
Rolling Jubilee - A Bailout Of The People By The People - kuahyeow
http://rollingjubilee.org/
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gruseom
Speaking of buying up debt, does anybody else remember how, early in 2009, the
Obama administration set up exchanges for private investors to buy toxic
assets from financial institutions with government support? I remember
Geithner announcing this with much fanfare as the program to return large
banks to solvency. There was a brief controversy, and then the whole thing
seemed to just disppear. My impression is that it turned out the banks didn't
want to sell at a price anyone wanted to pay. But I've always been curious:
what really happened? Is it public knowledge?

(Sorry for going off-topic... my excuse is that some of the same debt is
probably involved, albeit through many layers of indirection and far
downstream in the collection process.)

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hammock
It is called the PPIP (Public-Private Investment Program) Some info:
[http://www.nakedcapitalism.com/2011/01/richard-alford-why-
ha...](http://www.nakedcapitalism.com/2011/01/richard-alford-why-has-the-ppip-
scandal-been-swept-under-the-rug.html)
[http://www.huffingtonpost.com/2010/01/04/ppip-banks-
making-a...](http://www.huffingtonpost.com/2010/01/04/ppip-banks-making-a-
killi_n_410203.html) [http://en.wikipedia.org/wiki/Public-
Private_Investment_Progr...](http://en.wikipedia.org/wiki/Public-
Private_Investment_Program_for_Legacy_Assets)

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gruseom
Thanks. I skimmed those links and found it all confusing. What I got was,
approximately: it still exists, it's relatively small ($30B is small in
financial crisis terms), and its activities have not been particularly
transparent. On the other hand,
[http://www.treasury.gov/initiatives/financial-
stability/repo...](http://www.treasury.gov/initiatives/financial-
stability/reports/Documents/External%20Report%20-%2009-12%20vFinal.pdf).

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programminggeek
You know, consumer debt is probably the biggest thing slowing down the
economy, even though financial institutions are wanting to saddle the average
consumer with more debt. If people don't have money to buy things because they
are spending money servicing debt, that slows down the whole consumer economy.
The only people who win in that scenario are the banks, but they would profit
more over the long term by a stronger economy than they currently do from
consumer debt.

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backprojection
I think this makes sense from a high-level point of view. It seems like it
would be bad for the economy, if more wealth flows from consumers to bank
profits.

This is maybe simplistic, but I'm thinking progress is better served if more
people can buy iGadgets, than if bank execs can spend more on luxury goods.

There are huge, positive, side effects when people buy more technology,
because technology gets cheaper, which then advances economic growth.

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doctorpangloss
I admire the design. It's like carbon credits: you can buy pollution credits
and simply not use them, if you want to do good by the environment.

Buying debt is much more efficient than lobbying, going through lawsuits, etc.
It shouldn't be sustainable, presumably, since all these people buying up debt
should raise its price. But maybe it's sustainable enough.

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mschaecher
Anyone know if the reasoning behind not being able to buy individuals debt is
legal or if technical/execution?

A marketplace for this kind of relief a la Kiva could be hugely powerful.

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weaksauce
Probably so you can't game the system.

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mschaecher
Riiiight, because this opaque give us money and we'll buy off some anonymous
people's debt is a beacon for piece of mind.

A non-profit marketplace for this built similar to Kiva, LendingClub, etc.
increases transparency dramatically.

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weaksauce
Not how I intended it. The system was never intended to be used this way; they
intended to package up "bad" loans that they get a tax write off for and then
wholesale them for pennies on the dollar out to intermediaries. The
intermediaries don't get to look at each name on there to see if they are
getting a certain debt. It's just given a credit rating and then resold. If
the secondary debt collectors can collect on the bad debt for more than they
purchased it for they make a profit.

By gaming the system I meant that someone might go into debt, don't pay, wait
for them to offer it up on the secondary market and then buy back the debt for
pennies on the dollar effectively forgiving their own debt. They might need to
have someone else buy the debt for them but it's essentially the same process.

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malandrew
Is there a marketplace for debt online that I can visit as Joe Consumer and
buy the debt of others so I can forgive it or at least offer the debt back to
the person at cost? What information is likely to be public about the debtor
when one purchases the debt?

Is there a startup business idea in this?

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jonny_eh
Even better, why not let people buy out their own debt at near cost?

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jpdoctor
The term Moral Hazard is relevant here.

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malandrew
A better question is why the original lender doesn't just try to give the
original lender the chance to buy his own debt at pennies on the dollar more
than what they are selling it for. i.e. "Hey we're about to sell your $10k in
debt to company X for $500, but we'll sell it to you for $2000. Do you want to
buy it or should we sell it off to Company X?"

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mseebach
First, if the delinquent party has $2000 lying around for an expense like
this, the debt agency is probably better off trying to recover the full sum.
It's not like they can just loan it to them.

Second, if you're years behind on your debt, you're probably not in the habit
of reading letters from debt collection agencies.

Third: the moral hazard: get deep in debt, set aside 20% in a high interest
savings account, wait for offer.

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kalms
A few years back, when the credit crisis happened, several investment
companies bought up debt, and then offered people to pay it off, with half or
less, compared to what they owed before that.

I don't know if they actually earned anything from that type of investment,
but it went on for a while. It was in Denmark.

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swalsh
This sounds like the plan is to buy debt, typically in the way a collector
would. I guess, i'm curious what they're accomplishing here? By this point the
way I understand it the person has effectively already defaulted.

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mileswu
This is very similar to a projected supposed to help the Greek public debt
situation. <http://www.greecedebtfree.org/>

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kuahyeow
In the other thread : <https://news.ycombinator.com/item?id=4761402>

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state
What I like about this is how crazy it seems.

