Pawnshop Business Booming in Recession
KAYE: Have you ever been to a pawnshop? A lot of people would say no until recently. These days more and more people need some quick cash. And since they can't get it from the bank, they're venturing into places where the deals get more appealing every day. Our Gary Tuchman is back to tell us how desperate times are bringing some desperate measures.</s>TUCHMAN: That's right, Randi. When you go to a pawnshop, the idea is you are getting a loan and you're giving the pawnshop something valuable for collateral. Generally, you get up to 50 percent of the value of your item and you can get your jewelry or your car or your gun back for an interest rate that ranges around four percent monthly. Some of the items do get sold to others, but the original owner is given a grace period and most of them get their valuables back. Basically, pawnshop customers get easy loans and that's why it's currently a growth industry.</s>TUCHMAN (voice-over): Linda comes in with her fur coat but leaves without some of her jewelry.</s>UNIDENTIFIED MALE: What are these stuffs?</s>UNIDENTIFIED MALE: Those are baguettes.</s>UNIDENTIFIED MALE: Diamond baguettes.</s>TUCHMAN: Bob comes in with some diamonds and also hopes to leave with cash.</s>MARTA, BARTENDER: It has white gold inside. It's an antique one from the 1920s.</s>TUCHMAN: And Marta, who used to have a very comfortable income as a bartender, now hopes to sell her old watch because she needs the extra money.</s>MARTA: People are not tipping as much as they used to.</s>TUCHMAN: Across the U.S. as the recession deepens and businesses flounder, pawnshops and stores that buy jewelry are experiencing boom times. Some claiming up to a 40 percent jump in the number of people pawning their worldly possessions. Eric Modell is a pawnbroker as well as the executive director of the National Pawn Brokers Association.</s>ERIC MODELL, NATIONAL PAWNBROKERS ASSOC.: The availability of credit is non-existent practically today except in a pawnshop. We don't ask any questions. Everything is confidential and it's quick.</s>UNIDENTIFIED MALE: We buy gold, diamonds, jewelry, watches.</s>TUCHMAN: New York City's diamond district, a pawnbroking business is particularly hot. In the window, the world's most expensive watches, some worth tens of thousands of dollars, pawned off by wealthy owners, not your typical pawnshop clients, who find they now need a few extra bucks.</s>DAN PASTERNAK, GEM PAWNBROKERS: We have seen a lot more expensive items, high-end Rolexes, Cartier, Chopard, watches, you know, with diamonds with a higher value.</s>TUCHMAN: Back in 2005 when gas prices started making a dramatic climb, we saw the same phenomenon. This Jaguar owner drove into a Georgia pawnshop.</s>UNIDENTIFIED MALE: I'm selling this Bulova watch which is made in the early 1900s.</s>TUCHMAN: And pawned his watch to pay for Jaguar gas money. How much are you selling it for?</s>UNIDENTIFIED MALE: $200.</s>TUCHMAN: So pawnbrokers are not surprised by what they're seeing now. (on camera): If I come in with my $1,000 watch, let's say, even though my watch only cost $35, but if I come in with a $1,000 watch, how much can I get back?</s>PASTERNAK: It would not be usually a problem to get $500 as a loan on it.</s>TUCHMAN (voice-over): And now back to Linda. She hopes to get her diamonds back someday.</s>MODELL: So the total due is 398.04.</s>TUCHMAN: But for now she pays interest to keep them from being sold. As far as Bob with the diamond baguettes, he wanted $250 for them. How much would you have given him for that?</s>UNIDENTIFIED MALE: 150.</s>TUCHMAN: So no sale. The same thing with Marta.</s>UNIDENTIFIED MALE: How much?</s>MARTA: Whatever. 200 (ph).</s>UNIDENTIFIED MALE: No, I don't buy silver.</s>TUCHMAN: Marta and Bob will keep trying with other brokers.</s>UNIDENTIFIED MALE: We buy gold, watches.</s>TUCHMAN: These economic times leave them little choice.</s>TUCHMAN: The National Pawnbrokers Association says pawnshop customers typically have a household income of roughly $30,000 a year, but all those in the industry agree those numbers are being jacked up quite a bit now. Randi, I know a lot about the industry after my day with the pawnbrokers. You have a beautiful bracelet. That could get you a pretty penny.</s>KAYE: I'll keep those right here. Thanks, Gary. Still to come, an innocent conversation gets an entire family kicked off a plane in the name of security. For some, it's a clear- cut case of racial profiling. Ahead tonight, a "NO BIAS, NO BULL" debate. Has prudence turned into intolerance? And later, our "Welcome to the White House." The Obamas are finally moving to Washington this weekend, but not into the executive mansion just yet. We'll tell you about their new temporary digs as a long-awaited era finally begins.