Bankruptcy 鈥淩eform鈥in Congress Creditors_ Committees_ Ideology .ppt by zhaonedx

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									Bankruptcy “Reform” in
Congress: Creditors,
Committees, Ideology, and
Floor Voting in the Legislative
Process

            Stephen Nunez
           Howard Rosenthal
                                                              HOME PAGE


                                                             (512) 330-0073
                                               Bankruptcy.
Mr. Wm. Paul Lawrence II
100 Congress Avenue, Suite 2000
Austin, Texas 78701
Phone: (512) 330-0073
Fax: (888) 333-8984
Email: paul@lawrence-firm.com
Hours: By Appointment




  Nobody wants to file bankruptcy, but it's not the end
    of the world, either. Bad things do happen to good
 people. Millions of others have taken this path toward
      putting their lives and their businesses back into
                balance. Remember, this too shall pass.
Facts
Consumer bankruptcies > 1 million per
 year.
Individual households now in bankruptcy
 > 8 million.
Bankrupts who are they?
  Not extreme poor.
  But very rare if income > $75,000.
How many households bankrupt at some
 point in life ?
History
After 1898, bankruptcy low salience, interest
 groups matter.
No roll call voting on:
  Chandler Act, 1938
  Chapter 11, 1978.
Credit card coalition NCBC pushes for reform in
 late 90’s
  105th Congress, no final bill
  106th Congress, pocket veto
  107th Congress, abortion killed conference report in
   House
Policy Issues
Should We Lock’em Up or Give’em a Fresh
 Start?
  Bills push above median income types from
   ch. 7 to ch. 13.
  Bills push paperwork and counseling.
  Senate bill axes state exemptions, sets
   national exemption of $125,000.
Bankruptcy as Welfare Safety Net.
Bankruptcy Policy as Morality.
Small business bankruptcy.
Is the Problem Profligate
Debtors or Profligate
Creditors?
Theoretical Issues
“Ideology” , “Economic (pork barrel)” interests,
 Electoral Incentives
  WNOMINATE—the bill has a liberal-conservative cutpoint
  Bankruptcy filings—ambiguous effect
  State exemptions
  Campaign contributions--NCBC
--
  Outliers?
  Extra dimensions
Pivotal politics vs. Bargaining
Strategic voting
  Cross chamber kills
Senate Bill Moves in Liberal
Direction from House Bill. How?


 By negotiated compromise in the
 Judiciary committee
 By many, divisive votes on the floor.
Liberal amendments added
in Judiciary committee

Abortion bombers.
  Voted unanimously after bargain.
Privacy.
  Voted unanimously after bargain.
Tenant rights.
  Specter defects.
N.B. Committees are as ideological and the
 floor and do not show evidence of dimension
 unique to jurisdiction. Senate committee Dems
 more liberal on the issue than are floor Dems.
Liberal amendments added
on floor

Predatory loans.
Spousal income.
Kohl amendment on exemptions.
Strategy for the Creditor
Coalition

 Political Uncertainty—Gore or Bush
 Preventing Counterbids—Snyder and
  Groseclose
 Go for a large majority
  1. Moderate the bill
  2. Buy votes—moderate Democrats
 Keep the bill on the agenda.
   Support the Republican party.
House Passage Vote, 2001

Analysis for Returning Democrats
Independent Variables
  WNOMINATE score from 106th Congress
  Cont-NCBC contributions
  BCOM-dummy for member of banking
  JCOM-dummy for member of judiciary
  BCOMCONT interaction
  FILE-bankruptcy filings per household in judicial
   district of congressional district.
Rep. LaFalce continues to be a leader in seeking to
curb some of the worst abuses
in the credit card industry. Here he meets with three
college students from the
29th Congressional District to discuss credit card
solicitation practices on campus.
Freshmen Democrats

Predicted out-of-sample using average WNOM
 for Democrats.
Low contributions
Freshmen voted for bill more than predicted.
Votes as spot purchases—incumbents may have
 been paid for votes on bill vetoed by Clinton,
 freshmen will be paid for current votes.
                                                                 Figure 1
                             Predicted Probabilities of Voting for the House Bankruptcy Bill
                   (There are tw o points for each representative. One point show s the prediction from the m odel; the
                           other the predicted probability if the representative had received no NCBC m oney.)


                                                                    1




                                                                  0.8
                                                                                  Model with W-NOM, CONT, FILE,
                                                                                  JCOM, without LaFalce

                                                                  0.6
Probability




                                                                   Boucher
                                                                                                      Not Member of Judiciary
                                                                  0.4
                                                                                                      Not Member, No Money

                                                                                                      Member of Judiciary
                                                                  0.2
                                                                                                      Member, No Money


                                                                    0
              -1      -0.8        -0.6        -0.4       -0.2           0        0.2         0.4        0.6         0.8      1

                       < --Liberal                         W-Nominate Score                         Conservative-- >
Too Much Money to
Republicans?
Rs got average of $8155 vs. $5871 to Ds.
Actual vote for bill, 306
Votes if no contributions ~290
Votes if party totals maintained, but equal
 within party ~ 300
Votes if all money to Dems, equal within party ~
 340
Optimal allocation within party, party totals
 maintained ~ 320
Optimal allocation ~ 355 (all money to Dems)
              Optimal Allocation of NCBC Contributions
                                             Optimal Allocation of NCBC Contributions

                  400

                                                                                         Optimal
                  350

                                                                                         Optimal
                  300
                                                                                         within Party
$ (in hundreds)




                  250


                  200


                  150


                  100


                   50


                    0
                        -1     -0.8   -0.6      -0.4   -0.2    0     0.2    0.4    0.6    0.8        1

                         <-Liberal                       W-Nominate Score           Conservative->
WHO GOT MONEY?

Moderate Dems (weakly), conservative
 Republicans (strongly)
Banking committee members
Dems from marginal districts
Overall fit low
Moderating Jackson-Lee
Amendment & Recommital
Some Republicans would have supported
 more moderate bill.
Results are robust—two votes are more
 informative than one.




Pro-consumer but pro high exemptions.
Committee Action

Basic liberal-conservative alignment on floor
 reproduced in committee markups.
Ideological “shift” on bankruptcy in Judiciary.
  House Democrats more liberal than floor Democrats
   (as in logit results)
  Committee vote does not predict floor vote because
   of shift.
Multidimensionality perhaps blocked by agenda
 control in House and bargaining in Senate.
Conclusion

Money matters—estimated effects+possible
 threat effects.
Effect of money buried in regression constant.
Compromise—credit card companies get less
 than what they want.
Ideology—poor districts should no care given
 compromise.
Exemptions
Abortion

								
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