When I got out of school there were very few jobs, so I had to take whatever I could find. The first job opportunity that came along was with a finance company. Just the term “finance company” can be deceptive as finance is such a vague, all encompassing term. Anything that was to do with money can be called “finance” in some way, so it all seemed on the up and up to me. And there wasn’t much work for a kid from Newark, so I took the job.

I was accepted into the fold and began my career repossessing cars and making high interest loans to folks who could not afford to finance through traditional lenders. Nor could they afford the loans I made them. And I didn’t let them forget it.

“You’re only as good as your last envelope.”

For those who are unfamiliar with the niche of finance company lending, the concept sounds almost noble when described by the perpetrators. “We provide financing to those who cannot, whether due to poor credit or low income, find financing elsewhere. We provide a needed service.” My boss said these words to me on my first day on the job. Sounds reasonable enough, I thought. Then he asked me the following question: “What interest rate do you think we get on these loans?” I had no idea but figured I’d humor him and guess. “Fifteen percent?”. “No,” he replied. “We get Thirty percent! Can you believe it?”

The process was simple. Make a high interest personal loan to an unsuspecting borrower and when he can’t pay it, harass, cajole, or threaten them into giving you the title to his automobile in exchange for refinancing the loan. It was referred to as “flipping” and was the secret to profitability.

“There’s an old Italian saying: you screw up once, you lose two teeth.”

Getting a borrower to give you the title to his home was the ultimate coup. When they couldn’t keep up with the massive interest rates and monthly payments for the auto and personal loans you’d given them, the loan officer would bait them into a loan consolidation. The collateral? Why, that would be your house. The sales pitch was simple. Offer them a discounted rate on a mortgage and emphasis the fact that their payments would be significantly less. Never mind the fact that the “discounted” interest rate on a mortgage was twenty-three percent and the term of the loan was…eternity. What had started as a small personal loan for two years typically became a five, ten, or even fifteen year loan at a significantly higher rate then they could afford.

If that wasn’t enough, it would always help to point out the tax advantages. Most mortgage interest is tax deductible, and there would be plenty interest expense to write off on one’s income tax return. If that didn’t work, we could always threaten to “pull” the car. In other words, repossess it.

And often we did.

“Sorry, the highway was jammed with broken heroes on a last-chance power drive.”

This kind of work wears on you. In the beginning you justify it with yourself and others, reciting the company line and doing what you’re told because, well, it’s a living. But eventually you wake up at night thinking about the folks who’s livelihoods you’ve encumbered and you start arriving to work late with butterflies in your stomach. The novelty of having guns pointed your way by desperate folks tends to wear off pretty quickly too.

“Fear knocked on the door. Faith answered. There was no one there.”

Don’t confuse my stance on finance companies with being anti-business. I am a businessman and consider it to be an honorable profession. As a free market capitalist, I prefer as little government intrusion as possible in the private business sector, allowing the free market system to create jobs and spread wealth. And sure enough, finance companies do provide a service, making funds available to those who may not otherwise have access to capital. I also understand that these companies must require a greater rate of return as they are dealing with a higher risk clientele, thus exposing themselves to a higher rate of default and greater loss. I just can’t help but think that there has to be a better way without resorting to redistribution of wealth schemes imposed by the federal government that discourage investment and demonize success. Something needs to be done about a predatory practice that is permitted to continue to this day. With the current toxic climate in Washington I must admit, I don’t see substantive change coming any time soon though.

Fear is knocking and I have no faith that anyone will answer the door.

*The quotes above are borrowed from The Sopranos, a long running HBO series that took place in the old neighborhood and seemed to share a lot of similarities to our “legitimate” business activities.

Richard Rossi is a businessman, artist, and blogger, born and raised in Northern New Jersey (and very proud of that fact). You can find Rich’s ramblings at his Syracuse University sports blog or check out his children’s books at a Barnes & Noble near you.