After a lengthy government career defined by his central role in bailing out predatory Wall Street banks as former President Barack Obama’s Treasury Secretary, Timothy Geithner appears to have found his true calling in the private sector, where he now heads a large financial institution that exploits the economic struggles of poor Americans for profit.
“This industry is a pipeline to transfer money from the poor to the ultra-rich. Your economy, rigged to redistribute wealth to the top.”
—Ben Wikler, MoveOn.orgAs president of Warburg Pincus—a major New York private equity firm—Geithner helps manage a lucrative predatory lending outfit called Mariner Finance, which mass-mails loan checks to low-income Americans, hides exorbitant interest rates in the fine print, and quickly sues those who fail to repay the loan and interest in time, according to a detailed Washington Post report published late Sunday.
“It’s basically a way of monetizing poor people,” John Lafferty, who worked as a manager trainee at a Mariner Finance branch in Nashville, told the Post. “Maybe at the beginning, people thought these loans could help people pay their electric bill. But it has become a cash cow.”
Part of the burgeoning “consumer installment” industry—which consists of firms that offer slightly larger loans than payday lenders—Mariner Finance has hundreds of thousands of customers who, often in desparation, use the loans to cover soaring medical costs, home repairs, and other urgent expenses.
“This industry is a pipeline to transfer money from the poor to the ultra-rich,” Ben Wikler, Washington director of MoveOn.org, wrote in response to the Post‘s report on Sunday. “Obama’s treasury secretary Tim Geithner is president of one of the private equity firms making a killing from it. Your economy, rigged to redistribute wealth to the top.”
In one illustrative case detailed by the Post, Barbara Williams—a 72-year-old retired school custodian—cashed a $2,539 loan check from Mariner to pay for dental work and hospital bills that had mounted after “three mini-strokes and pneumonia.”
“In a just world, Geithner would be shamed out of society and forced to beg for scraps after a story like this was published. Instead, he’ll keep making millions.”
—Libby Watson, Splinter
“Within a few months, Mariner suggested she borrow another $500, and she did,” the Post reports. “She paid more than $350 for fees and insurance on the loan, according to the loan documents. The interest rate was 30 percent.”
After Williams fell behind on her payments, Mariner sued and “won court judgment against her in April for $3,852, including $632 in fees for Mariner’s attorney.”
Reacting to the Post‘s reporting—which also revealed how Mariner harasses customers and their relatives with phone calls if they’re late on payments—Splinter‘s Libby Watson wrote: “In a just world, Geithner would be shamed out of society and forced to beg for scraps after a story like this was published. Instead, he’ll keep making millions—while people like Barbara Williams are forced to take out predatory loans to pay their hospital bills.”
While Mariner refused to say how many loan checks it mails out to vulnerable Americans, the Post estimates that “the number is probably in the millions”—meaning there are likely countless others with stories similar to Williams’.
“Were there a few loans that actually helped people? Yes,” concluded an anonymous former branch manager in an interview with the Post. “Were 80 percent of them predatory? Probably.”
TORONTO — Our “corporate coup d’état in slow motion,” as the writer John Ralston Saul calls it, has opened a Pandora’s box of evils that is transforming America into a failed state. The “unholy trinity of corruption, impunity and violence,” he said, can no longer be checked. The ruling elites abjectly serve corporate power to exploit and impoverish the citizenry. Democratic institutions, including the courts, are mechanisms of corporate repression. Financial fraud and corporate crime are carried out with impunity. The decay is exacerbated by the state’s indiscriminate use of violence abroad and at home, where rogue law enforcement agencies harass and arrest citizens and the undocumented and often kill the unarmed. A depressed and enraged population, trapped by chronic unemployment and underemployment, is overdosing on opioids and beset by rising suicide rates. It engages in acts of nihilistic violence, including mass shootings. Hate groups proliferate. The savagery, mayhem and grotesque distortions familiar to those on the outer reaches of empire increasingly characterize American existence. And presiding over it all is the American version of Ubu Roi, playwright Alfred Jarry’s gluttonous, idiotic, vulgar, narcissistic and infantile king, who turned politics into burlesque.
“Congress works through corruption,” Saul, the author of books such as “Voltaire’s Bastards: The Dictatorship of Reason in the West” and “The Collapse of Globalism and the Reinvention of the World,” said when we spoke in Toronto. “I look at Congress and I see the British Parliament in the late 18th century, the rotten boroughs. Did they have elections? Yes. Were the elections exciting? Yes. They were extremely exciting.”
