Many Americans owe far less actual debt than their balance sheets imply, since banks are willing to accept pennies on the dollar to ensure at least some repayment on defaulted loans. Traditionally, debt collectors buy up the discounted loans from banks and harrass (strike) debtors to pay the full amount. In doing so they make a tidy profit by collecting more money than the bank would have been able to.
Operation “Rolling Jubilee” aims to disrupt the predatory debt collector trade by using charitable donations to buy discounted loans directly from banks and never asking debtors to pay the full amount. After a star-studded opening New York gala, the Occupy Wall Street offshoot has raised enough to forgive $5 million in debt.
Whatever you do, do NOT support Occupy Wall Street's debt relief drive here: rollingjubilee.org. Debt, like true love, is forever.—
Stephen Colbert (@StephenAtHome) November 15, 2012
For this latest crowdsourcing experiment, Occupy Wall Street seems to have come to terms with the fact that forgiving trillions in debt is more theatrics than practical. “We’ve always seen the Rolling Jubilee as a means, not an end. We know we’re not going to buy $11 trillion worth of debt,” said Astra Taylor, co-founder of Strike the Debt, the umbrella organization for Rolling Jubilee. “But it’s also eye-opening because so many people are unaware that there’s a secondary market of debt.”
Indeed, New York University Professor of Economics, Lawrence J. White, seemed diplomatic about the project. “I truly believe the Occupy Wall Street people have good intentions in all of this,” he admits. “It’s good PR, it’s good theatrics, but in terms of actual accomplishment, it’s pretty small.”
Rolling Jubilee’s online experiment isn’t really even for individual debtors, since they’ll never know if it was their debt that was bought in the first place. “The point of Rolling Jubilee is that it’s doing secret random debt forgiveness, not because that’s the most effective way to help out struggling indebted Americans, but because it’s about time that ordinary Americans started getting help with their liabilities rather than just too-big-to-fail financial institutions,” explains Reuters financial blogger, Felix Salmon.
Not everyone is thrilled about visualizing debt collectors, however. “If you can’t collect debt there will be no extension of credit, so you’re going to harm those that pay their bills, and you’re going to harm those that don’t anyway,” said Jan Stieger of Executive director of DBA International, an (admittedly biased) association representing debt buyers. “Debt buyers, although obviously the press and the media love to make them out as villains, they actually do provide a service to consumers”
Regardless of the practical outcomes, kudos to Occupy Wall Street for another public relations smash hit. Most movements go their entire existence without a single press victory, let alone more than one. If nothing else, their clever online strategies is something other causes could learn from.