Speed Reads

et tu, geithner?

Former Treasury Secretary Timothy Geithner once condemned predatory lending firms. Now he helps run one.

Private lending firms prey on low-income Americans who are often pushed further into poverty after taking on high-interest loans.

One of those firms, Mariner Finance, is owned by a private equity fund run by Warburg Pincus, a New York firm, The Washington Post reported Monday. That firm is headed up by former Treasury Secretary Timothy Geithner, who, while working in the Obama administration, said that predatory lenders were unfairly sticking vulnerable Americans with "absurdly complex and opaque" agreements that were purposefully risky.

Geithner's previous condemnations of lenders like Mariner Finance hasn't stopped them from rapidly expanding their efforts to target cash-strapped people. The Post reports that Mariner sends out unsolicited checks with interest rates of up to 36 percent in a "loans-by-mail" program. After specifically targeting people with low credit scores, the firm will aggressively go after borrowers in collections, suing them and demanding that they pay the cost of Mariner's lawyers.

"It's basically a way of monetizing poor people," said John Lafferty, a former Mariner Finance employee.

Mariner Finance says it offers an "important service to tens of millions of Americans who might otherwise not have safe, responsible access to credit." Warburg Pincus insisted that Mariner offers products in a "transparent" way with "clear disclosure," emphasizing the firm's good standing within examinations by state regulators. Read more at The Washington Post.