An oldie but a goodie: If my blog will be remembered for anything, it will be for accurately predicting the collapse of the real estate market back in 2005, and the role that the passage of the 2005 Bankruptcy "reform" act (or BARF, as it has come to be known) in exacerbating the crisis. How badly the GOP-enacted law screwed things up, however, can best be seen in a more scholarly paper recently published by UC Davis, and co-written by Wenli Li, Economic Advisor to the Federal Reserve Bank in Philadelphia. The conclusion:

Before 2005 bankruptcy reform, homeowners in financial distress could use bankruptcy to help save their homes. Homeowners could have their unsecured debts discharged in Chapter 7, thus freeing up funds to make their mortgage payments. Homeowners who were in default on their mortgages could stop foreclosure by filing under Chapter 13 and could use Chapter 13 repayment plans to repay their mortgage arrears over several years. Most homeowners who filed for bankruptcy were not obliged to repay anything to their unsecured creditors.

But the 2005 bankruptcy reform made filing for bankruptcy less useful as a save-your-home procedure. Debtors’ cost of filing increased sharply after the reform. Also the homestead exemption in bankruptcy was capped at $125,000, thus making it impossible for homeowners with high home equity to keep their homes in bankruptcy. A new “means test” increased higher-income debtors’ obligation to repay their unsecured debt in bankruptcy.

Because these changes reduced homeowners’ gain from filing for bankruptcy, they reduce default rates on unsecured debt. And because homeowners’ ability-to-pay is fixedin the short-run, these changes are predicted to increase default rates on mortgages. In the paper, we test whether adoption of the 2005 bankruptcy reform led to higher rates of mortgage default. We use a large dataset of prime and subprime mortgages.

Our main result is that bankruptcy reform caused mortgage default rates to rise. Comparing default rates three months before versus after bankruptcy reform, the increase was 36% for prime mortgages and 11% for subprime mortgages. Using a longer period of one year before versus after the reform, the increase was 50% for prime mortgages and 7% for subprime mortgages. Homeowners subject to the cap on the homestead exemption were 50% more likely to default after the reform, regardless of whether their mortgages were prime or subprime. Homeowners with subprime mortgages were 13% more likely to default if they were subject to the new means test, but default rates of those with prime mortgages did not change.

The study uses a lot of complicated mathematics to make its point, but its well worth browsing through if you have the time.

Perhaps a more devastating land mine, however, is something that was hatched by the lending industry, at roughly the same time they created default swaps and high-risk adjustable rate notes. The Mortgage Electronic Registration Systems, or MERS, was invented by Big Banking as a way to cut costs on the production of legal documents, specifically recording deeds. In real property transactions, ownership is usually shown through the public recordation of deeds, which create a chain of title proving that the person who claims to be the owner has a legitimate case, based on a series of orderly transactions dating back to Adam for all to see. At the same time, any party that has a lien on property, whether it be from a mortgage or some other debt, can also record, thereby establishing a priority based on when the lien was recorded.

Of course, recording anything with the county costs money. The almost-entirely unregulated process of lending money to prospective homeowners, the fruits of which we have seen in the insane rise and precipitous fall of the market in the last five years, generated increasingly complicated arrangements by which trusts involving multiple investors financed these high-risk notes, which would then be bought and sold to other investors. A very complicated system, indeed, which was how MERS came to be.

The idea behind MERS was that rather than generating a new document every time a loan was transfered, and thereby having to repeatedly record (and repeatedly pay fees) mortgages, an entity would be created that would take on the role of "holder of the lien" as a "nominee" of the actual note holder. The lender would collect money from the homeowner, but if the borrower ever fell behind, MERS would step in, and initiate the foreclosure process. MERS, however, is never actually the note holder, has no right to collect money on debts, and has no privity of contract whatsover with the parties to the homeloan.

Which is problematic, since MERS does not otherwise have anything resembling a right to participate in foreclosures, and courts are increasingly rejecting their attempts to proceed on the sixty million mortgages to which they "hold title." In Kansas, for example, the state supreme court recently held that MERS had no standing to pursue foreclosures, and courts in that state have effectively given a free pass to homeowners whose loans were originally held in the name of MERS. It's a slip-up that has effectively put the brakes on foreclosures based on loans generated after 2005, since the right by MERS to foreclose can be challenged even after a sale has occurred; even in states where MERS' claim for standing has been upheld, the threat of litigation challenging it's right to foreclose has suddenly made the option of modifying the underlying loan to terms that better suit the borrower more palatable, and certainly better than anything dreamed up by the Obama Administration.

