Sen. Barack Obama proposed changes in three-year-old bankruptcy laws Tuesday to help military families, the elderly and others overcome by debt because of medical bills, natural disasters or other financial distress.
In a campaign address at Powder Springs, Ga., that portrayed banks, credit-card companies and mortgage brokers as unscrupulous predators, the Illinois Democrat accused his presidential rival, Sen. John McCain, of constantly siding with the banking industry.
“When it comes to strengthening the safety net for hardworking families, he’s been part of the problem, not part of the solution,” Mr. Obama said.
“Like the president he hopes to succeed, Senator McCain does not believe the government has a real role to play in protecting Americans from unscrupulous lending practices,” Mr. Obama said. “He would continue to allow the banks and credit card companies to tilt the playing field in their favor, at the expense of hardworking Americans.”
The freshman senator took aim at the bankruptcy reform laws that Congress passed in 2005 by overwhelmingly bipartisan margins and were signed by President Bush.
The bill passed the Senate by a vote of 74-25, backed by 18 Democrats, all of whom are now supporting Mr. Obama’s presidential candidacy. The House gave final approval by a vote of 302-126, with 73 Democrats joining Republicans in favor of the measure.
The reforms were aimed at making it more difficult for people filing for bankruptcy to avoid paying their debts and, in effect, having most of it written off in the bankruptcy process. Credit card companies and banks said the practice resulted in billions of dollars in losses that drove up the cost of credit accounts to consumers and, eventually, led to tighter credit requirements that hurt lower- to middle-income people.
The bill, strongly supported by the credit card and banking industries, required more Americans filing for bankruptcy to pay back a larger share of their debts.
The Obama campaign pointed to a number of votes that Mr. McCain cast in the Senate on the Democrats’ amendments when the reforms were debated, accusing him of repeatedly “siding with banking industry lobbyists”.
The McCain campaign said Tuesday that Mr. Obama was playing partisan politics with an issue that had won strong bipartisan support for a bill that the Arizona Republican had helped steer through the Senate.
“Eighteen Democrats and John McCain worked together on the bipartisan Senate Bankruptcy Bill, and Barack Obama’s rigid partisanship and self-promoting political attacks show that he’s a typical politician – which is the problem in Washington, not the solution,” the McCain campaign said.
“The difference is clear, John McCain wants to grow jobs, keep Americans working and out of bankruptcy, while Barack Obama has shown he’ll tax job-creating small businesses and Americans making as little as $32,000 a year,” said campaign spokesman Tucker Bounds.
Mr. Obama proposed helping service members and military families who have fallen deeply in debt by speeding up the bankruptcy process, exempting them from a “harsh means test,” cutting “unnecessary paperwork” and offering a homestead exemption that would allow debtors to keep a larger share of their home’s value.
He promised to help Americans older than 62 who are facing bankruptcy with a minimum home exemption equal to the median cost of a home in their state – “giving them a better chance to keep their homes.”
He also proposed a 120-day moratorium “on adverse credit actions from collectors, such as [home] foreclosure.”
And whom exactly will pay for this – yup, you guessed it, the tax payers – just like we’re going to pay for every damn thing that Obama proposes.