Any day now, Vice President Joe Biden is set to announce whether he'll run for president, thus flummoxing the Democratic field and making life unnecessarily more difficult for the current pair of highly qualified frontrunners, Hillary Clinton and Bernie Sanders. There's much to be said about why Biden should gracefully decline to run and, frankly, the left would do well to assert itself against his would-be candidacy. Not only would Biden give the traditional press another reason to manufacture a false equivalence between, say, Donald Trump's buffoonery and Joe Biden's penchant for blurting awkward things, but just beneath Biden's likability lurks a darker side that ought to summarily repulse the left, and especially anyone who was screwed by the Great Recession.
On several occasions throughout the past 15 years, the colossally powerful banking lobby unsuccessfully pushed for new legislation to tighten the rules pertaining to who can file for bankruptcy protection, and how much protection they'll receive. The first time in recent memory occurred in 2000, when then-President Clinton pocket-vetoed bankruptcy reform legislation at the request of First Lady Hillary Clinton, who had been convinced to do so by a little known Harvard professor and vocal reformer named Elizabeth Warren. Joe Biden, on the other hand, voted for the bill. Another bill in 2001 failed to pass with Biden's vote. But the 2001 bill was resurrected after George W. Bush's second inauguration.
The Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA) was passed in April, 2005 by the U.S. Senate in a 74-25 vote, including the "yea" vote of Joe Biden, and was quickly signed by President Bush.
(Hillary Clinton skipped the vote. She did vote "yea" on the unsuccessful 2001 bill, although she later claimed to regret the vote, and explained that she had traded her support in order to make sure that alimony and child support payments weren't compromised by the new law. More on that later.)
In light of what occurred in its wake, this law is easily one of the most disgraceful aspects of the Bush and Biden legacies. The harm it did to middle-class Americans, especially during the crushing events of the recession four years later, is immeasurable. The bill made it nearly impossible for average families to file Chapter 7 bankruptcy protection, also known as "clean slate" bankruptcies intended to discharge nearly all debts, a matter of a few years before they'd need it the most. The bill instituted an all new means test to determine whether debtors with insurmountable financial hardships earned enough income to pay back all or part of their unsecured debts, specifically credit debt. If they earned too much, a clean slate bankruptcy became impossible, and they'd be forced to file Chapter 13, which would force debtors to pay back their debt over a five-year timeline, thus legalizing neo-indentured-servitude to creditors.
Among other things, the bill also forced debtors to enroll in an "instructional course concerning personal financial management." The requirement still exists even though there's little evidence of its efficacy. Additionally, the bill made it more difficult to force creditors to stop harassing debtors for repayment after bankruptcy protection had been filed. As if all of this wasn't bad enough, the Biden-supported legislation prioritized credit card debt repayment over child support repayment, forcing women who are owed back support to negotiate with credit card companies over the debts owed by their exes. Furthermore, the term "debtor" was changed by the BAPCPA to "household" so that the new means test would take into account the total earnings of an entire household, rather than one debtor -- including, for example, a teen daughter's babysitting money.
Worse yet, the bill contained nothing to crack down on abusive practices by predatory lenders, including punitive interest rates and penalties.
Unforgivably, Joe Biden was one of the leading cheerleaders of the bill.
Expecting penitence now from Biden is, of course, wishful thinking, considering his loyalty to home state of Delaware, which is the primary reason Biden supported every effort to screw middle class debtors. It turns out Delaware, specifically Wilmington, is the home base for a not insignificant number of credit card companies. During the Reagan '80s, a spate of new state laws were implemented to lure creditors from Manhattan to Wilmington by offering attractive tax incentives as well as defanging usury laws to allow companies such as Bank of America and Chase to charge significantly more onerous interest rates.
Put another way, the Bankruptcy Bill was great Biden and his Delawarean benefactors, but a financial atrocity for millions of families, made worse by the financial crisis and crippling recession that followed. While thousands of financial institutions received billions of dollars in relief during the recession, ordinary Americans who were hammered by medical and mortgage debt, not to mention record-smashing job losses, were more or less screwed. One study indicated that the BAPCPA "likely prevented a substantial increase in bankruptcy filings" during the recession: Even given the depth of the crisis, the number of bankruptcies rose to only around 1.5 million in 2010, which is 25 percent lower than the average number of bankruptcies per year prior to the bill's passage during a relatively healthy economy.
There are votes that are cast for political reasons and votes that are cast out of fealty to whichever group benefits most. Make no mistake: Biden's vote was entirely for the latter purpose and at the extreme expense of the people who he will expect to support him. Frankly, no amount of experience or folksy charm should blind Democrats into forgiving Biden's support for the BAPCPA. It's a deal-breaker.