Obama vs. McCain on Bankruptcy

(This is the second article in a continuing series examining the candidates’ thoughts and actions as we approach the coming election in November.)

The presumptive Democratic and Republican nominees’ positions on bankruptcy and credit reform are an important aspect of their fitness for the highest office in the country. What were some of their votes on bankruptcy and credit issues?

The first issue to be examined is how the candidates voted on the Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA). This bill, S. 256, made huge changes to the Bankruptcy Code, largely at the behest of credit card issuers, car loan lenders, and mortgage lenders. It is a massively anti-consumer law. As one bankruptcy judge put it in a published opinion, “Those responsible for the passing of [BAPCPA] did all in their power to avoid the proffered input from sitting United States Bankruptcy Judges, various professors of bankruptcy law at distinguished universities, and many professional associations filled with the best of the bankruptcy lawyers in the country as to the perceived flaws in the Act. This is because the parties pushing the passage of the Act had their own agenda. It was apparently an agenda to make more money off the backs of the consumers in this country….”

(For some of my past articles discussing BAPCPA and why it is such a terrible law, read Bankruptcy Basics: What About the New Bankruptcy Law?, How Will the New Bankruptcy Law Affect Me?, BAPCPA’s Biggest Blunders, Why I Hate Pre-Bankruptcy Credit Counseling, BAPCPA and the Rule of Unintended Consequences, and 15 Myths of Bankruptcy Reform.)

The vote on this bill was taken on March 10, 2005. Both Senators McCain and Obama were present and voted. McCain was one of the 74 Senators who voted FOR BAPCPA. Obama was one of the 24 Senators who voted AGAINST BAPCPA. (Senator Clinton was not present for the vote; her husband had just had surgery and she was out of town. For a complete tally of the votes, see the U.S. Senate’s official website by clicking here.)

Before the vote, in a constituent letter, Senator McCain called the bill, “…an important step toward a fair and balanced approach to restoring personal responsibility to our federal banking system.” Although I couldn’t find a corresponding pre-BAPCPA comment from Senator Obama, he did state at a January debate, in response to a question about the 2001 and 2005 bankruptcy bills, “I opposed them both. I think they were bad ideas, because they were pushed by the credit card companies, they were pushed by the mortgage companies, and they put the interests of those banks and financial institutions ahead of the interests of the American people. And this is typical.”