to please personally pay off your student loan. The Jubilee will be buying securitized debt bundles just like other institutions, which means they’re not targeting individual loans. Incidentally, the individuals paying these loans have no idea that they’ve been “bundled.” So while you may choose to donate to the Rolling Jubilee there is no guarantee that it’ll personally benefit you.

There’s also some doubt as to whether banks will be willing to sell loans to the Rolling Jubilee. Business Insider cites an example from the mortgage industry in which banks as well as Freddie Mac were unwilling to sell mortgages to people not planning to collect on them.

But if there’s one thing we know about banks it’s that they tend to buy and sell all kind of sketchy stuff. If they can get their asking price for bundle of loans, there’s no reason to think they’d be constitutionally unwilling to sell them to the Rolling Jubilee—it’d go against everything they stand for.

So while donating to the Jubilee may not help you specifically, it will probably help someone. And it may well help you—it’s like a lottery. And the best part: every dollar they raise has a huge multiplier effect. If you have $10,000 in student loan debt, by the time you pay it off over a number of years with the interest factored in you might actually pay $30,000, not $10,000. The project doesn’t even officially kick off until November 15, and they’ve already raised $93,000 to cancel $1,877,000 worth of debt over the life of the loans.

And we’ve all seen how powerful crowd-funding can be when it rallies around a common cause. A fundraising drive for Karen Klein, the bullied school bus monitor, this summer raised $683,000 for one person. If Rolling Jubilee raised that amount it’d erase $20 million in debt for individuals.

And aside from the positive of debt relief, the Guardian points out the other benefit here is that newly debt-free people will have new spending power, and their increased spending will boost the economy.

I donated a small amount to Barack Obama’s campaign in 2008 but I didn’t this year—it just disgusted me too much to watch billions of our hard-earned dollars pile up just to broadcast attack ads back in our faces. After the last four years, it seemed there must be something better to spend our money on. I’ve decided to donate what I didn’t to the Obama campaign this year to Rolling Jubilee. If the amount raised for Obama’s re-election campaign is matched by Rolling Jubilee, it’ll erase more than $30 billion in consumer debt and who knows what kind of economic growth it’d kickstart.




Brilliant plan, right? And the best part, it’s totally non-political, non partisan, and it doesn’t require Congress to pass any new regulations. It’s a people’s bailout, and the idea is to harness the power of people to impact the economy at a large scale, rather than depending on the government. It might have taken a while, but OWS has answered with a plan, and their plan kicks ass.



Source

What do you think, ONTD_P?
wingstar102 14th-Nov-2012 01:09 am (UTC)
Holy shit! This idea has so much potential to do exponential amount of good that it's mind boggling. Going to have to donate!
aviv_b 14th-Nov-2012 01:59 am (UTC)
I love this. I don't know if they can specialize in the type of debt, but I'd love to see health care debt being targeted at the top given a priority. No one should have to go broke in order not to die.
moiread 14th-Nov-2012 06:16 am (UTC)
I read a statement somewhere from someone official that says right now they're focusing on medical debt. I will attempt to dig that up.

Edit: AHA! Here it is:

https://twitter.com/StrikeDebt/status/267665123555028992
https://twitter.com/StrikeDebt/status/268051004958834690

Edited at 2012-11-14 06:24 am (UTC)
aviv_b 14th-Nov-2012 02:18 pm (UTC)
That's excellent news! I suppose we could end up paying for somone's elective cosmetic surgury, but that's OK, if we mostly help people who can't afford health insurance.
teacoat 14th-Nov-2012 02:03 am (UTC)
This sounds like a great idea! I'll definitely be donating.
popehippo 14th-Nov-2012 02:12 am (UTC)
where do I sign up
window_girl 14th-Nov-2012 10:07 pm (UTC)
MTE!

I mean, I would feel bad for taking even a couple hundre dollars that could have gone to someone more needy-I don't have a whole lot of debt, but it's crushing me. I can't get hired at McDonald's FFS, how am I supposed to make payments. It's devastating my credit report and a chance to ever go to a real college.
borderline_mary 14th-Nov-2012 02:20 am (UTC)
OH MY GOD.

