More on the Bankruptcy Bill

I think this comment is worth posting for everyone to read:

I share your outrage at this bill, but I can answer your question as to arguments for it.

One argument for it is that it may lead to a lowering of interest rates and fees, as fewer credit card bills will remain unpaid. (No, there was no mandate of such a result).

A second argument for this bill is that the Democrats have to show they are not merely "excusers of bad behavior" such as not paying bills. (No, this bill contained no exemptions for people bankrupt as a result of illness, disability, job loss or other factors beyond one's control.)

This IS a terrible bill, with insult added to injury by Democrats trying to prove themselves "relevant" to big money contributors by supporting it too.

If the Democrats are to become the majority party in the lifetime of any living person, we will have to prove ourselves "relevant" to our core constituency: ordinary people who need help from government. This is difficult to do when the most outrageous anti-consumer legislation is cloaked with a bi-partisan patina that shields many Republicans from blame.

Rep. Mark B. Cohen

Representative Cohen is House Democratic Caucus Chairman in Pennsylvania. Let's just say that this is certainly the most prestigious comment I've ever had. Who says blogging doesn't matter?

To the substance of Rep. Cohen's post: I'm glad that he had the detailed knowledge of this issue to explain what the rationales for this bill were. And I'm pleased that he opposes it.

Just for the sake of it, I'm going to reply to the pro-bill arguments.

1. Lower fees and interest rates
Representative Cohen already notes that there is no mandate for lower fees, so this is just a pie-in-the-sky hope as a benefit as opposed to a real cost to consumers. Not exactly a good deal. Another response would be that credit card companies are among the most profitable industries in America. If they had any incentive to reduce rates, wouldn't they have already done so?

2. Rewarding bad behavior
So getting sick is "bad behavior"? As I understand it, one half of all bankruptcies are due to health crises. In addition, who loaned this money to high-risk borrowers? The advocates of the bill may argue that they are eliminating a "moral hazard" problem, but what about the moral hazard on the part of companies who loan to 18 year old college students and encourage them to spend irresponsibly? A good example of this problem is the car companies, who offered easy credit terms and cash back in order to improve sales, and now are backing this bill because they are afraid people won't have the money to pay. Tell me, who's being irresponsible?

So sorry, but the arguments in favor of the bill are weak at best. Any Democrat who voted for this bill is either just a sucker or in bed with the credit card companies. Either is equally probable.

I'm not done with this issue. In the next few days I'm going to present statistical analysis on the relationship between campaign contributions, district median family income, and a House member's vote for the bill. Then maybe we'll see who these "Democrats" are really representing.