This expose on Warren Buffett owned Clayton Homes is brutal to his reputation:
The women — one in a long, colorful tribal skirt, another wearing turquoise jewelry, a traditional talisman against evil — were steered to a salesman who spoke Navajo, just like the voice on the store’s radio ads.
He walked them through Clayton-built homes on the lot, then into the sales center, passing a banner and posters promoting one subprime lender: Vanderbilt Mortgage, a Clayton subsidiary. Inside, he handed them a Vanderbilt sales pamphlet.
“Vanderbilt is the only one that finances on the reservation,” he told the women.
His claim, which the women caught on tape, was a lie. And it was illegal.
It is just one in a pattern of deceptions that Clayton has used to help extract billions from poor customers around the country — particularly people of color, who make up a substantial and growing portion of its business.
The company is controlled by Warren Buffett, one of the world’s richest men, but its methods hardly match Buffett’s honest, folksy image: Clayton systematically pursues unwitting minority homebuyers and baits them into costly subprime loans, many of which are doomed to fail, an investigation by The Seattle Times and BuzzFeed News has found.
Clayton’s predatory practices have damaged minority communities — from rural black enclaves in the Louisiana Delta, across Spanish-speaking swaths of Texas, to Native American reservations in the Southwest. Many customers end up losing their homes, thousands of dollars in down payments, or even land they’d owned outright.
There needs to be some sort of legal recourse. It’s part of a long series that is well worth your time. All the while I was reading this I was wishing this type of reporting happened more often.
WereBear
So it’s true. Behind every great fortune is a crime.
burnspbesq
If the allegations are true, there is. CFPB can hammer them for the kinds of predatory practices alleged.
If Clayton and Vanderbilt are subsidiaries of Berkshire Hathaway, there could also be some securities law problems lurking. I doubt Berkshire Hathaway would have disclosed that its subsidiaries could be in a heap o’ trouble with the CFPB.
Villago Delenda Est
Heads need to literally roll in this country to put a stop to this. The 1% have made their bed. Let them enjoy the fruits of their actions, just as the Bourbons, Romanovs, and Ceausescus did.
Ohio Mom
I’ve long thought of Warren Buffet as amazing for pulling off that “I’m just plain folks” act so completely, over so many decades.
rikyrah
thanks for bringing this to our attention.
Ryan
There does need to be legal recourse, but one can start by shaming Buffett. If he can be convinced, it’s possible he’ll end up being the guy most interested in seeing the issue taken care of. Of course, I probably have had some of that folksy charm rub off on me. Were it Jamie Dimon, you’d get zero sympathy from me.
Mnemosyne
@Ryan:
Buffett has a public image to protect. It’s the same reason that people go after Apple for manufacturing practices that all of the computer companies follow, some of whom are even worse. So going after Buffett personally will probably get action more quickly.
Starfish
There was something that went on during the subprime crisis where Warren Buffet was getting some sweet financial deals due to being really really rich where I started to think that “This is bullshit.”
I am searching for stuff from that period trying to figure out what was it that led me to believe that Warren Buffet was an asshole when I found this article from Forbes fluffing Warren Buffet about this Clayton Homes thing.
Starfish
@Mnemosyne: What you are saying reminds me of when I watched one the Jamie Johnson (one of the heirs to the Johnson and Johnson fortune) documentaries. He interviewed one of Warren Buffet’s adopted grand daughters for the film, and I started looking into her. She said some minor thing about Buffet in the film, and she was disowned over it.
I'mNotSureWhoIWantToBeYet
@Starfish: Buffett invested $5B in Goldman Sachs in September 2008. Fool.com:
He made a bundle (something like $2B) on that.
Cheers,
Scott.
Mandalay
@Ohio Mom:
What makes you think it is an act? As far as I can tell he really is a regular guy who happens to be brilliant at investing.
What is more amazing is that Buffett has managed to bury his past history of being a ruthless bastard as a businessman, and someone who fought to the death with the government over taxes. And the same applies to Bill Gates, who was just brutal at crushing the competition by any means necessary, regardless of the law.
That said, it’s easy for me to give them passes for their misdeeds. I can’t think of anyone else on earth selflessly doing more to make the world a better place. Given that they could have been sitting on their asses counting their money for the past ten years I find their achievements both noble and stunning (without excusing Buffett for anything that may arise from Cole’s OP).
