Independent Christian Voice


New bankruptcy law allows credit industry to continue its risky business without the risk

The GOP paid back some of its biggest contributors, the big banks and their credit card divisions, by passing legislation that helps an already highly profitable industry at the peril of already financially overwhelmed Americans. By passing the legislation, the GOP was absolving the credit card industry of its risky business practices. Any other business takes a risk when extending credit to a customer; when you make a bad decision to extend credit to someone not creditworthy, you take the risk of being stuck with the debt if they can't pay. That's business. It helps you make wiser business decisions when extending credit. But, for some reason, the bank/credit card industry — the experts in the money area — don't want to face the consequences of risky business practices. For the last decade, credit card companies have been extending credit recklessly, without little consideration of credit worthiness or ability to pay — including credit offers to underage children and household pets. For most people and most business, reckless behavior has consequences. The GOP-led Congress essentially minimized the consequences for reckless business practices, thus enabling banks and credit card companies to continue their bad corporate behavior — bad for less financially savvy consumers, bad for overburden families drowning in debt from circumstances beyond their control, and bad for our society in the long run (someone will have to pay the piper eventually). But then again, it is good for shareholders — and that's all that matters, right? The New York Times has the latest example of how Congress has emboldened this unscrupulous industry to continued reckless behavior:
As one of more than two million Americans who rushed to a courthouse this year to file for bankruptcy before a tough new law took effect, Laura Fogle is glad for her chance at a fresh start. A nurse and single mother of two, she blames her use of credit cards after cancer surgery for falling into deep debt.

Ms. Fogle is broke, and may not seem to be the kind of person to whom banks would want to offer credit cards. But she said she had no sooner filed for bankruptcy, and sworn off plastic, than she was hit with a flurry of solicitations from major banks.

"Every day, I get at least two or three new credit card offers - Citibank, MasterCard, you name it - they want to give me a credit card, at pretty high interest rates," said Ms. Fogle, who is 41 and lives here. "I've got a stack of these things on my table. It's tempting, but I've sworn them off."

If it seems odd to Ms. Fogle that banks would want to lend money to the newly bankrupt, it is no mystery to the financial community, which charges some of the highest interest rates to these newly available customers.

Under the new law, which the banking industry spent more than $100 million lobbying for, they may be even more attractive because it makes it harder for them to escape new credit card debt and extends to eight years from six the time before which they could liquidate their debts through bankruptcy again.



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