The 2005 Bankruptcy Bill: Knowing a Financial Crisis Was Imminent, Banks Lobbied Government to Pass Laws to Preserve Their Wealth

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Our government representatives would like us to believe that the subprime mortgage crisis (2, 3, 4, 5) could not have been predicted. The truth is, the collapse was expected and authorities were well aware that crimes were being committed.


I. Introduction

It is said that if you want to find the corrupt, follow the money. This catchphrase, however, cannot be used as a preventative measure; it can only be used in retrospect to punish perpetrators of a crime. It does very little to protect us from predators. This is unfortunate when applied to our current crony capitalistic system; a wrong decision in our personal finances can mean the difference between living a life of debt servitude or one of freedom.

In our current centralized economic system, the best way to avoid pitfalls and preserve wealth, improving lifestyle, is to pay close attention to changes in laws and be mindful of their implications. Take, for example, the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA):

“Referred to colloquially as the ‘New Bankruptcy Law’, the Act of Congress attempts to, among other things, make it more difficult for some consumers to file bankruptcy under Chapter 7; some of these consumers may instead utilize Chapter 13…. It was hailed at the time as the banking lobby’s greatest all-time victory.”

Bankruptcy Abuse Prevention, Consumer Protection Act Signed


The Bill: 119 STAT. 23, and general comparison of Chapter 7 and Chapter 13 bankruptcy (pdf).

Considering the timing of the 2005 Bankruptcy Bill, its passing coinciding with the largest economic crisis in contemporary history, one can infer that it came into effect to protect Wall Street from the full impact of the looming financial crisis; to transfer the liabilities of the shady business practices of the banks to the citizenry. The information presented below should shatter any delusions for the steadfast that this bill was made into law for any other reasons than to preserve Wall Street’s capital. The banks were, after all, the ones that bundled toxic debt, sold them to their clients as triple-A securities, and then bet against them:

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  • drokhole

    Whoever voted for this should check their moral compass.

    • Anarchy Pony

      They have those? I mean I know they have get reelected compasses and make money compasses. But moral compasses?

    • emperorreagan

      http://clerk.house.gov/evs/2005/roll108.xml

      http://www.senate.gov/legislative/LIS/roll_call_lists/roll_call_vote_cfm.cfm?congress=109&session=1&vote=00044

      All republicans in the house in 2005 + 79 democrats.

      In the senate, it was all republicans + several democrats.

      So 376 people in congress total. Though it’s probably less a moral compass and more a post-it note left on their desk by the member of each staff assigned to call the largest 5 banks to request direction on how to vote on every bill related to the financial industry.

      • drokhole

        Yeah, I glanced at the congressional roll call. Plenty of complicity and bankster boot-licking on both sides. A pox on them all. Was mainly meant as a send up to John Kerry’s comment/paternalistic admonition from the other day re: Syria and its utter lack of self-reflection/awareness.

        • emperorreagan

          Ha! I hadn’t seen that quote. I figured you were being facetious but I landed on earnest in my earnest-to-absurdist response oscillation.

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