A recent KSL Editorial expressed concern about loopholes in federal bankruptcy reform legislation that unfairly favor the rich. At the same time, though, we expressed hope the reforms will send a strong message to consumers “about the importance of being wise and responsible stewards.”
Stephen J. Kroes, Executive Director of Utah Foundation, generally agreed with our position on loopholes, but wrote to say our “description of the need for bankruptcy reform unfortunately falls into the all-too-familiar logical trap of blaming the bankrupt debtors.” “You infer that undisciplined spending by irresponsible people is more responsible than other factors for the increase in bankruptcies and that federal reforms now being considered will fix the problem. This kind of thinking prevents us from focusing on public policies that might really solve our nation’s bankruptcy problem. After much study on this subject, I believe that, rather than a general increase in bad behavior by consumers, our bankruptcy problems are more related to low savings rates, long-term increases in home prices, and somewhat stagnant wages.”
KSL thanks Mr. Kroes for the perspective he provides and notes that his research on bankruptcy in Utah will be published later this year by Utah Foundation. We look forward to the report.