The HOEPA legislation wasn't without its influence. Kathleen Keest uses its pa.s.sage to mark the start of subprime's second wave, or what she calls the "HOEPA evasion model." In Boston, Keest shook her head as she watched the big lenders react to HOEPA. If a high-cost loan was one carrying an interest rate of 17.5 percent, they would loan money at a rate of 17.2 percent and charge 7.9 percent in up-front costs to avoid the 8 percent trigger. To the extent even these small concessions ate into profits, the lenders more than made up the difference pushing overpriced products such as credit life insurance, which pays off a loan in the event of a death.

Fleet exited the subprime mortgage business in Georgia, but the company sold its portfolio to a rival named a.s.sociates, so Brennan found himself doing combat with a giant based in Dallas and owned primarily by the Ford Motor Company rather than one based in Providence. If anything, Brennan and Keest said, a.s.sociates was more insidious than Fleet. "They just packed loans with credit insurance and other junk, and then flipped people over and over and over," Keest said. Brennan saw the same thing. Whenever he met a new client coming to him because of a.s.sociates, they were invariably on their third or fourth refinancing.

In 1998, Brennan would travel to Washington, D.C., to testify about predatory lending at the Senate's Special Committee on Aging. He would fly to the nation's capital again two years later to talk about the same issue, though this time the invitation came from the House. In April 2000, when Andrew Cuomo, then the HUD secretary, was holding hearings to investigate subprime lending, Atlanta was the first stop on his five-city tour and Brennan was one of the featured speakers. "Finally, it's our day in the sun," he told a reporter for the Atlanta Journal-Const.i.tution Atlanta Journal-Const.i.tution.

It wasn't to be. Instead the dawning of the twenty-first century marked the start of Keest's third wave. By this time, a wide cast of players had joined the consumer finance companies, including a new crop of nonbank lenders such as Ameriquest and New Century. Increasingly, mainstream banks were revving up profits by purchasing or starting a subprime subsidiary. Unlike during waves one or two, the lenders were offering first mortgages as well as refinancings. Rather than holding the loans they wrote, they began selling off the mortgages to third parties that would in turn bundle and sell them on Wall Street. They were still frequently selling people loans more expensive than their incomes could handle, but they gambled that home prices would continue to rise at a brisk rate. The homeowner wanting a new mortgage could easily refinance as the home appreciated in worth and, in the event of a foreclosure, the bank would have repossessed a property that had grown in value. Of course, the gamble would prove disastrous if housing values were to fall. Brennan's message remained consistent throughout: The Fed must aggressively crack down on lending that bears no relation to a borrower's ability to repay. In particular it galled him that Fannie Mae and Freddie Mac, both created by the government explicitly to foster home ownership by buying and selling home mortgages, acted as a guarantor of some of these alternative subprime products. These twin giants of the mortgage world lent credibility to the subprime field and could cost the government untold billions if everything came crashing down. "Fannie and Freddie, as government-sponsored ent.i.ties, might very well turn to Congress for a financial bailout similar to the bailout of the savings and loan industry in the 1980s," Brennan warned when he testified before Congress in 2000. His words were prophetic but seemed to fall on deaf ears.

Brennan works out of a satellite bureau that Atlanta Legal Aid maintains in Decatur, just east of Atlanta. The bookshelves in his office are crammed with books on race, and the pictures on the wall include shots of John F. Kennedy and King. Most striking, though, are the souvenirs of his fights, including the many awards he has collected over the years. He has been honored by his fellow legal aid attorneys, the state bar of Georgia, and various national consumer groups. Black groups have honored him for his work, as have religious groups, women's groups, and groups representing the elderly. He has so many plaques and awards that he has room only for a small portion in his modest-sized office. The rest sit in a pile in one corner of the room.

In the fall of 2008, the board of Atlanta Legal Aid honored Brennan with a resolution acknowledging his forty years of service to the poor and working poor. He felt pride that day, but the moment mainly made him feel glum. "I find all the awards discouraging," he said. For Brennan they served as periodic reminders of how hard they had all worked and how little things had changed. "You work on something for twenty years," he said, shaking his head, "and it's been worse than it's ever been."

Three.

Going Big CLEVELAND, TENNESSEE, IN THE 1990s 1990s Allan Jones wasn't seeking to launch an industry in the spring of 1993 as he sat in the c.o.c.kpit of his single-engine Piper Saratoga on his way to Johnson City, Tennessee. He only wanted to convince a man to come to work for him.

Jones was still in his early twenties when he took over his father's small collection agency and built it into a multi-city behemoth-"the largest in Tennessee," he'll tell you-but it gnawed at him that he had no presence in the northeast corner of the state. "My final plug on the map," Jones recalled in a marbly Tennessee drawl. So when he heard that an old friend of his father's who lived up that way had been let go after years in the business, Jones jumped on the opportunity. He lives in Cleveland, Tennessee, a rural outpost thirty miles north of Chattanooga. He told Steve Hixson, a childhood friend whom he calls "Doughball," to meet him at the small airport where he kept his plane. "We're gonna see ol' James Eaton and see if we can't get him to come work for us," he told Hixson.

