Sunday, March 06, 2005
Great post over at Instapundit about the problems with the current bankruptcy bill before congress.

My simplistic take: credit card companies are evil. On a broader note, America is becoming more and more a society of [hyperbole warning] slaves. I do not mean to lessen the evils of slavery, but the analogy is somewhat fitting.

Credit card companies (and many second-mortgage business as well) purposely target people who cannot afford to take on significant debt. These credit card companies extend credit to them knowing they won't be able to pay back the principal but will keep making minimum payments (or close to minimum payments). Thus, the balance actually increases just from interest charges, and the customer is "enslaved" into this debt that they will never be able to pay off. It is simply an immoral practice, and I would love to see the government step in and either make it illegal, or alternatively, allow people trapped into this situation to file bankruptcy more easily. Maybe that would get the companies to stop these practices.

The second-mortgage business may be even worse than credit card companies - ever seen a commercial for Quicken Loans? I shudder every time I see it. It is a classic example of this business model. They will let you make pure interest payments every month so that you will never pay off any principal. That should be illegal in my opinion.

But of course credit card companies and second mortgage companies, realizing they are evil, lobby and contribute heavily to political campaigns on both sides of the ideological spectrum. And why not, they certainly can afford to buy off politicians - and make no mistake about it that is what is happening here.

As Instapundit points out, tougher bankruptcy standards are clearly not in the best interest of constituents of most (if not all) republicans. And from a conservative ideology, these are poor business practices that should be punished by the market via defaults. So tougher bankruptcy standards is not a matter of ideology either. The one possible argument for tougher standards is personal responsibility. But given the super aggressive marketing campaigns of credit card companies that are especially focused on those they know cannot afford to take on debt, this argument doesn't hold water either (at least not in my opinion).

So essentially any vote for this bankruptcy legislation is a corrupt vote. And I hope come re-election time voters remember that and vote accordingly.

Update: Great LA Times article (via

Update 2: Welcome Instapundit visitors! This is my first Instapundit link, and I have to say I am humbled. I should point out I agree with Mr. Reynolds that credit card companies do provide a necessary service. Although I think some practices - targeting sub prime customers already in debt - are pretty close to "evil." And frankly, they are just bad business practices (unless of course you can get really favorable bankruptcy legislation enacted!) So take my comments with a grain of salt (and please - especially if you disagree with me - post a comment or drop me an email at Thanks!
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I am an attorney in Chicago. Politically speaking, I am an indepedent that tends to lean conservative on fiscal issues and progressive on social issues. I try to remain as unbiased and open-minded as possible. Please email or post any comments, and especially criticisms. If something I say is wrong, or you disagree - let me know about it!

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