New Test for True Democrats
If the debtor be insolvent to serve creditors, let his body be cut in pieces on the third market day. It may be cut into more or fewer pieces with impunity. Or, if his creditors consent to it, let him be sold to foreigners beyond the Tiber. —- Twelve Tables, Table III, 6 (ca. 450 B.C.)The Nation's Editor's Cut this weekend takes note of the upcoming Senate consideration on the co-called "Bankruptcy Abuse Prevention and Consumer Protection Act," a.k.a. "bankruptcy reform" act. The Commercial Law League of America reports:
According to the Senate judiciary committee, the Bankruptcy Reform Act is going to the floor immediately, which means that it is on the schedule for the week of February 28.
As with so much in modern America, the words slapped on the title of this proposed legislation are Orwellian. Instead of preventing "abuse" it would clear the way for the most unsavory creditors to economically abuse low-and moderate-income families, soldiers and veterans, family farmers, and unwary seniors; instead of "protecting" American consumers it will expose them to the worst credit card companies, casino owners, lending institutions, small loan scams, telemarketers, unsavory insurance companies, door-to-door salesmen, liquidators, consumer scam houses (from 'Dare To be Great" to
dubious "video professor" types), third party debt collectors, the Recording Industry Association of America, and all the other economic predators who have found safe haven in the capitalist excesses of the Bush Administration era. See the Consumer Union's list and links of past political pay-offs.
Like most legal subjects, bankruptcy law is complex and dry. The current bill runs to more than 400 pages. Additionally, most consumers are unaware of the nature, foundation, history, procedures, or implications of current bankruptcy law -- much less the so-called 'reform' movement launched by business predators in the mid-1990's to buy the Congress, man by man and woman by woman, until they have a working majority to completely unbalance the legal system. But when the specifics of so-called 'bankruptcy' reform' are explained, past polls suggest a substantial majority of voters would be opposed to the measure. ["59% said that declaring bankruptcy should be the same level of difficulty as it is now or easier for those who have incomes below $25,000 a year. 32% said that it should be more difficult to enter bankruptcy for those who have incomes below $25,000 a year."]
As the web site Bankruptcy Laws explains:
"Since 1994, New Bankruptcy Laws threaten to severely restrict, and in many circumstances, abolish consumer bankruptcy relief. These new bankruptcy laws target consumers and wage earners while leaving business reorganization for large corporations intact. The new reform acts, as offered in the House and the Senate, represent the largest departure from traditional jurisprudence in history of U.S. Bankruptcy Courts. Judges lose discretion. Debtors are saddled with onerous burdens of proof and penalties. Creditors receive unprecedented latitude in enforcing one-sided rules. Overlapping formulas are designed to eliminate qualification across all avenues of relief. Complex. Slanted. Unjust."
Incredibly, 36 Democratic senators supported the bill the last time it came to the Senate floor. Common Dreams has archived the names of the disreputable Democrats here. Only thanks to Senator Paul Wellstone (D-Minn.) was the bill derailed when he successfully filibustered the bill shortly before his death in 2002.
The late senator's views on the bill and the stealthy un-democratic way in which it was being brought to a vote are archived in several documents searchable at the Paul and Sheila Wellstone Memorial Archives in pdf format. Once upon a time, his memorial U.S. Senate web site also had links to comprehensive floor speeches he delivered on the subject, but those seem to have disappeared.
