Wednesday, July 26, 2002
PUSHED BY CORPORATIONS ACCUSED OF MISCONDUCT
WASHINGTON, DC — Consumers Union today harshly criticized members of Congress for advancing a bill to deny American families hit by hard times the right to put their finances in order through bankruptcy.
The so-called “bankruptcy reform” bill has been pushed heavily by credit card companies and other lenders that would benefit greatly under the law. Congress passed a similar bill in 2000, but President Clinton vetoed it for being too hard on consumers with low and moderate incomes.
Frank Torres, Legislative Counsel for Consumers Union, made the following statement today about the bill:
“It is outrageous that Congress would even consider a bill that is being pushed by some of the same corporate lenders that have been accused of ripping off ordinary Americans. Some of the lenders that would benefit the most from this bill are the same ones that have been implicated in the Enron debacle.
“Meanwhile, WorldCom has filed for bankruptcy and drastically cut its severance packages. So you have a WorldCom employee who loses her job, loses her health insurance, gets a paltry severance, and is left with a retirement plan that may be worth nothing. That person may find it impossible to file for bankruptcy, but her employer WorldCom is free to file for bankruptcy after it cooked the books and cheated investors.
“If Congress and the President actually go through with this bill, they would be sending the message that it’s okay for a corporation accused of cheating to file for bankruptcy, but if you’re a laid-off employee who needs bankruptcy as a last resort, you may be out of luck.
“If Congress wants to do something about bankruptcy, it needs to start with corporate bankruptcy, not consumer bankruptcy. That’s where the most serious problems are. And the accounting bill just passed by Congress doesn’t address it. Before it attacks the ordinary Joe who needs to file for bankruptcy, Congress needs to go after the companies that use bankruptcy to hide from its shady deals.
“How can anyone in Congress or the White House say that now is the time to make it even harder for Americans who’ve lost their jobs and their savings thanks to companies like Enron and WorldCom? For months, lawmakers and the Bush administration have been talking about how angry they are about corporate misconduct and how much they feel for Americans who are struggling to make ends meet. And then they turn around and try to pass a bill like this. The level of hypocrisy is extraordinary.
“It is one thing to reform the bankruptcy system in order to boost personal responsibility. It is another thing entirely to deny help for millions of honest, unsuspecting Americans who are suddenly hit by a job loss, a death in the family, divorce, or some unforeseeable disaster. This bill simply goes too far. Congress is giving the lending industry its ‘wish list’ by passing this bill.
“The accounting reform bill hasn’t even been signed into law yet, and some people are already trying to revert back to the old way of giving big business exactly what it wants, whatever the consequence to consumers. It’s shameful, and we are going to try to do everything we can to appeal to Congress to stop this.”
Consumers Union Washington, DC Office
Consumers Union, publisher of Consumer Reports magazine, is an independent nonprofit testing, educational and information organization serving only the consumer. We are a comprehensive source of unbiased advice about products and services, personal finance, health, nutrition and other consumer concerns. Since 1936, our mission has been to test products, inform the public and protect consumers