There are some interesting contrasts in the news today as ordinary citizens fall deeper into debt while the petroleum industry continues to reap the benefits of the Bush administration's undying love.
In news that should surprise absolutely nobody, hurricane victims are piling up credit card debt at a rapid rate. Many of the people displaced by Katrina have nothing else to fall back on but their credit cards, if they're lucky enough to have credit in the first place. If bankruptcy awaits, that's too bad, according to the Republicans who have refused to consider Democratic proposals to add exemptions in the bankruptcy reform bill for military personnel and disaster victims, among others.
But wait, there's more! Now how much would you pay?
The consumer borrowing society that has been encouraged, even demanded, by the credit card industry has its limits, as this article outlines.
Next Storm: Bad Credit Score
Consumers who can't make their house payments any more - even if that house has been completely swept away by the storm - may face the ultimate penalty in America's credit-driven society: A credit score so low they won't qualify for the loans they need to start rebuilding. Consumer groups, anticipating the coming surge of late payments and account defaults, have asked credit bureaus to help. The consumer groups proposed that the bureaus take a pre-Katrina credit score snapshot of all residents in the affected areas. Later, when victims apply for loans, the pre-Katrina score could be used to identify whether victims were good credit risks before the storm.
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The proposal has the support of Fair Issac, the firm that generates the formula used to compute credit scores, called FICO scores. "Having knowledge of the old credit score could be used to help (lenders) make a more informed decision," said Tom Quinn VP of global scoring. "Was this person really late because they were late or because their mailbox was under water for three weeks?" But on Thursday, consumer groups revealed that the nation's three bureaus - Experian, Trans Union, and Equifax - have declined to participate in the plan.
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While some lenders still view entire credit reports before granting mortgages, and could pick out hurricane-related black marks and take them into account, lenders increasingly rely solely on credit scores to make lending decisions. That could spell serious trouble for Katrina victims, Hillebrand said.
As the bankruptcy reform bill slouches closer to reality and consumer filings soar in anticipation, the Department of Justice through its U.S. Bankruptcy Trustee program recognizes the hardships faced by Gulf Coast residents that make some provisions of the new law impractical to enforce, and grants a temporary waiver. It's important to note that the waiver is discretionary and can be revoked at any time. Republicans have so far refused to consider Democratic efforts to add outright exemptions from some of the new bankruptcy law's more draconian provisions for military personnel and disaster victims, among others.
WASHINGTON - The Justice Department temporarily waived a provision of a tough new bankruptcy law to aid people filing for bankruptcy in Louisiana and southern Mississippi because of Hurricane Katrina.
The department's United States Trustee Program said Tuesday that for the time being applicants in those areas would not have to undergo credit counseling before they file. Some observers had said the new law, the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005, would produce hardships for hurricane victims.
Sen. Russ Feingold, D-Wis., praised the waiver decision but said it highlights the need for legislation he has proposed that would provide a one-year grace period after Oct. 17 for people affected by the hurricane to file under current bankruptcy law. He said the new law does not have similar waiver flexibility for its other provisions.
"For example, neither the U.S. Trustee nor the Bankruptcy Court can waive a provision that makes it easier for landlords to evict their tenants who have filed for bankruptcy," Feingold said in a written statement. "This could compound the hardship faced by victims already made temporarily homeless by the hurricanes. The victims of (hurricanes) Katrina and Rita should not be the guinea pigs for the great bankruptcy experiment that will start in a matter of weeks."
Meanwhile, back in D.C., the party goes on as the House considers a bill to boost refineries.
The legislation, scheduled for a House vote Friday [October 7, 2005] before lawmakers depart for a weeklong recess, is aimed at giving industry assurances that lengthy government reviews and new environmental hurdles do not block refinery expansion -- and even prompt investors to build a new refinery.
No refineries have been built in the United States since 1976 as the industry has consolidated to fewer, but larger facilities.
