Midwest Voice: US Economy: Greedy credit card companies and Congress created a financial disaster - by Yael T. Abouhalkah

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US Economy: Greedy credit card companies and Congress created a financial disaster - by Yael T. Abouhalkah

It's a fascinating story: Greedy credit-card companies convinced a complicit Congress to approve new 2005 bankruptcy rules that helped torpedo the U.S. economy. The report making these allegations rings true; it was prepared by researchers at the Federal Reserve Bank of New York. It's yet another case where a self-serving industry got its way with Congress, with dire consequences for ordinary Americans. As for Congress, it's another case where members (who now want a $4,700-a-year raise) made irresponsible decisions to placate big-time donors. Basically, the new bankruptcy rules promoted by the credit card industry have led to a surge in home foreclosures. The reason: Before the 2005 bankruptcy act, people could file for Chapter 7 bankruptcy, which erased unsecured debt such as credit card debt. Chapter 7 helped people keep some money to make their mortgage payments. But the new law has forced more people to file for Chapter 13 bankruptcy. They still have to make payments to lenders such as the credit card companies, reducing the amount of funds available to make mortgage payments.