Professor Todd Zywicki, apologist-in-chief for the bankruptcy amendments, famously testified before Congress last February that not a single word needed to be changed in the bankruptcy bill — not so much as a misplaced comma, an incorrect cross-reference, an ambiguous phrase or simply a bad idea. It was, he told Senator Feingold, all perfect. Representative Sheila Jackson-Lee had introduced an amendment to provide some protection for victims of natural disasters. She was concerned about whether people caught in, say, a hurricane could waive paperwork requirements if their documents were buried in ten feet of mud or modify income calculations so that disaster relief payments wouldn’t be counted, but her proposal was voted down on party lines. According to Professor Zywicki, the bill — without the amendment — was perfect.
Now the Big Hurricane has hit, and a number of people are taking another look at whether bankruptcy relief for families and small businesses will be adequate. The New York Times suggested Monday morning that Katrina victims be given a reprieve on meeting the requirements of the law — and Professor Zywicki went on the attack. His complaint? The NYT editorial, according to Professor Zywicki, has the temerity to speak of the bankruptcy bill as “special interest politics.” Gee, the NYT is writing about a bill written by credit industry lobbyist Jeff Tassey and George Wallace, and, as the lobbyists cheerfully put it, “shopped” to a friendly congressman, and then backed up with tens of millions of dollars in campaign contributions. Special interest politics, indeed!
But Professor Z reserves special wrath for the NYT’s failure to give full credence to Congressman Sensenbrenner’s vague assurance that a “special circumstances” provision in the means test will protect all the Katrina victims. Try reading the provision; I sincerely hope the bankruptcy judges find a way to stretch the language of the new amendments to provide some relief for hurricane victims, but I don’t see how they will manage. Take the example of people who don’t have the documentation required by the new amendments. One Mississippi judge has already said flatly that he doesn’t think he has the power to waive the paperwork requirements, and as James Weingarten noted right here on TMPCafe, both the Mississippi and Louisiana State Bars have said they think the new bill will hurt hurricane victims. One thing is sure: Congressmen Sensenbrenner’s reassurances don’t give him that power.
Indeed, the “special circumstances” provision doesn’t come close to doing the work the Congressman claims. In one of the many ironies that mark the amendments to the bankruptcy bill, any adjustment requires additional documentation, and, for those whose papers are somewhere in the Gulf of Mexico, the plain language of the statute seems to provide no relief. For hundreds of other blows inflicted by the bankruptcy amendments, such as the increased rights of landlords to toss out tenants or the new risks facing someone who has drawn down a cash advance on a credit card, there is no pretense of relief of any kind — not even Congressman Sensenbrenner’s vague references to special circumstances.
Let’s face it — even the people who supported the bill are queasy about its application to people who have been wiped out by a hurricane. Republican Senator Vitter has introduced legislation to change the bill to account for natural disasters. (Will he send an “You-were-right-and-I-was-wrong card to Congresswoman Jackson-Lee?). Senator Grassley has admitted that there are problems. Even President Bush said he was looking at changes in the bankruptcy laws as part of the overall relief package.
If Congressman Sensenbrenner and Professor Zywicki think that the victims of hurricane Katrina will be fully protected, what’s wrong with an amendment to clarify that point? Let’s go back to the Jackson-Lee idea and make it explicit that people wiped out by a natural disaster get a break.
Or would that require the worst possible admission: a confession that perhaps the bankruptcy bill wasn’t quite perfect after all?
