The Downside of Synergy
This week, Bloomberg reported that the 2005 consumer bankruptcy amendments are a resounding success. It is indeed now harder for consumers to discharge their credit card debt in bankruptcy. So why are some major credit card companies concerned? The problem for some credit card companies is that they also are banks that hold consumer mortgages. By making it more difficult to get rid of credit card debt through bankruptcy, consumers are having a harder time keeping up with their mortgage payments - or are for some other reason choosing to pay their credit card bills ahead of their mortgages. Capital One's CEO reports in the article:
Of customers who are at least three months late on their mortgage payments, 70 percent are current on their credit cards
This is an astonishing figure. So the credit card department wins, but the mortgage department loses much more. How is this happening? Is this all the bankruptcy amendment? Are credit card debt collectors really that persuasive?











Welcome to TPMCafe's Book Club table. This week we're hosting a discussion of Susan Faludi's new book,

