[IP] Financial Impact of Katrina
-----Original Message-----
From: "Paul Levy"<plevy@xxxxxxxxxxx>
Sent: 02/09/05 3:35:48 PM
To: "dave@xxxxxxxxxx"<dave@xxxxxxxxxx>
Subject: Re: Financial Impact of Katrina
This message raises an important question about disaster relief that deserves
to be answered. National credit card companies and financial institutions are
constantly running to Congress for protection from this and that form of state
regulation (for example, National Bank Act preemption of state law, Federal
Arbitration Act preemption of state rules allowing citizens to sue in courts).
Maybe it's time Congress thought about putting a condition on that protection
-- that national financial institutions should agree to a moratorium, only for
consumers in the hardest hit areas, barring the imposition of interest and
penalties for a few months while they recover.
Paul Alan Levy
Public Citizen Litigation Group
1600 - 20th Street, N.W.
Washington, D.C. 20009
(202) 588-1000
http://www.citizen.org/litigation
>>> Deepak Gupta 9/2/2005 3:24:21 PM >>>
I have been working on a SCAP case this week with a lawyer from New Orleans
whose law firm has temporary relocated to a hotel in Houston. Today, he posted
the following on the group blog run by Professor Elizabeth Warren:
http://warrenreports.tpmcafe.com/story/2005/9/2/101357/1816
The lawyer from New Orleans is named Mickey Allweiss
***
I am a name partner in a mid-size New Orleans law firm supported by an
excellent staff of decent and devoted employees. My partners and I work hard
and respect those who work hard with us. In the wake of Hurricane Katrina, we
face, and our staff most certainly faces, an uncertain and challenging future.
Those futures (and the futures of all victims of Katrina) are made even more
daunting by otherwise-normal commercial practices that, in these circumstances,
may compound the financial devastation - namely, charging interest and late
fees on credit card debt.
Using our firm as a typical example reveals just how devastating the storm has
been. Until today I could not locate all of my partners. Obviously we cannot
perform necessary banking functions. We cannot receive mail. We cannot
communicate with or visit our office. We cannot find many clients. We cannot
collect fees or send bills. Consequently, there will be a significant delay in
revenue collection and, as an obvious by-product, a very real threat to our
ability to pay or even maintain all employees.
Yesterday I made calls to ask for some delay on behalf of our employees, but I
was turned down flat. Despite the circumstances, credit card companies
insisted upon payment and, on at least two separate occasions, confirmed that
accounts will continue to accrue interest and that they will charge fees for
late payment. In the face of this overwhelming tragedy, which has left over one
million people with uncertain futures, such a position is scandalous.
To avoid this additional insult, I propose that credit card companies be
required to honor, at a minimum, a 90 day moratorium on interest charges and
late fees on personal credit cards issued in affected area codes. President
Bush has asked all American citizens to contribute to the recovery effort;
surely he means corporate citizens as well. As a business owner, I know the
importance of the bottom line. But losing or deferring a small portion of a
company's overall profit is a small price to pay to enable those who haven't
already drowned to try to stay just a little bit above still rising waters.
***Relatedly, Elizabeth Warren reports that Congress is calling an emergency
session for next Tuesday to do something about the aftermath of Katrina.
Representatives Conyers, Jackson Lee and Nadler have an idea: let's take
another look at the bankruptcy legislation. It seems that in the haste to adopt
the credit industry version of the bill, some amendments to cut a little break
for the victims of natural disasters were defeated. Now everyone is scurrying
to re-read the those amendments to see just how hard this new bankruptcy law
will fall on families and small businesses thrown into financial chaos in the
wake of Katrina.
Here's is the URL:
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