The Wisdom Of Simplicity; The Folly Of Congress
I have practiced law in South Florida and across the nation for 30 years, including as a bankruptcy attorney and financial distress counselor in south Florida for 30 years. In the last few years, we have seen a disheartening increase in the number of our clients who are on the brink of losing their home….most often, as a result of predatory or irresponsible lending but as well due to our client’s unforseen loss of business or income due to the recession and unforseen shifts in the economy.
I was initially enthused by this administrations’ express intentions to legislate revisions to the bankruptcy code to allow debtors to seek reduction to their principal balances. This seemed to be a win-win scenario: The lender maintains a performing asset and the homeowner sees promise for tomorrow. These revisions would have required the modification of two simple lines of statute, and would have enabled firms like ours to save hundreds of owners from being cast asunder.
Instead, special interest groups, most recently the very banks receiving TARP funds, have successfully daunted this effort. The argument that such revisions to the law affords bankruptcy judges too much discretion is a false syllogism…it presupposes that said judges lack the requisite intellect or judiciousness to sort out those instances that represent irresponsible or abusive borrowing behavior. In fact, the more rationale argument is that bankruptcy judges are better suited than any other judicial body to evaluate fair play in the context of distressed financial circumstances.
It is commonly touted that the road to economic recovery must begin with the revitalization of the housing industry. I would state this in another way: Americans must be made confident that they will have a roof over their head. This country’s salvation may well lie in the sanctity of home ownership. When two lines of statutory change would save countless displacements and restore our faith, it seems sheer folly to ignore the power of such simplicity.