Post-Bankruptcy Bill, credit card companies go wild

Credit Slips:

In 2005, Congress gave the credit industry what it wanted: tighter bankruptcy laws. In 2006, the credit industry responded by mailing out 8 billion credit card solicitations — up 30% from 2005. Larry Ausubel and others predicted during the debates over the bankruptcy laws that if Congress made it tougher to go bankrupt, then lenders would engage in riskier lending as they tried harder to get people to borrow.

What kinds of risks are the card companies willing to take on? With about 110 million households in the US, that's about 73 card offers per household. If the average card offers is about $5,000 in pre-approved credit, that about $365,000 in offers for every American household — or about $1000 a day, every day of the year. [...]

If debtors have no bankruptcy option, Ronald Mann points out that creditors can keep them in the sweat box longer. Perhaps if bankruptcy were outlawed altogether the mailings would go to 16 billion, and if debtors' prisons were reinstituted, could the mailings top 25 billion? Ah, the possibilities.

To opt out of preapproved credit card offers, call (888) 567-8688 or go to www.optoutprescreen.com.