It's been over a year since Occupy Wall Street broke onto the scene. The loosely oranized movement that pitted the 99 percent against the 1 percent in the popular imagination lost steam last winter. But now a faction of the movement is back, and it's got a new new mission. It's called "The Rolling Jubilee," and it's got Occupy activists raising money to buy bad debt, and then forgive it.
Normally when you hear jubilee, you might think of Queen Elizabeth, or wedding anniversaries, but this jubilee has biblical roots -- it’s right there in Leviticus 25:28. Ken Smetters, an economics and public policy professor at Wharton says the idea dates back thousands of years.
“During Old Testament times where every 49 years you had what’s called the Sabbath of the Sabbaths,” he said.
The Jubliee was a time when the rich were expected to forgive the debt of the poor. Smetters says people used to take out loans in the form of goats, grain or sheckel and that debt was only taken on to alleviate poverty. Clearly, times have changed. Fast forward a few millennia and Occupy activists calling themselves Strike Debt are serving as hip middlemen. The group started fundraising online about a week and a half ago, taking a cue from Wall Street to try beat the one percent at its own game.
Just like the subprime mortgages that triggered the financial collapse, bad medical and credit card debt is regularly bundled and sold as securities, and that is exactly what the Rolling Jubilee has been snapping up at debt brokers for just pennies on the dollar. But where Wall Street would call in the collectors, the Jubilee is walking away from the IOUs it’s purchased, effectively abolishing the debt.
The process is anonymous (the Jubilee says you can’t tell much about a debtor in the middle of the jumble of a bundle), but while the Jubilee doesn’t know who it’s helping, the group says, so far, it’s raised enough to pay off just under $4 million of IOUs. Four million may sound like a lot of dollars, but keep in mind that consumer debt in this country is in the billions.
Kent Smetters, from Wharton, knows about the biblical origins of the Jubilee because he’s the son of a small town pastor. Which is also why he says he grew up under the poverty line. He says thinks debt can play an important role in the economy, and that the Jubilee, the modern version, could pose a moral hazard.
“If this program was actually the law of the land I would have never gotten out of poverty because no bank in their right mind would have lent me money,” he said.
If people know they don’t have to pay back debts, Smetters says, because projects like the Rolling Jubilee will bail them out, they won’t. And this means lenders would stop lending and people like Smetters, legitimate borrowers, wouldn’t be able to get a loan to go to school and better their lives. When asked if a potential ethical complication was a concern for the project, Laura Hanna, an organizer with the Jubilee, had some questions of her own.
“I guess I would ask, whether our financial market makes any sense for the majority of the population at this point. The question becomes why are we in so much personal debt?"
The Jubilee knows it can’t wipe out all debt. But Hanna says one of the project’s is start a conversation about why people take on debt and who they owe. In the meantime Hanna says even paying off old debt worth only five cents on the dollar will make some difference.
“So the point is the project is both real and symbolic. It will actually relieve people of debts they owe that they can’t pay,” she said.
The Rolling Jubliee is holding a fundraiser tonight in New York. Tickets are sold out, but hopefully not on credit cards.