Recently, a joint Harvard Law-Harvard Medical School study verified what many intuitively suspected -- that about "half of all Americans who file for bankruptcy do so because of medical expenses... ." Except for that, little has changed in the 2005 Senate bill or the legal issues it presents. Accordingly, it is as enlightening today as it was in past years to read Senator Wellstone's words. Here are a few samples from his comments as quoted in public press releases about the last version of the bill to reach the Senate floor:
"There is no doubt that this is a bad bill. It punishes the vulnerable and rewards the big banks and credit card companies for their own poor practices. I can only use the word ‘injustice' to describe this bill. If you look at the broad coalition many of whom are here today which has spoken out against the bankruptcy bill, it's pretty clear on whose backs this ‘reform' will fall: working families, seniors, women and children, minorities, and single parents. It will be a bitter irony if creditors are able to use a crisis - largely of their own making - to convince Congress to cut off borrower's access to bankruptcy relief... .As much as with the proposal to privatize Social Security, the so-called Bankruptcy Reform Act should be seen as a litmus test of what the Democratic Party really stands for and who is, and is not, a real Democrat.In the May 15, 2000 issue of Time Magazine, Donald L. Bartlett and James B. Steele wrote a comprehensive investigative report about the link between congressional corruption and the so-called Bankruptcy Reform Act, titled Soaked By Congress: Lavished with campaign cash, lawmakers are "reforming" bankruptcy -- punishing the downtrodden to catch a few cheats." In detail, the article exploded the factual and legal assetions of the bill's sponsors, showing them to be mere urban legends.
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In fact, there's no pretending that this is a bill designed to curb real abuse of the bankruptcy code. Does this bill take on wealthy debtors who file frivolous claims and shield their assets in multi million dollar mansions? No, it guts the cap on the homestead exemption adopted by the Senate. Nor does this bill contain another amendment adopted by the Senate that would prevent violators of the Fair Access to Clinic Entrances Act which protects women's health clinics from using the bankruptcy system to walk away from their punishment.
Instead, this legislation will deny a "fresh start" to low and moderate income families
who file for bankruptcy out of desperation. The inflexible, arbitrary means test will force many working families inappropriately into the Chapter 13 bankruptcy debt repayment
process - which 67% of such debtors fail to complete under current law. But the bill would also impose mandatory credit counseling on all debtors before they can seek bankruptcy relief regardless of circumstances; end the practice under current law of stopping eviction proceedings against tenants who file for bankruptcy; and impose new filing and paperwork requirements that would make bankruptcy process even more onerous.
This legislation is terrible for working families and it rewards the predatory and
irresponsible lending by banks and credit card companies which fed the crisis in the first place. For that reason, a broad coalition of consumer groups, unions, women's and children's groups, civil rights organizations, and religious groups have united in opposition to this bill.
In the months since the Senate passed Bankruptcy Reform, any pretense that this legislation is urgently needed has evaporated. The number of bankruptcies has fallen steadily over the past year, charge offs on credit card debt are down significantly and delinquencies have fallen to the lowest levels since 1995. Now proponents and opponents agree that nearly all debtors resort to bankruptcy not to game the system but rather as a desperate measure of economic survival and that only a tiny minority of Chapter 7 filers as few as 3% could afford any debt repayment."
Bartlett and Steele's report remains as relevant today as it was then, although so far as I know the article is available only to Time's on-line subscribers. But one core finding is easily summarized:
"What is the real reason Congress is doing this? Because the legislation is just what banks, credit-card companies, debt consolidators and other financial-services businesses ordered. To get it, they retained high-powered Washington lobbyists, among them Haley Barbour, former chairman of the Republican National Committee, and Lloyd Bentsen, onetime Senator and Treasury Secretary. The price tag for lobbying: more than $5 million.Along with the as-yet undisclosed Bush administration's proposed dismantling of Social Security and inaction on national health care, I know of no conservative weapon in Congress that is more squarely aimed at the American middle class than the proposed Bankruptcy Reform Act of 2005. Every Democrat worthy of the party's name and historical reputation of sticking up for the 'little guy' should oppose it.
At the same time, the lending industry poured contributions into the coffers of the national committees of both political parties and into the campaigns of individual lawmakers whose support was crucial. Some of the giving was appropriately timed. A $200,000 contribution to the National Republican Senatorial Committee by MBNA Corp.--which is to credit cards what Pepsi is to soft drinks--was delivered on the day of an earlier House vote on the bankruptcy bill. It passed handily, 300 to 125. The price tag for political contributions: more than $20 million. Says a Capitol Hill staff member who worked on the bankruptcy legislation: "If this were NASCAR, the members would have to have the corporate logos of their sponsors sewn to their jackets."
The Bankruptcy Reform Act is typical of legislation that Congress writes for the benefit of special-interest groups that are hefty campaign contributors--at the expense of ordinary Americans who contribute nothing. [emphasis added]