credit card

Joe Biden’s entry into the 2020 presidential race puts him in direct competition with his former rival, Senator Elizabeth Warren (D-Massachusetts). That rivalry stems from a 2005 credit card and bankruptcy bill Biden supported, that Warren vehemently opposed.

During her CNN town hall earlier this week, a student asked Sen. Warren what made her switch from being a registered Republican to a registered Democrat. That prompted Warren to talk about the one thing that got her into politics in the first place — a bill backed by the credit card industry that Biden supported as one of Delaware’s U.S. Senators. According to Warren, that bill is what made her turn from a strict policy wonk to a political crusader.

“I’m studying families that go bankrupt, and the credit card companies — a half dozen giant credit card companies — figured out that if they can get the bankruptcy laws changed, that what will happen is that they can improve their bottom line by just a little by keeping people locked out of bankruptcy,” Warren said. “Never mind that those people are head over heels in medical debt. that they’ve had job losses that have put them way behind, that they’ve had a death or a divorce in the family, that they’ve been cheated by credit card companies and mortgage companies.

“I looked around in the middle of that fight and I realized all the money was on one side, and all the hurtin’ was on the other. And that’s when I jumped in, politically. I got in the fight. And I fought it for ten years,” she continued. “And by the end of that fight I fully understood that every single Republican stood there for the banks, and half of the Democrats did.”

That bill, S. 256, passed in 2005 and was signed into law by then-President George W. Bush, but different iterations of it had been around since the mid-1990s. The bill that was ultimately passed was dubbed the “Bankruptcy Abuse Prevention and Consumer Protection Act,” and passed the Senate by a margin of 74-25. Then-Senator Biden was one of the 18 Democrats who voted yes, though all 25 no votes came from his Democratic colleagues. In a nutshell, the bill made it harder for working-class borrowers to declare bankruptcy while struggling with credit card debt and medical bills.

Biden didn’t just vote for the bill, though. In a 2006 blog post Warren wrote for Talking Points Memo, she described Biden as a “head cheerleader” for the bankruptcy bill, adding that he was part of “a bi-partisan coalition to prefer powerful corporation [sic] over hard-working families.”

“Senator Biden was twisting arms to get the bankruptcy bill through Congress,” Warren wrote.

Earlier this year, Politico wrote about a heated exchange Warren — who was a Harvard professor at the time — and Biden had in Washington, DC in February of 2005. According to Forbes, Biden’s home state of Delaware is home to half of the U.S. credit card market (including Chase, Discover, and BarclayCardUS) despite having just 0.3% of the U.S. population. This could be why Biden took lenders’ position that the reason bankruptcies were so high was because of irresponsible behavior on behalf of borrowers. However, Warren countered that Biden was trying to “take away the last shred of protection” for families deep in debt.

In her 2003 book, The Two-Income Trap, Warren cited in-depth research conducted into just how bad debt was for average working-class families. The reason for such skyrocketing debt levels, according to Warren, wasn’t because people were living beyond their means, but because credit card companies were preying on vulnerable people who lacked the means to fight back:

The numbers in the book were shocking: The foreclosure rate was up 255 percent. Bankruptcy filings were up 430 percent. Credit card debt was up 570 percent. The middle class was shriveling, and it had been for a good while, and it wasn’t mainly because of reckless spending but rather drastic increases in prices of housing and health care and preschool and college. At base the book was a shift in blame. These economic straits, Warren argued, were not the fault of the people who were suffering, nor was it the moral failure of a growing share of spendthrifts. No—a deregulated credit industry preyed the most on the stressed and the strained. The game was rigged.

Sen. Warren has yet to publicly go after Biden in the current election cycle, though she could call out his support of the bankruptcy bill during the first of many Democratic presidential debates beginning in June.

Tom Cahill is a contributor for Grit Post who covers political and economic news. He lives in Bend, Oregon. Send him an email at tom DOT v DOT cahill AT gmail DOT com.

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