Hixson and Jones told me the story after work one day. We were at the bar of the Bald Headed Bistro, a restaurant that Jones opened a one-minute walk from his office. Jones, who has made a couple hundred million from the payday business, was sipping what he calls a "Scotch slushie"-the single malt he drinks over crushed ice in a red plastic cup his bartender stocks especially for the boss-and Hixson was on his feet next to Jones, the better to narrate the story. A small crew of regulars, Jones underlings who seem only too happy to drink his alcohol, laugh at his jokes, and listen attentively as the boss runs through a familiar repertoire of old tales, had joined us. The James Eaton story is apparently a favorite for no other reason than that it offers a chance to showcase the imitations of Eaton that Jones and Hixson have lovingly honed over the years. One or the other will raise his voice one or two octaves and then, adopting a kind of mezzo-soprano hillbilly tw.a.n.g, proceed to make the other laugh.

"Ale-ann. Ale-ann, I sh.o.r.e do i-pree-shy-ate y'all comin' on up he-ya."

Jones had always admired James Eaton. He was a "real stately" fellow, he said, a bespectacled man who smoked a pipe. "He looked to me kind of like Sherlock Holmes," Jones said. That made it all the sadder when they found Eaton working in a shack so shabby the paint was peeling off the walls. It was the office of a dilapidated gas station where Eaton had set up a business he called Check Cashing, Inc. "I guess I've found myself my man in northeast Tennessee," Jones told himself.

Jones was not deep into his pitch that day when Eaton excused himself to deal with a customer. A baffled Jones asked Eaton what he was up to and he explained. "Ale-ann, Ale-ann, I'll tell you what." It turned out he was loaning cash to people who needed a bridge loan until the next payday. The school janitor who needed $100 today would pay him back $120 when he received his next paycheck.

At that point Jones was a successful businessman with around 250 employees. He was wealthy enough to own his own plane but he was also in the debt collection business, which meant he spent his days dealing with unhappy people. The people behind the businesses who paid his bills were constantly bellyaching that his collection agents weren't aggressive enough and he was forever hearing complaints from the debtors that they were too gung-ho. After an hour or so of watching Eaton deal with his customers, he was struck by how friendly it all was. "People would thank him," Jones recalled. "They would thank him and thank him and thank him." The other thing that stuck in his mind was that these were working folk, not poor people. They drove decent cars. They dressed in good clothes.

Jones wondered about the fee Eaton was charging. Wasn't 20 percent too steep for a short-term loan of maybe a week or two? "Ale-ann. Ale-ann," Eaton drawled, and then pointed out that his customers' banks would charge them at least that much on a bounced check.

"That's when the lightbulb went off in my head," Jones said.

Eaton, of course, said no to Jones's job offer. "I sure do appreciate you coming on up here," Eaton told him, "but this is the happiest business I've ever been in. I'm happy, my clients are happy. They just love me."

On the plane ride home, Hixson recalled, Jones was there but not there. "I couldn't hardly say a word to him," Hixson said.

They're happy, I'm happy.

Collections is a tough business. All those hospitals and department stores and credit card companies always on your back.

They just love me.

All those deadbeats demanding to talk with him because his people were rough with them over the phone.

Cheaper than a bounced check.

Jones thought of the grateful look on people's faces when Eaton handed over the money. And Eaton? How could he help feeling anything but ecstatic making 20 percent on his money? He kept thinking about that steep fee and how his customers saw it as a bargain. Jones sat on the board of a local bank; he saw the money they were making on bounced checks. Collections is a low-overhead business but Eaton was essentially running his operation out of a shack.

Jones was pushing forty at the time. He would be getting in on the ground floor of a potential new business. He would be siphoning off money from the banks and make a tidy profit in the process. What was there not to like?

He went over the numbers in his mind. Ten grand, he concluded. He would set aside $10,000 and give it a shot.

The early evening gathering at the Bald Headed Bistro was actually the second time I heard the story of Jones's trip to Johnson City. The first was the day before, when Jones and I were barreling down the interstate in the cab of his shiny new white Ford 4x4 with gleaming mag wheels, heading to Chattanooga for a wrestling match he wanted to see. "I think about that day and all I've accomplished," he said somberly, shaking his head. This version Jones delivered in almost hushed tones, as if sharing something precious, and it ended up making him feel nostalgic and sad. "You work so hard to build something from out of nothing and then watch a bunch of people who don't know anything about business try and take it apart," he said. Payday may have rendered him a very wealthy man but it has also made Jones, the industry's most prominent pioneer and its most outspoken defender, a favorite punching bag of consumer advocates around the United States. "Sixteen years-and all of a sudden what I do has become evil," he says. "I don't know what's changed that suddenly I'm evil." And not for the first time, and also not for the last, he launched into a small tirade about a man named Martin Eakes, the founder of the Center for Responsible Lending.

