Wed Nov 14, 2012, 05:07 PM
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Rolling Jubilee: How Occupy Wall Street aims to bail out the 99%
Business Insider and Financial Post Staff | Nov 14, 2012 2:39 PM ET | Last Updated: Nov 14, 2012 3:48 PM ET
ReutersOccupy Wall Street has launched a debt relief program that could gain them traction again. .
Debt resistance is just the beginning. Join us as we imagine and create a new world based on the common good, not Wall Street profits
Occupy Wall Street has been out of the headlines for a while now, but an offshoot of the group has launched a new plan that could gain them traction again.
Rolling Jubilee is a plan to use money pooled from donations to buy distressed consumer debt at marked down prices. Lenders often sell debts for pennies on the dollar to third parties who either try to collect on it or bundle it up for resale. But, instead of collecting it like a debt agency would, the group, known as Strike Debt, would forgive the debt.
The original debt holders will get a certified letter informing them they are off the hook, the New York Times reports.
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Here’s how the group describes it:
One of the organizers of the project, David Rees elaborates on his blog:
OWS is going to start buying distressed debt (medical bills, student loans, etc.) in order to forgive it. As a test run, we spent $500, which bought $14,000 of distressed debt. We then ERASED THAT DEBT.(If you’re a debt broker, once you own someone’s debt you can do whatever you want with it — traditionally, you hound debtors to their grave trying to collect. We’re playing a different game. A MORE AWESOME GAME.)
This is a simple, powerful way to help folks in need — to free them from heavy debt loads so they can focus on being productive, happy and healthy. As you can see from our test run, the return on investment approaches 30:1. That’s a crazy bargain!
That test run does sound impressive, and the idea of helping people in dire financial straits through unfortunate circumstances (for example, medical bills) is a noble one.
Rolling Jubilee, by the way, refers to the biblical tradition of a jubilee year, in which all debts are forgiven and all indentured servants are given their freedom.
Rollingjubilee.orgAccording to its website, Rolling Jubilee has already raised $162,729 through online donations, which is enough to buy $3.2-million worth of defaulted loans. .
But can it work? Alex Hern at the New Statesman points out that, while the law is on OWS’s side, the banks may not be. Hern points to Felix Salmon’s discussion of the American Homeowner Preservation, which sought to buy up distressed mortgages and find ways for the homeowners to stay in there homes and pay off their debt.
Here Salmon explains why that plan didn’t work:
” The idea might have been elegant, but it didn’t work in practice, because the banks wouldn’t play ball: They (and Freddie Mac) simply hated the idea of a homeowner being able to stay in their house after a short sale, and often asked for an affidavit from the buyer saying that the former owner would certainly be kicked out.”
Regardless of these pitfalls, OWS seems to be putting a lot of effort into the project. The plan will formally begin Thursday, Nov 15, with a fundraiser at a Greenwich Village nightclub. According to its website, the group has already raised $162,729 through online donations, which is enough to buy $3.2-million worth of defaulted loans.
And it’s earned praise from some unlikely places, such as Forbes magazine, which declared: ‘Finally, An Occupy Wall Street Idea We Can All Get Behind, The Rolling Jubilee.”
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Topics: Business Insider, Occupy Wall Street
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