Bankruptcy Reform

One of the reasons the "bankruptcy reform" effort was successful is that Americans have a deep uneasiness about the use of unsecured credit.

I've spent most of my career in banking and actually worked for two large credit card companies. The uneasiness showed up all the time in our consumer research. A large proportion of transactors (those people who did not pay finance charges) believed that people who did borrow on credit cards were lazy, feckless, and stupid. This attitude was widespread and persistent. Researchers dubbed it the "moralization of credit."

Revolvers (those who did pay finance charges) were a lot like cigarette smokers. They were aware of others's disapproval and would often lie about their behavior. No surprise that no one could organize them to oppose the bill.


This moralizing seems only to apply to individuals. Corporations do not face thee same obloquy. Donald Trump has used the threat of bankruptcy to restructure his corporate debt several times, but few think that this disqualifies him from playing the savvy business titan on TV.