FacebookTwitterGoogle+RedditEmail

The Politics of Bankruptcy

by Ralph Nader

When the current Congress convened last year there were lots of promises to curb predatory lenders that peddle credit on outrageous terms to poor, elderly and unsophisticated borrowers.

Not only is Congress reneging on its promises, but it is rushing to reward the lenders whose scams have devastated low, moderate and middle income families and forced many into foreclosures and bankruptcies.

Congress’ gift to the predatory lenders is a scam artists’ dream under the guise of “bankruptcy reform.” The sponsors hope that this “lenders’ relief” bill can be shoved through Congress in the last days of the session–before the American public realizes its elected representatives are rewarding the banks, credit card companies, finance companies and other financial corporations which have provided the Congress nearly $30 million in campaign contributions to promote “bankruptcy reform” in recent years.

The financial industry–along with its allies like gambling casinos and car dealers–are attempting to convert the nation’s consumer bankruptcy law–which has served consumers and business well for decades–into a punitive debt collection enterprise which will keep hard-pressed consumers in what amounts to “debtors’ prisons” for years.

The lobbyists for the credit merchants have consistently resorted to the tactics of the “big lie” with claims that the long-standing consumer bankruptcy protections are being abused by “dead beats” attempting to escape their debts. The hard facts gathered from surveys of bankruptcy filings show that 90 percent of all bankruptcies are triggered by the loss of a job, high medical bills and divorce.

Bankruptcy law always has been based on the principle that debtors facing impossible financial situations be given an opportunity for a new start–a second chance–to regain their role as productive citizens rather than being thrown on a human trash heap to satisfy the demands of the creditors.

Not only is this sensible and humane for the family trapped in unforeseen financial troubles, but it makes the utmost economic sense for local communities and the nation as a whole. Crushing families through a harsh bankruptcy law means more people on welfare rolls, off tax rolls and dependent on already hard pressed local charities.

Congressional supporters of the repeal of bankruptcy protections know quite well that many of the money problems faced by families today are the result of runaway credit card schemes of the past decade which have duped so many unsuspecting consumers. Credit card offers have filled mailboxes with come-ons of easy credit. Introductory offers of a low interest rate are quickly converted into double digit charges plus a mounting list of fees. As the card holder falls deeper into debt, the card companies continue to up the ante by offering bigger and bigger credit limits. Ultimately, the consumer is sucked into cascading debt multiplied by high interest rates and hidden and deceptive charges and fees.

And Congress–now so anxious to enact a punitive consumer bankruptcy law–has consistently rejected efforts to reign in credit card abuses. Instead, they want to punish the poor to bail out the credit pushers.

Congress’ timing adds an extra note of cruelty to the conversion of bankruptcy into a punitive anti-consumer device. Thousands of workers are losing their jobs, savings and pensions as a result of fraudulent management at Enron, WorldCom and other large corporations. Many of these workers are left with only a few hundred dollars in the bank, no jobs and facing outlays for mortgages, education, transportation and other necessities in an economy where unemployment is at six percent and rising.

Members of Congress have turned out reams of news releases and uttered thousands of words of lament about the workers caught in the whirlwind of massive corporate fraud. But, now many of these same Congressmen are ready and willing-and anxious-to enact a bankruptcy law which will truly clobber these same workers. Next time you hear your Senators and Representatives express sympathy for the victims of corporate fraud, ask how they voted on the repeal of consumer bankruptcy protections.

And you might ask them how they justify shredding consumer bankruptcy protections while leaving corporations free to continue to avail themselves of an easy route through bankruptcy, shedding investor equity and reorganizing as viable companies. An soft easy landing for corporate bankruptcy versus a harsh punitive rocky route for consumer bankruptcy-an atrocious double standard.

