Mica Defends CUNA's Bankruptcy Reform Support in Wisconsin Paper

WASHINGTON-CUNA President and CEO Dan Mica recently had a letter to the editor published in the Wisconsin State Journal, defending CUNA’s support of the bankruptcy reform bill after a scathing opinion piece against the legislation that noted CUNA as a backer. In the March 6 editorial, Senate Should Reject Bankruptcy Bill, it noted that a commission put together in the mid-1990s handed Congress a 1,300-page report with suggestions on how to reform the bankruptcy system. “Those recommendations should have become the roadmap directing Congress how to update and improve bankruptcy law for the benefit of creditors and debtors,” the opinion read. “Instead, Congress took a wrong turn. It neglected the commission’s work and allowed the credit card and banking industries to reshape bankruptcy reform into their own debt collection assistance plan, to the disadvantage of millions of consumers.” It said Wisconsin’s “fingerprints” have been all-over the bill from House sponsor Jim Sensenbrenner (R-Wis.) to Madison-based CUNA. In response, Mica pointed out that credit unions “have suffered record levels of bankruptcies for several years and have observed that too many members walk away from their debts, although many have the ability to pay back some or all of their debts.” He said that, in 2004, 40% of all credit union losses were attributable to bankruptcies, equaling $900 million. As cooperative financial institutions, credit unions must pass these losses down to all members through lower savings rates or higher loan rates. CUNA’s CEO emphasized, “Let’s be clear about one thing, however: CUNA recognizes that bankruptcy is a legitimate way for many who truly need an extraordinary means to address their indebtedness. Further, CUNA and thousands of credit unions nationwide have thrown their support and energy behind improving the financial literacy of our nation’s youth (through a partnership with the National Endowment for Financial Education) as a way to help them understand their financial alternatives.” However, Mica wrote, “Our issue, and that of credit unions, is when individuals use bankruptcy as a personal financial planning tool. The legislation pending in the Senate is the best chance to end this abuse, and save credit union members from further losses.” After spending eight years floundering in Congress, the Bankruptcy Abuse Prevention and Consumer Protection Act (S. 256) has proponents more optimistic than ever that it will become law this year. It has already passed the Senate and the House is expected to pick up the identical bill the week of April 4 after returning from the two-week spring recess. -