Advertising’s Role In The Mortgage Crisis

Today’s New York Times features an article that pulls no punches in suggesting that in recent years, more aggressive advertising prodded consumers to take out risky home equity loans:

“Live Richly.”
That catchy slogan, dreamed up by the Fallon Worldwide advertising agency, was pitched in 1999 to executives at Citicorp who were looking for a way to lure Americans to financial products like home equity loans. But some in the room did not like it. They worried the phrase would encourage people to live exorbitantly, says Stephen A. Cone, a top Citi marketer at the time.
Still, “Live Richly” won out. The advertising campaign, which cost some $1 billion from 2001 to 2006, urged people to lighten up about money and helped persuade hundreds of thousands of Citi customers to take out home equity loans — that is, to borrow against their homes. As one of the ads proclaimed: “There’s got to be at least $25,000 hidden in your house. We can help you find it.”
The portion of people who have home equity lines more than 30 days past due stands 55 percent above its average since the American Bankers Association began tracking it around 1990; delinquencies on home equity loans are 45 percent higher. Hundreds of thousands are delinquent, owing banks more than $10 billion on these loans, often on top of their first mortgages.
None of this would have been possible without a conscious effort by lenders, who have spent billions of dollars in advertising to change the language of home loans and with it Americans’ attitudes toward debt.

Yes, I know, I know: Personal responsibility. Advertising doesn’t force people to do anything. Consumers need to read the fine print. Don’t write checks your butt can’t cash.
But in example after example in this article (along with an accompanying visual slide show of ads), advertising sure made falling into debt sound easy and attractive. And throughout the economy, we’re paying the price for it.

About Dan Goldgeier

Blogging on AdPulp since 2005, Dan Goldgeier is a Seattle-based freelance copywriter with experience at advertising agencies across the U.S. He is a graduate of the Creative Circus ad school, and currently teaches at Seattle's School of Visual Concepts. In addition, he is a regular columnist for Dan published the best of his columns in a book entitled View From The Cheap Seats: A Broader Look at Advertising, Marketing, Branding, Global Politics, Office Politics, Sexual Politics, and Getting Drunk During a Job Interview. Look for it on Amazon in paperback and e-book editions.


  1. Mark Trueblood says:

    Nobody in advertising was in charge of making trillions of dollars worth of terrible loans, and then inventing shell games to hide it.
    I believe that advertising professionals should think responsibly, but this article sounds like it’s blaming the debt crisis on nice headlines and good t.v. spots.

  2. Mark: So True, so true. Looks like Citibank is trying to cover its ass for selling shitty products to further enrich themselves. Their greed is at fault here, not the advertising, though it sure did make that second mortgage sound good, as Danny says. Thanks Citibank for fucking up the financial stability of our nation.

  3. Mark Trueblood says:

    fortyver: Right! Though I believe the article may have a point, when it talks about how advertising increased consumerism and appeal of debt. It’s however a MUCH more complicated issue than ads causing the current crisis.

  4. I do agree that Advertising is a part of the problem, but I do believe that Citibank is trying desperately to take the spotlight off of the shitty business practices and to lay the blame on someone else.

  5. Do we create the desire or do we not?
    It might be the client’s scheme, but we give our all to make whatever they’re selling attractive.
    And it’s not our place to judge (which is a problem for me).
    Alex Bogusky said, “We’re mercenaries. You can pay us to go after anybody.”

  6. C’mon. Where have you guys been?
    Advertising is dead! We’re in a post-advertising world. Interruption no longer works. Consumers have become immune to advertising.
    Don’t you guys read the trades?

  7. Wow…
    …”Still, “Live Richly” won out. The advertising campaign, which cost some $1 billion from 2001 to 2006, urged people to lighten up about money and helped persuade hundreds of thousands of Citi customers to take out home equity loans — that is, to borrow against their homes.”…
    Gee, that a F’n stretch of a link, NY Times. I’m sure because of a simple positioning and tagline that tried espouse values that went beyond just living for money, that consumers were somehow hypnotized into taking out huge home loans. Give me a break.
    Where did this write get their journalism degree, Rove University?

  8. Regent, actually.
    Or Liberty.

  9. Mark Trueblood says:

    Very true, we do create the desire. And advertising does have much to answer for along the lines of promoting mindless consumerism as a means to happiness. (which of course it can never truly fulfill.)
    I am very conscious of the kind of vales and behavior that the ads i work on promote, and thankfully, I’ve worked with people who are as conscientious.
    But as I (and other comments) have said, the ad industry did not tell Citigroup or any other bank to be irresponsible, nor is the ad industry responsible for lack of oversight and accountability of the financial markets.
    The New York Times article seems like yet another way for the financial industry to spin their culpability. “Oh, well the ads MADE our CONSUMERS be IRRESPONSIBLE! Not our fault! Can we have another bailout, please?”

  10. Tom Messner says:

    They irony of Live Richly was that the bank took its own advice literally and said in effect, “Money is not important to us as long as all you folks are living in your homes and driving your cars and toting up the credit cards.”
    As someone said a long time ago in Martin Mayer’s The Bankers, “These new age bankers are great at giving out loans; just not so hot at collecting them.”