America’s Captains of Industry, Poverty Baron Edition

How to get very rich off the backs of the working poor.

Meet the megalenders, payday loan inventors, and pawnshop popularizers behind the logos.

ROSS LONGFIELD, former executive VP, Beneficial Corp.
INNOVATION: Invented the refund anticipation loan.
FINE PRINT: Longfield bet that low-income customers would pay dearly to get their tax refunds right away. “Everything we did suggested people would love it—love it to death,” he said.
UPSHOT: Now retired, Longfield has the leisure to race around Patagonia in his prized 1969 E-Type Jaguar SII coupe.

ALLAN JONES, CEO, Check Into Cash.
INNOVATION: Pioneered payday lending.
FINE PRINT: A small-town debt collector from Tennessee, Jones made a killing by making small loans—at 400 percent interest or more—against a person’s next paycheck, Social Security payment, or unemployment check.
UPSHOT: Jones clears some $20 million a year from his 1,000-plus stores. He owns a pair of jets and a 650-acre estate, complete with stables and a football stadium.
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WikimediaWikimediaERNIE TALLEY, CEO emeritus, Rent-A-Center.
INNOVATION: Fathered the rent-to-own industry.
FINE PRINT: Talley started the first store in the 1960s. He and his imitators figured out that the rent-to-own customer would spend $2,000 to buy the same TV set that a person with ready credit could buy outright for $800.
UPSHOT: The industry booked $7 billion last year; Rent-A-Center’s 3,000 stores boast profit margins twice as large as Best Buy’s.
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JACK DAUGHERTY, founder and chairman, Cash America.
INNOVATION: Took pawnshops mainstream.
FINE PRINT: Investment banks snubbed Daugherty back in 1983, when he first sought to strike it rich as a pawnbroker. But they changed their tune when they saw the killing he made charging 60 to 300 percent interest. “Merrill Lynch, now Dean Witter, now Goldman Sachs,” he told one reporter. “We get letters from all of them.”
UPSHOT: His 700-plus pawnshops earned $1 billion in revenue last year.
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TERRENCE MURRAY, former CEO, Fleet Bank.
INNOVATION: Megalenders got into subprime only after Murray, a working-class kid from Providence, R.I., who attended Harvard on a scholarship, showed them the way.
FINE PRINT: In the 1980s, Providence-based Fleet began targeting areas that had fallen on hard times, peddling subprime home loans, often at interest rates exceeding 20 percent a year.
UPSHOT: By 1991, Fleet was New England’s largest bank. “It was these huge profits that got the rest of the mainstream banking industry involved,” says attorney and subprime expert Bill Brennan.
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Henry McGee/Zumapress.comHenry McGee / ZumaSANDY WEILL, former CEO, Citigroup.
INNOVATION: In 1986, Weill, a Wall Street dealmaker looking for his next big thing, bought Commercial Credit Corp.—a second-rate peddler of loans with rates as high as 23 percent—and used the profits to snap up Smith Barney, Travelers Insurance, Salomon Brothers, and, ultimately, Citigroup.
FINE PRINT: Weill’s personal assistant had tried to talk him out of the Commercial purchase, calling it a loan-sharking biz. She was being a snob, Weill retorted. Under his leadership, Citigroup became a top-five subprime lender.
UPSHOT: What mortgage meltdown? Weill still owns a yacht; a $42 million Manhattan apartment; and homes in Greenwich, Conn. and the Adirondacks.
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Thank you!

We didn't know what to expect when we told you we needed to raise $400,000 before our fiscal year closed on June 30, and we're thrilled to report that our incredible community of readers contributed some $415,000 to help us keep charging as hard as we can during this crazy year.

You just sent an incredible message: that quality journalism doesn't have to answer to advertisers, billionaires, or hedge funds; that newsrooms can eke out an existence thanks primarily to the generosity of its readers. That's so powerful. Especially during what's been called a "media extinction event" when those looking to make a profit from the news pull back, the Mother Jones community steps in.

The months and years ahead won't be easy. Far from it. But there's no one we'd rather face the big challenges with than you, our committed and passionate readers, and our team of fearless reporters who show up every day.

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