Charge the Senate

This week the credit card industry — which raked in $30 billion in profits last year — storms the Congress in an attempt to squeeze a few more dimes from Americans who are sick or out of work. Starting today the Senate will consider a bill (S. 256) that would amend bankruptcy law to “make it harder for families struck by financial misfortune to get back on track.” (Nine out of 10 bankruptcies “are triggered by the loss of a job, high medical bills or divorce.) The bill is supported in Congress by a bipartisan coalition on the credit industry dole. They think they can pass the bill without the American people noticing. Prove them wrong. Write your senators and tell them to reject the legislation in its current form.

The bill on the Senate floor right now doesn’t stop some of the worst abuses of our bankruptcy system. In several states — including the president’s home in Texas — a multimillionaire buisnessman can declare bankruptcy, avoid his debts, and still keep his palatial estate. Some examples:

Marvin Warner, a former ambassador to Switzerland and the owner of a failed Ohio Savings & Loan, who paid off only a fraction of $300 million in bankruptcy claims while keeping his multi-million-dollar horse ranch near Ocala, Florida.

Dallas developer, Talmadge Wayne Tinsley, who filed under chapter 7 after incurring $60 million in debts. Tinsley objected to the Texas law that permitted him to keep only one acre of his $3.5 million, 3.1-acre magnolia-lined estate. But that acre included a five-bedroom, six-and-a-half-bath mansion with two studies, a pool and a guest house.

The 2001 bankruptcy bill at least stopped these abuses by capping the so-called “homestead exemption” at $125,000. This bill has a complicated exemption that will allow “wealthy debtors who are sophisticated enough to plan ahead — and those are, after all, the people we are talking about — can purchase a homestead to shelter their non-exempt assets and simply wait [49 months] before filing their petition.”