The Bankruptcy Bill: A Tutorial in Greed
Because they keep revamping and expanding the SAT, I'll propose a new economics puzzler for the test makers' consideration.
Question: What is the difference between a loan shark and a banker?
Answer: Not much. The former uses hired thugs to enforce repayment from the debtors; the latter employs the feds as paid muscle.
Even better would be to make the fast-tracked bankruptcy bill – already passed by the Senate and expected to be approved soon by the House and signed by president – the subject of one of the test's new critical-thinking essays. Teens could trace the correlation between the massive campaign contributions of credit card companies and banks and the imminent passage of legislation making it much more difficult for the hopelessly indebted to find the kind of relief offered by enlightened societies for millenniums.
Of course, not many high school students have been taught the central place of class warfare in modern American politics, but the bill would provide an excellent classroom case study in the political economy of greed. Consider it an updating of that old staple of government classes, "How a bill becomes a law." It would accurately place the role of corporate money in clear ascendance over the interests of regular people.
This subject is not an academic one for young Americans, because after high school they will become prime targets for predatory lenders, plastic-peddlers who just love to offer easy lines of credit to kids without jobs or even degrees. Once a student has that first shopping spree at the college bookstore, he or she is often off and running in a cycle of unsecured debt that can last a lifetime.
This exploitation of the naive extends to many Americans who are plagued by seductive credit card offers, despite low or uncertain sources of income and other major risk factors. There is no cap on interest rates; the card companies simply harvest risky debtors, slam 'em with outrageous fees and rates and keep them for decades in indentured servitude because they can't afford to dent the principal.
Yet for the banks, the inevitable surge in bankruptcies caused by these immoral business strategies hasn't slowed this fantastically profitable industry a whit. For all of the whining about deadbeats ripping off the system, credit card companies' annual pretax profits have soared two-and-a-half times in the last decade, and last year was their most profitable in more than 15 years.
So why gut the bankruptcy law now? Greed, pure and simple. And, pathetically, this bankers' dream is becoming a reality through the support of Republicans who have decided, as they often do with social issues, to selectively pick and choose when to follow the teachings of the Bible.
A key sponsor of the bill, Sen. Charles E. Grassley (R-Iowa), actively opposes abortion and same-sex marriage on biblical grounds yet believes the Good Book's clear definition and condemnation of usury is irrelevant. The Old Testament, revered by Jews, Muslims and Christians alike, mandates debt forgiveness after seven years, as was pointed out earlier this month by an organization of Christian lawyers in a letter to Grassley.
"I can't listen to Christian lawyers," said the senator, "because I would be imposing the Bible on a diverse population."
Sadly, when it comes to serving the prerogatives of banks, you can forget about those family values that folks such as Grassley prattle on about. The bill he wrote placed mothers and their children behind credit card companies in the line for a bankrupt ex-husband's paycheck, for example, which is positively Dickensian. Expected to sail through the House and onto the president's desk in the next few weeks, the bill turns the federal government into a guardian angel of an industry gone mad, placing no significant restriction on soaring interest rates and proliferating fees.
One extremely modest amendment that was rejected by the Senate would have blocked creditors from recovering debts from military personnel if the loans had annual rates higher than 36 percent. Also killed were sensible amendments designed to protect those ruined by a medical emergency, identity theft, dependent-caregiver expenses or loss of income due to being called to full-time military duty through the National Guard or the Reserve.
In the end, these individuals are simply not powerful enough to earn the protection of our by-the-powerful, for-the-powerful government. Creditors can scam consumers, Enron can burn California, Halliburton can gouge the Pentagon, the rich can enjoy obscene tax cuts, our "conservative" president can run up the deficit like a drunken sailor – and none of it seems to faze our elected leaders. For them, "fiscal responsibility" is just a high-minded prescription appropriate only for the commoners.