aTypical Joe: a gay New Yorker living in the rural South
Tuesday, October 25, 2005
Bankrupt
Golly. They’re surprised by the bubble:
For more than eight years, big banks lobbied aggressively to make it harder for consumers to file for bankruptcy.
Now that the new bankruptcy law has taken effect, was the investment worth it? The early data suggest that sometimes, you have to be careful what you wish for.
Bankruptcy filings were supposed to snowball in the months before the tough new law went into effect on Oct. 17. But the avalanche of petitions, and the lines of debtors streaming out the courthouse doors caught even the credit card issuers who supported the new law by surprise.
Poor banks. Now “the bottom-line benefits of the new law will now take longer to materialize.” Boo-hoo.
THESE NUMBERS MEAN SOMETHING REAL!!!
I don’t buy for a minute the chief financial officer of bank of America’s comment, “ For the long term, it is neutral to positive.”
This rings more true to me:
“The banks are saying that we expect bankruptcy-law-related losses will subside because of the rush to file,” said David A. Hendler, an analyst with CreditSights, an independent research firm based in New York. “But the undertone of credit quality is worsening.”
Even before bankruptcy filings began rising this spring, an American Bankers Association survey of 350 member institutions found that credit card delinquencies had been increasing when measured by the number of accounts past due. (When measured by dollars lost, it has declined). In September, it reported that the rate rose to a record of 4.81 percent during the second quarter, driven in large part by the higher price of gasoline. And it is not expected go down anytime soon.
A friend is involved in developing the financial education curriculum that is now required by the government of all who file for bankruptcy. I immediately pointed him to Christopher Hayes’ How to Turn Your Red State Blue.
I was particularly impressed with Hayes’ notion of building a movement around credit reform. The idea hasn’t really gone anywhere. It should!
I’ll be badgering my pal.
