Chapter Eight

Birth of the Debt Collective

The idea of debtor organizing would not die. While I was spending my days at WeWork, some former members of Strike Debt continued the conversation that had begun two years earlier. In the spring of 2013, Thomas Gokey started an email list for those activists, artists and researchers who wanted to keep talking, including myself, Andrew Ross, Astra Taylor, Hannah Appel, Laura Hanna, and a few others. Even though I was weary from past disappointments and couldn’t be sure where the conversation would lead, I was pleased. The list inaugurated a new working group for those who still hoped that the solidarity and good will we had witnessed in Strike Debt’s assemblies and via the Rolling Jubilee campaign could be channeled into something lasting.

We were still convinced that a membership organization for debtors was a logical step towards building new forms of solidarity between borrowers of all kinds. Before such an entity could be built, it had to first be envisioned. This was an act of imagination that felt like an urgent, practical necessity. We were a few years out from a financial crisis which had resulted in a spiral of foreclosures, job losses, and despair at the federal government’s effort to save banks instead of mortgage holders. Debtors had been left to ask a question that characterized the discontent of millions: Where’s My Bailout?

Our working group kept coming back to the housing market collapse which had pointed to the importance of consumer loan payments to the global economic system. When mortgage holders stopped paying their loans, the banking system faltered. The potential of debtor organizing was obvious. Back in 2008, Sheila Bair, the head of the Federal Deposit Insurance Corporation, had argued that homeowners should be bailed out instead of banks. She was ignored by the Obama administration. What, we wondered, if Bair had had the backing of a nationwide union of mortgage holders? Organized as a bloc, borrowers could have demanded loan write-downs while insisting on other concessions.

We applied this thinking to other types of debt. A private healthcare system meant that millions of people were drowning in medical bills. What if they joined together to rally for universal healthcare, refusing to pay their debts until their demand was met? What about those in hock to local court systems or to bail bondsmen? What might those borrowers win if they began to organize collectively as part of a formal entity dedicated to advancing their interests? The possibilities were thrilling.  

Persuaded that an organization for debtors was a necessity in theory, my colleagues and I moved on to imagining how a debtors union might function in practice. First, since most people joined organizations to receive benefits, service provision would have to be a top priority. We brainstormed several options. Partly because we had no money and did not know if we ever would, our earliest ideas were rooted in the belief that low-cost technology could be marshaled to the cause. Considering that tens of thousands of people were having their social security checks garnished for unpaid student loans, for example, we imagined ways that a debtors organization might intervene. “It would be pretty straightforward,” one of my colleagues wrote, “to make a web-based ‘default calculator’ that graphs out your monthly income if you continue to make payments on a loan and plot that against your 15% social security garnish cap.” In other words, the calculator would help social security recipients decide if it made better financial sense to face garnishment or to keep paying their student debt. At the same time, the calculator would serve as a recruitment tool. Organizers could contact anyone who used it to plug them into those local and national campaigns that were relevant to them.

While committed to integrating technology into organizing, most of our proposals for service provision amounted to a kind of pedagogy of debt. Many people were in the dark when it came to their loans. We wanted to change that. Borrowers often didn’t know how much they owed or to whom. Furthermore, since loans could be bought and sold multiple times, debtors might receive notices from different companies all claiming the right to collect on a loan that had been issued by another entity. Our working group imagined a service that would address the confusion. We would provide debtors with a summary of who owned their loans and under what terms. We would also provide them with a list of the companies, from servicers to collectors, that were profiting from their payments. Since collectors made money by disorienting and demoralizing borrowers, we believed that a debtors organization should make a priority of providing basic, accurate information.

While wanting to demystify the debt system for individuals, our working group was also obsessed with the question of how to build collectivity. How could the pain, suffering, and anger that we had seen in Zuccotti Park, in Strike Debt’s assemblies, and in hundreds of emails to the Rolling Jubilee be transformed into a power that could be turned against creditors, collectors, and those elected officials that did their bidding?

In the labor movement, one strategy was clear and effective. Unionized workers in one jobsite or industry could threaten employers’ profits by stopping or slowing down production until their demands were met. How could debtors prove similarly menacing to their adversaries? In its early stages, we knew, a debtors union would likely have to rely on symbolism. For example, what if a small number of people publicly announced that they were refusing their payments? Such a declaration might draw attention to the injustice of the debt type in question and force creditors to the negotiating table.