How serious is Congress about protecting citizens against corporate excesses and unfair, unscrupulous and deceptive lending practices? The vote on wiping out consumer bankruptcy protections will come up in both the Senate and the House of Representatives in September. It will be a major test of Congress’ ability to summon the courage to stand up to the massed lobbying forces of corporations. Forget the well-honed news releases and speeches-watch for the actual vote of your Senators and Representatives–for or against repealing protections for consumers on bankruptcy. This will be the hard telling evidence of who your elected representatives really represent in Washington. New Print Edition of CounterPunch Available Exclusively to Subscribers:

War Talk As White Noise: Anything to Get Harken and Halliburton Out of the Headlines; First Hilliard, Then McKinney: Jewish Groups Target Blacks Brave Enough to Talk About Justice in the Middle East; Intimidation is the Name of the Game; Smearing “Insane” McKinney As Muslims’ Pawn; The Missing Terrorist? Calling Scotland Yard: “Where’s Atif?” They Never Booed Dylan!: Tape Transcript Shows Famed Newport Folkfest Dissing of Electric Dylan Not True. The Catcalls were for Peter Yarrow! New Shame from the Liffey Shrike

Ralph Nader is a consumer advocate, lawyer and author of Only the Super-Rich Can Save Us! 

More articles by:
Weekend Edition
May 27, 2016
Friday - Sunday
John Pilger
Silencing America as It Prepares for War
Rob Urie
By the Numbers: Hillary Clinton and Donald Trump are Fringe Candidates
Paul Street
Feel the Hate
Daniel Raventós - Julie Wark
Basic Income Gathers Steam Across Europe
Andrew Levine
Hillary’s Gun Gambit
Jeffrey St. Clair
Hand Jobs: Heidegger, Hitler and Trump
S. Brian Willson
Remembering All the Deaths From All of Our Wars
Dave Lindorff
With Clinton’s Nixonian Email Scandal Deepening, Sanders Must Demand Answers
Pete Dolack
Millions for the Boss, Cuts for You!
Peter Lee
To Hell and Back: Hiroshima and Nagasaki
Gunnar Westberg
Close Calls: We Were Much Closer to Nuclear Annihilation Than We Ever Knew
Karl Grossman
Long Island as a Nuclear Park
Binoy Kampmark
Sweden’s Assange Problem: The District Court Ruling
Robert Fisk
Why the US Dropped Its Demand That Assad Must Go
Martha Rosenberg – Ronnie Cummins
Bayer and Monsanto: a Marriage Made in Hell
Brian Cloughley
Pivoting to War
Stavros Mavroudeas
Blatant Hypocrisy: the Latest Late-Night Bailout of Greece
Arun Gupta
A War of All Against All
Dan Kovalik
NPR, Yemen & the Downplaying of U.S. War Crimes
Randy Blazak
Thugs, Bullies, and Donald J. Trump: The Perils of Wounded Masculinity
Murray Dobbin
Are We Witnessing the Beginning of the End of Globalization?
Daniel Falcone
Urban Injustice: How Ghettos Happen, an Interview with David Hilfiker
Gloria Jimenez
In Honduras, USAID Was in Bed with Berta Cáceres’ Accused Killers
Kent Paterson
The Old Braceros Fight On
Lawrence Reichard
The Seemingly Endless Indignities of Air Travel: Report from the Losing Side of Class Warfare
Peter Berllios
Bernie and Utopia
Stan Cox – Paul Cox
Indonesia’s Unnatural Mud Disaster Turns Ten
Linda Pentz Gunter
Obama in Hiroshima: Time to Say “Sorry” and “Ban the Bomb”
George Souvlis
How the West Came to Rule: an Interview with Alexander Anievas
Julian Vigo
The Government and Your i-Phone: the Latest Threat to Privacy
Stratos Ramoglou
Why the Greek Economic Crisis Won’t be Ending Anytime Soon
David Price
The 2016 Tour of California: Notes on a Big Pharma Bike Race
Dmitry Mickiewicz
Barbarous Deforestation in Western Ukraine
Rev. William Alberts
The United Methodist Church Up to Its Old Trick: Kicking the Can of Real Inclusion Down the Road
Patrick Bond
Imperialism’s Junior Partners
Mark Hand
The Trouble with Fracking Fiction
Priti Gulati Cox
Broken Green: Two Years of Modi
Marc Levy
Sitrep: Hometown Unwelcomes Vietnam Vets
Lorenzo Raymond
Why Nonviolent Civil Resistance Doesn’t Work (Unless You Have Lots of Bombs)
Ed Kemmick
New Book Full of Amazing Montana Women
Michael Dickinson
Bye Bye Legal High in Backwards Britain
Missy Comley Beattie
Wanted: Daddy or Mommy in Chief
Ed Meek
The Republic of Fear
Charles R. Larson
Russian Women, Then and Now
David Yearsley
Elgar’s Hegemony: the Pomp of Empire
FacebookTwitterGoogle+RedditEmail