Group Calls Bankruptcy Bill Extremely Unfair to Average Americans

Santa Monica, CA — The Foundation for Taxpayer and Consumer Rights (FTCR) condemned legislation that would impose harsh new rules on consumers who file for bankruptcy, while big corporations are still afforded the traditional protections of bankruptcy. Congressional negotiators agreed yesterday on a credit card industry-sponsored bankruptcy bill that strips consumer protections for Americans struggling under the crush of credit card debt.

“The big guys can file multi-billion dollar bankruptcies, but the rest of us can’t get protection when we face difficult financial times,” said Doug Heller, senior consumer advocate with FTCR. “The hand of government is striking consumers, while criminal corporations like WorldCom, Enron and Adelphia receive the helping hand of bankruptcy protection.”

FTCR called it ironic that the bankruptcy bill agreement was announced on the same day that Congress came to agreement on the corporate accountability legislation. The consumer group noted that the corporate reform bill was weak in the area of ensuring that workers, retirees and other investors are compensated for the losses they sustain when criminal corporations retreat into the safe-haven of corporate bankruptcy protection.

“Not only do corporate scandals devastate average Americans’ lives, the personal bankruptcies that ensue after a corporate collapse will be much more painful under this law,” said Heller.

FTCR is calling on President Bush to reject the bankruptcy bill, which was sponsored by some of his largest campaign contributors in the credit card and banking industry. Under the bill, consumer credit cardholders will not be able to wipe the slate clean and start over, even though big corporations will continue to be allowed to pay pennies on the dollar for their debts once they declare bankruptcy. Bankrupt corporations even get special access to new credit once they file for bankruptcy protection, but average consumers will be left without a safe-harbor as a result of the new law.

“There is a double standard in Washington that says it’s OK for corporations to get a full range of bankruptcy protections, but consumers should be left to struggle on their own. President Bush should veto this extremely unfair legislation,” said Heller.

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