Bill Introduced Allowing Cancellation Of Over $1 Trillion In Student Debt Through Bankruptcy

Tyler Durden's picture

Courtesy of Sov Man's Simon Black, here are several of the most bizarre legal anecdotes to take place in the US and around the globe over the past week, staring with a bill currently making its way through Congress, which is seeking to wipe out over $1 trillion in student loans.

* * *

A Convenient Way to Cancel a Trillion Dollars of Debt

What happened:

Bankruptcy is like the ultimate get out of jail free card. You just get to wipe the slate clean, and even though your credit score and ability to borrow might suffer, you are free from all your previous obligations. But student loans have long been exempted from being erased by bankruptcy.

If this bill passes Congress however, hundreds of billions of currently delinquent student loans, potentially as much as $1.4 trillion worth of student loan debt...

.... would be eligible to be wiped out by declaring bankruptcy.

As the number of those defaulting on their student loans grows, this provision could be widely used by those seeking to escape their college debt.

What this means:

The government has helped raise the costs of college and basically scam people into accepting their loans, so it is easy to be sympathetic towards those with student loans. But still, it is messed up to allow people to discharge debts they agreed to pay.

There might be a little piece in most of us that doesn’t mind seeing what we consider a predatory lender get screwed and be left with the bill.

But apart from the overall immorality of failing to pay your debts, since the government owns most of the student loans, it would basically be the taxpayers getting screwed over once again. What a surprise.

Basically if massive amounts of debt were erased, it would be another bubble bursting, which would send the U.S. into a fresh round of economic instability.

The economy would spiral downward in relation to how many people took advantage of their get out of jail free card.

* * *

Criminal Consequences for Filming on Private Property?

What happened:

If you sneak beer into a football stadium, you have explicitly broken a stadium rule. You might expect to be kicked off their private property for this transgression. But what if instead you got a year in prison?

That’s what an Idaho “Ag Gag” law did; made it illegal to take photographs or videos on private property without permission from the owner. It also made it illegal to gain access to private property through misrepresentation, for instance an undercover reporter seeking a job. Violation of the law was punishable by a year in prison and/ or $5,000 fine.

The law was drafted and sponsored by The Idaho Dairymen's Association after a video came out showing horrible abuse of cows at a dairy in Hansen Idaho. The video was taken by an employee of Mercy for Animals conducting an undercover investigation.

The bill quickly passed the legislature and was signed by the governor, but was then struck down on the grounds that it violated free speech, and equal protection for employees who may be ensnared attempting to document unsafe working conditions.

The state appealed, and now the the courts will decide whether or not to reinstate the law.

What this means:

Private property owners surely have the right to kick someone off their land or seek civil damages for having their rules broken. But it is going entirely too far when the government is used as a henchman to enforce rules on private property that prohibit actions which are otherwise legal.

Rarely is a law passed in such an obvious effort to stifle the public’s ability to see what is happening behind the scenes in food production.

The government claims it regulates these industries, yet private organizations were the ones who brought the abuse of animals to light. But the government was more interested in supporting the dairy lobby than doing their job.

So how does the government solve the issue of the public taking regulation into their own hands? Make it illegal!

It is important to respect private property, but the government has no business enforcing criminal code for the violation of private rules.

If you don’t want people to film your property, then don’t allow them onto it in the first place. Or maybe just behave in a way that you aren’t afraid of the public seeing.

* * *

Can’t Find an Investor? Force the Taxpayers to Fund Your Startup!

What happened:

Nothing screams success-in-the-making like failing to fund your startup in the private sector, and having to beg the government for money. This is especially true as America is at the peak of the startup bubble, on the heels of easy money pouring countless millions into less than spectacular business ideas.

What does the government do when it sees a good bubble? Blow it bigger! How could something so enchanting ever burst?

The feds want to get in on startups, and start investing in entrepreneurs. After all, they are the ones who created the artificially low interest rates on lending by printing all this money ever since their last major financial bubble popped.

The government’s latest shenanigans is a bill in Congress that would spend tax dollars on startups and entrepreneurship, pouring grant money into “resources and services” for the “formation and early growth stages” of a company.

For the taxpayers, you will get all the exciting risk of investing, without any possible returns!

What this means:

As if there wasn’t enough money pouring into silly businesses without any real potential. At least those in the private sector lose their own money when they invest in stupid businesses, but now the taxpayers could be robbed to do the same. But if a startup can’t get funding in the private sector, it is probably for a good reason.

For the politicians, they can say that they created jobs… even if the jobs only last six months. That’s the thing about government; they highlight the initial benefits of their actions, and somehow forget to report back later on the lack of sustainability or unintended consequences of these genius ideas.

And even if the government could pick winning companies, that literally amounts to stealing your money and handing it out to private businesses.

But they can’t, and so the money they take from the taxpayers will more likely be misappropriated into the next Pets.com style failure.

* * *

You Are Liable For Your Employees’ Actions in Australia

What happened:

It would make sense if McDonalds was responsible for making sure their employees don’t sell drugs on their premises. But what if the fast food chain had to make sure their employees weren’t dealing drugs once they clocked out, and left McDonald's property? That would be a pretty huge liability for McDonald's, which would basically have to hire a full on internal investigations police force to make sure they weren’t blamed when one of their employees got caught pushing drugs.

Sounds ridiculous, yet many governments shift their policing responsibility to companies, and simply threaten them with fines if the business does not perform the government’s investigatory job for them.

Australia is doing just that, putting the burden of policing on companies, with new proposals to expand laws against foreign bribery in business. Under the proposals, companies would be responsible for preventing their employees from bribing foreign governments, even if the employee is not acting in official capacity, and even if there was no specific gain for the company.

