“Overhaul Bankruptcy”—So Say the Financiers behind Enron

Aug 12, 2002

U.S. senators and representatives rushed to cobble together a bill toughening the rules on bankruptcy filings before they recessed for their long end-of-summer vacation. One of the bill’s sponsors declared that the bill that had been jointly agreed on would “restore integrity and accountability to our bankruptcy system.”

Ari Fleischer, Bush’s spokesperson, said, “The president looks forward to signing that.” (Bush, who was already on the second leg of his third summer vacation, wasn’t around to speak for himself.)

It’s true that the specter of bankruptcy hangs over the country, with one big company after another declaring bankruptcy, wiping out their employees’ pension funds and 401(k) funds, leaving big debts behind in the wake of executives who are rushing off to put billions of dollars of money into offshore banks. World Com, Enron, Qwest, KMart–and they’re only the most visible ones–have certainly been abusing the bankruptcy system.

There’s only one problem. Congress didn’t overhaul the bankruptcy laws applying to the big guys. It overhauled the bankruptcy laws applying to ordinary people, so that most people won’t be able to write off their debts when they declare bankruptcy–only defer them.

The credit card and banking industries claim that too many people write off debts they should be able to pay.

What do they mean–“able to pay”? The average American who filed for bankruptcy last year had a car that was six to nine years old and income way below the median income. Almost half of all people filing for bankruptcy are deep in debt precisely because they were recently hit with big medical bills that their insurance didn’t cover–IF they had medical insurance at all. Then there were all those people laid off, unable to find a new job that paid decent money. As we all know, between house payments, a car note, insurance payments–not to mention, utilities, phones, and food–it doesn’t take long when you’re out of work, or just working for less, to get way behind in your bills.

It’s obvious that a government which wanted to deal with the real problems behind the growing number of bankruptcies would look into providing adequate financial support to unemployed workers and a decent medical insurance plan that covers everyone–as a start.

And then it would turn around and go after the big guys–the ones who, before they declared bankruptcy, stole billions of dollars from their employees’ pension funds for their own account. They might start with George W.’s good buddy, “Ken Boy” Lay, late of Enron fame. But they would quickly turn their attention to the big banks who have been helping executives drain money out of their corporations.

Here is the real irony of the push to reform bankruptcy laws: the very same big banks who paved the way for the corporate rush into bankruptcy are the very ones who today cry for “financial responsibility.”

“Financial responsibility”–words that mean nothing other than the right of the biggest corporations and banks to go on stealing from everyone else.