Arkadi Kuhlmann, CEO of ING Direct, apparently thinks the new bankruptcy bill will actually be damaging to financial-services companies. "How's that?" you ask.
Well, as things stand today, the Citibanks and Capital Ones of the world will pretty much offer credit to anyone or anything that casts a shadow. Once they get their wish from the bankruptcy reform legislation — in the form of harder-to-obtain Chapter 7 (full) bankruptcy availability for consumers — they will be free to expand their loose lending practices even further. They'll know that the odds of having to write off bad debts due to Chapter 7 claims just went down significantly; thus they can go throttle-up with more subprime lending. And expose themselves to more bad lending decisions.
"The one-sided provisions of this bankruptcy legislation are bad news for consumers," Kuhlmann said in a recent statement. "But they are also bad news for the financial services industry. Consumers are our customers. By creating a form of debt imprisonment, this bill will hobble the most important player in the world economy — the American consumer."
According to this article, Kuhlmann is the only CEO of a U.S. bank to publicly oppose the legislation. Go figure.
Labels: Bankruptcy
