Biting the hand that feeds you
Big banks have formed an unusual alliance with consumer advocates to urge the government to allow huge portions of credit card debt to be forgiven, a turnabout from recent years when the banking industry lobbied strenuously to make it harder for consumers to erase their credit card debts in bankruptcy.
Remember the bankruptcy bill? I do:
Bankruptcy reform has been a top priority of banks, credit-card companies, and retailers for the past decade. The credit card industry has given $25 million to federal candidates and the political parties since 1999 and commercial banks have given $76.2 million, according to the Center for Responsive Politics, a Washington, D.C.-based watchdog group. More than 60 percent of the donations went to Republicans.
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Opponents of the first revamp of the nation’s personal bankruptcy laws in more than a quarter-century said the legislation would deal a ruinous blow to the overwhelming majority of those forced to declare personal bankruptcy: moderate- and low-income families, many of them black or migrant or with only one parent; and individuals of modest means hit with large divorce losses or medical expenses.
What happened? Oh, right – it was a terrible idea in the first place. They got (more) greedy and it came back to haunt them. I say tie debt forgiveness to a whole new set of lending laws, a set that really, really cracks down on predatory lending and increase bankruptcy protection. Don’t provide another giveaway to another set of giant companies.
For a detailed recount of how it passed way back in 2005, see this incredible DK diary.
Tags: public policy
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