Zyz wasn’t always called Zyz. It was once called Fireguard Security, and it was founded by an exec at Halliburton, a giant military contractor that sucked a bazillion dollars out of America’s bank accounts selling pricey, underperforming military services to our troops all over the world, then followed up by helping to build a couple of semidefective, way-over-budget oil wells, including one that may yet be responsible for the sterilization of the Gulf of Mexico.
Halliburton had a “dynamic, thrusting young VP” (seriously, that’s what Fortune magazine called him) named Chambers Martin, who quit the company in 2008 to found Fireguard, which immediately began to make major bank by taking U.S. Army contracts to guard Halliburton supply convoys in Iraq and Afghanistan.
Fireguard was selling its debt left, right, and center, paying top interest rates, telling everyone that the gravy train could never end, because every year they were taking in bigger military contracts, which meant that every year, they’d have more money on hand to make their bonds’ payouts. It worked great, until the military drawdowns started to reduce their annual revenues, and they needed to branch out.
So they started trading bonds, instead of just issuing them, beginning with bonds issued on student loan debt. It turned out that every dollar I borrowed to go to Berkeley got turned into a bond—someone with money bought the right to get paid every time I made a payment on my debt. This made big bucks for Berkeley and for other universities and companies that “gave” students the loans they needed to get their magic diploma paper. Student debt bonds are even better than skeezy military contractor debt bonds because a skeezy military contractor can go bankrupt, but students can’t.
Bet you didn’t know that, huh? If you borrowed money to go to college and you someday find yourself so flat broke that you have to go bankrupt, all your debts will be wiped off the books—credit cards, car notes—but your student debts are immortal. And whenever you miss a payment, the scuzzy finance companies that buy the debts from universities are allowed to jack your debt up with monster fees and penalties, so if you owe $30,000 for college and $50,000 in credit card debt and you go bankrupt, you’ll find the credit card debt reduced or eliminated, but your student debt might grow to $150,000 after all the missed-payment fees are tacked on. The way student debt bankruptcy laws are set up, they can take money out of your Social Security check to pay the student loans you took out as a teenager, even if you’ve already paid millions in fees and penalties.
Enter Zyz. They had a dynamic, thrusting plan to get people to pay: straight-up thuggery. Zyz knew a lot about scaring, hurting, and chasing people. They had deep connections with Homeland Security, which meant access to databases of who lived where, who they were related to, what their tax returns said, how much income their parents, ex-spouses, grandparents, cousins, and school pals made. Zyz was … aggressive … about using this information. Thrusting, even.
So far, so sleazy. But it got worse. People who owed money to Zyz started to do things that were pretty out of character for them: a couple armed robberies, some burglaries, a little blackmail. A bunch of them joined the military, only to be discharged for being grossly unfit for service.
Why were they doing this? Because Zyz was providing them with “financial advice.” As in “You’d better find some way to pay your bills, pal, or things could get very, very bad for you and the people you love.” Zyz wasn’t just a private military service, and they weren’t just high-flying financial engineers: they were the mafia.
Homeland by Cory Doctorow