Posts Tagged ‘Bankruptcy Abuse Prevention Consumer Protection Act’

Obama V.P. Pick Joe Biden Shares Direct Blame For Foreclosure Disaster

August 28, 2008

Barack Obama – you know, the guy who tells us he can fix all the problems that Bush and Republicans caused – has an uncanny track record of picking the people who actually caused all the problems in the first place for key campaign positions.

Should Joe Biden Share Blame for Foreclosure Crisis?  At least two major studies and an ABC News investigative report say “YES.”  According to interviews with financial “Experts: Many Americans Lost Homes Due to a Bill Championed by Biden.”

Add that to Penny Pritzker – Obama’s National Finance Chairpersonwho was at the epicenter of the sub prime loan scandal that caused the foreclosure meltdown in the first place.  She paid $460 million of her family fortune through trusts to avoid going to jail.  And add that to Jim Johnson, Obama’s pick to chair his important Vice Presidential selection committee until he resigned amidst revelations that he had received sweetheart deals from sub-prime king Countrywide.  And Jim Johnson joined other key Democrats like Senate Banking Committee Chairman Christopher Dodd and Senate Banking Committee Chairman Kent Conrad, who received similar sweetheart deals.  And you can add to that the fact that federal regulators are pointedly blaming U.S. Sen. Charles Schumer, D-NY for the run that caused the IndyMac bank failure.

This is just like Democrats: behind all the  ostentatious and pretentious chants that they are fighting the battles for the little guy, they do what is best for their political futures at the behest of big money donors.  And when what they do in the name of the “little guy” ends up blowing up in the little guys’ face, they wash their hands of it and try to blame Republicans for it (after all, it’s all President Bush’s fault).

Hey, Democrats: President Bush’s Vice President didn’t cause the foreclosure meltdown; Barack Obama’s did.  And President Bush’s national finance chair wasn’t involved in the sub prime scandal from the very beginning; Barack Obama’s was.

Read the ABC investigative report on Joe Biden below.  Warning: it’s damning.  You’ve got Biden fighting for a law that directly led to the foreclosure meltdown, which wouldn’t have passed without his efforts.  You’ve got banks and credit card companies headquartered in Delaware.  You’ve got Biden’s own son working as an executive, lobbyists, and consultant for one of the players.

Should Biden Share Blame for Foreclosure Crisis?
Experts: Many Americans Lost Homes Due to a Bill Championed by Biden

By JUSTIN ROOD

August 28, 2008Experts say hundreds of thousands of Americans may have lost their homes due to a bill championed by Sen. Joseph Biden, D-Del., Barack Obama’s vice-presidential running mate.

At least two studies have concluded that the United States’ foreclosure crisis was exacerbated by a 2005 law that overhauled the nation’s bankruptcy law. That conclusion is echoed by other experts, although the banking and credit industry disputes it.

Congressional Republicans drove the effort to pass the Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA) of 2005. But Biden – who has enjoyed hundreds of thousands of dollars in campaign donations from credit industry executives – endorsed the measure early on and worked to gather Democratic support for it.

Biden’s early and vocal support was “essential” to the bill’s passage, said Travis Plunkett of the Washington D.C.-based advocacy group Consumer Federation, which opposed the measure. Biden “went out of his way to undermine criticism of the legislation,” and his efforts helped convince other Democrats to support the bill.

“Biden was a fairly strong proponent of that bankruptcy bill,” said Philip Corwin, a consultant for the American Bankers Association, which represents banks and lenders. However, Biden was “not in our pocket in any way,” he added.

Biden’s Senate office did not provide comment for this story.

Asked if the Obama/Biden campaign was concerned Biden’s record was a liability when discussing economic security, David Wade, a spokesman for the Obama/Biden campaign, said, “Barack Obama and Joe Biden have real solutions for struggling families in danger of losing their homes because of the Bush economy and abusive lending practices.”

BAPCPA “is directly responsible for the rising foreclosure rate since the end of 2005,” concluded a 2007 study by Credit Suisse. The law “increased foreclosures and the number of homes for sale,” echoed a July 2008 study by U.S. Treasury researcher David Bernstein. That study estimated the law had pushed foreclosures or forced sales on 200,000 homeowners since it went into effect, but noted that was a rough, “back-of-the-envelope” calculation.

“Trying to tie the forclosure crisis to the [2005 bankruptcy] bill is a stretch,” said the ABA’s Corwin. Corwin called the Credit Suisse report “junk” and said the Bernstein study wasn’t “worth the paper it was written on.”

The head author of the 2007 Credit Suisse report clarified his earlier findings in an email Wednesday. “The law likely contributed to increased foreclosures early on,” said researcher Don Ravitsky, but combined with other key factors, including subprime lending practices, to create the current crisis. Bernstein did not respond to a request for an interview.

The bill was backed by banks and credit card companies including MBNA, which is headquartered in Delaware, Biden’s home state. They wanted the bill because it would make it harder for Americans to use bankruptcy to avoid repaying credit card debt. MBNA executives had been Biden’s single largest source of campaign donations, and MBNA has employed Biden’s son Hunter as a company executive, lobbyist and consultant. The Obama campaign has said Hunter Biden did no work for MBNA on the bankruptcy bill. MBNA has since been bought by Bank of America.

Over the past two years, sub-prime mortgage borrowing and a weakening economy have pushed increasing numbers of Americans into dire financial straits. Under the old rules, many could have declared bankruptcy, shed much of their debt, restructured their mortgages and held onto their homes, according to experts and the two reports.

But the 2005 law Biden championed made it more expensive and more difficult to declare bankruptcy, experts conclude. That forced hundreds of thousands of distressed homeowners to sell their homes, or default on their mortgages, after which the bank would sell their former home, according to the studies. That flood of homes going up for sale in an already-weakening market further depressed home prices, according to the two reports, snowballing into the current crisis.

BAPCPA “increased home foreclosures, increased the dollar value of financial assets in default, and put additional downward price pressure on real estate markets,” concluded the Bernstein report. Bernstein conducted the report as an individual, not as a representative the Treasury Department.

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