Starfish
@Mandalay: They have all the money in the world. They have accountants to count it for them. The money won’t matter to them after they are dead and gone. Their place in the history books will.
Gvg
Buffet has a few things going for him that make people think he has good judgement and that his advice is worth following. I don’t know that he has a nice guy or folksy reputation. 1 his hedge fund actually delivered value not hype for decades and other hot stars have never lasted so long or reliably. 2 he bought companies and made money by running them not stripping them or loading them with debt then bailing. 3 he has advocated a more progressive income tax system on the basis it’s more fair and also better business. The story about his secretary having a higher tax rate than he did etc. I think this is correct based on how things have gone here over the last few decades.
This does not mean he can’t have flaws nor that he is nice. I actually don’t know. I will wait and see if the investigation gets proven and what he does about it.
I'mNotSureWhoIWantToBeYet
@Mandalay: “Selflessly”? Really?
His foundation is spending the bare minimum (5%/yr) to keep their legal status as a charity. At that rate, it will be an extremely rich and powerful organization for a very long time.
You’re right that he crushed his competition. I’m not as willing to forgive and forget as you.
We like to think that measurements and data are objective and they naturally lead to objective policies. Someone here (RM, I think) pointed out policies are never objective – they’re always designed to achive some end that is shaped by subjective views about what the proper end should be. Eradicating malaria is a good that few can argue with, though I don’t know enough about his methods in that area. Similarly, improving public education is a good, but his ideas about the way public education should be changed, and his apparent mania for working around the public in pushing his goals, is not.
We should always be suspicious of the super-wealthy throwing their weight around in public policy debates, especially when the press fawns over how brilliant and selfless they are.
My $0.02.
Cheers,
Scott.
J R in WV
And it isn’t like only poor folks get robbed. Thank God for Bernie for that Ponzi scheme he ran to steal billions of dollars from rich folks~!
Not trying to excuse Buffet from failure to control his companies to compel them to be fair and honest in all their dealings with the public!
Just being glad that rich folks are also subject to being stolen from, and there is so much more money to take, too!!
For Buffet to shitcan his granddaughter shows what a hopelessly evil animated piece of excrement he really is. Horrible. She didn’t even criticize him, she just talked about being in his family, and then he really showed his ass to the world.
I wouldn’t urinate on him if he was on fire after that. Hopelessly evil.
rikyrah
Samuel Sinyangwe
@samswey
Every person killed by Cleveland police over the past four years has been black. 70% have been unarmed. #TamirRice
J R in WV
@rikyrah:
And this doesn’t surprise a bit!! “Every person
killedmurdered by Cleveland police over the past four years has been black.”Fixed that for you Rikyrah! No offense!!
Ohio Mom
@Mandalay: There is a fair amount of controversy over Gates’ health efforts in Africa, and as Scott points out above, his efforts at “improving” public education in this country are absolutely pernicious. You can goggle all that pretty easily. Try the articles from Dissent magazine. It’s hardly to Buffet’s credit that he joined up with Gates to remake the world in such ill-conceived ways.
When you get down to it, the essence of Buffet worship has always seemed to me to be “He’s good at his job.” Whoop-de-do. Yes, he kept the modest house he lived in when he started out. Do you think that is the only house he owns?
Mandalay
@I’mNotSureWhoIWantToBeYet:
We should indeed. I count myself as cynical as most, and I am not blind to their past sins.
But even if one strongly disagrees with Buffett and Gates over specific issues (e.g. Gates on polio), I find it impossible to overlook the massive overall good they have done in recent years.
The only thing more amazing is the empty zeal of small people who sneer at them, no matter what they do.
I'mNotSureWhoIWantToBeYet
@Mandalay: Wow.
Cheers,
Scott.
Warren Terra
You should check out the Tampa Bay Times 5+ part series on the terrible decision St. Petersburg made to de-integrate its public schools and then abandon the poor black kids in their ghetto.
Ohio Mom
My husband’s best friend is from Nebraska and so feels a special kinship with Buffet. As a result, I’ve been listening to how great Buffet is for years and have only become more repelled by him (Buffet, not DH’s friend). I mean, I agree with Buffet that tax rates are unfair. Please show me how he has used his vast resources to do something about this.
