Bankruptcy Support Grows
Despite a slight crack last week in the credit union consensus behind bankruptcy reform, there continues to be near unanimity behind the bankruptcy reform bill that is moving again through Congress.
That crack appeared when one credit union leader, Jim Blaine, president of the North Carolina State Employees CU, the nation's second-largest credit union, stood next to Sen. Ted Kennedy and other Democratic opponents of the bill during a Capitol Hill news conference last week to denounce the bill. Blaine, a long-time critic of the bill, insisted the measure goes too far towards penalizing irresponsible behavior by individual borrowers and does nothing to curb irresponsible behavior by lenders, like the continued proliferation of credit card offerings. "If you're going to hold borrowers to a higher standard of responsibility, then you should hold lenders to higher standards," said Blaine. "This bill fails the test of a balance between lenders and borrowers."
But Blaine appears to be a lone wolf in the credit union movement, where executives continue to overwhelmingly favor the bill. The near-unanimous support for the bill was evident during CUNA's annual Government Affairs Conference last week.
Most of the credit union executives asserted that bankruptcy-related losses amounted to about half of their annual charge-offs.
Almost every one of the credit union managers had an anecdote to relate about what they considered to be an abuse.
Larry Mortenson, CEO of Los Alamos, N.M.-based Zia Credit Union, relayed the case of a married couple, each earning over $100,000 a year, with more than $400,000 in retirement savings, who were allowed through Chapter 7 to walk away from all of their debts and protect their retirement money.
Ken Beine, president of Shoreline Credit Union, who testified before Congress last month on the bankrtupcy reform bill, said a member of his Two Rivers, Wis., credit union is preparing to file for bankruptcy for a third time.