The Economic Downturn Affects All Businesses – Even Bail Bonds
By Tonya Rynerson, Los Angeles Bail Bondsman
Conventional wisdom says that when the economy goes down, crime goes up. And when crime rises, bail bond bondsmen prosper. Actually, neither of these assumptions is correct.
Some states have seen an increase in certain types of crimes, but not all. And yes, the economy has affected bail bondsmen too. Remember, we "sell" a product just like other merchants. If people don't have money to pay their mortgages, they likely can't afford bail bonds either.
Are Crime Rates Really Rising?
It depends on where you live.
Connecticut Attorney General, Richard Blumenthal lamented in March that "our worst economic times seem to be bringing out the worst in many of our people," referring to an increase of shoplifting, armed robberies, and fraud in the state.
The opposite seems to be happening in California though. In January, the Los Angeles Times reported that, for the sixth consecutive year, crime rates are continuing to fall in Los Angeles and Southern California.
The economic situation is even helping to solve crimes in some areas. Nashville law enforcement officials report a 53% increase in tips to the Nashville Crime Stoppers group. The reward money seems to be a powerful motivator for many. ”I even had one caller call in and say, ‘You know, normally I'm not a snitch, but I need the money,'" said Metro detective Jim Lambert."
Good People Are Not "Going Bad"
Part of the concern about increased crime is the fear that home foreclosures and layoffs will turn ordinary, honest citizens into criminals. There's not a lot of evidence to support that.
The Providence, RI Fire Department has seen an increase in calls – but not for fires. Thieves break into vacant houses, steal copper plumbing, and cause flooding. The town's police chief told the New York Times last fall that's he's seeing a "shift for the worse." A survey of 200 law enforcement agencies last July found that nearly 40% "said that home foreclosures had produced an impact on their law enforcement activities, either by a loss in tax revenue or an uptick in crime around abandoned houses."
But El Cajon, CA Police Capt. Bruno Cirello discounts the economy as a reason for crime. He says that people committing crimes now "were criminals before the economic downturn."
Thank goodness, we haven't seen an influx of clients who turned to crime just to survive. Even without a recession, bail bondsmen deal every day with good people who just made a mistake. And people do surprising things when they feel desperate.
For instance, last month, we had a client who had embezzled large sums from her employer because her family was in financial trouble. Her husband explained that they planned to make retribution and that "she was just trying to help the family." Fortunately, that's not the norm, just one story in a thousand we've dealt with.
Domestic Violence Calls Rise as the Economy Falls
Desperation though, takes many forms. One of the worst is when stress and uncertainty causes people to lash out violently against family members.
The US Department of Justice was concerned enough to issue a Community Dispatch in January titled "Preparing for Crime in a Bad Economy." It specifically warns about an expected increase in domestic violence.
Unfortunately, the DOJ is right. This is one crime that really is on the rise in California. In San Diego County, the volume of calls to the local YWCA Domestic Violence Hotline has almost doubled compared to 2008.
“The women we're talking to are fleeing situations that are stress-driven, stress added to an already bad situation,” said Debra Zanders-Willis, chief operating officer for the county's YWCA. “The stress of not being able to make a mortgage payment within the family, stress of unemployment added to an already volatile situation.”
California law takes domestic violence seriously. Since the OJ Simpson case, laws have been strengthened and bail bond amounts increased. The bail amount on a basic domestic violence charge ranges from $20,000 to $50,000. Consider that the bail bond amount is 10% of that, and it's an expensive lesson on the importance of anger management.
A Bad Economy Affects the Bail Bond Industry
When people lose their jobs – or are afraid they might – they cut back on all expenses, and bail bonds are no exception.
In South Florida, bail bondsmen are seeing less business because people simply can't afford the bail bond amount:
"…like any other businesses, bondsmen's customers have less money. That means fewer people who are arrested can find the cash or collateral due to the bondsmen in order to post bond and get them out of jail."
At Rynerson Bail Bonds, we've seen the same situation. It's a particular issue with higher end bonds because we must have collateral. Especially at the $100k level and up, we need assurance that the person purchasing the bail bond contract has enough collateral to cover the whole amount. But the collapse in housing prices has really hit people hard. They bought with interest-only mortgages or have loans, sometimes, second or even third mortgages in excess of the house's value. Many people now just don't have any equity in their homes or lines of credit available.
In other cases, even if people have the money, they're worried about spending it. They say: "We'll it's just a couple of days in jail. Instead of spending $5,000 on a bail bond, I'll just ride it out." Previously, they wouldn't have thought twice about pulling out a credit card. But now, people really have to balance whether it makes sense to put $5k or even $1500 on their credit card when they might need that money to pay for rent later.
Fortunately, in the past few months, the situation has improved. I've noticed that people in general are more willing to spend money and seem more hopeful and optimistic about the future. It could be the stimulus money flowing or just a general feeling of confidence that the economy will get better.
Whatever the reason, it's a good sign for everyone – no matter what business you're in.