Occupy Wall Street has been out of the headline for a while now, but 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. Then, instead of collecting it like a debt agency would, the group would forgive the debt.
Here’s how the group describe it:
One of the organisers of the project, David Rees, offers more explanation 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.
Could 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 (a benefit concert with big name indie rock stars will take place in NYC next week). The plan will formally begin November 15th.
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