Rotten boroughs were the 19th-century version of gerrymandering. The British oligarchs created electoral maps through which depopulated boroughs—50 of them had fewer than 50 voters—were easily dominated by the rich to maintain control of the House of Commons. In the United States, our ruling class has done much the same, creating districts where incumbents, who often run unchallenged, return to Congress election after election. Only about 40 of the 435 seats in the House of Representatives are actually contested. And given the composition of the Supreme Court, especially with Donald Trump poised to install another justice, it will get worse.
The corruption of the British system was amended in what Saul called “a wave upwards.” The 1832 Reform Act abolished a practice in which oligarchs, such as Charles Howard, the 11th Duke of Norfolk, controlled the election results in 11 boroughs. The opening up of the British parliamentary system took nearly a century. In the United States, Saul said, the destruction of democracy is part of “a wave downwards.”
The two political parties are one party—the corporate party. They do not debate substantive issues. They each support the expansion of imperial wars, the bloated military budget, the dictates of global capitalism, the bailing out of Wall Street, punishing austerity measures, assaulting basic civil liberties through wholesale government surveillance and the abolition of due process, and an electoral process that has cemented into place a system of legalized bribery. They battle over cultural tropes such as abortion, gay rights and prayer in schools. We elect politicians based on how we are made to feel about them by the public relations industry. Politics is anti-politics.
The Republican Party built its political base in these culture wars around Christian fascists, nativists and white supremacists. The Democratic Party built its base around those who supported workers’ rights, multiculturalism, diversity and gender equality. The base of each party was used and manipulated by elites. The Republican Party elites had no intention of banning abortion or turning America into a “Christian nation.” The Democratic Party elites had no intention of protecting workers from predatory corporatism. Everyone was sold out. The ascendancy of a populist right, dominated by racists and bigots, is the inevitable product of the corporate coup d’état, Saul said. He warned we should not be complacent because of President Trump’s imbecility. Trump is immensely dangerous. “The insipid,” Thomas Mann wrote in “The Magic Mountain,” “is not synonymous with the harmless.”
“How could a civilization devoted to structure, expertise and answers evolve into other than a coalition of professional groups?” Saul asked in “Voltaire’s Bastards.” “How, then, could the individual citizen not be seen as a serious impediment to getting on with business? This has been obscured by the proposition of painfully simplified abstract notions which are divorced from any social reality and presented as values.”
“The rational elites, obsessed by structure, have become increasingly authoritarian in a modern, administrative way,” he wrote in another section of the book. “The citizens feel insulted and isolated. They look for someone to throw stones on their behalf. Any old stone will do. The cruder the better to crush the self-assurance of the obscure men and their obscure methods. The New Right, with its parody of democratic values, has been a crude but devastating stone with which to punish the modern elites.”
All despotic regimes, Saul said, carry out their final battle for control by contending against public officials and government bureaucrats, the so-called deep state, which views the rise to power of demagogues and their sleazy enablers with alarm. These traditional courtiers, often cynical, ambitious, amoral and subservient to corporate power, nevertheless engage in the decorum and language of democracy. A few with a conscience win minor skirmishes to slow the rise of tyranny. Despots see these courtiers and democratic institutions, no matter how anemic, as a threat. This explains the assaults on the State Department, the Justice Department, the Environmental Protection Agency, the Department of Education and the courts. Despots use their appointees to undermine and destroy these institutions, mocking their existence and questioning the loyalty of the professionals who staff them. The reviled and neutered public employee surrenders or walks away in despair. Last year, the entire senior level of management officials resigned at the State Department. Resignations continue to bleed the diplomatic core, as they do at other agencies and departments, and last week included James D. Melville Jr., the U.S. ambassador to Estonia, and Susan Thornton, the nominee to be assistant secretary for East Asian affairs.
“For the President to say the EU was ‘set up to take advantage of the United States, to attack our piggy bank,’ or that ‘NATO is as bad as NAFTA’ is not only factually wrong, but proves to me that it’s time to go,” Melville said in the post that announced his resignation.
Once a process of deconstruction is complete, the system calcifies into tyranny. There remain no internal mechanisms, even in name, to carry out reform. This corrosive process is being played out daily in Trump’s Twitter rages, lies, smears and the barrage of insults he levels against public servants, including some of his own appointees, such as Attorney General Jeff Sessions, as well as institutions such as the FBI.
Witnessing this, Saul berates the American press too, which he said willingly plays its part in the charade for ratings and advertising dollars.
“Trump gives these astonishingly Mussolini-ish press conferences,” he said. “He says to the press, ‘Shut up. Stop!’ The press screams at him like a mob, a bunch of cattle. How can they be taken seriously? It is like the end of the Roman Republic. Important political leaders from the Senate, along with their rivals, would move around Rome with 50 people to protect them. Scenes, exactly like Trump’s interactions with the press, defined the end of the Roman Republic. Nobody knew what was going on. There was no dignity. You can’t have a democracy without a level of respect and dignity. You only have chaos. This chaos eventually leads to a call for autocratic order. Trump benefits from the confusion, even though he resembles a cartoonish figure out of a funny novel, a character from Jean Genet’s ‘The Balcony,’ although without the self-awareness.”