We also played out scenarios by which a collectivity of debtors might legitimately threaten lenders’ profits. Doing so would likely require targeting a specific type of bundled loan. We knew, for example, that 30% of all federal student loans were being pooled together and sold to investors as a financial product called Student Loan Asset-Backed Securities. SLABS were a sure bet for investors because they were insured by the federal government. There were a host of private entities–from servicers to guarantors–who profited from this arrangement. We wondered if debtors could threaten those profits by reducing the value of a particular security. For example, what if a debtors organization identified and contacted every borrower whose loan was part of the same SLABS? There might be 50,000 people whose debts had been bundled together. If a percentage of them joined a strike, we reasoned, they might threaten the profitability of that bundle. Of course, the federal government would make sure that creditors got paid. But the government stepping in to shore up profits for investors who had been targeted in a debt strike could count as a kind of victory by demonstrating whose side elected officials were on in the creditor-debtor relationship. Thinking of SLABS, an historically foolproof revenue source for rich investors, as a vulnerability that student debtors could exploit exemplified the kind of thinking that our working group engaged in during much of 2013.

We also researched how student debtors might raise awareness about how US higher education was being financed. One idea was inspired by a 2011 essay by Robert Meister. In “They Pledged Your Tuition to Wall Street,” the Professor described how the University of California system had been underfunded for decades. As a result, colleges in the state were largely financed by private bank lending rather than by public money. One reason that banks were so eager to lend to the University of California, Meister explained, was that college officials had assured them that, if necessary, they would raise tuition in order to pay back the loans. Bonds sold by the University of California were a sure bet for investors because student tuition had been “pledged” as collateral against default. This was a relationship between banks and educational institutions that could stoke controversy since most people assumed that public colleges spent their money educating students, not backstopping Wall Street profits.

Beyond raising awareness, organized blocs of debtors could turn the situation to their advantage. What, we wondered, if debtors went on strike against those banks that were lending to the schools? Such an action could draw attention to how nominally public colleges and universities were actually being funded. Borrowers may not even have to stop paying their loans. They may only have to threaten to do so, while currently enrolled students could pledge to join the strike as soon as their own debts came due. Debtors’ ability to threaten losses on the bond markets, we surmised, could give them a kind of leverage powerful enough to put the question of how higher education ought to be paid up for public debate.   

From threatening the profitability of student loan securities to strikes aimed at the higher education bond market, our thinking during this period was highly ambitious and often skirted the edge of feasibility. But turning mass indebtedness into a source of power that ordinary people could wield was the kind of work we thought a debtors organization could and should do.

Imagining organized blocs of debtors in action was also an attempt to face material facts. Millions of homeowners had been devastated by the 2008 crisis, resulting in a massive loss of wealth that disproportionately harmed black and brown people. And yet there was no organization fighting in mortgage holders’ interest. Funding for colleges and universities had been slashed and student debt had exploded in recent decades. And yet there was no way for former students to join together and fight back. A profit-driven healthcare system meant that medical bills were crushing families. And yet there was no bloc of medical debtors fighting for universal healthcare. The solution to these problems was government spending on public goods. A debtors organization, we were convinced, could force the issue.

I hounded my fellow working group members about moving quickly from talking to action. To start the process, we outlined our conclusions on paper. A debtors union, we wrote in one internal document, “should be an infrastructural base for organizing”:

Local chapters could be formed to investigate our punitive economy and research ways to intervene to transform it. Collectively, debtors could force lenders to            negotiate or even cancel illegitimate debts. A targeted debt strike at one financial institution could weaken the sector in which it operates and put the whole system on warning. As a collective, debtors would also have the power to inform the debate about the root causes of mass indebtedness. Broadly speaking, a national debtors organization could become part of an anti-capitalist social movement to imagine a sustainable economic system that benefits all of us.            

We wanted an institution where people in debt could access services, participate in research and educational projects, and develop strategies and tactics for pressuring creditors as well as elected officials. To be effective, such an entity would have to be one part of a broader social movement demanding a sustainable economy.

Our research and discussion raised a fundamental question that could not be answered in theory. Would anyone want to join the organization that we were in the process of imagining? A willingness to donate money to bail out debtors did not necessarily translate into the desire to organize with others, especially since being in debt usually inspired shame and guilt rather than the kind of collective pride that prompted workers to wear t-shirts imprinted with their labor union’s logo.

To answer the question, we would need to apply our idea. But it felt like we were making progress. By the end of the year, we had even come up with a title for the organization that was being imagined into existence. Like much of the language that we would invent in the years to come, the name did not roll easily off the tongue. We called it the Debt Collective. 

Chapter Nine