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The Warren Buffett Shuffle: Predatory label put on Berkshire division

By D. Sidney Potter
web posted July 27, 2015

Warren Buffett, the proud owner of Clayton Homes, the nation's largest home builder of manufactured homes, which he bought on the cheap 12 years ago for $1.7 billion in cash, is considered by some to be a loan sharking business, wherein Clayton builds, sells and then extends high interest loans on their manufactured homes.  Its' sort of like one-stop shop for the chronically broke, busted and soon to be bankrupted.  But instead of the typical hyperbola that many a journalist/writers will often engage in on unopposed editorial commentary on today's economic social ills, a "fair and balanced" approach will yield a much more enlightened event, where you the reader can draw your own conclusion. 

Hence, it was only a few months ago (April 2, 2015, to be exact), that The Seattle Times and The Center for Public Integrity broke a story that exposed the financial improprieties of Clayton Homes. In case you missed it, Public Integrity snatched a Pulitzer Prize in 2014.

For those that are dubious of the virulent opposition to Buffett's gold-plated home building business model that he successfully operates in the lower 48 (Hawaii and Alaska apparently opted out), here are some of the facts (not liberal laced BS):

Clayton Homes, owned by Warren Buffett's Berkshire Hathaway, makes more mobile home loans than any competitor by a factor of six.

Warren Buffett's Clayton Homes operates under at least 18 names, leading many buyers to think they're shopping around.

Warren Buffett's Clayton Homes lends at interest rates that can top 15 percent, and often adds thousands in fees to borrowers' loans.

Clayton customers report deceptive and predatory deals including loan terms that changed abruptly, surprise fees and pressure to take on excessive payments.

For manufactured homes, the default rate is about 28 percent industry wide, according to research by reputable sources. Clayton's failure rates are 26 to 33 percent, amongst the 18 different name brands they operate.

Former dealers said Clayton Homes encouraged them to steer buyers to finance with Clayton's own high-interest lenders.

Source: The Center for Public Integrity and The Seattle Times, April 2015

To put this in a nut shell, Buffett has the market locked on high interest loans that target the Wal-Mart demographic.  This is the opposite equivalent of the payday loan industry, that garnishes the bulk of their business by targeting black and brown consumers in the inner cities.  The only difference is that black and brown consumers tend to vote as Democrats, whose leaders are at the forefront of combating abusive lending practices, while their white counterparts tend to vote as Republicans, whose leaders are at the forefront of protecting businesses that thrive in making installment and payday loans at exuberant cut-throat rates that would make a loan shark blush. What type of rates you may ask. Try 30% to 300%. But instead of breaking your knees if you don't pay up – which would almost be preferably, they destroy your credit, they destroy your name, and possible your marriage – while laughing all the way to the bank (literally).  These guys invented Blaxplotation, long before movies in the 1970's coined the term.  And it you're lucky, they'll call your work, your neighbors, and your relatives – informing them of your missed payments. 

While it cannot be said that Buffet put the "axe" in Blaxplotation, he most definitely put the jive shuffle in the Irish Jig. And whilst he certainly gives trailer park inhabitants a run for their money, where ‘tis the season that politicians are grinning ear to ear for their votes – they shouldn't expect much from these blond hair, blue eyed devils, since at the end of the day it will take much more than a foreclosure to wean them away from the political party that supports an industry that is intent on selling them an over-priced home, at an over-inflated interest loan, that guarantees them a 33% chance of foreclosure. Only in America!  So paradoxical, it's amusing. (Who says white guys can't dance). ESR

This is D. Sidney Potter's second contribution to Enter Stage Right. © 2015.

 

 

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