Jones is bald with a round face and a full beard-Rob Reiner, but more dyspeptic and bulkier and without the liberal politics. He stands about five feet, eight inches tall and has the round shoulders of a former fullback. On our first day together, he wore scuffed cowboy boots and a monogrammed white dress shirt and his large belly hung over frayed jeans. He was likable enough, friendly and self-deprecating; noticing my pages of interview questions, he cracked, "You've done more homework on me than I did at Cleveland High in four years." But mainly he was a man looking for an argument. Where payday's critics such as Eakes live in the realm of theory, he said, his customers live in the real world, where a quick cash advance can mean the difference between the kids going to bed fed or hungry.

"They try and stop check-cashing operations," Jones said of the consumer advocates he's battled over the past few years. "They try and stop the tax refund business. They try and stop the rent-to-own industry. They try and stop the auto t.i.tle loan industry. I guess as far as Martin Eakes is concerned, it doesn't make a difference if regular people have access to cash when they need it."

In our initial phone conversation, Jones had practically insisted I travel to Cleveland to let him expound on the magnificence of the payday loan. "If you're a'gonna write about payday, you gotta get down here and see me," Jones said. "I created the industry and the rest of 'em just copied me." I was convinced, but then, after dozens of emails and phone conversations with the a.s.sistant in charge of his schedule, I received a curt email message from the company's communications director informing me that Jones had changed his mind. I decided to go to Cleveland anyway to see for myself this improbable birthplace of the modern-day cash advance business, a town of thirty-five thousand that had given rise to payday's first two big chains, Jones's and a local who copied his business. A few days before my arrival, I sent Jones an email informing him that I'd be coming to town to talk with people who knew him. An hour later Jones phoned. He'd be happy to make time to see me while I was in town, he told me-and that weekend Allan Jones and I became BFFs.

We attended a wrestling match on the campus of the University of Tennessee, in Chattanooga an hour's drive away, and then had lunch. Back in Cleveland, he showed me the hospital where he was born and drove me by the house where a childhood friend lived who would talk with him late into the night over their CB radios. He pointed out where one of his sisters lived and confided in me that his weight had grown so out of control that he had recently had gastric bypa.s.s surgery. He drove me up the hill to show me his house and invited me to watch the Super Bowl with him and his sons, but I declined because we had already spent more than five hours together and had plans to meet the next morning so I could see his operations and then talk again over lunch. Even best friends need time apart.

Destiny, as Allan Jones sees it, was awaiting him even as he exited the womb. The big news in Cleveland in the fall of 1952 was the opening of a new hospital and he was the first baby delivered there. "The day I'm born and I'm already in the newspaper," Jones said shaking his head in amazement. Is it any wonder, he asked me, that he had accomplished "great things" in his life? A few years back he had the idea of building a "First Mother's Garden" on the grounds of the hospital in honor of his mother. "There was all this attention on me," Jones reasoned, "but it was her who gave labor."

Jones figures he was no older than ten when he started collecting dried-out Christmas trees for a giant community bonfire. It became an annual post-holiday tradition in Cleveland, and in time he required kids to be at his house by 8 A.M A.M. sharp if they wanted to partic.i.p.ate. He was goal oriented even then, eager to beat his number from the previous year. "I'd get furious at a kid if he didn't show up," he said. He admits to harboring a visceral dislike all these years later for a kid whose mother wouldn't let him start collecting trees until 10 A.M A.M.

"Looking back, there were a lot of firsts in my life," Jones said. "I was the first person to collect all the Christmas trees. I was the first person to buy a fax machine in Cleveland. I was the first to have a cell phone. I was the first in Cleveland to have a Segway."

Jones was never much of a student. He always remembered being kept back in sixth grade but after his mother died he found paperwork reminding him that he had been held back a second time. In high school, his accounting teacher told him he would fail her cla.s.s if he didn't buckle down. "It doesn't matter," he remembers telling her. "What you can't do yourself, you can hire to get done." He described his family as "regular middle cla.s.s" but also mentioned a housekeeper who refused to enter his room because of the snakes and other small animals he kept there. By his account, he was a boy's boy, into sports and outdoorsy things. His teacher would describe a fungus or a species of plant-and the next day he would show up with a sample.

"I always wanted to be a biological teacher-or a wrestling coach," Jones said.

Wrestling was his life in high school except during football season. To a certain extent wrestling is still his life. "I was a great high school wrestler," he boasted, second in the state in his weight cla.s.s by his senior year. He had been a pretty good football player as well, he told me, starting fullback, but then the school was integrated and after that he did nothing but block for a much speedier tailback who was black. He wasn't resentful, Jones said-but he was also sure to mention that his former teammate is on skid row. In high school, he and his girlfriend were named "best-looking couple" but he was disappointed. "I wanted 'most likely to succeed,'" he said.

