Poverty, Inc.
Fringe bank industries, from home equity lenders and car-pawn businesses to rent-to-own companies, are aggressively targeting and frequently exploiting those outside the mainstream banking system, often charging usurious rates of interest.

That's the conclusion a report released in August by Consumers Union, publishers of Consumer Reports.

According to the report, more people in the United States than at any time since the Great Depression are now considered subprime borrowers -- those who may have difficulty getting a credit card or a bank loan due to limited income or less than an "A" credit rating.

The report, "Poverty, Inc." finds that when many subprime borrowers take out home equity or car loans from non-bank sub-prime lenders, they face confusing loan terms or crushing interest rates that can lead to foreclosure on their homes or repossession of their only means of transportation.

The report finds that the $125 billion subprime mortgage industry is thriving in part because the 1980s real estate boom created a new class of homeowners -- cash poor and often uneducated -- but with lots of equity in their homes.

These consumers -- largely the poor and the elderly -- are often targets for companies that loan money based on the value of the house -- not on the borrower's income -- and then can foreclose when the high payments aren't met.

Releasing MOSES
A large hazardous waste company in July dropped a lawsuit against a Texas citizens group that was fighting the company's pollution.

American Ecology Corp. and two of its subsidiaries, American Ecology Environmental Services Corp. and U.S. Ecology dropped the two-year old lawsuit against the citizens' group, Mothers Organized to Stop Environmental Sins (MOSES), its president, Phyllis Glazer, her 77 year-old mother, Glazer's husband and his family business.

MOSES had questioned the company's violations of federal and state environmental laws and the impact those violations were having on the health of the community.

The lawsuit, filed by Chicago law firm of Latham & Watkins, alleged racketeering, defamation and business disparagement.

"I believe the company knew from the start that they could not support any of their allegations in this lawsuit and the purpose was purely to harass, silence and punish me," Glazer says. "As we approached a point in the case where the court would most likely have thrown out this egregious lawsuit, I believe the company realized that they could have lost the case and then would face our counterclaim against them for bringing a frivolous lawsuit. They were suddenly very eager to get out of their lawsuit."

Glazer reluctantly agreed to drop her counterclaim. "I was ready to go to court, but I had to consider saving my elderly mother and other family members from continued anguish over this lawsuit."

The Winona, Texas facility that Glazer and her group were fighting has been closed by the company and "hopefully clean up will be done properly," Glazer says.

Consumer advocate Ralph Nader says that Glazer and her family were perhaps the first citizens who had the resources to fight against such a harassment lawsuit.

"This sends a message that, particularly when citizens have the resources to fight back, this kind of intimidation lawsuit doesn't work," Nader says. "However, this suit and others like it demonstrate the need for legislation to protect citizens, especially those of more modest means, from these frivolous lawsuits that put a chill on our first amendment rights."

Shell Out of Peru, Maybe
Shell and Mobil announced in July that they would pull out of the massive Camisea joint venture in the Peruvian highlands. The two companies had highlighted the natural gas project as a model to prove they could carry out low-impact research development in an ecologically fragile area (see "Peru Goes Beneath the Shell," Multinational Monitor, May 1997).

"We regret that it was not possible to resolve issues that prevent the progression of the project at the current time and the realization of the substantial benefits available," says Alan Hunt, general manager of Shell Prospective and Development Peru. "Shell and Mobil remain active in exploration activities in Peru."

Reuters reports government officials explain that the pullout was due to a dispute with the Peruvian government over how to distribute the gas piped from the interior fields to Lima and over pricing arrangements.

Following the withdrawal announcement, the government declared that the project would be broken into three or four parts and proceed with new investors. Government officials claimed that a dozen companies were interested in undertaking parts of the project, though some analysts were skeptical of this claim.

Analysts soon speculated that Shell and Mobil might resume participation in part of the project, or perhaps even resume responsibility for the entire project, following a contractual renegotiation.

President Fujimori has made the $3 billion Camisea project a linchpin of his economic development. It is supposed both to signal the country's openness to foreign investment and provide cheap energy to manufacturers in and around Lima.

-- Russell Mokhiber and Robert Weissman