We wouldn’t be in this mess. Robert Kuttner:
I happened to be flying on American Airlines the morning after the company declared bankruptcy. Exactly nothing bad happened to my flight. Nobody passed the hat to buy aviation fuel. The flight attendants offered the same dismal snacks. It was business as usual.
American will get to stiff its creditors, its employees, its pensioners, and sail happily onward, not even required to replace its managers. Chapter 11 filings are standard operating procedure when necessary in corporate America. In its full-page ads promising no disruption of service, American managed to avoid even the word “bankruptcy.”
Meanwhile, millions of underwater homeowners are denied the protections of bankruptcy laws. Like American Airlines, they would love to get out from under crushing debts and begin again. But the law is much tougher on them.
If only homeowners were airlines.
Welcome to the age of the double standard.
After more than a decade of business lobbying, in 2005 bankruptcy laws were revised to tilt against consumers. The financial lobby contended that the bankruptcy option was leading consumers to abuse credit cards. No sooner was the law passed than banks redoubled their efforts to peddle high-interest rate credit cards and sub-prime mortgages to people with bad credit ratings.
Want another one? In late November, the parent company of Massey Energy, whose extreme negligence killed 29 miners in West Virginia, agreed to pay a $209 million fine that includes damages to families, but no personal penalties for executives.
Meanwhile, more than 200,000 small time drug users who didn’t kill anybody are doing hard prison time.