Requiem for February:

An average of 3,960 bankruptcy petitions were filed per day nationwide last month, up 18 percent from January and up 28 percent from a year earlier, according to Automated Access to Court Electronic Records, a bankruptcy data and management company.

February was the busiest month for filings since Congress overhauled the bankruptcy law in 2005. Bankruptcy experts said the rise was particularly worrisome because those changes made filing for bankruptcy more complicated and expensive.

“This number of bankruptcies may be under-representative of the true financial distress consumers are feeling because of the steps Congress has taken,” said Jack Williams, a scholar in residence at the American Bankruptcy Institute and a professor at Georgia State University.

The latest figures show the financial pain is spreading from states like California and Florida, which exemplified the housing boom and subsequent bust, to those along the Eastern Seaboard like Maryland, Virginia and Delaware, which were among the 10 states with the largest percentage increase in filings in January and February. “You are seeing a good-size uptick everywhere,” said Mike Bickford, president of Automated Access.

Bankruptcy experts caution, however, that data from just one or two months can be misleading.

“The monthly bankruptcy filing rate has a lot of cyclicality,” Robert M. Lawless, a professor of law at the University of Illinois College of Law, wrote on Tuesday on the widely read bankruptcy blog, Creditslips.org. Some experts, for example, say bankruptcies often seem to rise in February as debts from the holiday season come due. Even so, the trend is definitely upward, Mr. Lawless wrote. States as disparate as Kentucky and Rhode Island joined the top 10 list, and the absolute number of filings rose significantly.

--N.Y. Times (3/5/2008). In fact, the cyclicality mentioned above normally increases even more in March, April and May, with the X-mas holiday and summer months being the slow time for filings. People like to hang on through the holiday season, max out their credit cards to insure that a Merry Christmas and a Happy New Year is had by all, then file after they get one or two bills behind (something like that also happens during the summer, when it's vacations and weddings for which debtors go all-in).

On the other hand (you knew that was coming), the fact that the number of filings reached a post-YBK peak last month is not particularly interesting. Almost every month since BARF went into effect in October, 2005, has seen an increase; the most noticeable thing YBK accomplished was that it created a panic before the new law went into effect, leading many people who hadn't planned on filing, or even desired filing, to head to the Bankruptcy Court to get their bankruptcy done before the change occurred. In the twenty-eight months since, it has taken the toxic combo of a collapsing real estate market and a massive credit crunch (brought on, in no small part, by YBK) leading to recession that has returned the monthly level of filings to its historic, pre-BARF norms.

Having written an op-ed for the LA Times a few years back at the time the new bankruptcy law went into effect, I thought that a follow-up piece, about the ARM-caused home foreclosure boom would be in order. So I penned an offering, focused on the bill sponsered by Brad Miller and Linda Sanchez to allow bankruptcy courts to modify home loans through Chapter 13, and submitted it to the Powers That Be on Spring Street. Where it was quickly (and correctly) rejected without explanation.

Lo and behold, the Times did decide to publish a piece by another writer on the same subject yesterday, a former politico named Jack Kemp. It's an excellent piece, making the conservative argument for a more liberal bankruptcy law:

I applaud the White House efforts to encourage mortgage servicers to modify existing adjustable-rate loans for a limited number of borrowers who cannot afford interest rate resets. However, depending solely on the goodwill of an industry that bears no small measure of responsibility in this crisis is unlikely to be the full answer.

What is missing is a rational and urgent push to help the estimated 2.2 million families in danger of losing their homes to foreclosure in the near future. Congress is considering a small fix that would have more impact on these families than any other option under consideration: temporarily allowing bankruptcy courts to give the same relief to homeowners on principal-residence mortgages that businesspeople get on real estate investment loans, that farmers get on farm loans and that individuals receive on loans for vacation homes, cars, trucks and boats.

Bankruptcy law is wildly off-kilter in how it treats homeownership. Under current law, courts can lower unreasonably high interest rates on secured loans, reschedule secured loan payments to make them more affordable and adjust the secured portion of loans down to the fair market value of the underlying property -- all secured loans, that is, except those secured by the debtor's home. This gaping loophole threatens the most vulnerable with the loss of their most valuable assets -- their homes -- and leaves untouched their largest liabilities -- their mortgages.

