A new report shows how former Treasury Secretary Timothy Geithner is profiting off of a company that runs loansharking schemes on unsuspecting Americans.
On Sunday night, The Washington Post highlighted the unscrupulous business practices of a company called Mariner Finance, which has a unique way of preying on the poor. Mariner regularly mails unsolicited checks to Americans via U.S. mail, which come with hefty interest rates and other fees. This is a step up from payday lenders, which require Americans to come inside their office and personally ask for a loan.
If anyone who receives a check from Mariner cashes it without reading the fine print, they can be subjected to costly lawsuits. 72-year-old Barbara Williams told the Post that she cashed a $2,539 check from Mariner in order to pay down hospital bills incurred following several mini-strokes and pneumonia:
Within a few months, Mariner suggested she borrow another $500, and she did. She paid more than $350 for fees and insurance on the loan, according to the loan documents. The interest rate was 30 percent.
“It was kind of like I was in a trance,” she said of her decision to borrow from Mariner. She paid back some of the money but then fell behind, and Mariner sued. The company won court judgment against her in April for $3,852, including $632 in fees for Mariner’s attorney.
“It’s basically a way of monetizing poor people,” former Mariner employee John Lafferty 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.”
Mariner is owned by private equity firm Warburg Pincus, which is headed by Timothy Geithner. Prior to joining Warburg, Geithner was former President Barack Obama’s Treasury Secretary, overseeing the disbursement of billions of tax dollars to banks during the post-crash financial bailouts of 2009. Geithner, ironically, spoke out against predatory lenders (like Mariner, for example) while serving as Treasury Secretary.
Geithner refused to comment for the Post‘s report, and Grit Post’s request for comment sent to a cell phone registered to his wife, Caroline, has not been acknowledged as of this writing. However, Warburg spokeswoman Mary Armstrong defended Mariner’s business practices as “a valuable service.”
“Mariner Finance delivers a valuable service to hundreds of thousands of Americans who have limited access to consumer credit,” Armstrong told the Post. “Mariner is licensed, regulated, and in good standing, in all states in which it operates and its operations are subject to frequent examination by state regulators. Mariner’s products are transparent with clear disclosure and Mariner proactively educates its customers in every step of the process.”
Logan Espinoza is a freelance contributor specializing in economic issues. He lives in Phoenix, Arizona with his wife and daughter. Contact him at logan DOT espinoza AT yahoo DOT com.