Bush Signs Debt-Slavery Bankruptcy Bill

Last Week the House of Representatives sided with the powerful credit card industry and passed new legislation which will make it harder for Americans to climb out of debt. It's a devastating blow to Americans struggling financially due to job loss, medical expenses, divorce or military duty. The legislation, however, did nothing to curb the aggressive tactics employed by the credit card companies in targeting vulnerable individuals, making it a virtual windfall to the industry. And evidence shows credit card companies aren't shy about trying to make a buck off of easy targets. Quick to smell the blood in the water, the companies specifically target the newly bankrupt, swamping them with new credit card offers so they rack up even more debt. The right wing of the House manipulated the process in order to squelch any amendments which would soften the blow, including measures which "would have given extra bankruptcy protections to victims of identity theft and to military personnel returning from Iraq and Afghanistan." (The Washington Post shames the right-wing conservatives who shoved this bill through, saying even the bill's staunchest proponents "should be embarrassed that it was muscled through the House in this kind of Potemkin-democracy way.") How could legislation like this pass, you ask? Just follow the money. According to the Center for Responsive Politics, the banking, credit card and retail industries flooded Congress with cash in the last election cycle, donating more than $56 million to political parties and candidates. [more]

The credit card industry, which took in $30 billion in profits last year and doled out more than $7.8 million to candidates in the 2004 election cycle, has lobbied relentlessly for the bill, pushing the fiction that bankruptcies occur because of "irresponsible consumerism" (in bill sponsor Charles Grassley's (R-IA) words). In fact, "ninety percent of all bankruptcies are triggered by the loss of a job, high medical bills or divorce." In recent years, personal bankruptcy rates have shot to record highs amid a weak labor market and declining health insurance coverage. The bill is set to create several "new hurdles" that will make it harder and more expensive for Americans to recover from such episodes, while failing to stop the actual abuses that plague the system.

CREDIT CARD COMPANIES WIN BIG: While the bill creates major new hurdles for Americans in debt, it places no restrictions whatsoever on the credit card industry. According to the National Consumer Law Center, "the bill doesn't address the primary ways in which credit card companies take advantage of consumers: high fees; deceptive promotions and disclosures; and unfair practices such as universal default." For instance, the bill allows creditors to "post inaccurate and hard-to-find rate information in Internet credit card solicitations," often targeted at college students or low-income Americans. The bill also shields credit card companies from liability and weakens legal protections from predatory interest rates – "as high as 36 percent in some cases" – as well as exorbitant late fees and over-limit penalties.

What's It All About, Progressives?
This latest in a long series of legislative defeats has caused the American progressive coalition to ask itself why Republicans are so united, and Democrats so disunited. Bob Fertik, president of Democrats.com said: "We must ask: Where was [House Minority Leader] Nancy Pelosi before today? Why did [House] Minority Whip Steny Hoyer support this outrageous bill? Why did Senate Majority Leader Harry Reid even try to take credit for this Republican bill? And why did 'New Democrats' Ellen Tauscher, Ron Kind, Artur Davis, and Joe Crowley push this bill on their colleagues? What party do they imagine they belong to? Who do they think elected them to Congress?"[3] [more]