Yra Harris on How BAPCPA Has "Flown Back in the Banks' Faces Good and Hard"
With little fanfare, Yra Harris, a veteran trader of Chicago's pits, started blogging his Notes From the Underground last December. I learned about it last month from a good friend of his, and strongly recommend it to you. Yra is a frequent guest commentator on CNBC, and one of the smarter guys in the room.
Yesterday on CNBC's Squawk Box, Yra commented on how BAPCPA's changes ended up screwing the banks "good and hard."
He explains (starting at about 2:50 of the clip) that BAPCPA's anti-consumer protection features have had the unintended consequence (see others here, here, and here) of flipping around distressed middle class America's incentives in a way that has multiplied the banks' net consumer losses manyfold. Pre-BAPCPA, people would file bankruptcy to keep their house and escape their credit card debt. Now, however, people are instead paying down their credit cards at the expense of their mortgage in order to keep their credit lines available for the inevitable rainy day(s). Meanwhile, they live mortgage-free for 12-18 months and build up their cash reserves until they're finally forced from their home in foreclosure.
And so, Yra concludes, the law that has "done more harm to middle class America" than any other single piece of consumer legislation (others concurring here) has "flown back in the faces of the banks and slapped 'em hard," again proving true the old saying, "be careful what you wish for" because, as Yra puts it, "it'll come back at you good and hard!"
Finally, in case you're wondering where I've been of late, I can pretty much lay my absence at the feet of my three adorable children, pictured above, Zachey, Rockey (Rachel), and Davey. (Davey and Zachey are now three. Here they are at birth and again two years ago.) Every day I'm at work, they call and ask "when's 'D' coming home?" And when I'm home, they run downstairs with big smiles saying they want to "go in 'D's' car" to the park, the mall, the zoo, the ice cream store, the slurpee store, etc. etc. Obviously, an excellent reason not to blog!
Thanks for reading.
© Steve Jakubowski 2010
Thanks for supplying some very useful info on the topic.
I will definitely be sure in saving your website and will definitely check back periodically.
I love this post! I agree that BAPCPA has done as much damage as any statute before or since, although simple inflation and taxes have played their parts as well. And since the banks tried for about a decade to get BAPCPA in place, they must be pretty cranky with themselves at this point; shot themselves in the foot!
And you have some great reasons not to blog there!
BAPCPA was, and still is, a very unpopular bill. There were many problems with it. However, there was some good intent behind BAPCPA, but it was not implemented well and didn't meet its objective.