Crooks and Liars
Friday May 11, 2012 06:43 pm
Sen. Bernie Sanders: Break Up the Big Banks
After the news that JP Morgan Chase lost $2 billion on high-risk credit derivatives this week, as usual, Sen. Bernie Sanders was one of our few voices of reason out there about what to do with these still too-big-to-fail institutions — break them up.
From the Senator’s press releases: Break Up Big Banks:
J.P. Morgan Chase revealed that its in-house trading operation lost $2 billion in the past six weeks. “The debacle at J.P. Morgan Chase reaffirms my view that the largest six banks in this country, including J.P. Morgan Chase, which have assets equivalent to two-thirds of our GDP, must be broken up. This is important in order to bring more competition into the financial marketplace and to prevent another ‘too-big-to-fail’ bailout,” Sen. Bernie Sanders said. “At a time when 23 million Americans are either unemployed or underemployed, huge financial institutions should not be involved in ‘making wagers or high-stake bets.’ They should be investing in the productive economy creating jobs and improving our standard of living.”
But couldn’t we just trust them? After all, we know they mean well. Or do they just do well? Very damned well, no matter what happens to the rest of us. Sure feels like time to sharpen those guillotine blades, doesn’t it? You think not? Read the next bit and then see what you think. Here’s my new favorite oxymoron: “The Bankruptcy Abuse Prevention and Consumer Protection Act”. Bend over a little more and say pretty-please would be more like it.
“Some will rob you with a six-gun
And some with a fountain pen.”
Only the writing implements have changed since Woody Guthrie’s day, apparently. – LLF
Crooks and Liars
Sunday May 13, 2012 07:00 am
Study: Broke Americans Are Too Poor To File For Bankruptcy, Thanks To The Pols Who Voted For ‘Reform’
By Susie Madrak
Credit: GetBankruptcyAttorney.comYes, thanks to politicians like Tom Carper, whose baby it was, and Joe Biden, the former senator from MBNA, who supported it, the bankruptcy “reform” act pretty much killed off any chance at all for poor people to recover from their debts. It also made credit card companies more powerful – and profitable, so as far as the politicians are concerned, win/win!
If there’s anything at all that I wish the Occupy movement would focus on, it would be overturning this travesty and getting people some relief from debt prison.
It’s also why it’s really, really important to support Elizabeth Warren. It will make the bankers crazy:
This year, hundreds of thousands of Americans are expected to be too broke to file for bankruptcy.
The average cost to file for Chapter 7 bankruptcy protection, the most common form of consumer bankruptcy, is more than $1,500, according to recent research submitted to the National Bureau of Economic Research.
As a result, anywhere between 200,000 and one million consumers are estimated to be unable to afford that steep cost this year.
The research, conducted by a group of professors from Columbia University, the University of Chicago and Washington University in St. Louis, examined how bankruptcy filings spiked after people received their tax rebates in previous years. They estimate that another 200,000 consumers, who would otherwise not have enough money to file, will use their tax refunds to pay for bankruptcy this year.
“For lots of people, bankruptcy has been taken off the table as an option because of the severe fees involved,” said Jialan Wang, co-author of the report.
Among those fees is a charge of about $300 just for filing the paperwork with the federal court, while the rest typically goes to bankruptcy lawyers, said Wang.
And there are other expenses on top of that, including fees for mandatory pre-bankruptcy credit counseling and a pre-discharge debtor education course. These average about $85 altogether, according to a recent study sponsored by the American Bankruptcy Institute.
That means many of the Americans who have seen their debt snowball out of control due to events like job loss, foreclosure or a medical emergency during the economic downturn are now left without their last financial lifeline, she said.
“It becomes harder and harder to pay off the debt as interest payments get higher, so your debt grows larger and larger,” she said.
The cost of filing for bankruptcy has risen in recent years as a result of the 2005 Bankruptcy Abuse Prevention and Consumer Protection Act, which aimed to reduce the number of bankruptcies taking place by adding more requirements to the filing process — including additional paperwork and the credit counseling and debtor education.
Yes, this really was Christmas morning for the banks and credit card companies. This provision was especially clever:
If a lawyer at a large law firm represents a consumer in a bankruptcy case, under the Bankruptcy Reform Act the lawyer has just brought his entire law firm under that Act’s jurisdiction. This means that any advertisement made by that firm must contain the following “disclosure”:
We are a debt relief agency. We help people file for bankruptcy under the Bankruptcy Code.
Can you imagine that a large law firm, which might have numerous business or creditor clients, would want to place such a “disclosure” on its law firm brochure? Or on its website? Or on its Christmas cards? Or on any other written material which a court might later say constituted an “advertisement”? You know the answer already: no way. Even consumer bankruptcy law firms can barely swallow this absurd language; it was enough to make big law firms choke. Word promptly went out: no lawyers at our white shoe law firm will being doing any more consumer bankruptcies, lest we have to identify ourselves as “debt relief agents” to all of our clients.
But the single most important change homeowners experienced under bankruptcy reform was the removal of the bankruptcy judges’ authority to grant mortgage cramdowns. Oh sure, they can still do it — on your vacation house, not your primary residence! (Just in case you had any doubt how shameless this Act really is, and who it was supposed to protect.)
That’s why so many mortgage holders went under. They no longer had any legal recourse, and as a result, it helped crash the economy. But see how well it worked out for the 1%?