Tougher Bankruptcy Law$ Pay Political Debt$

 

At the last minute, the Senate removed a clause specifically designed to protect people who lost money a few years ago investing in the now-failed Lloyd’s of London.  That’s a shame.  Our society is too dim to see what the hell is really going on unless it’s written in large, neon letters, and so I'm always in favor of leaving the “enough rope” riders, clauses and amendments in Washington legislation.  Removing that clause and passing the rest of the new bankruptcy bill was like taking the worm out of a rotten apple before offering it to a starving child.

 

This is the kind of bill that gets through Congress most easily in the first few months after an election, before our representatives forget that they really represent the special interest groups that helped them obtain or remain in office.  Actually, removing that clause and passing the rest of the new bankruptcy bill was like taking the worm out of a rotten apple before offering it to a starving child and demanding a receipt claiming full, fresh Fuji apple value for tax purposes before allowing the child to bite into it.  It shows that Congress can and now has blithely ignored the fact that almost all bankruptcies are unavoidable and not perpetrated either for pleasure or criminal intent, because the lending industry is calling in political debts.

 

The bill is designed to make it possible for lenders to be less responsible about the criteria they use for lending.  Since it is now harder for people crushed by debt for whatever reason to obtain relief, the lenders can gamble on less secure risks, and their representatives can make harassment calls to desperate debtors a little later at night and a little earlier in the morning with impunity.  Because they will now loosen their own restrictions on lending, they will suffer more defaults, which will allow them to argue that they are at more risk in making loans and should be able to make more profit in return for more risk, which means that debtors will be charged more interest and penalty fees, because that’s where the profit comes from.  Higher payments will be harder to make, meaning that inability to pay will become likelier, and “inability to pay” seems kinda synonymous with “bankruptcy to me, but then, I'm neither a lender nor a United States Senator.

 

The bill will not bring back debtors’ prisons or public stocks, though it makes it easier for us to envision community service penalties and partial public reimbursements to lenders in return for same being associated with bankruptcy at some point in the future.  Even as you read this editorial, there are lenders dozing at their desks dreaming of sucking the public tit in just that fashion.

 

By the way, the bill will not accomplish its purpose.  The basic procedure for declaring bankruptcy remains exactly the same, and that procedure is to go to the “Bankruptcy” subheading under “Attorneys” in the Yellow Pages.  The increased difficulties attached to a decision no one wants to make will lead attorneys to charge higher fees to people who can least afford to pay them, and every cent of those increased fees that goes to the bankruptcy attorneys will not be available to go to the lenders.

 

I know, that all seems pretty simple to figure out, but we’re talking about people who just told the whole country that they’re too damn dumb to figure out how to restrict their lending to people who will be able to successfully pay them back with interest in the first place.  Sure, we all romanticized it when we were kids playing “Loan Officer(remember, “No collateral?!  Close your eyes and count to 50”),” but when you grow up, you have to accept the fact that very few people go into that field just because they prefer it to neurosurgery and quantum physics.  As convincing an argument as it appears to be when lenders proclaim themselves an afflicted minority and appeal for government assistance, I don’t quite buy it.  Especially not on credit.