Tuesday, May 06, 2014

Rich Republicans Don't Need to Worry About Bankruptcy

Elizabeth Warren. A Fighting Chance. New York: Metropolitan Books, Henry Holt and Co., 2014.

Warren taught bankruptcy law at the University of Pennsylvania. It was her academic observation that consumers slowly went into greater and greater debt They were then convinced to consolidate their debts into one credit card at 24% interest rate. Home equity was offered to provide consumers with more equity. People were offered second and third mortgages. Banks made lots of money from people paying debt. Many were forced to file for bankruptcy. Yet even when one in five were filing for bankruptcy, the banks still earned profits overall.

Banks increased interest rates and created more frees Credit cards became more accessible to take advantage of these rates and fees.

The banks successfully lobbied to change bankruptcy laws that made it more difficult for consumers to declare bankruptcy.

Senator Edward Kennedy sought advice from Warren on bankruptcy issues. He agreed to take a lead on these issues within the Senate for protecting consumers. Senators Dick Durbin, Chuck Schumer, Russ Feingold, and Paul Wellstone joined the cause. Despite Wellstone’s death, they one an initial Senate fight.

When George W. Bush became President, the bankruptcy laws were changed to make it harder for consumers to declare bankruptcy.

Warren observed the Treasury Department, in bailing out banks after the financial meltdown, received only 66% of assets for what the Federal government borrowed to the banks.

When the banks borrowed Federal government money, they sold shares of the their stocks to the Federal government at lower costs.

Warren was upset that the Federal government was ore interested in protecting the banks than consumers who were losing their life savings.

Warren pushed for creating a consumer financial protection agency. Rep. Barney Frank and Sen. Chris Dodd fought to create this Warren sought to include an agency overseeing credit reporting agencies. This bill passed as part of a Senate financial package. Sen. Scott Brown’s vote was needed to move the bill (as otherwise there were only 59 Senators favoring moving it to a vote and 60 were needed. Brown had replaced Edward Kennedy after Kennedy’s death.) Brown did so yet insisted that taxpayers pay for the reforms rather than banks, The package became law.

President Obama nominated Warren to head the new agency. He refused to commit to how much responsibility the new agency would be given, yet he asked her to trust him. He also named Warren an Assistant to the President so she would have direct influence,

Warren ran for the U.S. Senate against Scott Brown, They both agreed to donate their own campaign funds to charity ,if an outside group ran ads on their behalf. They would donate half what the outside group spent.

Warren’s mother was born in what had been Indian territory and was now Oklahoma. She was attacked for claiming she had Indian ancestry. She insists she does.


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