Trump’s decision to launch a trade war—Canada will impose punitive measures on $12.63 billion worth of imported American goods in response—is an example of the damage a despot who has little understanding of the economy, politics, international relations or law can do. These self-inflicted wounds, Saul warned, see despots intensify attacks on the demonized and the vulnerable, such as Muslims and the undocumented. Despots frantically scapegoat others for their mess, often inciting violence among their supporters to placate an inchoate rage.
“I’ve always opposed trade deals not because I oppose trade,” Saul said, “or because I thought they were about getting a fair balance in the trade, but because the trade deals were about something else. They were about deregulation. They were about handing power to corporations and banks. They weren’t about trade. Trump has again and again attacked the Canadian dairy system. Nobody has stopped to ask him, ‘Why are you opposing this instead of adopting it for yourself?’ A lot of American dairy farmers would like to have the Canadian system.”
“The free market approach to agriculture produces a surplus that drives prices down and destroys the income of farmers,” Saul said. “There are two ways of responding to this. One of them is subsidizing. Europe, following the old social democratic approach, subsidizes their agricultural sector. This drives down the income of farmers, so [the governments] subsidize [agriculture] more. They have enormous surpluses. Periodically, they’re throwing millions of tomatoes on the streets.”
“The United States claims it embraces the free market, but it does the same thing as the Europeans,” Saul said. “It too heavily subsidizes the agricultural industry. This leads to American dairy farmers producing too much milk. This economic argument says the way to win is to mass-produce cheap goods. This is the Walmart argument. You’re not selling your milk or cheese for enough to make a living. The end result is, even though you subsidize them, the farmers go bankrupt. They commit suicide. You have terrible unhappiness in the [U.S.] dairy community.”
“We have a very efficient management system in Canada that keeps the prices up, not so high that working-class people can’t buy milk and cheese, but it keeps the prices up high enough that farmers can make a proper living,” Saul said. “Because farmers can make a proper living they’re not committing suicide. What Trump is saying to Canadians is that they should give up a system that works so Canadian farmers can commit suicide with American farmers.”
“The problem with the Western world is surplus production,” Saul said. “We’re in surplus production in almost every area. But there is a terrible distribution system where people around the globe suffer and die from starvation. This is a distribution problem, not a production problem.”
Saul said the imposition of tariffs and the crude insults Trump uses against American allies—he called Canadian Prime Minister Justin Trudeau “dishonest and weak”—are rapidly destroying America’s clout and standing in the global hierarchy. This behavior is having very negative political, economic and social consequences for the United States.
“The whole world, the Western world in particular, invested enormously in the idea that the United States is the leader,” Saul said. “The idea that the United States is to be admired. What’s sad about it is Americans take it for granted that the world loves them. They’ve never analyzed the responsibilities that come with being the leader. It’s what you expect from a good parent. You act in a certain way. People want to identify with the United States. It’s been that way since the Second World War. All this is being thrown away. Like or dislike Obama, he rebuilt a great part of the world’s admiration for the United States. I know what his failures were. But I also know his strengths. He was a president who was capable of acting and talking like the intelligent, civilized American that everyone wants to admire.”
“But there’s always a shadow to the bright tower,” Saul went on. “Trump’s feeding that shadow. ‘Americans are stupid. Americans are corrupt. Americans are not educated. Americans can’t be trusted.’ The whole list. The longer the chaos goes on, the worse it gets.”
The collapse of the legislative and executive branches of government has now been accompanied by the collapse of the judiciary. The loss of an independent judiciary, Saul warned, is especially ominous.
“The biggest problem in the United States is a very powerful and deeply corrupted Supreme Court,” Saul said. “This will set patterns for decades. It will be hard to undo the evil being put into place.”
Saul despaired, at the same time, over the Trump administration’s attack on public education, which he called “the most fundamental service of government when it comes to a democracy.”
“What holds democracy up?” Saul asked. “What makes democracy work? Public education is number one. A well-educated citizen. [Secretary of Education] Betsy DeVos is undoing that. There is a special place for her in hell.”
U.S. trading partners and allies such as Canada and European states will, he said, reduce their dependence on the American market. The traditional strategic and political ties to Washington will be steadily weakened. And when the next financial crash comes, and Saul expects one to come, the United States will be bereft of partners when it needs them most.
“If you treat your closest allies as a threat, who is going to stand with you?” he asked.