By Robert Scheer
LOS ANGELES TIMES

Banks and other lending institutions spend $40 million a year buying Congress. A bankruptcy bill that has passed the House and is expected to sail through the Senate proves the moneychangers get what they pay for. Once again, they've defiled the temple. The new law for the first time would give the usurious lenders of credit cards an equal claim to the remaining funds of those declaring personal bankruptcy, jostling with women seeking alimony and child support. The creditors want it both ways. They justify loan-shark type interest rates that now quickly rise to more than 20% by claiming that unsecured credit card debt is so risky. But rather than bear the consequence of that risk, they want the government to act as the enforcer of last resort exacting payment. (The credit cards offered by Providian Bank to people with marginal credit charge 23.9% interest per year. Ironically, the conservatives who are pushing the restrictions on bankruptcy protection, also claim to support the "free market system." Apparently, the free market is only rhetoric, because the major corporations that would benefit from the changes in bankruptcy law are actually relying on political influence over a republic that has always been a police state, to squeeze a profit out of the most marginal individuals in the economy. WFI Editor)

The booming and highly profitable credit card industry sends out 3.5 billion solicitations a year, selling consumers on the ease of obtaining unsecured debt. A blizzard of such proposals offering low teaser rates on pre-approved credit lines arrives at the addresses of the under-aged, under-financed and sometimes the deceased. No wonder so many unqualified borrowers go broke, accounting for most of the astounding 1.4 million personal bankruptcies last year (1998), representing $40 billion of debt. On average, those in bankruptcy earn less than $18,000 a year after taxes; they are simply working people who got in over their heads.

Some losses to poor credit risks should be the expected cost of doing business this way. The banks knew the statistics on those risks when they made loans to people without the means to repay. And it's a highly profitable business, even with deadbeats, which is why so many solicitations continue to arrive in the mail. Yet now, in an excess of greed, they want the government to fatten their already-huge profit margins by allowing them to cut into the line in bankruptcy court. The new legislation would allow bankers to drag families deeper into debt, then compete with widows, divorcees and children for the remaining assets or wages of a bankrupt spouse. (So much for family values! WFI Editor)

The bankruptcy "reform" legislation sponsored by the banking industry was defeated last year, largely due to the threat of a presidential veto, but this year, the banks are back, and their 313-108 bipartisan House victory is large enough to overcome a presidential veto. There is nothing in the legislation that forces banks to act more responsibly in making loans. Even House Judiciary Chairman Henry J. Hyde (R-IL), who voted for the bill, pointed out it "contains 75 enhancements here for the creditors" and nothing for the consumer, attesting to what he termed the power of the "awesome creditor lobby." There is no restraint on the schemes of banks and other lenders to cajole, seduce and otherwise entrap the young and gullible into sinking deeper into debt. Nor are there limits on the skyrocketing increases that follow low introductory teaser rates (like 3.9% apr); some rates have climbed to 25%. (Additionally, some of the creditors change the annual interest rate if any payment is made late, so that what starts out at 13%, can end up at 24% apr. WFI Editor) This same Congress that wants to post the Ten Commandments in government buildings and schools allows banks to practice the act of usury that is condemned in the sacred Scriptures of the world's major religions - Christian, Jewish and Muslim.

The legislation, representing the most sweeping change in bankruptcy law in a century, would continue to protect businessmen who incur debts while going after the hapless consumer. In an example provided by bankruptcy expert Douglas Baird, a businessman with $200,000 in business debt would get to write it off as well as keep his $500,000 homesteaded house from the hands of creditors. But if a working widow renter, saddled with her late husband's credit card and medical debts, declares bankruptcy, her life savings or her garnished wages would go to creditor banks. She wouldn't get the fresh start that bankruptcy law intended. As Baird summarized the legislation: "A new bankruptcy law that provides a fresh start to our businessman but denies it to our widow is indecent."

The National Conference of Bankruptcy Judges and many consumer groups oppose this bill, which will be debated by the Senate July 12^th. But it will pass unless consumers flood their senators with email (http://www.senate.gov/contacting), letters and calls complaining about this perversion of the fairness of bankruptcy law.

SOURCE: Excerpted from the 29 June, 1999, issue of the Los Angeles Times, Orange County Edition, Commentary section, from an article entitled, "Congress Is On Wrong Track on Bankruptcy." Reprinted in the public service of the national interest of the American people.