Bankruptcy Reform: My Take on the Political Landscape

I’m really not cut out to be an activist type, and this post doesn’t make me one. For a more consistent update on the legislative goings-on, Politology, who has a post today, would appear to be the place to go for the most current updates over the next couple of weeks.

I wish I had time today, but I’ll have to wait until tomorrow to get to my response to the academic justification for this bill, and my take on other people who deserve a serious whacking for their positions in this matter.

I do have some thoughts on where people can go to build some momentum to oppose the legislation:

- The African-American community. I hope no one thinks it’s racist to state a well-established fact, namely that bad credit is more prevalent with African-Americans than it is with the rest of the population. I suspect this also means that African-Americans are disproportionately represented among those who file for bankruptcy, and will therefore be disproportionately impacted by this bill. Social workers and African-American ministers should recognize the hardships that will be placed on people of modest means.

- The Hispanic community. I don’t believe Hispanic bankruptcy rates are higher than that of the rest of the population–yet. The Hispanic community has a long and, based on history, justifiable tradition of not trusting the banking system. Many Hispanics don’t even have checking accounts and wouldn’t dream of borrowing from a bank. That said, I have heard plenty of anecdotal evidence that card companies target people with Hispanic names as customers because they know that their financial acumen is below average, and because they are much likely to pay interest on their cards from the very beginning. A few years ago, Mike Reagan devoted a couple of hours of air time to an outrageous situation where mall store employees were being paid a bonus for every new cardholder they signed up, and were specifically told to go after Hispanics because they would be less likely to pay their bill in full, and were more likely to make mistakes (late payment, going over the limit, etc.). The GOP thinks they’re gaining support in the Hispanic community. They won’t get it if they’re seen as the lapdogs of the moneychangers deceiving Hispanics into debt mightmares and ultimately out of access to the American Dream.

- The evangelical Christian community. This is supposedly the GOP’s core constituency, but bankruptcies are more common in the South and parts of the West, and ministers in the trenches have to have their share of predatory lending and bankruptcy horror stories. Where in the bleep have they been? A couple of weeks ago, a group of Christian bankruptcy lawyers publicly opposed to the bill were given an insulting bank of the hand by Sen. Charles Grassley of Iowa, one of the bill’s sponsors. Where’s the outrage?

- The evangelical financial community. So far, there’s nothing but silence from Dave Ramsey, Ron Blue, and Crown Financial (which carries on the legacy of Larry Burkett). Surely you guys have an opinion. What is it? CORRECTION HT to Dave B, who says that Dave Ramsey has ranted about the bill on his radio program. Assuming that’s true, please accept my sincerest apologies-my investigations were limited to each person’s web sites. It’s possible that the other evangelical financial guys noted have said something on their programs too. Similar apologies are hereby rendered if they’ve talked about it and I’ve missed it. That said, I’m not sure individual radio rants are enough. I’m not them, but if I were I’d be forming a coalition to stop this. The president would give a group like this a hearing, and would be taking a risk by brushing them off.

- (don’t laugh) Focus on the Family. FWIW, I sent a missive to FOF telling them that they should chill on the euphoria over keeping what was IMHO a ridiculous amendment that would have prevented abortion protestors from filing for bankruptcy, and “focus” on what IS in the current bill, and how it runs counter to Biblical prohibitions against usury and the whole notion of “compassionate conservatism.” I suggest others do the same (do I really have to suggest to keep it civil?). Go here to write, phone, or fax FOF.

- (really don’t laugh) James Dobson. He is the head of FOF, clearly has the ear of the president, and could be the one person in the whole country who could convince the president to veto the bill if it got to his desk, and convince Karl Rove that letting this bill go into law is a giant political miscalculation. I know many who read this will disagree, but I see Dobson as a generally reasonable but sometimes misguided person. And regardless of what you think of him, you can’t deny that he would be an important ally in this situation.

- The Catholic community. The Church operates a large percentage of inner-city private schools. Many of the parents of the kids who go there will be affected by this bill, and may have to pull their kids out (The WSJ says there’s an exemption for private school tuition, but in practice I think creditors will force filers to abandon private schools). The Church’s ability to speak freely on the topic is unfortunately limited by its own financial problems, but that doesn’t mean everyday Catholics can’t raise their voices.

So let’s recap. It seems intuitively clear to me that Catholics, Hispanics, the political wing of the evangelical community, the people in the trenches in the evangelical community, African-Americans, grass-roots right-wingers, and most left-wingers either do, would, or should oppose this bill.

So, remind me: Who, besides the moneychangers and their bought-off congressmen and senators, is for this?

UPDATE: Just One Minute thinks disclosure is the solution (”Make the Shark Show Its Teeth”). The ever-vigilant Instapundit finds the idea “interesting” (pun accidental). Disclosure is certainly part of it, but it’s not the whole answer, and it isn’t enough to justify letting this bill go through as is if added. I believe the focus on disclosure distracts from what I believe is a typical bankruptcy scenario today. More on that tomorrow.

UPDATE 2 (7PM March 12): Insta has just noted how quiet a few normally outspoken financial guys (evangelical and otherwise) have been silent. I might add the name Bruce Williams to the list, too.

UPDATE 3 (11:30 AM March 13): Apparently Clark Howard has mentioned his opposition to the bill on the air as well. Given that these guys (Ramsey and Howard) have nothing on their sites, Insta’s suggestion that they need to be blogging seems spot-on.

I also deleted “so-called” from “so-called academic justification” in the second paragraph above, as it seems (well, actually was) disrespectful of Todd Zywicki’s academic credentials. I hereby tender an unsolicited apology for that harshness.

That isn’t to say I can’t disagree with Mr. Zywicki for good reasons, and that’s coming up shortly.