Reply #17: Obama Must Not Pick A Fight With Hillary On A Repeal of Bankruptcy Reform [View All]

[Median Democrat]

I think pushing for a total repeal of bankruptcy reform undermines efforts to unify the party.

The reference to Elizabeth Warren's discussion with Hillary Clinton is only in the preface of the book. Whether you believe Warren's recollection of events or not, the rest of the book is a great discussion of how many middle class Americans are overe-extended due in part to changes in the lending industry, which no longer extends credit based on the ability to pay, rather credit is extended to those who are most vulnerable.

Elizabeth Warren is a Harvard Law professor who specializes in the area of bankruptcy law.

Here is Hillary Clinton's statement from the floor on Bankruptcy Reform:

Clinton said, “Bankruptcy reform is important. I grew up with a father who worked hard to avoid having debts. In recent weeks, I have heard form many small credit unions throughout New York, hard working small lenders whose entire membership suffers when the credit union is faced with covering bankruptcy losses. <…> Reform is needed. The right kind of reform is necessary. We're on our way toward that goal, and I hope we can achieve final passage of a good bankruptcy reform bill this year.”

Here is Mother Jones story on the issue:

http://www.motherjones.com/washington_dispatch/2007/07/campaign_contributions_credit_card_companies-2.html

Hillary Clinton, who receives large sums of money from banks and investment companies, has waffled on the issue. In the The Two Income Trap: Why Middle-Class Mothers and Fathers Are Going Broke, Harvard law professor Elizabeth Warren recounts a 1998 meeting with Clinton, who was then First Lady. Clinton wanted to know more about credit cards and how they affected women and Warren, a leading critic of credit card company practices, gave her a short lecture over lunch, focusing on the drawbacks in an earlier version of the new bankruptcy legislation (which Bill Clinton and the White House staff were quietly supporting in hopes of wooing the banking industry). Warren writes that after their talk, Hillary promised to do what she could to stop the "awful bill." And, by the time the legislation passed Congress in 2000, Bill Clinton had changed his position and vetoed it. An aide later told Warren, "A couple of days after Mrs. Clinton met with you, we changed sides so fast that you could see skid marks in the hallways of the White House."

But a year later, Clinton, then a freshman senator, voted for virtually the same bill when it was refloated by Bush. "Campaigns cost money," Warren writes, "and that money wasn't coming from families in financial trouble. Senator Clinton received $140,000 in campaign contributions from banking industry executives in a single year, making her one of the top two recipients in the Senate."

Despite his 2001 yes vote on the bankruptcy legislation, John Edwards is now one of the only candidates now taking up the issue of consumer debt—relying, in large part, on Elizabeth Warren's analysis and ideas. In a speech on his campaign theme of "the two Americas" at Cooper Union in New York City last month, Edwards proposed "setting up a new consumer commission to be called the Family Savings and Credit Commission … deal with all financial services—credit cards, mortgages, car loans, check-cashers, payday loans, investment accounts, and more. It will ban the most abusive terms and make sure consumers understand the others." Edwards has also more directly pledged to "pass strong national laws protecting us against the worst abuses in credit markets." (On that front, of course, Congress would have to cooperate.)