Mar 3, 2005

Protection for the Wealthy When They Screw

But the Unprotected Will Have to Pay
The proposed law on bankruptcy has some peculiar provisions, namely the wealthy could shield most of their assets in trusts. Before 1997, they had to hide their assets outside the country, but since then, many states have made it easier for the rich to keep much of what makes them ..comfortable after a bankruptcy! The Sarbanes-Oxley law made the executives personally liable for the illegalities of their companies. Yet, the current bill doesn't touch this topic. The rich can cover their ass(ets), claim bankruptcy and pay no hefty fines for their wrong doings.
Yes, but how about the shame you ask? Surely you understand that the wealthier a person is the more he needs to ..cover his shame, you know, like frequent trips abroad and estates big enough to hide himself from the public! Please, don't ask me to dignify the remark about the "double whammy:" the directors of the bank/credit corporations who screw the public, are themselves the ones who get preferential treatment! Yeah, and the point is?

It is truly obscene to see Republicans and Democrats in agreement ready to screw the American consumer. For example, they voted 74 to 24 not to cap the APR at 30%! I guess that's not high enough. [After all, the creditors would say, you seem to be a very high risk debtor, because you let us push you into that predicament... So, shut up and pay, or else!]
Other amendments that were defeated: to protect old people from losing their (only) home, and meager savings; to require the credit card companies to fully disclose the actual interest amount the consumer has to pay, and the exact terms & conditions under which this can change! You did know that if had a problem with one creditor, all the other creditors could dramatically raise your APR, right?

If you charged someone, say, a 35% interest, it would be considered "loan-sharking," but usury fees & other charges seem to be just fine to our elected "wise guys." Contact them, and voice your concern now. This bill will affect all of us who use credit; it's not only about bankruptcy and perks for the rich people/corporations. This administration has been duping the public for a while now (remember the WMD). You know what the crooks say about the oft-fooled: stupid people deserve to be mugged.

Using the excuse of ending the abuse (read: by the average person), the banking industry, through the Republican one-party-rule, is pushing this bill. Some consumers do pile up debt with reckless spending, but the truth is that most of the people end up in bankruptcy court because of unforeseen or dire circumstances: like a job loss, medical (yes, because of the travesty of our health care system) expenses, and divorce. These are the same people who have no big assets to protect. It's the super-rich who have houses, money, and investments to protect, and the current bill in Congress provides for them in spades. It is also an obscene payback to the credit card companies that made $30 billion in profits last year.

When are we going to stop this mugging? It's puzzling to me that a nation of consumers--and, boy, we do consume--doesn't seem to understand ..consumerism! This proposed bankruptcy law is shameful, no ifs, ends or buts. Don't want to use protection? OK, but at the very least you must say, NO, to this monstrosity!

In an earlier posting on this blog, there was a discussion about the rewards the credit card and banking industries have been getting from the Bush White House. Molly Ivins, Suzan Douglas have written excellent articles on this topic, and PBS's Frontline did a story on the secret history of credit cards last month. If you use money, read and act.

PS>I wanted to elevate a point made by SK (NY) in the comments section here..."What everybody has to understand is this: THE RICH WHO FILE FOR BANKRUPTCY DO NOT DO IT FOR MONEY PROBLEMS! They do it to PROTECT their assets and KEEP their money!" Also read Elizabeth Warren's interview; she's a Harvard professor and an authority on the subject.


Anonymous said...

Universal default, fees and APR that change whimsingly, are some of the ways the credit card companies have been screwing us.

Is this what Bush meant by spending his political capital?

One attack after the other.... It began with attempting to privatize Social Security....

Tsk, tsk...

Anonymous said...

Bankruptcy is one of the most agonizing things a person has to go through. Especially when this person is poor or middle class (whatever this means). Losing one's credit it's much more difficult to climb up again.
On the other hand, if a rich person who has access to accountants and lawyers and, thus, can set up "trusts" or off-shore accounts, declares bankruptcy, I don't think it's that much of a big deal... They have enough resources to resume their lives, AND, they do have connections!

Anne, NY

Anonymous said...

I had the same discussion with friends just the other day.. they don't seem to understand that although there are irresponsible people out there, the majority of them don't come from the middle/lower classes.

The scam is perpetuated by the wealthy who do have ways to shield their assets and live a normal life just before and after bankruptcy!

The Harvard study showed that in the 2 years before filing for bankruptcy, 19% of families went without food, 40% had their phone cut off, 43% couldn't fill a medical prescription, and 53% went without any medical care.

So the proposed law will not enable the average person hide anything because he ain't got anything to hide.

What everybody has to understand is this: THE RICH WHO FILE FOR BANKRUPTCY DO NOT DO IT FOR MONEY PROBLEMS! They do it to PROTECT their assets and KEEP their money!


Anonymous said...

you should have mentioned the families of those reserves and national guardsmen who've been called to Iraq, and with the "back door draft", they've spending upwards of a year there....
Those who have/had businesses are definitely going to feel the financial burden, even have to declare bankruptcy if their businesses fail!

Jim L. NJ

Andros said...

Yes, you're absolutely right! Actually, the Dems in the Senate tried to include an amendment to protect the military personel but it was voted down by the Repubs!

It's obvious that the credit card companies don't take any hostages... and their hacks in Congress oblige!

Another point is that the same reservists/national guardsmen lose their health coverage once they return home from active duty. Efforts by Hilary Clinton and others to provide coverage for them have stalled in Congress.

The bill treats someone who spent money on health care the same as one who maxed his c.c. at a casino or a shopping mall!

But before we shift the focus on the reckless consumers (yes, they deserve the blame) we should put things in perspective... that is, look at the thievery and the outright scamming of the consumer by the c.c. companies... Only in America usury fees are legal... and those fees can change at will (not yours, but the banks').

It's like you agree to buy a car at a price, but when you take it home, they tell you now it costs more! Oh, and you wrecked your lawnmower, you're a high risk.... and the fees climb up!

It's no wonder why the banking industry is having record profit years!

Andros said... has a "strategy memo" on the bankruptcy bill by John Podesta, former Clinton chief of staff.. it's worth reading

Anonymous said...

Kos has a posting why some "reasonably progressive politicians" voted to go along with this bad bill....

The analysis shows that those Dems get lots of $$$ from the banking industry....
Jim, DE