George and Mary

This is how I picture it…

In 1998, the Taiwanese financial markets are starting to take a hit because of businesses sending their production lines to mainland China. Taiwan is filled with dozens of Banks, born during the booming economy days of the 1980’s and early 1990’s and at one such bank, Cosmos Bank, a worried board of directors sits around wondering how they’re going to weather the currently looming crisis. They need cash, they need investors and a source of income, but all the traditional sources (business loans, home loans, credit cards) are all tapped out or not doing too well in the current economy. What to do? What to do?

Then I picture a young up and coming exec (which would put him in his 40’s around here)looking out the boardroom window and seeing the signs for one of the big computer companies or perhaps it was for a cosmetics line. In any case, an idea suddenly strikes him: big loans aren’t working…why don’t we try…micro loans! Credit cards at the time have (by North American standards) low maximums and charge a large amount of interest (around 20% per month) on money taken out for cash advances. So, our young exec decides, why not make a new type of card which fills in the gap between major loans and credit cards. By making the interest a little lower (say 18% per month), making the card really easy to get (both credit cards and loans require two co-signers and a lot of paperwork to get) and making the money easy to access (use a bank machine to draw money anytime you want from your loan account) people, and especially young goods-hungry consumers will be able to get the goods they want, when they want them, without any of that legal hassle that puts them off.

So, our bright young executive whips his chair around and quickly raises his hand.

“Yes?” Says the chairman.

Without pausing to take a breath, the young exec boldly outlines his new idea while the other members of the board listen quietly, nodding to themselves. Slowly, their eyes start to light up as they see the possibilties, even the chairman is smiling to himself. But, there’s that one doubter down at the end, the one who never liked our young exec to begin with, and he raises his hand to comment.

“Nice idea, but how do we get them to buy into it?”

The young exec’s eyes go wide as he hits a question he didn’t think of yet, quickly he searches his thoughts, and then his look of fear turns to confidence again.

“We don’t sell it to them as a loan from a bank. Kids borrow money from friends and family all the time, and we’ll sell it to them as a loan from some friends. They’re not getting money from us, they’re getting money from their buddies next door…We’ll call them…George and Mary.”

Is this how it happened? Who knows?

But, the reality is that shortly after this two young hipsters were everywhere to be seen in Taiwan by the names of George and Mary. Sporting the latest fashions and electronic goods, these advertising darlings and their catchy theme song became an everpresent aspect of Taiwanese culture. Young people flocked to Cosmos bank to get money from their new friends “George and Mary”, and other banks quickly followed suit with their clones as the cash started to roll in. Sure, it was about lending money out to people, but of course young people are notorious for not paying their bills on time, and 18% interest racks up some hefty bills pretty quickly. People who weren’t willing to take out killer cash advances seemed not as bothered by these “temporary loans” which had to be taken as cash, not credit. After all, most probably figured, they could pay it off in a paycheck or two. (You still needed to have a job before George and Mary would lend money to you, but little other requirements.)

A few weeks ago, Taiwan lawmakers banned banks and lending institutions from advertising these cards in anything but the print media. The reason? Taiwanese currently owe NT$350 Million (about 14 million Canadian dollars) to banks on these cash cards, and some banks have even gone under due to people defaulting on their payments. Parents are the ones often being stuck with the bills, and families have collapsed financially as well because the temporary loans they took from “George and Mary” turned into mounting debt. In a country where there is little social security, and the financial situation is getting worse and worse due to political and economic problems, George and Mary are gleefully throwing gas on the fire, and the lawmakers are trying their best to slow it down, even if they can’t stop it.

I wish them luck, they’re fighting against the shortsightedness of human nature.

In the meantime, I’m sure our formerly young executive sits in his office at the top smiling to himself each day as he works, thinking about how “he” singlehandedly saved the bank while a radio plays in the background…

“If-you-need-cash, and-need-it-now, call Geeeeeeeorge and Maaaaaaary!…”