In the absence of modification, many of today's loans will result in foreclosure. When servicers are unwilling or unable to voluntarily modify exploding, unsustainable home mortgage loans, Congress has a duty to consider involuntary modification in bankruptcy court, where the same relief is granted on all other secured loans. The proposed Emergency Home Ownership and Mortgage Equity Protection Act being considered by Congress would do just that. It is targeted at only sub-prime and nontraditional mortgages and will be available for only seven years after it is enacted in order to mitigate against the next wave of exploding interest rate resets.

I have a number of other proposals to reform the bankruptcy law to enable delinquent homeowners to keep their homes while paying down their default, here, here and here.

Reason will not lead to Solution: When last we left the thorny subject of the current real estate implosion and its relation to bankruptcy law, the House of Representatives was considering legislation that would relax the current draconian restrictions on homeowners in filing Chapter 13 bankruptcies to stave off the Repo Man. The bill passed through sub-committee last month, and two weeks ago the Chief Economist for Moody's Corp. testified before the Judiciary Committee that one provision of the bill, which would permit the courts to modify the terms of a home mortgage, would save up to a half-million homes from being lost in foreclosure over the next year and a half.

This is such a sensible reform that I can hardly believe it has any chance of passing through Congress, let alone getting signed by the President. It would reamortize the secured amount of a home loan at the appraised value of the home, permitting homeowners to treat oversecured mortgages as unsecured, the same way owners of vacation homes and rental properties, of commercial real property, and family farmers can under the current law. It would also permit repayment plans that exceed the current five-year limit, and end the worthless requirement that debtors seek credit counseling as a precondition to filing a bankruptcy.

To those reforms I would add three others: raising the debt limit on Chapter 13 filings; eliminating the barrier that prevents homeowners from receiving discharges in Chapter 13 when they have filed a Chapter 7 within the last four years; and ending the presumption of abuse element. The current limits (just over a million dollars in secured debt, and just under $337,000 for unsecured debt) are particularly arbitrary for middle class homeowners, many of whom made the mistake of borrowing against the artificial rise in the value of their homes just before they needed hospitalization, or had a high judgment imposed against them or their business. The elimination of the 4-year barrier on Chapter 13 filings should be self-evident in this economy; many of the people who filed bankruptcies on the eve of YBK in October, 2005 also own homes, and not allowing them to save their homes would be unfair. And the presumption of abuse element, always the most controversial aspect of the 2005 law, forces many homeowners who simply wish to walk away from their property, into Chapter 13 (or its very expensive cousin, Chapter 11), benefiting no one, least of all the banks that are prevented from foreclosing by the automatic stay.*

But as I said, its chances for passage are dim, at least until after the 2008 election. Few Republicans in either house of Congress back the measure, and even if it gets out of the House, the likelihood that the Democrats could invoke cloture in the Senate, or even get a majority to support such reforms, is bleak. And by the time another session of Congress decides to act, the devastation to the economy that will no doubt be caused by the upcoming landslide of foreclosure sales will have already occurred.

*Its stated purpose, to discourage filings by middle and upper class debtors, has failed miserably; in the Central District of California, less than one percent of all affected cases get dismissed, in spite of all the time and paperwork the statute imposes.

UPDATE: Thanx to the good folks at Winds of Change for cross-posting this.

YBK [Fin]: Wow, who saw this coming? Oh, wait....

Three bits of miscellany, for your review: Countrywide Mortgage, one of the nation's largest prime lenders for homes, saw its profits fall by a third in the last quarter, with one out of twenty-two loans now being in default; in Southern California, a record number of foreclosures occurred in the second quarter of 2007, with 17,408 homes being lost, an 800% increase over last year; and bankruptcy filings have more than doubled in the Central District of California so far in 2007.

Of course, bankruptcy filings in 2006 were at historic lows, in the aftermath of YBK and the passage of the new law, and the current totals are still well off the figures from the pre-BARF era. But in some areas of the country, the collapse of the real estate bubble is sparking a renewed rush to the bankruptcy courthouse. Locally, Riverside and San Bernardino Counties are the new hubs of the debt relief bar, as those two rapidly expanding centers of exurban population growth witness a Perfect Storm: an oversupply of housing combined with an accelerating rate of defaults in mortgages, together with a sharp collapse in the value of homes which makes refinancing impossible. Anyone who refinanced since 2002, and/or has an adjustable rate loan, the only thing to do is pray.

