Debt Reckoning Michael Carnacchi would like to stick a boot up the bank’s ass, but he’ll settle for a hearing at the Supreme Court
Michael Carnacchi is a reluctant citizen-hero, a man who leads a conversation with humility and good humor. He’s easily the Best Of winner for Best North Bay Citizen, despite humble protestations to the contrary.
Carnacchi is the living embodiment of the “Main Street” that was often invoked during the run-up to the 2008 presidential election. That election occurred as the global economy was poised to collapse and, in the campaign vernacular of the day, Main Street couldn’t catch a break, while Wall Street demanded—and got—all the breaks it could handle.
He’s the living embodiment because Carnacchi’s cobbler shop, Apple Cobbler, is on Main Street in Sebastopol. And, by late 2007, while George Bush and his irresponsible neoconservative cabal were ruining the American economy—two unfunded wars, tax breaks for the rich—he was trying to stay afloat.
Like many Americans, Carnacchi’s shoe-making biz hit a wall as the economy headed south, which is where his troubles began. He had a Citibank credit card issued through U.S. Bancorp, which had a balance of about $14,000 on it—most of what he’d borrowed had gone right back into his business, he says.
Carnacchi was four days late with a payment back in Dec. 2007—and if you remember those days, they were pretty scary times for small businessmen and big banks alike.
The Bohemian reported at the time that Carnacchi was a responsible borrower whose monthly payments were reasonable, about $213, and his interest rate was about 3 percent. Manageable.
But when he was late, the interest and monthly nut ballooned the following month: New interest rate: 31 percent. New monthly payment: $1,224.
Carnacchi protested, but the bank wouldn’t work with him to reduce the interest rate or minimum payment—so he refused to pay it. He fought off debt collectors and fought in court—and continued to rebuff settlement offers as his case jumped from county to state to federal court.
At every turn, Carnacchi pushes credit onto other, anonymous supporters of his years-long David-and-Goliath battle against U.S. Bancorp. Mostly, he says, he couldn’t have done any of this without the support of his Sebastopol neighbors.
That battle comes to a head this week. On Friday, Carnacchi’s petition, the so-called writ of certiorari, will come before the nine justice of the United States Supreme Court. They’ll let the world know by Monday, March 23, whether they think his case has made the cut.
It’s a long shot that they’ll take the case, as the court only accepts a fraction of those that come before it each year. Carnacchi filed the writ himself after he lost his last battle in court, at the U.S. Court of Appeals for the Ninth Circuit.
He had a nonagenarian lawyer-mentor help him with legalese and research behind the scenes, and an anonymous supporter in Sebastopol covered the printing cost of the writ, about $300. Another Sebastopol supporter used to write him a check for $25 once a week, and he says people come to the store all the time to say, Keep fighting, man.
Win or lose, it’s been worth it for Carnacchi.
He’s eating bacon from a mess cup as the 52-year-old cobbler talks about the case and why he is pursuing it.
Carnacchi has been in business here for 21 years, and, yeah, he was the most expensive bootmaker in the country there for a minute. He makes boots for George Lucas and other luminaries, but business is down. He’s gone from two or three orders a month to one new order every other month. There’s a lot of backlog, so he’s got plenty of work to do—except he’s been spending much of his time at a law library in Santa Rosa trying to fight back against those insane interest and payment spikes from 2007.
Even as the bank aggressively sought to collect from Carnacchi, U.S. Bancorp was crying for relief from the U.S. government after the near-crash of the global economy. The bank got bailed out with Trouble Asset Relief (TARP) funds, even as it played hardball over Carnacchi’s bill.
“They used taxpayer money to sue a taxpayer,” Carnacchi says.
He fought back, and though he’s lost in court at all turns, he’s also turned back four settlement offers and says the case isn’t really about the money, anyway. He’s doing this, he says, for workers who got flushed out of the American economy over bad loans offered by irresponsible banks—and still haven’t made any kind of demonstrable comeback. Main Street has a long way to go.
Each settlement offer, Carnacchi says, came in the form of a “mutual walkaway.” The bank was willing to let him walk away from the entire debt—now eclipsing $50,000 with the fees and interest charges—but Carnacchi wasn’t letting go.
The bank would agree to not collect on the judgment or refer it to a third party for collection, if only Carnacchi would agree to not talk to the media or federal regulators in the aftermath of a settlement.
In effect, he says, he had to release the bank entirely from liability, and that wasn’t going to happen. This is a man from Detroit who rode his Harley-Davidson to California.
Instead of backing down, Carnacchi drew attention to the fact that U.S. Bancorp had merged with a bank incorporated in North Dakota. That move, he alleges in his writ, allowed it to “issue credit cards with no limitations as to interest in nearly every state in the Union.”
His complaint charges that the bank “knowingly conspired to unconstitutionally and covertly” evade usury laws. His basic argument is that U.S. Bancorp conspired to create an elaborate loan-sharking operation, subject to federal anti-racketeering laws. If corporations are people, he argues, then the bank should be treated like a Mafia gangster.
While Carnacchi takes a reporter through the twists and turns of his case, a young woman walks excitedly into the shop.
Carnacchi breaks out a cool pair of moccasins he’s worked on for her, and charges the woman $50, which she doesn’t have on her.
She leaves wearing the moccasins and carrying her sandals, and calls Carnacchi a little later to say she’ll be back soon with that $50. He laughs. He knows where she lives, he jokes. This is the small-town stuff that keeps him going—that has kept him going for seven years now.
“At each step, it was critical to my morale to have the community support,” he says. Not to mention the support of astrologer Rob Brezsny.
“I couldn’t have done it without him,” says Carnacchi with a laugh. He’s a Cancer, like Brezsny.
Justice Antonin Scalia will need to be in retrograde for this writ to have any chance of getting the four votes needed for the judges to hear the case. “I’ve lost so many times, it will be as much a surprise to me as anyone,” he says. Should they accept it, he says, he’ll deliver the oral argument himself.
One of three things can happen on Friday: the case will be rejected, it will be accepted, or U.S. Bancorp could be compelled to respond.
It only takes one justice to compel U.S. Bancorp to respond to Carnacchi’s writ. “That would be huge,” he says.
