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Pastimes : Clown-Free Zone... sorry, no clowns allowed -- Ignore unavailable to you. Want to Upgrade?

To: Oblomov who wrote (193170)	9/22/2002 9:13:01 PM
From: hdl	Read Replies (2) \| Respond to of 436258

in the current u.s., the uninsured, single mothers,the illegal immigrant, those who get a free lunch at school,Irish travelers, those with disabilities- (such as drug addiction),etc. are practically heroes.

To: Oblomov who wrote (193170)	9/22/2002 10:54:32 PM
From: Ken98	Respond to of 436258

Oblomov, I agree that both debtor and creditor share an element of responsibility when the debtor finds itself in bankruptcy court. However, the creditor knew the rules of the game when he extended credit and should have asked for and received additional interest (or taken additional security) to compensate for incremental risk. For an unsecured credit card company who extended large amounts of unsecured credit to consumers (knowing in advance that their debt was easily dischargeable in bankruptcy) to spend tens of millions of dollars in lobbying money and campaign contributions to change the rules of the game because they made bad (some would say greedy) business decisions is shameful. I would add a couple of other general bankruptcy observations. First, the alcoholic analogy someone put forth is appropriate - the debtor / creditor relationship is symbiotic. One cannot exist without the other. At the bottom of the credit cycle there is not enough risk tolerance by creditors. When the old North Carolina National Bank (next NationsBank, next BofA) took over the venerable Republic Bank in Dallas in the early 90's people said "NCNB" stood for "No Cash for NoBody". One could hardly say that of today's Bank of America. On the other hand, consumers traditionally likewise re-trench during recessionary times and boost savings rates and these cycles are usually in sync. I would like to hear your thoughts about these cycles presently being out of sync. Second, one of the little known foundations of our present bankruptcy laws is their early foundations in American jurisprudence. Our Founding Fathers (being a fairly entrepreneurial lot) saw fit to drop that into Article II, Section 8 of the Constitution that Congress had the power to enact bankruptcy laws. And the new Congress did so as one of their first laws. They found the British system of oppressive creditor's rights laws to be unfair and realized the inherent benefits in having an orderly, fair, and expedient manner in which to restructure debts. The British system (both then and now) does not realize the equivalent to our Chapter 11 restructuring - it only realizes liquidation for the benefit of creditors. The Japanese system (and their society) likewise do not recognize the importance of our restructuring model. If you want to have a risk-based, entrepreneurial economy you can't penalize risk-based, entrepreneurial activity. Lastly, the new bankruptcy law turns these historical foundations (and logic) on its head. The new law guts state law creditor exemptions. For example, Texas has had unlimited homestead exemption since we were an independent country. Everyone (debtor and creditor alike) has known these rules for over 175 years. Likewise, changing unsecured credit card debt to be non-dischargable (based on a lame-brained means testing scheme) turns history on its head and gives one class of creditors special treatment solely because they bought and paid for this law. Sorry for the rant, and hope all is well for you. Ken