Irony: How Tougher Bankruptcy Laws Are Hurting Banks That Pushed For Them

[jeffrey]

Washington Mutual Inc. got what it wanted in 2005: A revised bankruptcy code that no longer lets people walk away from credit card bills.

The largest U.S. savings and loan didn't count on a housing recession. The new bankruptcy laws are helping drive foreclosures to a record as homeowners default on mortgages and struggle to pay credit card debts that might have been wiped out under the old code, said Jay Westbrook, a professor of business law at the University of Texas Law School in Austin and a former adviser to the International Monetary Fund and the World Bank.

Bloomberg.com: Exclusive

[Broken Arrow]

Huh, very interesting trade-off. Be careful what you wish for indeed.

[sweeps]

The Law of Unintended Consequences strikes again.

[Joan.of.the.Arch]

Huhm, I had not thought of the reduced availability of bankruptcy as contributing to an increasing rate of mortgage default. I guess it would, though.

[Ima saver]

Our newspaper is full of homes being sold on the courthouse steps.

[Exile]

What a hoot! It's almost enough to make an old atheist like me believe in karma.