YBK [The Aftermath]: Prof. Kleiman has a good update on the bankruptcy reform act that went into effect last October, and the impact it will have once the combination of collapsing home values and delinquent ARM loans hits American homeowners. Ironically, the devastation it will cause will occur in spite of the law having been so "perfect," that not a word need be changed.

The Canary in the Coalmine:

The number of Californians who are significantly behind on their mortgage payments and at risk of losing their homes to foreclosure more than doubled in the three months ended Sept. 30, providing the latest evidence of trouble in the housing market, figures released Wednesday show.

Lenders sent out 26,705 default notices — the first step toward a foreclosure — during the July-to-September period, up from 12,606 during the same quarter in 2005, according to DataQuick Information Systems.

(snip)

Foreclosures are rare when the housing market is strong and prices are rising. In those conditions, borrowers can usually sell their homes quickly, or they have enough equity to allow them to refinance their loans. But in another disquieting sign, DataQuick reported that 19% of the owners who went into default earlier in the year actually lost their homes to foreclosure in the third quarter, more than triple the 6% in 2005.

(snip)

The softening of the housing market was the trigger, as new homeowners with little or no equity in their properties found themselves unable to sell at a high enough price to pay off the balance of the loan and still cover all of the sale expenses.

"Whereas a year ago, people could have put their house on the market and sold their way out of the problem, now they're stuck with the house," said Richard Pittman, housing services coordinator for credit counselor ByDesign Financial Solutions in Los Angeles.

--Los Angeles Times (10/19/20)

We caught a break last year when the housing market didn't collapse, in conjunction with the anticipation of the apocolyptic bankruptcy law. YBK was limited in its impact to borrowers and credit card companies, not homeowners, many of whom were able to stave off the trip to the courthouse by refinancing in the twilight days of the housing boom. Those people who are now threatened with the foreclosure of their homes will be visiting my office soon, as well as the offices of other bankruptcy attorneys (oops, my bad: other "debt relief agencies"), but without the protections Chapter 7 and 13 debtors had under the old law.

And as a consequence, more people will lose their homes in the end to foreclosure, which will further depreciate the value of real estate, which will suck even more money out of the economy.

YBK, THE SEQUEL: Foreclosure activity (ie., foreclosures and notice of default) in California has more than doubled in the second quarter of this year. Although that is a slight decline from the first quarter, and California remains below the national norm in terms of foreclosures, these are frightening numbers, particularly when you combine this with skyrocketing energy costs and the percentage of adjustable-rate mortgages homeowners have in this state. More foreclosures will lead to declining home values, which will diminish the net worth of property owners, making it harder to borrow and invest, leading to more defaults and bankruptcies, as people desperately try to use the last remaining resort to keeping their homes.

Oh, and have I mentioned they changed the bankruptcy laws last year....

Back when I was writing about YBK, I used a chart showing the relationship between home values and a number of other variables, including bankruptcy filing rates and voting patterns in Presidential elections. The most recent numbers are out, and they still show the strong correlation between rising property values over the past quarter-century and Democratic voting in Presidential elections. The twenty-five states that have seen the smallest increase in home prices since 1980 are, without exception, states that cast ballots for George Bush in the last election. All but six of the states in the top half went for Kerry, and of the Red States that cracked the top twenty-six, five (Virginia, Florida, Arizona, Colorado, and Nevada) are states that are either Purple States and/or trending Democratic, and the other state, Montana, has a strong historical track record of backing progressive Democrats in statewide elections.

In the meantime, here's an interesting summary of what the recent flood of foreclosures means, and how the new bankruptcy law has exacerbated the problem. [link via Susie Madrak]

YBK, Revisited: It looks like we caught a break with the Housing Bubble. It burst alright, but at least it did so after the new bankruptcy law went into effect last October. My great fear last year was that people were going reach the limit as to how much they could borrow off their home's equity, and thereafter falling into foreclosure, at precisely the time that the expiration of the old bankruptcy law would occur. We ended up having a panic anyway, but it could have been a lot worse.

Now come these figures, showing that the foreclosure rate on homes has dramatically gone up nationwide immediately after the new law went into effect. The bankruptcy rates are starting to go up again as well, albeit nowhere near the typical numbers from recent years. [link via Sploid]

Over two million people filed bankruptcy in 2005, a 32% jump from the year before, or approximately a half million more filers than in 2004. That's a nice round number, a half million: the number of people who filed the week before YBK last October was just over a half million. Chapter 7 filings were up almost 50% from the year before; about one in 53 households filed for bankruptcy protection in 2005.