I will definitely be donating to this.
clarice_01 14th-Nov-2012 02:26 am (UTC)
This is such a cool idea. I will actually donate to this! (I usually just donate to Relay for Life.)
tabaqui 14th-Nov-2012 02:27 am (UTC)
I think this is amazing.
tijae 14th-Nov-2012 02:34 am (UTC)
I hope this is a huge success that helps a lot of people.
callmetothejedi 14th-Nov-2012 02:42 am (UTC)
This sounds amazing. From a completely selfish perspective, I know that my boyfriend could use help from this group, as could a lot of the folks I went to college with.
sadisticsidhe 14th-Nov-2012 02:51 am (UTC)
First off I have no mind for economics or finance let me say that.

Secondly, I've read this article several times and maybe the answer is staring me in the face but how do they get the loans? Like they buy the loans or bundled loans and then they cancel it. I got that. They buy the loans using money that people donate. I also got that. How are they buying the loans so cheap? Like if i have 10K in student debt and they go to buy my bundle? loan?, how are the able to buy it for like less than 10k? Why would be debt holder sell it for less than 10k? Or are they only buying part of my loan?

Maybe I'm asking the wrong question...
temperance_k 14th-Nov-2012 03:01 am (UTC)
So, I was curious about this as well, and I did some (very quick and light) digging.

Apparently, the key is that the group is buying distressed debt, which is basically debt which has a VERY high risk of default. I'm guessing that due to this high risk, the debt sells for much, much cheaper because there's almost no hope in recuperating the money anyway! So, whoever owns the debt, assuming you want it paid, would really have to hound the person/company in order to get their difference. Instead of spending money and resources to do this when there's little to no chance of it happening, might as well make a few bucks off of the debt.

That's the reasoning, I guess. Full disclosure: I KNOW NOTHING about finance.
tsu_ 14th-Nov-2012 03:07 am (UTC)
Basically banks normally hold a whole bunch of 'bad' debt (debt that is not regularly paid) which normally has very high interest and low repayment (the customers cannot afford to pay it back) so what they do is randomly pick a couple of awful/extreme-risk loans mix it with some middling/low-mid risk loans and sell it as a 'lot' to debt-collecting companies.

The debt companies (who have debtors + resources to chase and harass the original loan-owners) will buy the debt from the bank at a low price, from the idea that they can make profit if collecting the rest of the high interest

or from their website:

Banks sell debt for pennies on the dollar on a shadowy speculative market of debt buyers who then turn around and try to collect the full amount from debtors. The Rolling Jubilee intervenes by buying debt, keeping it out of the hands of collectors, and then abolishing it.
sadisticsidhe 14th-Nov-2012 03:13 am (UTC)
Oh! I think I get it.

Key word there is think.

I guess what was throwing me is I either didn't see or they didn't say that it was high risk debt. So I was like "But why though?" It makes more sense now.
tsu_ 14th-Nov-2012 03:23 am (UTC)
yeah what I find really interesting is that what they're doing is bascially the *reverse* of what banks did with derivatives. Before the Lehman collapse, banks would mix high-risk investments with low/moderate risk investments (to get an average or a 'deriative' value that assessed as average risk) and sell it to people's pensions/401K/livelihoods etc etc and that's really how the whole sub-mortgage-prime bubble explosion really started
operatic_diva 14th-Nov-2012 04:22 am (UTC)
My $5,000 personal loan debt was sold for 10 cents to a company. They paid like $20,000 for about $350,000 in debt. And they are ruthless, calling my neighbours, my employers, my boyfriend- they even showed up at my door.

I think this is a great idea.
roseofjuly 14th-Nov-2012 06:34 am (UTC)
That's illegal in the U.S., them calling your neighbors and employer, btw. Hopefully you reported them!
sunhawk 14th-Nov-2012 02:55 am (UTC)
Will only Americans be able to donate or can anyone donate? The FAQ didn't say either way. Very interesting idea, hope it works!
free_spoons 14th-Nov-2012 03:04 am (UTC)
This idea sounds great. I'd just want them, when the random person gets their "Your debt is now $0" letter to include something about Rolling Jubilee, including how to donate. Image the cumulative effect if everyone who had their debt forgiven still payed 1 payment back to Jubilee to keep the project going?*


