How’s that Bankruptcy Bill Working Out for You, Chase?

A lot of people are (justifiably) beating up on the auto industry for lobbying to have CAFE standards eased so they could continue to produce gas-guzzling behemoths that used to be but are no longer profitable.

But while we’re beating up short-sighted corporations, we ought not forget the credit industry–who demanded changes to bankruptcy laws that are now having adverse effects on the industry.

Federal bank regulators have rejected a request by banks and consumer advocates for a program to let lenders forgive huge portions of credit card debt.

The Office of the Comptroller of the Currency rejected the request for a special program that would allow as much as 40 percent of credit card debt to be forgiven for consumers who don’t qualify for existing repayment plans.

[snip]

The Financial Services Roundtable, which represents more than 100 large banks, brokerage firms and insurance companies, will "continue to look for ways to help consumers in these extraordinary times," said the group’s senior vice president, Scott Talbott.

Travis Plunkett, legislative director of Consumer Federation, said that with the number of deeply indebted consumers growing dramatically, "we still hope to work with bank regulators or Congress to create an alternative" to bankruptcy for them.

Gosh. If you hadn’t gotten greedy and just kept the old bankruptcy process in place, it would have been a lot easier to get partial payment on credit cards in lieu of nothing. 

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30 replies
  1. JimWhite says:

    Tee hee. With plummeting consumer spending, these parasites are going to die of starvation over the holiday shopping season. Remember when a really bad Christmas season only saw spending increase over the previous year by 5% or less? Gonna decrease by at least that much this year.

    Couldn’t happen to a better bunch. It’s too bad some vulture group will undoubtedly buy up the debt when some credit card operations go belly up and continue to squeeze what they can out of the strapped consumers.

    • CasualObserver says:

      It’s too bad some vulture group will undoubtedly buy up the debt when some credit card operations go belly up and continue to squeeze what they can out of the strapped consumers.

      Let’s hope it ain’t Blackwater. I hear they’re looking to ‘divesify’…

  2. WilliamOckham says:

    This is a classic case of why you can’t give the industry lobbyists everything they want. When they get together as a group, an industry has about the same judgement and self-control as an overtired 5 year-old hyped up on too much Kool-Aid and six straight hours of watching Christmas season commercials on Nickelodeon.

    • GulfCoastPirate says:

      What did the article say. ‘…too big to save’?

      LMAO. I read somewhere a couple days ago that only 8% of the available 30 year bonds were sold at the last auction. We’re frakked. Crank up the printing presses. Two trillion for Citi but not a dime for the automakers who actually MAKE something.

  3. klynn says:

    …overtired 5 year-old hyped up on too much Kool-Aid and six straight hours of watching Christmas season commercials on Nickelodeon.

    Rule number one as a parent: never let your child watch THAT much television or even drink Kool-Aid.

    Rule number two: Do not buy the toys advertised on Nick, they are cheap, cost too much and lack lasting quality, and fun enrichment.

    What to do with lobbyists who act like five year olds? Do what any good parent does to act in a loving and caring way…SET LIMITS. Priceless.

    • scribe says:

      Give the kid a yo-yo, a rag doll, jacks, or one of those paddle-rubberband-and-ball things.

      Watch them try to figure out how to make them work. It will keep them occupied for hours. This obtains particularly if you know how to, say, Walk the Dog with your old Duncan Supreme, show the kid a couple tricks and then put it away with a smug, bored attitude.

      That frustration will keep that kid focused on figuring out how to do it for literally hours.

  4. klynn says:

    Gee, I thought the oil industry was a bigger lobbying group for lowering the CAFE standards in order to rake in those record profits?

  5. WilliamOckham says:

    In a related note, here is a very unpretty picture, courtesy Calculated Risk:

    Retail Sales are collapsing

    If you think it looks bad, imagine what those credit card companies are thinking… The people with money have stopped spending which means you are earning less from them;the people who owe you money are going lose their jobs for a long time; and you helped create the problem…

    • readerOfTeaLeaves says:

      Yeah, but never underestimate the human capacity for denial.
      JohnJ gave an excellent example around these parts just yesterday of former mortgage bankers who blame the housing problems solely on ‘bad buyers’ and view themselves as the ‘injured party’.

      Self-deceptions are going to have to be mitigated before any of these problems can be addressed; one of the things that’s most incredible to me in watching all this play out is how unbelievably wrapped up in denial the guilty parties appear to be.
      Kind of like the post-election GOP, who think that ‘better marketing’ is going to save their party.
      Whatever….

  6. perris says:

    don’t forget, the old bankruptcy protections made the lender more inclined to give loans that had good creditors, or where compensation justified risk

    once they had no risk of losing a loan from bankruptcy they had every incentive to give loans to whoever wanted one

  7. bmaz says:

    I don’t understand. These institutions have basic contractual relationships with their customers. sure the bankruptcy provisions may alter what can occur in that process, but how is it the companies are prevented from engaging in common compromise/accord and satisfaction outside of the BK process?

    • WilliamOckham says:

      Here’s what the government objects to:

      An agency said the government objects to allowing banks to defer losses for several years on the forgiven debt, as would occur in accounting by lenders under the special program.

      The agency “does not consider any plan that defers the timely recognition of loss as prudent, and any such proposal cannot be viewed favorably by us,” Timothy Long, senior deputy comptroller for bank supervision policy, said in a letter to the two groups dated Monday and made public Wednesday.
      blockquote>

  8. bell says:

    people are generally going to become a lot more aware of how finances and the banking biz works and they are not going to be happy at what they find.. banking is a con job for the most part..

  9. phred says:

    I find it richly ironic that companies who backed draconian measures against consumers to limit their access to bankruptcy, now have their hand out for the bailout. Since these companies find bankruptcy so distateful, how ’bout we just send their executives straight to debtors prison and be done with it. ; )

    • PJEvans says:

      I like the idea of having company bankruptcies with at least some of the same terms as consumer bankruptcies: they can’t get out from under all their obligations, they have to pay some of them off.

  10. jimhicks3 says:

    If I remember correctly our dear VP elect was one of the more rabid proponents of the new law. They all suck!
    jh3

  11. timbo says:

    Let’s keep the pressure on the Dems to repeal the stupid laws enacted under Shrub and also the ones enacted at the end of Clinton’s term. We need to have a separation of banks from investment and insurance, and we need to have laws that encourage lenders not to get in over their heads…and ours.

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