Land of the Fee: Hidden Costs and the Decline of the American Middle Class
by Devin Fergus
Oxford University Press, 264 pp.
In 2010, Consumer Reports polled its readers on "what bugs America most." The winner: "unexpected [or] hidden fees." The good readers of Consumer Reports were not outliers. Fees reliably incite mass indignation. More and more of our dealings--not just financial transactions, but also reserving hotel rooms or booking flights, for example--come festooned with them. Many bear cryptic names (such as a "recasting fee," to pick just one from a list included with my 2017 mortgage interest statement) and are accompanied by reams of impenetrable legal boilerplate (in 1980, most credit cards came with a single-page contract; little more than twenty years later, this had spiraled to thirty-plus pages of obfuscatory verbiage). Tinging our affront is a sense of impotence at the impunity with which they're levied. If we even know we're paying them, that is--often they go undisclosed, lumped into an item's overall price.
But fees are not merely irksome, contends Devin Fergus, a professor of history and black studies at the University of Missouri and the author of Land of the Fee. Fergus argues that the explosion of fees has become a lien on social mobility--inflicting death by a thousand cuts on the American dream.
Despite the book's title, Fergus's target isn't solely fees; he takes aim at a set of fee-laden financial products that exact a regressive tax on many Americans as they navigate life--attending college, buying a house, commuting to and from work, and making ends meet: student loans, subprime mortgages, urban car insurance, and payday loans. Collectively, he writes, they constitute a toll on the primary means by which most of us acquire what wealth we'll get to call our own.
Fergus imparts some fast facts: the proportion of household debt accounted for by student loans increased from 28 to 58 percent between 1983 and 2001; by 2005, subprime mortgages were siphoning $9.1 billion a year from borrowers in interest, penalty payments, and other fees; and in 60 percent of payday loans, fees eclipse the sum borrowed. The impacts reverberate. Student loan debt, for instance, delays home ownership and affects the terms of mortgages and other loans borrowers qualify for. In aggregate, these costs exert a crushing burden on working- and middle-class Americans, relieving them annually of at least $1.46 trillion--an amount that exceeds...