Commenter Thorley Winston waxes wroth below at my criticism of the new consumer bankruptcy bill:
What rubbish. There is nothing “anti-consumer” about requiring that people who voluntarily decide to enter into a contract should have to uphold their end of the bargain.
Without going into deep detail on this bill (I’ll suggest a reasonably neutral link), let me respond to Thorley and actually get to spend some time kicking at the well-polished loafers of the corporate shills who have pushed this legislation.
I’m always amused when, as a Democrat, conservative Republicans bust me for believing in Big Government Intervention – usually, on behalf of the poor, the less powerful, and people who have been typically excluded from ‘the game’ we play in our economy and polity.
I’m amused because they are the same ones who trip over the tassels on their loafers rushing to the Capitol to get laws changed that might materially improve their lot in life.Let’s look at bankruptcy as an example, and without deeply analyzing the bill, suggest that as far as consumers are concerned, this substantially shifts the burden in bankruptcy to them and from creditors (who stood to lose).
Now portfolio management is simple; I underwrite the risks in my portfolio and set a return necessary to cover the risk. The pattern on increasing consumer willingness to use bankruptcy as a tool for financial management – much like Worldcom, K-Mart, Johns-Mansville, and other corporate borrowers, who follow the pattern set out in ‘Strategic Bankruptcy‘.
But to me, the issue really isn’t a ‘goose’ and ‘gander’ one; the issue is simple.
When the companies that are in the business of loaning money to consumers don’t like the returns or risk they are taking to get those returns, their response isn’t to improve underwriting, better manage their loan portfolios, offer better credit education to their customers – it’s to use their financial and political clout to change the rules under which those loans were made.
Because the laws in place were are much a part of the structure of those loans as the actual agreements executed by the people ol’ Thorley is so contemptuous of.
And that, my friends, is why I can’t get at all distraught about the fact that government regulation imposes burdens (in general – obviously there are lame and counterproductive regulations) on business. Live by the fine print, die by the fine print, I always say.