Managing credit is no card game RIT's Manning uses lessons learned as a Scout to teach, preach debt relief Ben Rand, June 11, 2006 KARIN VON VOIGTLANDER staff photographer RIT professor Robert D. Manning believes that "people could be managing their lives better, but the odds are stacked against them." Manning's interest in credit and its impact on society started in the mid-1980s after reading a newspaper story about indebtedness.

(June 11, 2006) — Call him a credit card crusader. A pointy-headed scholar. A naive reactionary, if you must. But whatever name you choose, don't refer to Robert Manning as a pessimist.

Sure, the Rochester Institute of Technology professor has some dark views — about the sharp rise in consumer debt; about the country's negative savings rate; about the lack of planning for retirement; and about what he believes is a predatory banking system.

Yet he actually has an uplifting outlook. Manning simply believes that Americans can do better for themselves, accomplishing their dreams and aspirations without excessively relying on the use of credit cards. And he intends to spend much of the next year explaining how and why in an increasingly aggressive media, academic and public policy campaign.

The 48-year-old Florida native plans to publish three books over the next 12 months, including a follow-up to Credit Card Nation: The Consequences of America's Addiction to Credit, the groundbreaking work that established him as one of the most outspoken critics of the country's consumer spending and lending practices. Manning argues that deregulation of the banking industry in the 1980s has unleashed powerful forces that encourage banks to overlend and seduce consumers to overspend. His research will also play a prime role in at least three documentaries, including In Debt We Trust: America Before the Bubble Bursts, which debuts Friday at the prestigious Nantucket Film Festival. Portions of that movie were filmed on the campus of RIT.

In addition to all that, Manning will also be the lead player in a pioneering debt relief program in Utah, approved by the state legislature, that could serve as an alternative to bankruptcy. The goal of the program: To enable consumers to pay back as much as they can without having to liquidate their homes or put the black mark of bankruptcy on their records.

As if that wasn't enough, next year Manning and his staff will launch a novel undergraduate program and research center in consumer financial services at RIT. Along the way, he's made a few adversaries in the banking industry, which disputes the notion that it encourages overspending. Credit cards represent a small fraction of total consumer debt, the industry says; as well, banks follow careful guidelines to determine creditworthiness. It also argues that the greater availability of credit has strengthened the country by, for instance, making it possible for more people to own homes.

The broad scope of Manning's academic and legislative activism stems not from his political beliefs but rather from a lesson he says he learned long ago, as a 13-year-old Eagle Scout. Whenever his troop went camping, Manning recalls, Scoutmasters always stressed they were to leave the site in better shape than when they found it. And so "my role as a scholar is not to just describe and analyze," he says, "but to help make it better. That applies whether I'm cleaning a campsite or understanding the impact credit cards have on society."

That impact, he says, has been vast, transforming society from one that values hard work, frugality and saving to one that emphasizes consumption and instant gratification.

But more than just railing at materialism in society, Manning believes that debt held by both consumers and the government is putting the future of the United States at risk, as we borrow ever-increasing amounts from countries whose interests may be antagonistic to ours, such as China.

"People could be managing their lives better, but the odds are stacked against them," says Manning, who has academic degrees from Johns Hopkins, Northern Illinois and Duke universities.

The subject of credit and its impact on society fell to Manning almost as a fluke. While traveling through the Orlando, Fla., airport in the mid-1980s, he saw a newspaper item about the increasing indebtedness of Americans. Shortly thereafter, he began noticing rising numbers of students dropping out of college and using credit cards to pay for tuition.

So began a career-defining area of research that saw him publish a major study on the use of credit cards on campus in 1999 and Credit Card Nation in 2000. The two works together almost immediately turned him into a media darling, and the calls have not stopped since. He has appeared on every major network and has testified eight times before congressional committees. The research has led him to conclude that the rise in consumer debt is due largely to deregulation of the banking industry, which created powerful incentives for banks to offer credit to a wider audience than ever before.

He says the journey has become personal for him because over the years he's heard many tragic stories about the impact of overspending, such as a young man who committed suicide under pressure from his debt load.

Manning, who uses credit cards himself, stresses he's not factoring out the individual's responsibility in his work. He's just arguing that the system favors credit card companies too much — and that assigning blame is counterproductive.

"Is it that the bank overlent, or that the consumer overspent? You can't put your finger on one or the other," Manning says. But, he adds, the industry has "the incentive to overlend but doesn't assume any risk."

The banking industry says it does not overlend and prey on customers. Because of the carefully measured increase in credit, millions of more people have been able to buy their own homes and open their own businesses, says Tracey Mills, spokeswoman for the American Banker's Association. In the past, credit was hard to get and expensive; today, anyone can earn low interest rates by paying on time. The industry also argues that credit card is fractionally low compared to total debt and that a large percentage of consumers — more than a third — pay off balances every month. (Manning responds that such an argument is "specious" because many consumers use home equity loans to pay credit card bills, a strategy that will cause problems as rates rise.)

The banking and credit card industries and Manning do share one area of common concern: Both agree that the country needs a crash course in financial literacy. That's one main thrust of Manning's new financial services major, which is slated to enroll its first students in the fall of 2007.

Manning, who joined RIT in 2001 to be closer to family, expects to train students in areas such as banking, insurance, investing and personal finance. The goal: to develop professionals with a broad understanding of the financial services market from both a corporate and consumer perspective.

Manning is also a participant in the Credit Abuse Resistance Education Program, started by U.S. Bankruptcy Court Judge John Ninfo, which aims to teach secondary school students about personal finance. Started in Rochester, the program has spread to 31 states.

Ninfo says that Manning offers an important voice in helping the nation understand the ripple effects of debt. Education is the key to reversing the debt spiral, he says, because re-regulating the banking industry and credit card rates would create too many problems for the economy. Credit cards often offer a safety net for families coping with health and other emergencies, he said. "The only answer," he said, "is to increase our financial I.Q.s."

Manning's commitment in part is what attracted Danny Schecter, director of In Debt We Trust. A former producer at both CNN and ABC News, Schecter directed WMD: Weapons of Mass Deception, a film about the media's role in reporting the Iraq war. Manning served as editorial adviser on the film.

"He's not just an author, moving subject to subject," Schecter said. "He's engaged. ... He's not only writing about it, but he's actively working to try to help people from getting over their heads."

Manning's work has earned the respect of his bosses — if not total agreement.

RIT President Albert Simone said that Manning is an important voice because of his ability to "connect dots." He also raises important points about the nation's negative savings rate and the public policy implications for retirement, Simone said. Manning also has legitimate points about consumer disclosures.

Where the two differ, however, is in the weight of personal responsibility. Simone, an economist himself, is not ready to blame the banking industry for the abuses of consumers.

"If someone makes it easy for me to spend money, makes it easy for me to get drunk, that doesn't mean I do those things," Simone said.

Manning's response is that Simone's position highlights the generational differences in the debt issue. The RIT president is used to the era when community banks watched carefully over who received how much credit. "He grew up in an era where you had to fight for every penny," Manning said, whereas today young people are told, "You can have it all, without any sacrifice."

Despite their professional difference of opinion on personal responsibility, Simone said he's glad Manning is doing his work at RIT.

"Bob is a respectful individual, but he is passionate," Simone said. "Once he gets onto something, he is like a railroad train. And he is creative."

BRAND@DemocratandChronicle.com

This story ran on on June 11, 2006.