How fitting and how depressing that one of the first measures to go roaring through this session of Congress is a bill to give relief to the nation's suffering bill collectors.
This gives us a sobering taste of what it's going to be like in a Washington where the nation's business interests set the national agenda. For the first time in nearly 50 years, there is very little to stop big business from exercising the power that goes with Republican control of the legislative and executive branches. And since George W. Bush's certification as president was the gift of five justices of the U.S. Supreme Court, it suggests a virtual Republican monopoly curiously at odds with Al Gore's 540,000-vote margin of victory in the popular vote.
Bill collectors are, of course, a necessary component of our economy even if most of us are glad we've been able to find other jobs. Still, even those of us who pay our bills retain a certain sympathy for those unfortunates who get caught up in credit traps that increasingly lure consumers into imprudent debt. Only former President Clinton's veto prevented the last Congress from overhauling the bankruptcy statutes to the satisfaction of the nation's banks, more particularly to the liking of the issuers of the nation's credit cards. There are now about 456 million bank credit cards outstanding in the United States, more than twice as many as 10 years ago. Outstanding bank credit card debt, much of it at atrocious levels of interest, has almost tripled in the same period.
This gives you an idea of the size of the beast being milked and why the banking industry moved heaven and earth to protect its cow. No longer threatened by veto, the "reform" bill that would make qualifying for bankruptcy more difficult sailed through the House in minutes this year. It ran into a rash of amendments in the Senate last week. But most of them seemed doomed, even one that would have given relief to debtors forced into bankruptcy by medical bills.
"The credit card industry showered senators and political parties, and it shows," said Sen. Russell D. Feingold, D-Wis.
By some estimates, political contributions from the credit card industry exceeded $6 million in only the first half of 2000. I can imagine no other explanation why the bill got such effusive support from the usually coherent Sen. Joseph R. Biden Jr., D-Del. "Unnecessary and abusive bankruptcy costs everyone," Biden said.
He has an astonishing ability to sniff abuse or is it just an uncanny capacity to smell out the number of credit card issuers domiciled in business-friendly Delaware? There's less mystery as to why President Bush drools to sign a bankruptcy overhaul bill. The Center for Responsive Politics reports that the nation's largest credit card issuer, MBNA, was the largest single contributor to Bush's campaign.
Citigroup and Morgan Stanley Dean Witter & Co., the nation's second-and third-ranked credit card issuers, were among the top 10 Bush contributors.
One of the lonelier voices in this debate was that of the Consumer Federation of America. "Credit card issuers are brazenly lobbying for new bankruptcy restrictions at the same time their aggressive marketing and lending practices are pushing many families closer to the financial brink," said federation lobbyist Travis Plunkett.
Judging from the contents of my mailbox, I'd agree. It seems to be stuffed daily with credit card offers, many of which come with pre-printed checks that I am invited to fill out and cash. The consumer federation estimates that credit card issuers shipped 3.3 billion mail offers last year, up from 2.87 billion in 1999. Since most of these end up in the trash, you can imagine the money the card issuers are wasting on postage alone and how much they will have to inflate interest rates and fees to cover these costs.
Perhaps the most disingenuous argument for bankruptcy "reform" is that it is necessary to prevent rich people from escaping their debts.
This claim is typically backed up by citing millionaires who moved to Florida and purchased mansions to shelter their assets. This abuse could easily be rectified by narrow legislation that would target only deadbeat millionaires.
Anyway, a study by the federal judiciary of bankruptcy cases found that the median income of debtors seeking bankruptcy in 1999 was only $21,500.
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