Magazine article American Banker

Democrats and Allies Hit Bankruptcy Bill, Blame Financial Firms

Magazine article American Banker

Democrats and Allies Hit Bankruptcy Bill, Blame Financial Firms

Article excerpt

WASHINGTON -

Democratic lawmakers on Tuesday rallied consumer, labor, and religious advocates against pending bankruptcy-reform legislation.

Sens. Paul Wellstone of Minnesota, Russ Feingold of Wisconsin, and Rep. Jerrold Nadler of New York heaped much of their scorn for the legislation at the feet of banks and credit card companies, whom they blamed for using millions of dollars in campaign contributions to coax Congress into adopting bills that would hurt consumers.

"I can only use the word 'injustice' to describe this bill," Sen. Paul Wellstone, D-Minn., said at a news conference. "It punishes the vulnerable and ... does virtually nothing to hold lenders accountable for their own poor practices."

The lawmakers argued the legislation -- which has been passed by the House and Senate and is in compromise talks -- would prevent poor and middle-class families that slip into financial trouble because of expensive medical bills, job loss, or other events, from eliminating their unsecured debts under Chapter 7 of the bankruptcy code. They also complained that the legislation would fail to adequately shield child-support payments and retirement savings from creditors, and would encourage risky and predatory lending.

Representatives of the United Auto Workers, the AFL-CIO, the National Organization for Women, and other groups also blasted the bill.

Industry officials called the claims exaggerated.

"We have addressed all these issues time and again," said Jeffrey A. Tassey, chief lobbyist for the American Financial Services Association. …

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