Morally bankrupt

Think Progress points us to E.J. Dionne on the bankruptcy bill now being considered in the Senate.

Dionne quotes Elizabeth Warren of Harvard Law:

Testifying before the Senate Judiciary Committee in early February, Warren argued that the proposal "assumes that everyone is in bankruptcy for the same reason — too much unnecessary spending."

What does that mean in practice? "A family driven to bankruptcy by the increased costs of caring for an elderly parent with Alzheimer's disease is treated the same as someone who maxed out his credit cards at a casino," Warren said. "A person who had a heart attack is treated the same as someone who had a spending spree at the shopping mall. A mother who works two jobs and who cannot manage the prescription drugs needed for a child with diabetes is treated the same as someone who charged a bunch of credit cards with only a vague intent to repay."

TP also notes that the bankruptcy bill, a priority for lobbyists from the legal loansharks of the credit card industry, is receiving the support of many so-called "values voters."

If that’s the case, maybe Senators should review the Bible before their floor debate. As you can see from these quotes provided by Rep. Bernie Sanders office, the Bible is very clear about God’s views on the evil of usury …

In addition to being forbidden by Christian teaching and universally morally condemned before the 20th century, usury is also bad business.

It's unsustainable. It doesn't work. Bad loans made to people with insufficient credit don't magically become good loans by hiking the interest rate on them even higher. All that does is improve the short-term paper profits of the credit card banks while making it even less likely that these loans will ever be repaid (thus further eroding the long-term actual profits of the credit card banks).

I propose an amendment to the bankruptcy bill instituting federal caps on credit card interest rates and fees.

This would butt heads with the Supreme Court's 1978 Marquette ruling, but it's about time the court was forced to reconsider that dubious decision. (Bankrate.com has a good backgrounder on it here.)

Such an amendment would do more to improve the health of the credit card industry than this bill will with its crude Paulie Walnuts-style enforcement approach. Increasing the misery of the miserable won't actually benefit the prodigal misers backing this bill. The crisis facing the credit card industry is not only the result of irresponsibly greedy debtors, but also of irresponsibly greedy lenders. The bill ought to address both problems.

UPDATE: Peatey, in comments below, points us to this post from Angry Bear, which is too good to leave buried in comments.