Tag: bankruptcy amendments

  • Revisiting the 2005 Amendments When Times Get Hard

    Posted by

    Elizabeth Warren

    As a follow up to my earlier post about the forces that have made bankruptcy less workable for reorganizations, I note a new Businessweek article.  Retailers are feeling the pain of reduced consumer spending and tough credit terms, and now they are discovering that the 2005 bankruptcy amendments will make it harder–or impossible–for some of them to reorganize.

    In an article entitled, When Chapter 11 is the End of the Story, reporters have started interviewing failing retailers who are facing new hurdles because of the changes in the law. The conclusion?  Companies that might have reorganized before 2005 may now be pushed into liquidation.

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  • Credit Card Promises

    Posted by

    Elizabeth Warren

    During the debates over bankruptcy reform, the credit industry launched a public relations campaign claiming that bankruptcy cost every American family $400 every year. The stat was picked up and repeated as fact by both the politicians and the press (more details here). The promise was clear:  pass bankruptcy reform and watch the costs of consumer credit fall. Now the numbers are coming in. Did credit industry losses decline? Did the cost of a credit card go down? A new paper, The Effect of Bankruptcy Reform on Credit Card Prices and Industry Profits, assembles pre- and post-BAPCPA data to answer that question.

    First, the answers from the author, Mike Simkovic: 

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  • Credit Cards and the Mortgage Meltdown

    Posted by

    Elizabeth Warren

    The role of subprime lenders in inflating the housing bubble, then bringing down the whole economy has received plenty of headlines.  But there has been little attention paid to the role of credit card lending and BAPCPA in the current home foreclosure crisis. 

    A new academic paper, Bankruptcy Reform and Foreclosure, argues that the 2005 bankruptcy amendments are deepening the mortgage crisis. The article was written by David Bernstein, an economist at the U.S. Treasury who chose to post this analysis as private citizen listing only his home address and home e-mail address.  Drawing on data from the Survey of Consumer Finance, he links credit card debt, access to bankruptcy, and mortgage foreclosures. If more families could use bankruptcy to deal with their credit card debts, more could avoid foreclosure on their homes.

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