Coleman's credit card flip flop

Last week, Sen. Norm Coleman opened a Senate hearing with an impassioned speech about abuses by credit card companies. "Although the practices at issue today are not criminal schemes, they clearly have a devastating impact on the many families who are mired in debt—and credit opportunities that look like a helping hand actually become snares that sink the consumer into further depths of debt," Coleman intoned. "High interest rates, hefty fees, and crippling penalties impede more and more hard-working families from pursuing their American dream."

Never mind that two years ago, Coleman voted in favor of a law that made it significantly harder for people with unmanageable credit card debt to file for bankruptcy. His reasoning: Too many irresponsible wealthy people were exploiting loopholes in the old bankruptcy laws. "This pro-consumer bill will curb gaming of the system and I'm sure that's why it enjoys such overwhelming and bipartisan support in the Senate," he declared in a press release issued March 10, 2005.

Bankruptcies fell sharply nationwide in response to the '05 bankruptcy law reform, to their lowest levels in more than 25 years. In Minnesota, almost 7,800 were filed in October 2005, the month the change took effect, vs. 108 the following month. Numbers have crept back up every month since, however, recently hovering around 800 per month. Meanwhile, average credit card debt is about $9,000 per person.

Coleman's staff defends the senator's votes, which they say aren't contradictory at all. Coleman Communications Director Tom Steward points out that the 2005 reform requires debtors to get counseling before they can file for bankruptcy. Since then, Coleman also has worked to reform the credit counseling industry, he says: "The credit counseling agencies become a funnel-point for debt-strapped Americans, and Senator Coleman's success in cleaning up that industry will mean that many Americans successfully manage their debt with credit counseling, rather than declaring bankruptcy."