Have the new bankruptcy laws banks lobbied heavily for contributed to the credit/mortgage crisis?

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Washington Mutual Inc. got what it wanted in 2005: a revised bankruptcy code that no longer lets people walk away from credit card bills.

The largest US savings and loan didn’t count on a housing recession. The new bankruptcy laws are helping drive foreclosures to a record as homeowners default on mortgages and struggle to pay credit card debts that might have been wiped out under the old code, said Jay Westbrook, a professor of business law at the University of Texas Law School in Austin and a former adviser to the International Monetary Fund and the World Bank.

http://www.boston.com/business/personalfinance/articles/2007/11/11/shift_in_bankruptcy_laws_staggers_mortgage_holders/

3 Comments
  1. Reply
    stringofmetal
    January 20, 2011 at 6:18 pm

    Yes absolutly……However…It might be a good thing to reprogram americans…..from the Fast paced got to have it now……back to saving money…and if you don’t have the money…you don’t buy it…. It takes a lot of discipline…and it can be done…. The new laws…Are bad for those..who loose there jobs and have family crisis and financial downfall that can’t pay back the money…..The bankrupcy laws were put into place for those people…..and now it has been taken away…I think it’s bad that BIG corporations are still able to write off millions…and bankrupt…but the small poor middle class amarican..is not aloud to anymore….

  2. Reply
    searching for friends
    January 20, 2011 at 6:42 pm

    not in my opinion. The problem is that for a while there anyone with a pulse was offered a mortgage and no one thought about what was going to happen when rates changed (on arm loans)they over bought. Just because you can afford this payment doesn’t mean that the next payment will be the same. Very few people in America know how to manage without a credit card.If you can’t pay cash for that food you are eating you can’t afford it. If you can’t pay cash for the clothes you are wearing you can’t afford them. No one knows how to save to get things anymore. It’s all about instant gratification.
    WAKE UP
    man does not live by credit card….why pay more on a card for something you can’t afford now???

    Hopefully this is going to be an awakening for a lot of people.
    I know I don’t have a single credit card and don’t miss the extra interest I would have to pay if I did.

    Smart money management is what we all need to learn

  3. Reply
    tribeca_belle
    January 20, 2011 at 7:29 pm

    Absolutely. The banks and the credit card companies wrote the new bankruptcy laws that they had lobbied so long for. Now it’s helping to undermine them and the general economy.

    Harvard Law Professor Elizabeth Warren warned about this years ago but greedy neocons just don’t listen.

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