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.
As 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 recently.
"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."
"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%."
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% of them predatory? Probably."