Jones spent a year at Middle Tennessee State University in Murfreesboro before dropping out to work at his father's credit agency. By then, his father, increasingly incapacitated by emphysema, was only able to work a few hours each day, and a rival credit agency had recently opened in town. "Come home and save the business," his mother asked him, "so we can afford to send your two sisters to college." Jones didn't need much convincing. He had married his high school sweetheart, who was pregnant with their first child. They were living in a trailer near school. Even before his mother's call, he had taken a summer job with a nearby collection agency. That firm had five offices, compared to his father's one-and Jones was already looking ahead to the possibility of going into the family business. "I copied every form," he said. "I got copies of their collection letters. I studied how they hired their lawyers. I studied how they did everything." He was eager to prove to people back home, he said, that he was more than just a star wrestler.

In Cleveland, people know Jones's name if for no other reason than that they see it everywhere. The local high school is home to a million-dollar Jones Wrestling Center and there's an Allan Jones Intercollegiate Aquatic Center on the campus of the University of Tennessee. He seems to own half of downtown, and when one is driving the main highway that cuts through town, it's hard to miss the giant, department-store-sized lettering spelling out JONES MANAGEMENT JONES MANAGEMENT on the side of his headquarters. Then there are all the smaller reminders, such as the granite marker that stands prominently in the plaza in the center of Cleveland with an inscription: "These Courthouse Trees Are Planted in Memory of W. A. 'Bill' Jones By His Son W. A. 'Allan' Jones, Jr., and Dedicated to All Citizens of Bradley County." The joke in Cleveland is that W. Allan Jones, Jr., has never planted so much as a tree in town without simultaneously issuing a press release and striking a bronze commemorative. on the side of his headquarters. Then there are all the smaller reminders, such as the granite marker that stands prominently in the plaza in the center of Cleveland with an inscription: "These Courthouse Trees Are Planted in Memory of W. A. 'Bill' Jones By His Son W. A. 'Allan' Jones, Jr., and Dedicated to All Citizens of Bradley County." The joke in Cleveland is that W. Allan Jones, Jr., has never planted so much as a tree in town without simultaneously issuing a press release and striking a bronze commemorative.

Jones doesn't seem very well liked in his hometown, at least if the sampling of people I met with is any indication. In recent years, Jones has donated property to the city for the expansion of the local public library and he built an attractive white bandstand on the town square to replace the old one. But the city councilman I spoke with didn't seem to care for Jones, nor did the retired publisher with whom I met while in town. Even Jones's generosity served as a target of their derision. Sure, he rebuilt the old bandstand but then he seems to have spent nearly as much money throwing a big party in his honor, flying in Tony Dow, Ken Osmond, and Jerry Mathers (Wally, Eddie Haskell, and the Beav) for the occasion. A woman who has known Jones since grade school brought up that same party when describing Jones as a man "who lives totally and completely in the past."

My companions for lunch my first day in town included a teacher, a local businessman, and a corporate attorney. All of them had been raised in the area and all seemed to share a distaste for Jones. For the teacher it was the secondhand stories she's heard about what it's like to work with Jones and the strings he's attached to the money he's given to the schools. "He's not one to just make a donation," she said. "He puts on all these restrictions." Most of the money has gone to the school's wrestling program. The lawyer was from a moneyed background and seemed to look down on Jones as a man who did not know how to handle his wealth.

The businessman offered perhaps the most interesting perspective. Early in our meal he took a call on his cell phone that he took care of in a rapid, mumbly code like a bookie or a stock trader. After a couple more of these staccato conversations he explained that while he owns a legitimate business, he earns extra money providing cash advances to those who don't have the checking account or regular paycheck a person needs to take out a payday loan from a firm like Jones's. For years he's been watching Jones. He was impressed by what he's accomplished, he said, but not the way he's handled success. It offends him that Jones is "not a man capable of doing anything quietly."

When I told my luncheon companions that I was scheduled to have dinner that night at the home of a local attorney named Jimmy Logan, it provoked laughter. Allan Jones might want to be known around town for his philanthropy and his business accomplishments but he seems most famous for an incident that occurred shortly after he dropped out of college and moved home to Cleveland. Separated from his wife and suspecting she was unfaithful, he spliced into the phone line of his old home to record her conversations. That's how he found out she was carrying on with Logan. Unhappy that Jones was playing tapes of his pillow talk around town, Logan used his influence to get Jones convicted of federal wiretapping charges. Eventually Jones would be exonerated by an appeals court in Cincinnati that ruled that since Jones paid the bill, he could not be guilty of recording a conversation on his own telephone. But that was only the start of the feuding between Jones and Logan that entertained the community for years. From the perspective of my lunch friends, I was stepping into a favorite story line from a popular old soap opera.

"He's a sleaze," Jones would say of Logan the next day. "He's a sc.u.mdog." Logan, however, proved more magnanimous, at least in front of an out-of-town journalist sitting in his study with a tape recorder. His left eye squinted, he curled his lip, he leaned in close as if he were about to impart some great considered wisdom, and said, "Allan Jones has done many fine, fine things for this town."