*yeah, I know not everyone could or would want to make a donation, but if you didn't know about rolling jubilee until your debt was forgiven, I would bet quite a few would pay it forward.
squeeful 14th-Nov-2012 03:21 am (UTC)
Or even just tell other people about it and maybe they could donate.
tsu_ 14th-Nov-2012 03:08 am (UTC)
I love this idea, however I wish it worked also for student loans :(
bushy_brow 14th-Nov-2012 03:20 am (UTC)
The article claims that it would work for student loans, but I don't buy it, personally. Since student loans are guaranteed by the government, I don't think they'd fall into the high-risk category in order to be bundled in the first place. Though I would be more than happy to be proven wrong.
clarice_01 14th-Nov-2012 03:26 am (UTC)
They want to do it for student loans, but don't think they can right now. From their FAQ:
Can Rolling Jubilee abolish student debt?
Student debt has surpassed $1 trillion partly because it is one of the most protected forms of debt by federal law. Student debtors may not discharge their loans in bankruptcy and lenders have rights to garnish wages and social security payments. The vast majority of student loans have these federal guarantees. We cannot buy these loans because there is no secondary market. However, we believe it may be possible to buy private student loans that are not guaranteed by the federal government; Strike Debt may attempt to purchase this kind of debt after doing further research.
bushy_brow 14th-Nov-2012 03:40 am (UTC)
That's what I figured. Boo, anyway. ;-P
tsu_ 14th-Nov-2012 03:28 am (UTC)
I checked their website - and they(Rolling Jubliee) clearly state they cannot absolve student loans:

Student debt has surpassed $1 trillion partly because it is one of the most protected forms of debt by federal law. Student debtors may not discharge their loans in bankruptcy and lenders have rights to garnish wages and social security payments. The vast majority of student loans have these federal guarantees. We cannot buy these loans because there is no secondary market. However, we believe it may be possible to buy private student loans that are not guaranteed by the federal government; Strike Debt may attempt to purchase this kind of debt after doing further research.

I don't think it would work for *all* mortgage loans either, mostly because if it's asset-based then the bank would just seize the property. What they are probably targeting is private loans (like healthcare) or credit card debt.
bushy_brow 14th-Nov-2012 03:41 am (UTC)
Makes sense.
angelofdeath275 14th-Nov-2012 07:49 pm (UTC)
same here :(
shortsweetcynic 14th-Nov-2012 03:32 am (UTC)
This is AWESOME.
coraki 14th-Nov-2012 04:14 am (UTC)
I heard about this last week. I liked it on my facebook and have been getting updates.

Nov. 15th is having a telethon and variety show, with a bunch of celebrities. Tickets are already sold out. The event though will be live streamed from www.rollingjubilee.org though.

http://www.lepoissonrouge.com/lpr_events/peoples-bailout/
cyranothe2nd 14th-Nov-2012 05:18 am (UTC)
Looks like they just raised $100,000 in a fundraiser. They are also having a benefit concert on Thurs.

http://www.democracynow.org/2012/11/13/headlines#111311

You can donate at rollingjubilee.org
makemerun 14th-Nov-2012 05:59 am (UTC)
It's like Fight Club-the-movie without terrorism!

I fucking love this.

SOMEBODY HOLD MY HAND LET'S DO THIS

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hinoema 14th-Nov-2012 07:18 am (UTC)
This is fifty kinds of awesome and I will definitely be donating.
hinoema Ugh, the source comments...14th-Nov-2012 07:24 am (UTC)
I read a lot of "This will only encourage people to go into debt and expect the debt fairy to bail them out!" and "This will only devalue th dollar!" and just, some people...
evilgmbethy 14th-Nov-2012 09:11 am (UTC)
this is awesome!!
electric_mole_x 14th-Nov-2012 03:16 pm (UTC)
This is interesting, and sounds like a pretty good plan. The skeptic in me would love to see it in effect though, and see the results after they've successfully bought and cancelled some loans first hand. Idk. Consider me jaded when it comes to leaving people to do the right thing when you funnel tons of money to them.
bushy_brow 15th-Nov-2012 03:17 am (UTC)
That was my second thought, right behind, "I wish this would work for student loans..."
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