Trey Jackson has the video of Elizabeth Warren debating Todd Zywicki.
Good stuff. Warren gets the nod on this one. Zywicki implied that since bankruptcies increased while the economy improved, it by definition meant the increase was because of fraud. This is one of the central dishonest arguments for the bill.
Remember, from the pdf I mentioned before:
The bankruptcy filing rate is a symptom. It is not the disease. Some people do abuse the bankruptcy system, but the overwhelming majority of people in bankruptcy are in financial distress as a result of job loss, medical expense, divorce, or a combination of those causes. In our view, the fundamental change over the last ten years has been the way that credit is marketed to consumers. Credit card lenders have become more aggressive in marketing their products, and a large, very profitable, market has emerged in subprime lending. Increased risk is part of the business model. Therefore, it should not come as a surprise that as credit is extended to riskier and riskier borrowers, a greater number default when faced with a financial reversal. Nonetheless, consumer lending remains highly profitable, even under current law.
But even more maddening is the assertion that the increased bankruptcy filing rate is a problem. Yes, of course it's a problem. But who is it afflicting? The profitable credit card companies with the financial models that already take the bankruptcy filing rate into account? Or the individuals and families that are experiencing such hardship that they are finding it more necessary to declare bankruptcy? Congress believes that it's the credit card companies that deserve the rescuing.
By the way, to dismiss with a canard - no one is arguing that poor people should not have access to credit. It's fine to use a credit card for emergency funds or short term expenses that will be paid off. But the credit card companies are marketing their product as extra disposable income. Their financial interests are to put people in long term debt at high interest rates. Their job is to create the demand. They are very, very good at it. Personal responsibility doesn't mean we're required to accept the presence of temptation.
Posted by tunesmith at March 18, 2005 01:02 AM
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Seems I'm not the only one going after Todd Zywicki, who appears to have become the face of the pro-bankruptcy "reform" effort.
Harvard Law professor Elizabeth Warren faced off with Zywicki in a "Lou Dobbs Tonight" segment Thursday night. Warren's ... [Read More]
Tracked on March 18, 2005 09:45 AM
I can't speak for Reynolds, but Warren does address this. Her point is simple. Of course you can find examples of filers with lots of debt AND lots of assets or income to pay it. But this is relatively rare among filers.
The American Bankruptcy Association estimates that maybe 3% of claims are fraudulent (meaning filers could pay their debts). Opponents of this bill always cite bare anecdotes ("I read about a really bad debtor in the news!") and then extrapolate to the whole population. Another option is to refer to reality.
The "wimps" are the people who cower behind straw men--like the deadbeat debtor--because they are terrified of the possibility that "personal responsibility" can't solve all the world's problems.
Posted by: Spear at March 18, 2005 07:34 AM
Your comparison to food is...there is no good word for it. If I loan money to someone that is up to their ears in debt, or earns barely enough to live, are you going to feel any sympathy for me if they fail to pay back? Probably not...however, the credit industry is going to get the federal government to act as a collector for their bad lending practices.
Whether or not someone has substantial assets or not is a factor in bankruptcy. There are exemptions for most things but only in a few cases are they unlimited. Pensions being one. 29 says s/he watches the filings...do you know what the assets consist of? Is it home equity - limited amount allowed, or is it pension/401K, with an unlimited amount allowed. Home equity MIGHT be able to be used to satisfy some debt (changing unsecured for secured debt) but pension/401k's often are not - or if they are used, have serious tax liabilities. (we have a client whose chapter 13 was busted by the IRS billing him 4k for a 401k loan that was not repaid because the chapter 13 trustee disallowed it....today he converted his 13 to a 7 and will start packing this weekend...his home of 13 years will be lost to foreclosure by the end of april.)
Reality. Watching a man trying to not cry while we told him it was over.
Posted by: Tracy at March 18, 2005 09:42 PM
What do you want from the credit card companies?
Do you want to force them to stop marketing their product? That's sort of like saying Bic Macs are profitable for McDonald's and might make you fat if you eat too many of them, so we'll force McDonald's to stop marketing Big Macs.
Makes no sense.
I track my region's bankruptcy filings every 2 weeks when they're printed in the Des Moines Register. There are people granted Chapter 7 with even debt/asset ratios, and in a lot of cases people with $20K, $60K, $180K, and over $300K more in assets than debts. There's also a lot of filings where people will have between $4000 and $8000 in debt and a couple grand in assets. How in the world can we possibly justify this?
You and Reynolds and Warren NEVER address this. WIMPS.
Posted by: 29 at March 18, 2005 06:09 AM