Logan might not have offered much in the way of insight into Jones but over dinner that night he helped to explain why payday lending had taken hold in the soil of Cleveland. This corner of the world has long been the kind of place that gives a man the elbow room and the ethical leeway to make a living any way he sees fit. Grundy County, to the west, had long been known throughout the region as the car-stripping capital of the South, and there was a time when Cleveland was renowned throughout the United States for a related business. Locally they tended to call them "shade-tree mechanics," men who made their money rolling back odometers for unscrupulous auto dealers looking to jack up the prices of used cars. Dating back to the 1950s and through most of the 1980s, Logan said, you'd see cars up on lifts in front yards and backyards all over town, their wheels spinning backward for hours at a time so that tens of thousands of miles would disappear from the odometer. But don't sell these hardworking souls short, Logan counseled. You'd see them working at 5 A.M A.M. and they'd still be at it until midnight. They would bang out dents and install new upholstery-whatever it took to make a car with 90,000 miles on it plausibly look like one with 40,000 by the time an out-of-town dealer came to pick it up. The dealers got their money's worth, Logan seemed to be saying, but the U.S. Department of Justice didn't see it that way, nor did the state officials who finally beefed up the odometer tampering laws and Tennessee's auto fraud division starting in 1986.

On his first day on the job Jones thought his father might have lost his mind. He had recently hired a new manager but he let him go and announced to Jones, then nineteen years old, "You're in charge, son." But the son gamely settled in and began to crack the whip like an old pro. He figured out the average collection agent made twenty-five calls a day, but by his reckoning a person should reasonably make a new phone call every five minutes. So he imposed a quota of at least one hundred calls per day per person.

"After that the company really took off," Jones grinned.

His father had been a glad-handing, good-time Charlie who had served as the president of both the Kiwanis and the local Chamber of Commerce. It was important to the senior Jones to be well liked. His son, by contrast, was single-minded and impatient, a young bull who muscled his way into an account when he had to. "He was averse to controversy," Jones said of his father. "I wasn't." Angry that they had no share of the collections business at the local hospital where he had been born, Jones, still in his early twenties, demanded a meeting with the hospital's board of directors. He wanted his father to join him to lend his support and the weight of his name, but the old man wouldn't do it, Jones said. "Dad was so nervous, he went home." Jones drove by the family house on his way to the hospital. His father was sitting out front in a lawn chair reading the paper. Jones was twenty-four when he bought out his father for $100,000 and named himself the chairman, president, and chief executive officer of Credit Bureau Services, Inc., a company that in time he would sell for more than $10 million.

Success prompted Jones to start dreaming big. At the start of 1993, shortly before visiting James Eaton in Johnson City, he began acc.u.mulating land in the hills just north of Cleveland. After work, he would drive to his property, light a cigar, sip a Scotch slushie, and dream about the grand home he would someday build on his hill. "I was always fascinated with the Beverly Hillbillies' house," he told me. He wanted to build an equally impressive home so that people would remember him long after he had pa.s.sed.

"Most homes were designed to last a hundred years, maybe," he said. "Mine I wanted to design to last a thousand."

Driving me around Cleveland, Jones was grousing about some of the more ludicrous things people say about him. At the Home Depot he overheard two men talking about him. "I'm telling you," one man said to the other in a voice of utter certainty, "the fixtures are made of solid gold. Solid gold!" Jones shook his head. He has pewter, stainless steel, and perhaps porcelain faucets in his new house on the hill, but none, he a.s.sured me, are made from gold.

"There's a price that I never realized I'd pay for fame," Jones said. "People think the worst of me."

His son attends public school. His home number is listed in the phone book. Jones told me both these things the first time we spoke and then repeated them not ten minutes into the start of our two days together. He mentioned this pair of facts a third time during our driving tour. He pointed out that he was driving a Ford pickup. He could afford something much more expensive, he said, but that's not him. He pointed out that his jeans are frayed and his boots scuffed. He buys his suits from a local clothes store. He was intent on convincing me that he's still a regular Joe, despite all his riches.

That is no easy task. His home is still reachable through directory a.s.sistance but it also sits behind a locked gate on a hill high above town and includes two working elevators. His youngest child does attend Cleveland High School but while I was there he was driving a $300,000 Maybach, a loaner from his father while his car was in the shop. Jones, a self-described "car nut," had an air-conditioned garage built on his property to house a collection that includes both a vintage Rolls and a vintage Bentley. And then there are the planes and yachts he owns and the $12.3 million he spent in 2002 buying a dude ranch in Jackson Hole, Wyoming, because, he explained, "We really enjoy being out in nature in my household."

