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A Matter of Life in Debt (Editorial)

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Later this week, Dennis Smiley is scheduled to be sentenced for bank fraud. If you want to know how a market-level bank president ended up owing $6 million to every other bank in northwest Arkansas, see our Whisper, As Sentencing Approaches, Dennis Smiley Attorney Says Banks Share Responsibility. The details are unique, but the plotline is as old as boy-meets-girl: Upstanding member of society gets in a financial pinch and uses his position to access someone else’s money, always with the intention of repaying it before any harm is done.

Smiley is almost a caricature. How could any intelligent, well-educated person — a banker, no less — mistake debt for wealth? How could he have overspent more than the vast majority of Americans, even well-paid ones, will earn in a lifetime of honest work?

Few people are in Smiley’s professional position, so few get the benefit of every doubt that his fellow bankers gave him when he schmoozed his way into another $100,000 or $200,000 of debt. But there is one part of Smiley’s story that feels very common and increasingly so: He started his adult life in debt.

“He would tell you that obtaining credit and living beyond his means has been a problem since he first got married and was in (college) on a part-time income,” Smiley’s attorney wrote in an appeal for leniency. “Even at that early stage, he began accumulating credit card debt and loans.”

It’s not clear that any of Smiley’s early debt was student loans, but most new college graduates arrive in the workplace with significant debt. According to the Institute for College Access & Success, seven in 10 graduates in the class of 2014 nationally and 55 percent in Arkansas had college debt averaging more than $25,000. Many, of course, owe much more.

Obviously we’re not arguing that early debt caused Smiley’s crimes or that everyone who starts his career with debt will end up in federal prison, as Smiley surely will. But the normalization of constant and eternal debt does give one pause.

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