So what was the point again? Three months later, we are beginning to see some trends:

Three months after a new bankruptcy law took effect, the overwhelming majority of debtors seen by credit counseling agencies are filing for bankruptcy instead of using repayment plans envisioned by the law's supporters.

The law requires debtors to see credit counselors before they file for bankruptcy protection. It is a prerequisite that banks and credit card issuers hoped would steer consumers away from bankruptcy court and into plans that would allow them to repay debts over a few years.

But so far, that is not happening.

The counseling agencies say most debtors are in such deep financial trouble that they cannot qualify for a debt-management plan.

"Typically, consumers are too far gone when they get to us," said Ivan L. Hand Jr., president and chief executive of Money Management International Inc. (MMI), the nation's largest credit-counseling organization.

(snip)

The pre-bankruptcy credit-counseling requirement was initiated by Sen. Jeff Sessions (R-Ala.) during the 10-year battle to enact a new law. He said in a recent interview that it was "disappointing" to learn that so few consumers have signed up for a debt-management plan. He said he intends to monitor the law's progress and was "not prepared to give up on this."

This bears out what I've been seeing as well. I have yet to see the mandated credit counseling do anything more than confirm the debtor's first instinct: that he needs to file bankruptcy pronto. All that's changed was the time and paperwork...and the explosion in filings engendered by the pre-YBK panic in October.

Don't Mess with Texas: Last month, over 15% of the new foreclosures nationwide were in the Lone Star State. One out of every 631 households are in some stage of the foreclosure process in Texas, encompassing 12,753 homes, and the numbers rose 61% for the month of December. In comparison, California, which also saw a significant jump in December, reported only 7,674 homes in foreclosure. Other states joining Texas at the bottom of the heap are Utah, Indiana and Ohio, which regular readers of this site know have also seen the smallest increase in property values over the last five years, as well as the highest bankruptcy rates.

November totals for the Central District of California are out...and they show that the number of bankruptcy filings fell by more than 90% from the totals of one year ago. The large drop in Chapter 13 filings after October 17 (remember, that's the provision favored by the new law) is perhaps the strongest indication that it's not so much the new law scaring people away as it was the end of the old law drawing a high number of people out of the woodwork, who then filed before YBK.

YBK [The Bloody Aftermath]: Thanks to the diligent efforts of Joe Biden, Steny Hoyer, and the rest of the Democratic K-Street Caucus, bankruptcy attorneys in Los Angeles and its suburbs were given an early Christmas Holiday present this year. There were over 28,000 filings in the month of October, almost all of them in the first two weeks of the month (a typical month, like February of this year, before the new law was passed, might see only 4,500 filings). That was a 525% increase from the same month a year ago, or almost half the total from last year, in a two week time span.

YBK [The Sequel]: One inevitable result of the pre-YBK panic was that new filings after October 17 would all but disappear. The Washington Post confirms that in the first month since the new law went into effect, the number of new cases went from nearly three-quarters of a million in the two weeks preceding YBK, including just under a half-million in the final week, to about 3,000 cases a week since then. Prior to the signing of the bankruptcy "reform" act, a typical week saw about 30,000 cases. After the run on the courts in October, it is a welcome break for those of us who make our living in this area; we are having a hard time just filing the amendments, attending the hearings, and, in the case of Trustees, adminstering the assets that are required under the old law, without having to think about what we should be doing with new clients.

The scuttlebutt around the local courts is that the new cases are being disproportionately filed in pro per (that is, without benefit of legal counsel), using forms that are out-of-date and without adherence to any of the new requirements, such as mandatory credit counseling, mandated by the new law. Therefore, many of the cases included in the total are going to get dismissed. That will lower the new total even further, but many of those debtors are still going to have a need to discard their debts, so I expect to see some of these people in my office next month. The end of the old law cleared the decks, as it were, but the problems with the economy remain.

