Occupy Movement Buys Up Debts…And Forgives Them!

'Occupy' Zürich Lindenhof 2011-10-30 15-56-28Douglas Rushkoff describes a positive turn in the life of the Occupy movement, for CNN via his blog:

Much like President Obama, the Occupy movement is alive and well and entering its second term, thank you very much. It’s no longer about squatting in public parks, getting on the news, or — in some cases — getting arrested. No, instead this decentralized, bottom-up, anti-Wall Street effort is taking aim at your medical, student and other loans: It aims to relieve your debt.

Just as Obama appears to have left the lofty rhetoric of “being the change” behind him as he confronts the more practical realities of working a financial plan through an intransigent Congress, the occupiers have given up on winning media mindshare or public support and have turned instead to direct action that helps real people. In its Act 2, Occupy is just occupying the space where it’s needed.

Remember, Occupy does not have leaders, an administration or some central office. It’s not a single body with a mission control that makes particular decisions. It began as a one-day demonstration in New York, “Occupy Wall Street,” spawned by an announcement from the anti-corporate Adbusters magazine, and then mushroomed into similar encampments around the United States and in other parts of the world.

Although police eventually shut down these demonstrations, the social and Internet infrastructure of the movement remained intact. People met one another over the course of the demonstrations, forged relationships online and continued working in their own ways. Different members in different places have chosen to concern themselves with particular problems. Those that resonate with others in the loose collective end up getting support from the various websites and Facebook pages already associated with the Occupy movement. While there is no “official” Occupy movement, when an effort gains support from enough of the trusted Occupy networks, it can be considered a de facto Occupy action.

Most recently, the movement came to the rescue of hurricane victims with Occupy Sandy – a bottom-up, people-driven recovery effort that rivaled FEMA for its ability to bring aid to the people who needed it…

[continues at Rushkoff’s blog]

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  • Liam_McGonagle

    I agree with Rushkoff that this is a much stronger statement than the mere physical presence of marchers in front of a Wall Street bank.

    But it’s not a totally unambiguous gesture. These banks should be forced to write off these debts directly at the borrower level–not recoup good solid M1 cash from the pockets of hardworking Americans to justify their own crappy underwriting standards.

    And from what I understand, they’re not buying specific mortgages directly–they’re buying the bundled securities that are ‘theoretically’ backed by the mortgages. Which as a practical matter are totally untraceable to the individual home owners, who therefore still run the risk of foreclosure under dodgy court procedures.

    Not to cr*p on Rushkoff’s parade (which I usually seem to do), because the Sandy relief and other stuff he mentions are unqualified goods, but there’s some improvement wanting in the effectiveness of some measures.

    • Haystack

      I was actually pretty excited when I heard about this. When you consider that most of that debt sells for a small fraction of the amount that will be cancelled, it strikes me as a great return on investment. It would also generate considerable good will for the Occupy movement as well as attention to the predatory lending crisis that, one hopes, could increase pressure for actual policy changes.

      There are ambiguities, as you point out, but I like the general thrust of the idea; perhaps if it catches on they will be able to fine-tune it somehow.

    • http://www.facebook.com/eric.fischer.73 Eric Fischer

      As I understood the article, they’re not focusing on mortgage securities but personal debt that is already going up for auction to debt collection agencies.
      In that specific area, this could be rather effective.

      • Liam_McGonagle

        Yeah, I really wondered about this, too. Especially after ProPublica did a bit in conjunction with NPR to try to actually trace the homeowners whose mortgages back some tanked securities. They had only mixed results. They could verify whether a particular mortgage was part of particular security tranches, but not provide a comprehensive accounting for all units outstanding for those tranches.

        Anyhow, NPR had an interview yesterday with an Occupy Debt spokesperson who described the transactions precisely as I did–the purchase of bundled securities backed by troubled mortgage debt.

    • alizardx

      Not at all sure relief will actually get to debtors, the connection between MBS and individual mortgagors, for instance … is a trifle abstract. Seen at foreclosure sites that had same mortgage in multiple trusts, for instance. OTOH, seen VERY sophisticated analysis of financial regulation impacts coming from OWS, so maybe they know what they are doing.

  • Noah Way

    The system will find a way to squash this, can’t have anyone competing with debt for profit..

  • Roger Mexico

    Occupy, I think, is in the process of finding a niche for itself, and one thing it’s done well is call attention to problems which are perhaps poorly understood by the general public. (Such as the role of lobbying firms like ALEC, or 1%–99% discrepancy in income trends itself)

    What I find striking here is the existence of such steep discounts in the secondary market for existing debt. If it’s really possible to ‘purchase’ someone’s debt at 4% of its nominal value, then I would hope this stunt (that’s what it’s likely to amount to) calls attention to those markets and what they say about the role of debt in our economy–it seems to be less about the lender recouping the money they lent than the principle of indebtedness. $500 buys you the right to hound some impoverished person for money for however long it will take them to pay off the compounded price of a $14,000 loan, which could potentially be the rest of their life.
    In other words, it resembles a market in which it’s possible to effectively auction off people who have become de facto indentured servants. That’s a bit troubling,

  • feint_ruled

    This is a great idea! When you repeatedly fail to pay off a debt, the owed organisation often sells the debt off to the heavy mob for pennies in the pound. As I understand it, Occupy are inserting themselves at this stage, and instead of getting a letter from a debt-collection agency you will get a letter from Occupy saying “good news, your debt is gone.” You cannot target individuals for relief as you buy batches of debt, but the randomness of it all adds another level of nuance.

    It offers tremendous ROI. Well done to whoever came up with this!

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