Maxed Out: Hard Times, Easy Credit And The Era Of Predatory Lenders [abridged]

Introduction:
James D. Scurlock offers a groundbreaking look into the culture of debt that has been institutionalized over the past generation. From Washington, DC to Macon, Mississippi, to Beverly Hills, CA, Scurlocks reveals the breadth and depth of America's dependence on easy credit to finance war efforts, tractors, mobile homes, to acquire the best body and face that plastic surgery can provide and, of course, to keep the American Dream -- home ownership -- a reality. Scurlock builds a compelling case that the individual is not solely to blame for rising consumer debt, just as irresponsible "gamers" are not the cause of skyrocketing bankruptcy rates and the now-infamous "subprime" borrowers did not precipitate the international credit crisis ; indeed, Scurlock uncovers how revolutionary changes in the banking, credit, and debt collection industries virtually ensure that consumer debt continues to mount, month after month, in order to realize double-digit profit growth. But, Scurlock argues, the financial industry has not changed the laws of mathematics; they have only postponed the day of reckoning. It is now up to individual Americans to re-examine their lifestyles in the context of new definitions of financial success and security. Ultimately, each of us must decide if the American Dream can really be purchased with easy credit.
Discussion Questions:
1. What does Scurlock mean when he says that debt is the only product of the banking industry? How do banks sell and ensure their profitability from this product? Does Scurlock's conceptualization of debt as product alter your understanding of the role and nature of banks? Why or why not?
2. How did Dee Hock's introduction of the credit card impact people's understanding of and relationship to money? What two characteristics of consumer credit were exploited by Hock's Bank Americard?
3. How has credit been marketed to consumers? What roles do distinctions between good and bad debt and high and low credit scores play in this marketing process? Do the aforementioned distinctions have meaning outside of the credit marketing process? Why or why not?
4. What are some of the commonly used metaphors for credit? How have these metaphors been internalized by consumers? Which of the metaphors resonate with you?
5. According to Bob Manning, professor at Rochester Institute and Technology, what underlies America's addiction to credit? Do you agree or disagree? How does Scurlock's exploration support or challenge his claim?
6. What were the banking practices and government policies towards banks in place prior to the 1970s? What assumptions did the banking industry and the federal government make about the American consumer and their responsibilities to them? How and why did banking practices change? How has this contributed to the recent international crisis in subprime mortgage lending?
7. According to Scurlock, how does the federal government participate in and maintain the culture of debt? What government indices of progress are tied to the culture of debt? How does Scurlock suggest that the federal government evaluate its success?
8. How has the meaning and value of homeownership evolved for the American consumer? What do terms such as American Dream, home equity and refinancing mean in the current debt culture?
9. What does the term "debt snowball" mean? How do public misconceptions of "debt snowballing" extend rather than curtail consumer debt?
10. What roles do financial gurus such as Dave Ramsey of Financial Peace University and Suze Orman play in propagating the culture of debt? What does Scurlock suggest underlie these gurus' glorified status in popular culture? Do you agree with his analysis? Why or why not?
11. Scurlock proposes that the solicitation practices of the tobacco and alcohol industries are analogous to those employed by the credit industry. What does his analogy reveal about the nature of Americas' relationship to credit and purveyors of credit? If Scurlock's analogy is correct, what role does the government need to play in mitigating the impact of credit on its citizens?
12. What does Elizabeth Warren's study of middle class spending habits since the 1970s uncover about the American economy and the American consumer? How does she characterize Americans' use of credit and bankruptcy? What part did her findings play in the federal debates about the Bankruptcy Reform Act of 2005? Were her findings in line with your own understanding of bankruptcy? Why or why not?
13. What do Yolanda Garcia and the many others' stories reveal about the American Dream? How do their stories illuminate the culture of debt and the mechanisms that create and sustain it?
14. Identify the strategies Scurlock offers to fight the culture of debt. Which strategy do you believe has the most likelihood of success? Why? Which has the least likelihood? Why? Can you identify strategies Scurlock missed? What are they?
15. Identify the ways that the financial industry has equated credit with cash, e.g. using a credit card as an "emergency" fund. Then discuss the differences.
Enhancing your book club:
1. Get the film Maxed Out and arrange a movie night with your book club members.
• How did your experience of watching the film differ from reading the text? Which did you prefer? Why?
• Identify any strengths of the book that were sacrificed in the film version. What elements were improved upon by the film?
• Did the film offer new insights? What were they?
• Which stories proved most compelling in the film? Why?
• What potential solutions did individuals offer in the film? How did these solutions differ from those offered in the text?
2. Encourage each member of your book club to bring to your book club meeting a copy of a credit card statement. Encourage members to bring a range of credit card statements to facilitate comparison. Additionally, ask members to bring a stack of 3x5 cards or small sticky notes on which to write.
• Assess how many members have read the fine print on the backs of credit card statements. Why did some members read this fine print? Why did others neglect to read the fine print?
• Ask a few members to read various sections of the fine print on their statements. Try to read a range of statements. As members read their statement aloud, jot down on the 3x5 card or small stick notes any term that you do not understand and discuss the following:
• How similar or different are the statements from each other?
• Lay all 3x5 cards or small stick notes on a table for the group to peruse. What are the various terms that members find confusing? Is their a general consensus on confusing terms? How does the group feel about unmasking these terms?
• What new information did this reading reveal?
3. Visit the website: http://www.affil.org/, Americans for Fairness in Lending
• Print out: Six Principles of Fairness in Lending
• Make enough copies for each member of your book club.
• Evaluate and discuss the efficacy of the principles with your club:
• Do you agree with these principles?
• If you had to eliminate one principle, which one would you sacrifice? Why?
• Which, if any, of the principles alter your understanding of your personal relationship to credit? How so?
• After evaluating the principles and determining if you agree them, visit http://www.affil.org/endorse and endorse the principles by submitting your name and contact information.
• If you have a story, share it on the website with others as well.
4. Explore America's relationship with credit cards
• Visit http://www.pbs.org/wgbh/pages/frontline/shows/credit/, The Secret History of the Credit Card.
• Watch the full program online either individually or as a group and discuss the following questions:
• What is the portrait of the credit card industry that emerges from this program? How is this picture of the credit industry different or similar to the picture Scurlock painted?
• What are the Marquette and the Smiley vs. Citibank decisions and how did they impact the credit industry? Does the program's analysis reflect the lessons learned in your reading of Maxed Out?
• How did Andrew Kahr insights alter the practices of the credit industry? How were these practices discussed in Maxed Out?
5. Read more about Elizabeth Warren's ideas in her book All Your Worth.