April 14, 2005

The bankruptcy bill

No surprise, the House has passed the bankruptcy bill that the credit card companies wanted.

If this were a vacuum, I'd be a fan of this bill. What could be more irresponsible than running up huge consumer debt and then hiding behind Chapter 7 so you don't have to pay it all off? This bill makes the very reasonable demand that you should pay off your debts, not dissolve them.

But this isn't a vacuum. This is a place where credit card companies hand out credit cards like candy; where they actively work to encourage people to buy more things than they can pay for; where they do all in their power to suggest that their customers not pay off their debt each month; where they add double-digit interest to the difference between the minimum monthly payment and the total balance.

None of this is an excuse for avoiding debts in bankruptcy, but it is an argument for why House Republicans might have been wiser to at least allow a vote on some of the 35 amendments offered by Democrats that would have done such sensible things as exempt victims of identity theft from the law's tougher requirements. The Republican leadership might then have been able to argue plausibly that they were primarily interested in protecting access to credit for everyone by encouraging personal responsibility.

Alas, however, the details of how this legislation was passed suggest instead that the Republicans were more interested in rewarding their patrons in the credit and retail industries than in making good public policy for everyone. If people find it hard to distinguish me from the typical liberal, its only because I agree with the liberals that our conservative political leaders virtually always get it wrong.

Posted by Carey at April 14, 2005 10:07 PM

Let's not forget that many, if not most, personal bankruptcies have more to do with unforeseen circumstances like medical bills. Also, the bill does nothing to prevent the wealthy corporations from declaring bankruptcy. The continued loopholes for the rich and the lack of exception for simple bad luck (as opposed to lack of responsibility) are the two great failings of the bill. That and the fact (as you correctly pointed out) that we live in a culture of debt. Good post.

Posted by: Larry at April 15, 2005 12:40 PM