Tuesday, July 30, 2002
STATEMENT BY CONSUMERS UNION
WASHINGTON, DC – Frank Torres, Legislative Counsel for Consumers Union, today made the following statement regarding the new corporate reform law signed by President Bush:
“This new law is the first important step toward restoring corporate accountability and public trust. Lax oversight led to a stream of corporate scandals that outraged the public, hurt investor confidence, and rocked the stock market. This law demonstrates the ability of Congress to identify problems that the marketplace cannot correct by itself.
“But much more needs to be done. There are still several issues left on the table, including pension reforms, stock options, and ensuring that the investors and employees whose savings were decimated can recoup their losses.
“Something else should be noted. This law is aimed at cracking down on corporate misconduct. It’s hard to understand how the President and Congress can be out there praising this law at the same time they are trying to pass another law to help some of the very companies accused of misconduct.
“Now that this law is signed, the President and Congress are focused on a bill to make it harder for people hit by hard times to file for personal bankruptcy. This proposal is being pushed by credit card companies and other lenders that would benefit greatly under such a law. Some of these companies are the same ones that Congress has accused of helping Enron set up its shady deals.
“It is outrageous that Congress and the White House would even consider such a bill at a time like this, especially given all they have said today about corporate reform. With this bankruptcy bill, it’s as if they are saying that it’s okay for a company like WorldCom to file for bankruptcy after it overstates its earnings and misleads investors. But tough luck for the ordinary employees at WorldCom who lose their jobs and now may find it impossible to seek bankruptcy as a last resort.
“We understand the need to reform the bankruptcy system to boost personal responsibility among those who can easily repay their debts. But it is another thing entirely to deny help for millions of honest, unsuspecting Americans who are suddenly hit by a job loss, a family death, divorce, or some other unforeseeable disaster.
“Despite what credit card companies claim, this bill is targeted at the less affluent. Under this bill, wealthy debtors would be able to plan their bankruptcies and keep their homes. All they have to do live in their property for a little over 3 years and it’s protected. The Enron and WorldCom executives may have already met that requirement, so they’ll get to keep their multi-million dollar homes should they declare bankruptcy.
“Economic circumstances for many Americans have changed dramatically. Yet, credit card companies appear to be making more money than ever — in most cases on the backs of consumer lending. Now is not the time to make it tougher for people struggling to make ends meet in order to help the credit card companies.”
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.