Mandalay
@Ohio Mom:
Oh FFS – you want to have your cake and eat it. He chooses to live in the house he grew up in, but that is not evidence for you that he is a regular guy – it’s an excuse to sneer that he must have other houses as well.
Mandalay
@Ohio Mom:
Try this. No doubt it doesn’t meet your standards of how Buffett should be spending his time.
What exactly do you want him to do? Spend all his time and energy fruitlessly arguing with the Republican majorities in Congress over taxes on the rich, or actually do something useful?
Ohio Mom
@Mandalay: I don’t know how much time he spends in his regular guy house and how much time he spends in his rich guy house (s) and neither do you: keeping his other home (s) out of the spotlight is one way he perpetuates his aw-shucks schtick (compared to Gates, who wants us to know all about his little castle).
I’m done with this topic. We’ll just have to agree to disagree.
I'mNotSureWhoIWantToBeYet
@Mandalay: Oh, a pledge counts as doing something useful. I see.
If he really thought that he wasn’t paying enough in taxes and wanted to pay more, he could act on his own. He could send a check to the Bureau of the Public Debt.
But I guess that doesn’t count as much as a pledge. Thanks for straightening that out for us.
Cheers,
Scott.
The Lodger
@I’mNotSureWhoIWantToBeYet: Also, he owns Moody’s, which was complicit in the re-rating of crap mortgages as AAA, which fueled the real estate crisis in the late 80s. Buffett himself would have canned anyone who invested his own money that sloppily, yet he allowed millions of people to be decieved with faulty ratings. So much for St. Warren.
Goblue72
@burnspbesq: Why is it your knee jerk incredulity on these things perfectly eludes with corporate paymaster ass kissing?
Jesus Christ, don’t you have a corporate overseas tax shelter to go work on?
Goblue72
@I’mNotSureWhoIWantToBeYet: Bingo.
Goblue72
@Mandalay: You need some chapstick?
burnspbesq
@Goblue72:
“Knee-jerk incredulity?”
Suck a chainshaw. You have a problem with wanting to know what actually happened before jumping to conclusions, that’s your pathology. I’m under no obligation to follow you into madness.
Prescott Cactus
@Gvg:
It’s not a hedge fund. It’s a publicly treaded stock named Berkshire Hathaway on the NYSE: BRK-A or BRK-B aka Baby Berkshires (1500 B shares= 1 A share) . BRK-A is a hair under $200,000 a share.
@The Lodger:
Berkshire Hathaway owns around 13% of Moody’s (MCO – NYSE)
You may now resume the sharpening the pitchforks and the lighting of the torches.
mclaren
It’s nearly impossible to make money in America in 2015 without brutalizing and exploiting people.
Once upon a time, capitalism involved building useful stuff and creating a win-win situation where both the customers and the manufacturers benefited.
Today, capitalism has turned into an asshole factory. American capitalism in 2015 is a lifeboat filled with 320 million people, and to stay afloat you have to throw someone else out of the lifeboat. Trouble is, everyone else is trying to throw you out too.
Source: “The Asshole Factory,” Harvard economist Umair Haque, themedium.com, 21 April 2015.
mclaren
@Goblue72:
It’s a great big co-inky-dink. Tax avoidance lawyers like burnsie just coincidentally happen to find reports of exploitation and sadistic brutalization of workers implausible. Why? Because we live in the best of all possible capitalistic worlds, that’s why. The Invisible Hand assures us of it, and magnificent edifices of modern economics like Dynamic Stochastic General Equilibrium prove it mathematically.
So all those armies of working poor people living in their cars that form vast rings around America’s major cities are just a huge optical illusion. Now get back to cleaning out that toilet with a toothbrush, serf!
mclaren
@burnspbesq:
With sublimely wrought arguments like this, you can see why burnspbesq commands his 1-percenter income. Clearly burnspbesq is the flower of America’s intellectual elite.
M. Bouffant
What reputation? He’s a blood-sucking, rent-seeking parasite like the rest of them.
Paul in KY
@WereBear: A ‘great’ crime.
Paul in KY
@Starfish: Sorta shows to me how scared they (the .001%) are at the exact circumstances of their wealth/privilege being disseminated to us lessers.