Indeed, even now the numbers of new filings are beginning to go back up again. YBK motivated a lot of people who had been procrastinating to file at the last minute, most of whom never would even considering the need to file. The new law creates a few more hoops to jump through, and increases the paperwork to successfully file a new case, but it doesn't eliminate the problems of out-of-control revolving credit, or of delinquent mortgage or car payments. In a matter unrelated to YBK, monthly credit card payments are going to increase significantly in January, and the housing bubble has already begun to burst in certain areas of the country. Bankruptcy attorneys have had years to prepare for this lull, and the explosion in business last month has bought us time. And a fair number of people who didn't file in October now have the bug planted in their ears.

Prediction: anticpate a sizeable increase after the holidays, and a restoration of the old weekly norms by the end of 2006.

Post-YBK: Here's one group that is profiting from the changeover to the new law almost as much as bankruptcy lawyers (and more so than even the credit card companies): corporate debt collectors. They buy delinquent accounts from the original lender, combine tough talk with amenable compromise, and make a profit from collecting not the entire amount due, but enough to cover their original investment. The most successful of the corporate "repo-men", Portfolio Recovery Associates, collects more than three dollars for every dollar it spends purchasing bad debt. Sweet gig, is that....

YBK [The Bloody Aftermath]: Good article in this morning's New York Times about the visitation of the Law of Unintended Consequences on the credit industry. Apparently now, they realize they got scammed by their lobbyists:

For more than eight years, big banks lobbied aggressively to make it harder for consumers to file for bankruptcy.

Now that the new bankruptcy law has taken effect, was the investment worth it? The early data suggest that sometimes, you have to be careful what you wish for.

Bankruptcy filings were supposed to snowball in the months before the tough new law went into effect on Oct. 17. But the avalanche of petitions, and the lines of debtors streaming out the courthouse doors caught even the credit card issuers who supported the new law by surprise.

In recent days, the five biggest bank issuers of credit cards have said that the unexpectedly large flood of filings shaved hundreds of million of dollars off their earnings in the third quarter.

But with tens of thousands of petitions still being processed and Hurricane Katrina's impact on cardholders still being sorted out, the bankruptcy rush is likely to result in well over a billion dollars worth of losses by the end of the year.

"We thought it would cause a bubble," James Dimon, the president of J. P. Morgan Chase, said last week. "The bubble is just bigger than we thought."

Sallie L. Krawcheck, the chief financial officer for Citigroup, said, "It's clearly done some short-term earnings damage to the card industry."

Of course, most banks projected a tidal wave of filings in anticipation of the new, more restrictive rules. They weighed the long-term benefits of a bankruptcy overhaul against the short-term costs of the expected surge of bad, uncollectible debts. What they misjudged, however, was the extent.

More than 500,000 Americans filed for bankruptcy protection in the 10 days before the law took effect on Oct. 17, according to estimates by Lundquist Consulting, a research firm in Burlingame, Calif. That is roughly a third of the total number of bankruptcies filed in 2004. And though the number is expected to soon slow to a trickle, some bankruptcy courts were so inundated with filers that thousands more could be counted this week.

As a result, many banks have found themselves warning that the bankruptcy rule changes would have a big impact on fourth-quarter profits. And executives concede the bottom-line benefits of the new law will now take longer to materialize.

Understand, the estimate that it will cost "well over a billion dollar in losses" is definitely on the low side. The overwhelming number of late filings included many debtors who would have otherwise continued making payments on their past-due bills, and would have never contemplated taking the steps necessary to file bankruptcy, were it not for the sense of urgency set by the October 17 deadline. Since the average amount of credit card debt in Chapter 7 cases is approximately $20,000, the flood of last-minute filings (btw, it will be weeks before all the new petitions are counted by the undermanned courts) will probably push the immediate losses over the $10 billion mark. As I noted last week, YBK may have created the greatest transfer of wealth from the haves to the have-nots since the Great Society.

YBK [Post-game]: In the final week under the old law, there were at least 205,000 personal bankruptcies filed, and after electronic filings and other yet-to-be-counted measures are considered, the total may surpass 300,000 500,000. The previous record was just over 100,000 filings, set the previous week, and a normal week would have seen about 30,000 filings. Taking into account that the average amount of credit card debt per filing is just under $20,000, almost all of which will now be forgiven by the terms of the old law, in the past fortnight we may have seen one of the greatest transfers in wealth from the rich to the poor in history: $8 billion $12 billion, from the credit card industry to consumers. Suffice it to say, it will take awhile for Biden's Friends to recover, another victim of the Law of Unintended Consequences !!

UPDATE [10/20]: Statistics revised per Washington Post story this morning.