Who Supports the New Bankruptcy Law? — Just Follow the Money

In May 1, 2006

An interesting article appeared last week under the title, “Bankruptcy Law Does Have Supporters.” Well, no kidding. Of course the new law has supporters. How else would it have passed Congress? I’m sure most of the executives in the credit card industry think it’s a pretty good bill. They should know. Collectively, they spent millions of dollars lobbying to get it passed.

Basically, the article in question is a litany of pronouncements by experts (?) who support the new law. But just “follow the money” and you immediately see what’s going on here. With the exception of a law professor from Georgetown University, who likes the “consumer protection” aspects of the bill (oh, brother!), virtually every other authority cited in the article represents the business community in one form or another. Absent are quotes from ANY individual, organization, or association that works with debt-strapped consumers on a regular basis.

To prove my point, take a look at the parade of pro-bankruptcy-reform authorities cited in the article:

A director from the U.S. Chamber of Commerce. Check.

The head of a market research firm that recently published a report on the widespread “abuse” of bankruptcy. Who does the firm conduct its research for? The lending industry. Check.

A spokesperson for the American Bankers Association. Check.

A lobbyist for the National Retail Federation. Check.

Head of a trade association of consumer credit and finance companies. Check.

You get the idea. All of the voices in support of the new law are pro-business. Might these folks be just a little biased? Where are the quotes from the people in the trenches? You, know, like the judges who actually try these bankruptcy cases in their courts? Why aren’t they quoted as supporting the new law? Or bankruptcy attorneys? Couldn’t they find any bankruptcy attorneys who like the new law? Apparently not. And there is a reason for that.

Yes, abuses occasionally happen in the bankruptcy system. People sometimes try to game the system. But — surprise, surprise — abuses will occur under the new law too. The bottom line is that the old system was not broken and did not need fixing. It worked fine. Was it perfect? No. Will the new law correct those imperfections? No. Will it introduce new and unnecessary problems?

At the time, Judge Frank Monroe of Austin called the new law a trap for consumers, characterizing some of its provisions as “inane, absurd, and incomprehensible to any rational human being.” I guess he just doesn’t know what he’s talking about…


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