PrintOctober 3, 2008
Joe Biden on debt: homeowners vs. credit card debtors
During the Vice Presidential Debate, Sen. Biden took the position that bankruptcy courts should have the power to reduce the principal amount owed on mortgages:
"...we should be allowing bankruptcy courts to be able to re-adjust not just the interest rate you're paying on your mortgage to be able to stay in your home, but be able to adjust the principal that you owe, the principal that you owe."
I pointed out that this type of adjustment in obligations is actually what Biden fought as the Senator from MBNA when he oversaw and pushed for a new bankruptcy law that made it onerous for debt-strapped consumers to avoid the credit card obligations. Ken Sweet of Fox Business wrote:
... consumer advocates may take a harsh view of Biden's vote in favor of the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005. The law was the first major re-write of the bankruptcy code in over 30 years, and, according to critics, made it harder and more expensive for lower and middle-class consumers to file for bankruptcy. [....]The credit card and banking lobby, including Biden-donor MBNA, pumped millions of dollars into Congress over 10 years to help get approval of that bill. Biden voted for it, while Obama was one of the 25 senators who voted against it. [....]Lawless said the biggest problem with the law was the hurdles it created for consumers who seek to file for Chapter 7 or Chapter 13 bankruptcy.
Harsh bankruptcy terms for credit card debtors, and court-ordered reduction in mortgage principal for home owners seems to be Biden's policy. One would think that as a group home owners are more prosperous than credit card debtors. Where's the "fairness" about which Biden talked last night?
