Joe Biden & MBNA

I am a strong supporter of Barack Obama’s campaign, and I am very pleased with his selection of Joseph Biden for Vice President. Biden will bring needed experience, respect, and fire to the campaign. But Joe Biden is from Delaware, the home of MBNA, the credit card giant, now owned by Bank of America.

All politicians have warts of one kind or another, and as a citizen it is all but impossible to find a political leader with whom you always agree. But as someone who is concerned about Americans who struggle with debt, I find Biden’s stance on bankruptcy reform particularly troubling. He has been a consistent supporter of the credit card industry’s efforts to make bankruptcy rules more stringent and to make the process of declaring personal bankruptcy more onerous and more expensive. After nine years of lobbying, the banks were able get a new, tougher bankruptcy bill through Congress, and President Bush signed it into law in 2005.

Barack Obama voted against the bankruptcy bill and has been a steady opponent of the credit card industry, but Biden’s stance on this issue is a blemish on an otherwise very respectable voting history. Unfortunately, now that the economy is in a tailspin and foreclosures are bursting out all over, the hurdles imposed in the 2005 bankruptcy bill are making life even more difficult for many debt-burdened consumers who could use the second chance that bankruptcy is designed to provide.

To make matters worse, there is at least the appearance of an improper relationship between Biden and MBNA. Today, the NY Times is reporting that Hunter Biden, the senator’s son and an attorney, worked for MBNA for from 2001 to 2005, a period that coincides with the credit card industry’s bankruptcy lobbying effort. The Obama campaign is defending this messy bit of Biden history, but it is a troubling episode that provides yet another example of the pernicious influence of big money in our government.

Appearance on The NewsHour with Jim Lehrer

As part of series conversations on the economy, I appeared on the Monday, August 18th edition of The NewsHour with Jim Lehrer. A transcript of the interview, as well as audio files and streaming video can be found here.

Exporting Credit Card Debt

I am often asked why credit card debt is such an American problem, and my usual answer is that, with some exceptions, other countries haven’t caught up with us yet. We lead the pack in indebtedness. The latest installment in the NY Times series on debt shows how the rest of the world is catching up. For some time, the UK and its former colonies (US, South Africa, and Australia) have had debt problems, but now credit cards, and the problems associated with them are spreading to Asia and Latin America. The article highlights problems in Turkey and South Korea.

Few American exports have proved as popular as credit cards. In just a generation, they have gone from a totem of Western affluence to an everyday accessory in Brazil, Mexico, India, China, South Korea and elsewhere. More than two-thirds of the world’s 3.67 billion payment cards circulate abroad.

The world map displayed below shows an expanding pattern of debt. Most of the light areas that have no debt are third-world countries where poverty is so desperate that credit cards would have no purpose. As time passes, this map is likely to go in one direction only: toward darker shades of green and increased credit card debt. It is troubling to think of a future world economy in which every developed nation has a citizenry strapped with debt and chained to their jobs in an effort to meet their monthly obligations. Is this an export the rest of the world really wants?