The GOP legislation also would limit to six the different blends of gasoline and diesel fuel that refiners would be required to produce, reversing a trend of using so-called "boutique" fuels to satisfy clean air demands. And it would give the federal government greater say in siting a refinery and pipeline. It also calls on the president to designate military bases or other federal property where a refinery might be built.
But opponents, including most Democrats and some moderate Republicans, have accused Barton and GOP leaders of using the hurricane devastation to push through proposals long sought by industry, including some not related to refineries at all. [Now there's a surprise. - Ed.]
For example, the bill would give some cities longer to meet federal clean air standards and it would allow not only refineries, but also coal-burning power plants and other industries to expand or change operations without adding new pollution controls even if, in some cases, emissions increase.
It is a change long sought industry groups and the Bush administration, but currently is bogged down in the courts because of lawsuits from a number of states.
There is a glaring contrast with the Republicans' move to back off environmental regulation of refineries with the recent House passage of a bill to gut the Endangered Species Act.
The bill would require the government to compensate property owners if steps to protect species thwarted development plans.
"You've got to pay when you take away somebody's private property. That is what we have to do," Pombo told House colleagues. "The only way this is going to work is if we bring in property owners to be part of the solution and to be part of recovering those species."
Many Democrats and moderate Republicans said Pombo's bill would eliminate important protections for species and clear the way for large handouts from the government to property owners.
The bill sets a "dangerous precedent that private individuals must be paid to comply with an environmental law," said Rep. Nick Rahall of West Virginia, the committee's top Democrat.
The point, of course, is to make government regulations too costly to be enforced. The idea behind the anti-ESA bill is that individuals should be compensated for the impact of governmental regulation on their private property interests. It's not a new concept, but what is new is the recent push by the libertarian wing of the Republican party to get rid of regulation by this back door method of making it too expensive to be enforced.
This is antithetical to the concept of a community in which government has the so-called "police power" to impose reasonable regulations for purposes of protecting the health, safety and welfare of the group as a whole. That concept assumes that some individuals may bear a disproportionate share of the burden of regulation, but it is a price they pay for membership in society and all of its other benefits; for instance, environmental regulations burden industry in the interest of all of us being able to breathe the air and drink the water. (Although the Republicans recently demonstrated their priorities in this area when they handcuffed the EPA's ability to make rules against mercury pollution, because that would be too big of a burden on industry, and never mind that the next generation of workers will be more likely to suffer from the toxic effects of mercury in the environment.)
There is an obvious disconnect in the Republican approach: Make government pay for the privilege of imposing environmental regulations on industry, but don't make industry pay for the benefit of having longstanding environmental regulations relaxed. Perhaps they're counting the petroleum industry as having already paid enough to its lobbyists, and thinking it would be unfair to make them pay twice by increasing their taxes as well.
Disaster victims, on the other hand, can just muddle along at the mercy of their lenders.
That's the new Republican way, you see; you're on your own. Too bad if the rules are rigged to favor large lenders over individuals, and benefit industry at the expense of the air and water.
Connect the dots.
Crossposted over at My Left Wing.
Update 10/7/2005: The refinery bill passed Congress on a close vote, 210-212. It's known as the Gasoline for American Security Act. No, really. Free gas for everyone!
One silver lining is that no Democrats voted for the bill, noting among other objections that the bill does absolutely nothing to address the rising price of natural gas and consequent increases in home heating costs this winter.
As per usual, the Republican majority bent the rules to get their way:
The vote, which was supposed to be taken in five minutes, lasted more than 40 minutes as GOP leaders searched for the last two votes they needed to get the bill approved. They buttonholed lawmakers for last-minute lobbying as Democrats complained loudly that the vote should be closed. Finally two GOP lawmakers switched from “no” to “yes,” giving the bill’s supporters the margin of victory.
Reportedly, the legislation's fate in the Senate is uncertain. There's still time to make a difference by contacting your Senator.