People talk about his jets as if they are proof that he's just another nouveau riche entrepreneur who indulges every whim despite the cost. But that's only because "the common person," Jones said, "just doesn't understand business." The three big jets he's bought over the years have been purchased through an airplane leasing company he calls Jones Airways. His payday company leases the jets from Jones Airways (in 1999, Jones was charging himself $360,000 a month for the jets plus extra for flying time), which has allowed him to claim the jets as a business expense. Jones Airways was briefly a three-jet airline but he tells me, "I sold the big one. Had it eight months but sold it for a $10 million profit."

Jones only wishes he could say the same about the 157-foot yacht he bought a few years back after the previous one, a 136-footer originally owned by Spain's King Juan Carlos, was destroyed in a fire. "In the last two years I owned it, I was on it maybe fourteen days," he said. It was a gem, he said-a vessel with "an abundance of exquisite and highly detailed woodwork," marble tiling, and ten big-screen TVs, according to Yachting Yachting magazine-but also a royal headache given that it required a staff of nine. To pick up extra cash, he would rent it for $200,000 per week but then he sold it in March 2008. "I was lucky," he said. "A guy called me and offered me what I paid for it." Now when he feels like getting out on the water, he uses the forty-four-footer he still owns. "People say I'm making all this money off of payday," Jones said, "but even I'm cutting back." magazine-but also a royal headache given that it required a staff of nine. To pick up extra cash, he would rent it for $200,000 per week but then he sold it in March 2008. "I was lucky," he said. "A guy called me and offered me what I paid for it." Now when he feels like getting out on the water, he uses the forty-four-footer he still owns. "People say I'm making all this money off of payday," Jones said, "but even I'm cutting back."

Jones didn't waste any time once he had decided to jump into the cash advance business. He leased an empty storefront on a busy corner and spent two days fixing it up before he opened its doors. Let MBAs with their fancy degrees waste months writing business plans and modeling alternative scenarios. Three weeks after visiting James Eaton in Johnson City, on the first day of summer 1993, Jones opened a store he called Check Into Cash. His first customer, he said, was a military man who needed $100 to buy a bicycle for his daughter's birthday.

Not long after opening that first store, he opened a second one in a town thirty miles away. As a sort of experiment, he put a childhood chum he was inclined to describe as a "lump on the log" in charge of that operation. It didn't seem to make a difference. That store made money just as rapidly as the first. He consulted with a big firm in Chattanooga whose lawyers advised him that there was nothing in Tennessee law expressly forbidding him from making these high-rate, short-term loans, and he opened another seven stores around the state in 1994. He collected nearly $1 million in fees that year and yet the stores, including salaries and bad debt, cost him only $486,000. That left him with half a million dollars in profits.

He was preoccupied running a statewide collection agency so he hired Steve Scoggins, a man he had known since they were both kids, to help him oversee the payday portion of his business. He gave Scoggins a budget of $1 million and told him to scout for new locations. After doing some research, Scoggins asked him, do you want twenty good-looking stores or sixty that don't look so nice? Jones chose the sixty. In 1995, Check Into Cash generated nearly $1 million in pretax profits on $3.7 million in fees, operating stores in Tennessee, Kentucky, and Indiana, where a quirk in the law exempted small loans from the state's usury provisions. Neither James Eaton or Allan Jones invented the payday loan. Moneytree, a check-cashing firm on the West Coast, had been offering cash advances to its customers since the late 1980s, as had QC Holdings, a check casher that started in Kansas City, Missouri. But Jones was the first to pursue the cash advance as a stand-alone business with blue-sky potential. "It was like we was filling this giant void out there," Jones said.

Jones wouldn't have to look far to find his first big compet.i.tor. It was a local man named Steve McKenzie, who was a few years ahead of Jones in high school. McKenzie, who everyone called Toby, had grown up poor in a family whose woes were serious enough to draw the attention of the local authorities. He cut a high profile in town even as a teenager, when, to help support his family, he took a job delivering newspapers in a smashed-up Volvo he had bought for $150. A social worker named Joe Kirkpatrick used to look in on the family and especially McKenzie's younger brother, who had a penchant for getting into sc.r.a.pes. Kirkpatrick had a theory that people in public housing have no dreams unless they invent a different dream every week. McKenzie was different. "Toby was rough around the edges," Kirkpatrick said, but likable and also a hard worker. Kirkpatrick made sure to keep an eye out for McKenzie because he struck him as one kid whose dreams seemed attainable.

Jones and McKenzie first met in the late 1970s, when both were still in their twenties and McKenzie was looking to rent s.p.a.ce for a new business he had recently gotten into called rent-to-own. "You know how stores rent TVs to people?" McKenzie said in explaining the business to Jones. "I'm going to rent them everything. Living room sets. Bedroom sets. TVs. Everything."

"n.o.body's going to rent their bed," a skeptical Jones responded.

"Man, you don't know. You just don't know." But even if Jones doubted the business, he recognized McKenzie as his kind of businessman. Buy a television in a store, Jones remembered him explaining, and you might pay a 20 or 30 percent markup over the proprietor's price. But rent out that same TV by the week and you make several times what you paid for it.

