The Two-Income Trap - Elizabeth Warren [80]
Well that certainly sounds good; after all, who wouldn’t want some extra cash? But there are a few serious problems with this claim. First, the figure is a gross exaggeration. According to the NCBC, the same banking lobby group that generated the $550 promise, only 100,000 of the 1.5 million families who file for bankruptcy each year could afford to repay some of their debts. In other words, under the proposed bill, those 100,000 bankrupt families would be expected to generate $550 for every household in America, since the other 1.4 million are already tapped out.99 So we did the math. Suppose the laws were changed, and those 100,000 families could no longer seek protection from the bankruptcy courts, and they were forced to repay as much as they possibly could. In order to return an amount that added up to $550 for every household in America, each one of those bankrupt families would have to repay more than $550,000 in a single year! In our sample of more than 2,000 bankrupt families, not one even owed $550,000, let alone earned enough money to repay that amount. But even if a magic fairy somehow gave all the bankrupt families every dollar they needed to repay their debts in full, what makes anyone think the banks would pass that money on to consumers? Recall that the credit card industry got a $10 billion windfall from falling interest rates in 2001 that they did not pass on to their customers. Why would this supposed $550 per family be any different?
Nevertheless, the combination of intense lobbying and a good cover story had its intended effect. Despite President Clinton’s veto, the bankruptcy bill was reintroduced in the next session of Congress. This time, even Senator Hillary Clinton bowed to big business. She had been in office two months when she had her chance to vote on what she had called that “awful bill.” Sure, the official Bankruptcy Commission had better credentials than the banking lobby. Yes, her husband had actually appointed the Chairman of the Commission and two of the commissioners. And she clearly understood that families in trouble would be hit hardest by the proposed changes. But the Bankruptcy Commission did not make campaign contributions or have its own lobbyists, and neither do families in financial trouble. Senator Clinton had taken $140,000 in campaign contributions from the banking industry, and she proved willing to overcome her “strong reservations about whether this bill is both balanced and responsible”100 and voted in favor of “that awful bill.”
Goliath Meets David
We could stop here. We could join the chorus of those who routinely bemoan the political clout of a few big businesses, and we could make the obligatory plea for effective campaign finance reform (which somehow never quite takes hold in a meaningful way, despite the clamor). But if we stopped now, we would be missing the best part of the story—the part that shows that although the banking industry may be powerful, it isn’t the only voice that gets heard in Washington.
The cards were certainly stacked in favor of passing the banking industry’s version of the bankruptcy bill in 2002. So who stopped the “awful bill” from becoming law? The answer may surprise the reader; it certainly surprised the credit industry and the congressional power brokers. An unlikely group of citizens organized without any help from big business, and they made sure Congress paid attention. Who were these citizens? Women.
What prompted