<ul><li>http:// www.youtube.com/watch?v=hn5EP9StlVA </li></ul>
Michelle White. Journal of Economic Perspectives—Volume 21, Number 4—Fall 2007—Pages 175–199
<ul><li>Serves as a public policy discussion that deals with social, moral, and economic incentives. </li></ul><ul><li>My ...
<ul><li>“… ..American Express Co., whose customers are generally affluent, said Thursday it expects slower spending and mo...
<ul><li>“… Credit-card debt rose by $8.7 billion, or 11.3%, in November to $937 billion after an 8.6% gain in October. It ...
<ul><li>Though the Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA) of 2005 was intended to eliminate the ...
<ul><li>Adverse events? </li></ul><ul><li>Casino gambling? </li></ul><ul><li>Growing Middle-class? </li></ul>
Dave Pollard. “THE TWO-INCOME TRAP: WHY LENDERS WANT YOU TO LIVE BEYOND YOUR MEANS.” Salon.com . 11 Jan 2004. http://blogs...
<ul><li>Allowed for fewer gains from bankruptcy by more closely regulating what you can file for and how often </li></ul><...
<ul><li>More difficult to file for bankruptcy, therefore, significantly less bankruptcies filed. </li></ul><ul><li>Dramati...
<ul><li>The Rational Consumer </li></ul><ul><li>The Hyperbolic Discounter </li></ul>
<ul><li>Consumption insurance </li></ul><ul><li>Promotes self-employment and small business </li></ul><ul><li>Reduces the ...
<ul><li>Fairly low asset exemption level </li></ul><ul><li>Low bankruptcy costs </li></ul><ul><li>Low bankruptcy punishmen...
<ul><li>Require credit card lenders to raise minimum payment levels. </li></ul><ul><li>Prohibit rewards programs that enco...
<ul><li>“…  an appropriate policy response to this kind of overborrowing must both discourage hyperbolic discounters from ...
<ul><li>How can we relate this discussion to social, moral, and economic incentives? Specifically, how have these changed ...
Upcoming SlideShare
Loading in …5
×

Credit and Bankruptcy

334 views
311 views

Published on

Published in: Business, Economy & Finance
0 Comments
0 Likes
Statistics
Notes
  • Be the first to comment

  • Be the first to like this

No Downloads
Views
Total views
334
On SlideShare
0
From Embeds
0
Number of Embeds
12
Actions
Shares
0
Downloads
8
Comments
0
Likes
0
Embeds 0
No embeds

No notes for slide

Credit and Bankruptcy

  1. 1. <ul><li>http:// www.youtube.com/watch?v=hn5EP9StlVA </li></ul>
  2. 2. Michelle White. Journal of Economic Perspectives—Volume 21, Number 4—Fall 2007—Pages 175–199
  3. 3. <ul><li>Serves as a public policy discussion that deals with social, moral, and economic incentives. </li></ul><ul><li>My previous experience with MasterCard Worldwide </li></ul><ul><li>It’s relevant do today’s economic situation. </li></ul>
  4. 4. <ul><li>“… ..American Express Co., whose customers are generally affluent, said Thursday it expects slower spending and more missed payments on credit card bills to hurt its profit throughout 2008….” </li></ul>
  5. 5. <ul><li>“… Credit-card debt rose by $8.7 billion, or 11.3%, in November to $937 billion after an 8.6% gain in October. It was the biggest increase since May and the fourth-largest gain in credit-card debt since the expansion began in November 2001. </li></ul><ul><li>Some economists say consumers are using their credit cards more because they can't tap their home equity as easily as they could a year or two ago….” </li></ul>
  6. 6. <ul><li>Though the Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA) of 2005 was intended to eliminate the number of bankruptcies, it has increased financial distress among US consumers. </li></ul>
  7. 7. <ul><li>Adverse events? </li></ul><ul><li>Casino gambling? </li></ul><ul><li>Growing Middle-class? </li></ul>
  8. 8. Dave Pollard. “THE TWO-INCOME TRAP: WHY LENDERS WANT YOU TO LIVE BEYOND YOUR MEANS.” Salon.com . 11 Jan 2004. http://blogs.salon.com/0002007/2004/10/28.html.
  9. 9. <ul><li>Allowed for fewer gains from bankruptcy by more closely regulating what you can file for and how often </li></ul><ul><li>Made bankruptcy more expensive </li></ul>
  10. 10. <ul><li>More difficult to file for bankruptcy, therefore, significantly less bankruptcies filed. </li></ul><ul><li>Dramatically reduced lenders’ losses from default </li></ul><ul><li>Credit Card companies begin to lend more, even to consumers with bad credit. </li></ul>
  11. 11. <ul><li>The Rational Consumer </li></ul><ul><li>The Hyperbolic Discounter </li></ul>
  12. 12. <ul><li>Consumption insurance </li></ul><ul><li>Promotes self-employment and small business </li></ul><ul><li>Reduces the Moral Hazard </li></ul>
  13. 13. <ul><li>Fairly low asset exemption level </li></ul><ul><li>Low bankruptcy costs </li></ul><ul><li>Low bankruptcy punishment </li></ul><ul><li>“ In general, bankruptcy policy should be more pro-debtor if hyperbolic discounters wish to control their borrowing behavior, since lenders supply less credit under a more pro-debtor bankruptcy policy.” </li></ul>
  14. 14. <ul><li>Require credit card lenders to raise minimum payment levels. </li></ul><ul><li>Prohibit rewards programs that encourage over spending </li></ul><ul><li>Stop marketing to college students </li></ul><ul><li>Eliminate unsolicited card offers </li></ul><ul><li>Force companies to provide more information </li></ul><ul><li>Reintroduction of usury limits </li></ul>
  15. 15. <ul><li>“… an appropriate policy response to this kind of overborrowing must both discourage hyperbolic discounters from borrowing too much and penalize lenders who take advantage of hyperbolic discounters’ tendency to overborrow.” </li></ul>
  16. 16. <ul><li>How can we relate this discussion to social, moral, and economic incentives? Specifically, how have these changed with the evolution of the credit card markets? </li></ul><ul><li>What effects could the author’s proposed bankruptcy reform have on the economy? </li></ul>

×