Compet.i.tion was inevitable in a business that lucrative, and down the interstate, just south of Cleveland, a rival had seemingly opened directly across the street from one of McKenzie's stores. The warring between them seemed particularly fierce, with banners that said things like "Don't be ripped off across the street!" Joe Kirkpatrick remembers expressing his sympathies to McKenzie when they ran into one another in town.

"He looks at me with this big ol' grin on his face," Kirkpatrick remembered, "and he says, 'Joe, I own 'em both. The type of person who goes to a store like mine, they get all p.i.s.sed off because you repossess, they get back at you by crossing the street. I'm just givin' 'em a place to go!'"

McKenzie's rent-to-own empire was up to eighty stores when he hired a CPA named Jerry Robinson to put his books in shape for an initial public offering, or IPO. Robinson worked in what he describes as "the bare-knuckles side of banking," lending money to businesses like McKenzie's while working for a subsidiary of Transamerica, the San Francisco insurance giant, called Transamerica Commercial Finance, which specialized in businesses catering to the subprime market. Robinson, who had grown up poor, thought he had found his meal ticket when McKenzie asked him to join him in Cleveland. "There was the potential to make a lot of money doing this," Robinson said of rent-to-own. "There were millions of people without a checking account and without any kind of credit who needed some way of financing these small transactions." The only hitch, he discovered, but only once he had moved to Tennessee, was his new boss. Robinson's eyes began to open during a trip the two made to Chicago to meet with a banker Robinson knew there. The banker made a seemingly reasonable recommendation when he suggested that McKenzie consider slowing down his expansion plans, at least until he got some of his numbers in order. "Toby says to the guy, 'You're a f.u.c.king order taker; you're lucky I don't beat the s.h.i.t out of you right here,'" Robinson said. Maybe more frightening was the question McKenzie asked him after the meeting: "How do you think it went?"

"I worked for Toby for two years, four months, nine days...," Robinson said.

In the end, though, the problem wasn't McKenzie but bad timing. Robinson still remembers the exact day in September 1993 that he and McKenzie were staying in a hotel outside Nashville to meet with people from J. C. Bradford & Company, the middle-market investment banking firm they were hoping would take the company public. Robinson was reasonably certain Bradford would green light the offering, until he took a glance at that morning's Wall Street Journal Wall Street Journal. "Left hand column, above the fold"-a page-one article casting the industry as one ripe for reform if not legal sanctions. With Jones, McKenzie had used the example of a television set; the Journal Journal focused on the Sanyo VCR that would cost $289.98 if a customer bought it at a retail outlet-or $1,003.56 over eighteen months if it were purchased through weekly installments at Rent-A-Center, the industry's leading company. That worked out to an annual rate of 220 percent. More d.a.m.ning was the new term the focused on the Sanyo VCR that would cost $289.98 if a customer bought it at a retail outlet-or $1,003.56 over eighteen months if it were purchased through weekly installments at Rent-A-Center, the industry's leading company. That worked out to an annual rate of 220 percent. More d.a.m.ning was the new term the Journal Journal taught its readers: the "couch payment." That was when the repo man accepts s.e.x in lieu of a payment. Of the twenty-eight former Rent-A-Center managers interviewed for the article, six admitted that couch payments had occurred in their territory. The banker pa.s.sed on the deal. taught its readers: the "couch payment." That was when the repo man accepts s.e.x in lieu of a payment. Of the twenty-eight former Rent-A-Center managers interviewed for the article, six admitted that couch payments had occurred in their territory. The banker pa.s.sed on the deal.

At that point, McKenzie was making $34 million a year in profits. He would have grown faster if they had raised $15 million in an IPO, but he had plenty of cash to plow back into the business. Yet once his boss had been denied the glamour of a public offering, Robinson saw that McKenzie's interest in the rent-to-own business was fading. That's when he asked Robinson to take a closer look at what Allan Jones was up to.

Robinson had already flirted with payday back when he was with Transamerica. On the lookout for entrepreneurs seeking to strike it rich operating on the fringes of the economy, Robinson and his colleagues had flown to Kansas City to talk with the people at QC Holdings, a check-cashing company experimenting with payday loans. They liked the idea of charging a 20 percent fee, of course, but Robinson couldn't understand the logic of offering loans to people with nothing in the way of collateral except their word that they would pay back a loan on payday. "We told them that was the dumbest thing we ever heard and flew home," Robinson said.

Robinson's mind began to change after he spent a few hours doing reconnaissance work outside one of Allan Jones's Check Into Cash stores. He was still nervous even when they opened their first payday lending store. They handed out $10,000 in forty-eight hours and he wondered if he and McKenzie weren't "the two stupidest people on the planet." An ad of theirs would run on the radio station and he would watch the phones light up-but were they simply reaching a whole new set of people who might be happy to take their money but less eager to pay it back? McKenzie, however, harbored no doubts. He sold his rent-to-own chain for $15 million and, like Jones, hired people to scour the country looking for fresh business locations. For the two local Cleveland boys, the race was on.

