News Release

The Bankruptcy Bill: Opening Doors to Debt Slavery?

ELIZABETH WARREN
Warren is a professor at Harvard Law School and coauthor of The Two-Income Trap: Why Middle-Class Parents Are Going Broke. She directed the National Bankruptcy Review Commission’s study of federal bankruptcy laws and drafted its report to Congress. In her testimony before the Senate Judiciary Committee in February, she said: “Overwhelmingly, American families file for bankruptcy because they have been driven there — largely by medical and economic catastrophe — not because they want to go there.”
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STEVE WEISS
Weiss is the editor of Capital Eye, the money-in-politics newsletter published by the Center for Responsive Politics. He said today: “Judging by [the previous] week’s Senate vote on bankruptcy legislation, the millions of dollars in campaign donations contributed by the credit card industry over the years was money well spent. … An analysis of the contributions shows that senators who voted to pass the bill raised an average of nearly twice as much between 1999 and 2004 from the finance and credit industry as those who voted against the bill. … The measure [is now at] the House of Representatives, where Republican leaders have promised quick action on the bill. Finance and credit companies have given a total of $5.9 million in individual and PAC contributions since 1999 to current House members, 64 percent to Republicans.”
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ROBERT D. MANNING
Manning is the author of Credit Card Nation: The Consequences of America’s Addiction to Credit and professor at the Rochester Institute of Technology in New York. He has testified numerous times before Congress on consumer finance and bankruptcy. He said today: “The decline in public social services and erosion of household income over the last two decades have contributed to soaring levels of consumer debt — doubling over the last 10 years. The rising cost of consumer debt, especially credit cards, is exacerbating U.S. social inequality as families struggle with rising employment instability, medical expenses, and housing prices. Today, the record profits of the banking industry reflect both the financial distress of American households and the lack of government regulation of its ‘risk-based’ pricing policies. This is as evidenced by the unprecedented rise of personal bankruptcies — over 12 million in the last decade and 1.6 million in 2004. Sadly, the response of the U.S. Congress has been to enact a more stringent, pro-creditor bankruptcy bill that will aggravate the financial hardships of middle-income families.”
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JOHN TAYLOR
Taylor is the president of the National Community Reinvestment Coalition. He said today: “Predatory lenders often push families to brink of foreclosure through unconscionable loans. This bill now comes along and says that families facing unavoidable debts such as sudden medical expenses cannot seek protection from their creditors, including abusive lenders.”
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DAVID SWANSON
David Swanson is the coordinator of debtslavery.org, a coaliton against the current bankruptcy bill. He said today: “Credit card companies, like most lenders, charge interest rates based on the risk they see of each borrower failing to pay back the loan. … The higher rate is supposed to cover the losses the lender will suffer when some of the riskier borrowers default. This system has been bringing in massive record profits for the credit card companies: $30 billion last year. … The current bankruptcy bill leaves millionaires’ loopholes in place.”

[Swanson noted: “At 9:30 a.m. on Wednesday, April 13, there will be a press conference at room 2237 of the Rayburn House Office Building in Washington. Members of Congress will be there to speak against Bankruptcy Bill (S 256) along with representatives of labor, women, consumers, children, seniors, veterans, activists, and academics. The groups present will include Consumer Federation of America, AFL-CIO, Center for American Progress, National Women’s Law Center, American Federation of State County and Municipal Employees, Association of Community Organizations for Reform Now, Center for Responsible Lending, Consumers Union, Demos, National Association of Consumer Bankruptcy Attorneys, National Consumer Law Center, National Community Reinvestment Coalition, National Organization for Women, Progressive Democrats of America, Public Campaign Action Fund, Public Citizen, United Auto Workers, United States Public Interest Research Group.”] More Information
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For more information, contact at the Institute for Public Accuracy:
Sam Husseini, (202) 347-0020; or David Zupan, (541) 484-9167