Do u think it's ODD that Bankruptcy Law changed, then this HUGE Forclosure Disaster?

[talbot]

I wonder if the Government knew this Economic trainwreck was coming in a couple yrs so changed the Bankruptcy Law to protect the interests of Corporate America. What do you think?

[syvwkh]

Back in 2005 when the new bankruptcy laws were passed by Congress many worried that the laws would have consequences no one imagined. And surprise to surprise, the new bankruptcy law is contributing to the rise in foreclosures across the country.
Everyone thinks of bankruptcy as a tool to get out of debt, but the real reason for bankruptcy is to allow entreprenuers to take on more risk. One of the great things about the American economy is that innovation is very highly valued. And that failure is not punished as in the rest of the world. This has given the United States a competitive advantage that is disappearing when we fail to reward risk taking.
But today’s growing problem in the housing market is different—foreclosures are soaring, while bankruptcies, though clearly on the upswing, are running roughly at half the 2001-2003 pace. The reason: that new bankruptcy law, approved by Congress in 2005 after years of debate, makes it much harder for households to get out from under their consumer debt. The result: More people being forced to walk away from their homes, leaving lenders holding the bag. Perversely, a law intended to help the financial industry may be damaging the housing sector, creditors and borrowers alike. “It doesn’t matter what you think of the purpose of the new bankruptcy law. The timing is bad,” says Susan M. Wachter, professor of real estate at the Wharton School of Business. via BusinessWeek

[leonie36]

no the old BK system was being abused long before the housing crisis

even if it was the same it wouldnt have prevented this crisis, the money has got to come from somewhere

This current crisis was caused by greed, the Banks gave a whole bunch of money to people with very questionable credit and then SURPRISE they didnt pay. The Banks knew the risk they just didnt care example = Countrywide

[talbot]

I think it's possible. The laws also changed so those suffering an illness that left the with no money can no longer file for bankruptcy so they are basically without hope for the rest of their lives. Thanks Bush.

[edmondo93]

You are catching on, my friend.

[garwyli91]

Yes... they are PREVENTING lawyers from telling their clients to "hurry up and buy more stuff" so they can screw the businesses over by getting more stuff and having it "forgiven".

Lawyers are scum....

[blaeey]

Yes... they are PREVENTING lawyers from telling their clients to "hurry up and buy more stuff" so they can screw the businesses over by getting more stuff and having it "forgiven".

Lawyers are scum....

No. Joe Biden had a big hand in it while his lobbyist son got paid off?

Joe changed the law to hurt normal Americans while his lobbyist son worked for the biggest credit card company who the legislation benefitted.

[veto]

No, the road to hell is paved with good intentions. On this, Bush actually tried to do something decent. He encouraged, and requested the GSE's to support, home ownership among groups of people who heretofore had been shut out of ownership. This was a good thing.

Unfortunately, 100% loan-to-value and adjustable resets, when the borrower could barely pay in the first place, let to disaster.

Like most things Bush tried, little thought was given and the outcome was predictable. But, to give the neocon fools some credit, the intention was good.

[celeste]

None of the bankruptcy law changes had anything to do at all with foreclosure or mortgages. There's no connection.