Leslie Eaton in today’s New York Times has one of the more thoughtful and balanced articles on the bankruptcy reform legislation. She writes (correctly, 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 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, 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.
Update:
Reading the Right Coast, reminded me to mention Gail Heriot’s excellent extended letter in the Washington Post yesterday, commenting on E.J. Dionne’s column on the bankruptcy reform legislation, especially exposing the myth that half of consumer bankruptcies are supposedly caused by medical problems (an effort in which I have handled a laboring oar as well, of course).
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