Posted by Todd Zywicki:
Interesting Article on Bankruptcy Reform:
Leslie Eaton in today's New York Times has one of the more thoughtful
and balanced [1]articles on the bankruptcy reform legislation. She
writes (crrectly, I think):
But at its broadest, the debate illustrates the clash between
competing American values: the right to a fresh start versus the
idea that people must be held responsible for their actions.
As I noted in an [2]essay published last year in the Michigan Law
Review, the driving force in the bankruptcy reform debate is the
influence of ideology, and especially the ideology of personal
responsibility, that has animated many reforms in Washington in recent
years. To the extent that special interests have played much of a
role, it appears that the lobbying efforts by the consumer credit
industry on one side and the lobby efforts of the bankruptcy bar on
the other have largely canceled out each other around the fringes of
the debate, leaving the ideology of personal responsibility as the
predominant factor in the debate.
So I was pleased to see that Eaton understands this, unlike say,
[3]David Broder. As interesting as Eaton's column is, Broder's is
weak. There are interest-groups on all sides, most notably bankruptcy
lawyers and other professionals, who have lobbied hard against the
bill. Why? Because fewer bankruptcy filings means less money in
lawyers' pockets. Unsurprisingly, the most vocal opponents of reform
in the Senate are also among the largest recipients of contributions
by lawyers. Broder makes no mention of this.
An another problem with the argument is that the relevant committee
with jurisdiction over bankruptcy reform is the Judiciary Committee in
the House and Senate. Why does this matter? First, because the
Judiciary Committee is the traditional playground for lawyers, not
bankers, which as David Skeel has noted, provides lawyers with a
substantial leg up in lobbying efforts surrounding bankruptcy reform,
and which is one reason why enactment of bipartisan bankruptcy reform
legislation has taken 8 years. Second, although the consumer credit
industry certainly is a major player when it comes to lobbying, most
of their contributions--unsurprisingly--are made to members of the
Banking Committees, not the Judiciary Committees.
In fact, a study by Princeton�s Stephen Nunez and Howard Rosenthal
using votes on the bill in 2001 concluded that perhaps 15 of the 306
members� votes in the House in favor of the legislation at that time
may have been swayed by campaign contributions from the consumer
credit industry�or about five percent of the House�s 74% majority. 15
out of 306 "yes" votes. Hardly enough to account for the consistent
overwhelming support for the bill.
References
1. http://www.nytimes.com/2005/03/13/weekinreview/13eato.html?pagewanted=1
2. http://papers.ssrn.com/sol3/papers.cfm?abstract_id=327223
3. http://www.washingtonpost.com/wp-dyn/articles/A28522-2005Mar11.html
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