Jones and I were heading up the hill to his home when we pa.s.sed through a new development of pricey homes and high hedges on the northern edge of town where some of Cleveland's wealthiest residents live. Many of the homes have been built in a style a writer for Harper's Harper's would memorably describe as "Plantation Revival: columned white monstrosities like something out of would memorably describe as "Plantation Revival: columned white monstrosities like something out of Gone with the Wind Gone with the Wind." Jones pointed out one such monstrosity in the making, a half-built multistory brick edifice. That was to be Toby McKenzie's new place, Jones said. There was more than a hint of satisfaction in Jones's choice of tenses. McKenzie had declared bankruptcy a few weeks before I showed up in Cleveland, and the speculation around town was that his home would never be finished. Jones argued that McKenzie's financial woes demonstrate that payday isn't as lucrative as its critics think but in reality it only proved that the business didn't render you so rich that you're inoculated against bad financial decisions. The immediate source of McKenzie's problems, the local media had reported, was the many millions he had committed to real estate deals and especially his investment in a high-end golf development that was an early casualty of the global credit crunch.

The loan shark, who has been a chat-in-the-street friend of McKenzie since both were young men, reached the opposite conclusion as Jones. McKenzie's mistake, he said, is that he got out of a proven market. "You can make more money off the rich but it carries a much bigger risk," he said. In contrast, there's what he calls the "poor people's economy." "The thing about the poor people's economy," he said, "is that basically it's recession-proof. You're always going to have people who need $100 or $200 real quick."

For many, jumping into the payday business would seem barely more plausible than joining Tony Soprano's crew. Yet for people like Jared Davis, a twenty-six-year-old rich kid from Cincinnati casting about for something to do, the lowly cash advance business proved the opportunity he had been waiting for. One year after Allan Jones opened his first store, a friend told Davis about the store his sister was running in Louisville, Kentucky, and Davis, who was working for his father, Allen Davis, the CEO and president of Provident Bank, Cincinnati's second largest, went down for a look. The place had a distinctly backroom feel to it but Davis saw potential. "Loaning people small amounts of money against their next paycheck?" Davis said. "I liked the business. I liked it a lot." His father agreed to stake him money so he could open a store just across the river from Cincinnati, in Covington, Kentucky. He chose the name Check 'n Go.

Davis ran that first store for a few months to get a feeling for the customer and to design a system before hiring a manager and taking to the road. "I was thinking twelve, thirteen, maybe fourteen stores," Davis said. That was before he met Jones and McKenzie in Puerto Rico at his first meeting of the National Check Cashers a.s.sociation and realized payday lending was bigger than Kentucky. David Davis, his older brother, had recently joined the business, which meant they had the advantage of each other's labor-and a father with deep pockets. "After Puerto Rico, we decided to go big," Davis said.

With each new state Davis would buy a map and book that listed its cities by population. He figured he visited just about every city in Kentucky with at least twenty thousand people before he aimed his Jeep Cherokee toward Indiana and repeated the same routine. "My job was to find the stores," Davis said. "Once I was ready to open one, I would hand the keys over and David would run it."

"I'm not very disciplined," Davis confessed. "I'm not the kind to make eight or nine A.M A.M. meetings. But basically after we built out Kentucky and heard Indiana was available, I started driving and didn't stop."

The more ambitious payday companies had lawyers researching the usury laws of every state. Illinois! Illinois had no cap on the rates a lender could charge. Wisconsin! Oregon! New Mexico! And when they worked their way through this scattering of available states, they explored new frontiers with the help of the lobbyists they put on retainer. "It was necessary to explain to governors and to legislators, 'Here's what we do and here's why it's necessary,'" Jared Davis said. A usury cap that prevented a working stiff from borrowing a few hundred dollars till payday, they argued, was the worst kind of government paternalism. And to reinforce that point of view, these entrepreneurs with a newfound interest in policy debates gave generously to the political campaigns of the right state legislators. "We were very successful in educating them about the usefulness of our product and getting laws pa.s.sed," Davis said.

Jones parked his truck on a side street a few minutes from the front entrance to his home, which he has given the name "Creekridge." He seemed ready to tell me something meaningful but he only wanted to share with me his vision of a home that would last a thousand years. "I never wanted to live in some subdivision house," Jones told me. "What I was looking for was a big piece of real estate that would let me build a really big house." He paid $1 million for the first two hundred acres and at least $3 million for the next 450 acres. He shaved off the top of the hill and paid for two lakes to be built on the property. He imagined himself fishing with his sons, and his sons fishing with their friends, so he paid a woman $7,000 to drain her lake so he could take her ba.s.s. For his kids he had built a regulation-sized football field complete with lights, bleachers, and a fieldhouse and also a three-story tree house. The property is so sprawling that there are little wooden signs pointing visitors in the right direction: "beach," "stadium," "stables," "greenhouse." The property also has an aviary, where he raises birds.