Middle Class Bears Greatest Burden of Economic Risk
If there was ever a need for more proof of the gap between America’s wealthiest and the rest of us, look no further than the recent bankruptcy of the Trump Plaza and Trump Taj Mahal in Atlantic City.
On one hand, there is billionaire Donald Trump, who 30 years earlier touted opening of the casino as one of his greatest investments, a crown achievement and possibly one of the greatest buildings in the country. When the venture folded, he was offering his own praises for having the foresight and “great timing” to sell the casino beforehand.
On the other hand are approximately 1,000 workers left to pick up the pieces after losing jobs, where they had learned skills that aren’t so easily transferable in communities where they purchased homes for which they the value has plummeted and they can no longer pay the mortgage.
Our Miami foreclosure defense lawyers know this is just one in a cascade of examples revealing how our laws and practices advance corporate interests and shield them from the consequences of poor financial decisions, while brutally punishing the rest of us.
This very point was the subject of a recent Huffington Post column by Robert Reich, professor of public policy at the University of California at Berkley.
Reich noted the two primary ways corporations are able to skate through the fallout of bad investments are bankruptcy and limited liability.
Let’s start with the former. The whole purpose of bankruptcy is to give people an opportunity for a fresh start. However, the only ones who truly get that are those on Wall Street, wealthy moguls or large corporations.
Take the example given by Reich of American Airlines, which effectively used a bankruptcy to shed contracts with former employees, which would have required them to abide by labor agreements and continue increasing pension plans. When the airline did finally emerge from bankruptcy after three years and complete a merger with U.S. Airways, all creditors were paid back in full. Shareholders, too, were more greatly enriched. Even the CEO received a $20 million severance package.
But what about American’s former employees? For their hardship, they received nothing.
While federal lawmakers approved enormous bailouts to keep the banking industry afloat in the midst of the Great Recession (caused by the bank’s greedy and often illegal practices in the housing market), they declined to enact any meaningful reform that would protect American families from losing their home. In Florida, a measure was recently enacted that pushes judges to flush the backlog of foreclosure cases ever-faster through the system, often overriding basic rights of borrowers.
Since 2008, when the economic fallout first became evident, some 4 million families have lost their homes due to Wall Street’s excesses. Filing for bankruptcy in order to keep their home wasn’t an option for most. Our foreclosure defense lawyers know bankruptcy may have stayed the proceedings in some cases, but it didn’t fix the problem altogether as such a filing might have done for a corporation in the same boat.
Those same lawmakers who have refused to provide relief to homeowners have no greater track record when it comes to student debt. Since 2006, student loan debt has increased two-fold, now somewhere around $1.3 trillion It accounts for approximately 40 percent of all personal debt in this country. That’s more than we owe on our cars or credit cards. But graduates who fall behind on payments? Not able to start over. Bankruptcy is not an option to wipe those debts clean.
Some have reasoned students should never have pursued an education they couldn’t afford. The trouble with that argument is many students were taken by for-profit colleges that doled out diplomas like Tic Tacs, regardless of the position of the job market.
While we all assume inherent economic risks, there are grave concerns regarding who bears the brunt of that risk when times are tough. The way things stand now, it’s certainly not the Donald Trumps of the world.
If you’re battling foreclosure in Miami or the surrounding areas contact Bruce Jacobs & Associates for a confidential appointment to discuss your rights. Call 305-358-7991. Also, don’t miss Miami Foreclosure Attorney Bruce Jacobs on 880AM/the Biz, every Wednesday from 5 p.m. to 6 p.m. on “Debt Warriors with Bruce Jacobs,” discussing foreclosure topics that matter to YOU.