So this means Australian companies will need to somehow prevent employees not only from acting illegally on behalf of the company, but also from conducting any illegal activity in their own personal lives that involves foreign governments.

What this means:

Basically this is a huge disincentive to doing business overseas if you own an Australian company. The new proposals create numerous costly liabilities and add substantial risk to international operations.

Under the proposals the company who employs the person accused of bribing a foreign official would be automatically held accountable. The rules specifically say that the employee does not have to be acting on behalf of the company, and could be ensnared for bribing for the sake of personal gain.

The safest bet would be for Australian companies to simply not operate internationally.  Of course that seems like suicide in a modern global market.

Perhaps the proposed regulations are Australia’s way of disincentivizing foreign trade and promoting nationalism. But they risk crippling their worldwide competitiveness the more they burden Australian companies with doing the government’s policing duties.

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Croesus's picture

It had to happen, sooner or later...but it tells snowflakes that all they gotta do to get what they want, is cry.

Might work here in the West, but the East has no sympathy for bleating sissies.

Come on, shitshow, collapse already, dammitt!

Altesh's picture

I don't know where the sterotypical view of millennials as SJW comes from. It is so rare to meet people who are fucked up like that. At most it's one in every hundred people, and I think most people percieve them to be annoying. 

Creepy_Azz_Crackaah's picture

This is why Dear Leader Obama nationalized the student loan business.  Now the productive people - the people who actually pay taxes - will have to pay for the outrageously high tuitions, massive monuments to themselves college campi, and union teacher pay and pensions.

AltRight Girl's picture

How about the ones that really count?

The ones that actually pay taxes in this country: the white middle class.

When will THEY get a break?

The Tens of Millions of Forgotten Americans that The U.S. Economy Has Left Behind

Chuck-Norris's picture

Is this bill's purpose to keep the snowflakes from chimping in the street?

Doubt will pass.

 

Md4's picture

Damned sure shouldn't.

It's the idea simmering in the heads that came up with it that's the problem here.

Focus on real, organic GROWTH, congressional shitheads.

NOT on debt or ultimately-easy ways out.

Of course, that takes actual work...

saveUSsavers's picture
Total Campaign Contributions Received by John K. Delaney: $1,584,857 Top 10 Interests Funding Interest Contributions Securities & Investment $183,650 Real Estate $165,300 Lawyers/Law Firms $120,400 Commercial Banks $100,900 Insurance $81,750 Misc Finance $53,500 Business Services $44,000 Accountants $41,400 Finance/Credit Companies $38,600 Electric Utilities $23,250


Top 10 Organizations Funding Organization Contributions Jpmorgan Chase and Company $26,400 Alliance Partners $21,750 Capital One Financial $15,600 Bernstein Companies $14,300 Hhc Finance $13,750 Nasdaq Incorporated $13,250 Arent Fox Llp $11,600 Mortgage Bankers Association $11,250 American Council of Engineering Cos $11,000 State Farm Mutual Automobile Insurance $10,000

847328_3527's picture

It's basically a bailout for univeristy teachers and overpaid administrators.

 

Oddly, there is no sign of reigning in the out-of-control lending or communist teachers.

Fed Supporter's picture

Exactly right it will keep the shit show rolling for them for a long time to come.

Not sure which Tyler wrote this but obviously not the economics one.  see

"Basically if massive amounts of debt were erased, it would be another bubble bursting, which would send the U.S. into a fresh round of economic instability.

The economy would spiral downward in relation to how many people took advantage of"

 

THis statement is wrong on two counts.  THe  economy will get better not worse because the debt forgiven will just be added to the national debt not lot lost by real investors and secondly it will free up a lot of cash to be sepent elsewhere in our economy.  For shit sakes it'll goose the economy all these college kids can start buying new cars and houses.

Fed Supporter's picture

Looks like maybe the Tyler down voted me or some other dipshit that actually thinks erasing billions of debt will not be a net positive to the US economy.

Yog Soggoth's picture

You must be an out of work anthropoligist with a huge student loan because you suck at economics. There is no such thing as free money. You could always weave baskets and hats to repay all the time and money you wasted.

Macavity's picture

Fed-supporter might be a realist, you might be an economist. Both, one or none of you might be right.

Empirically, there is such thing as "free money". No branch of economics can deal with USD hegemony, USD vassals, and the US monetising other countries' futures.

From another angle, everybody wants in one the free money game, even if it perpetuates maxed out prices on all "essential" goods and services. Capitalist tuition prices with an effective socialist backstop. What's not to love? What a splendid free money fountain.

shamus001's picture

They can't buy new cars since there are no jobs in "philanthropy" or "Arts & Music" or "History of the poor immigrants" majors.

Working security with a masters; earning 10-15.00/hr. will not qualify for homeownership or a 30,000.00 loan for a new car.  And many of these students are deferring their loans due to "hardships" and the ones who are not, are lifers at college.... and the ones paying back their tuition at .75%?  The difference saved by not paying 300 bucks on their tuition MIGHT buy them a new bottom of the line car, but when that gets repo'd because they cannot afford the payment & insurance & gas on their measly income, then the auto industry suffers.... AND IT'S BEEN SUFFERING BIG TIME!

In short... I disagree with your conclusion about goosing the nation.  I wasn't the one who down voted you, but after seeing your cry baby statement about getting downvoted...I downvoted you then.... you know... just for the fun of it! (and to watch you boil)

Nice Try Lao Che's picture

If they pass this bill, there godamn well better be a proviso in it that states they have to come mow my fucking lawn for for the next 10 years for the debt to be erased.

Herd Redirection Committee's picture

OK, so walk me through this:

Debt being relieved is a bad thing?  Obviously debt prevention is best but come on.  There is more student debt now because the cost of everything has gone up.  Tuition, rent, meals, utilities, text books, beer, pizza.  And tuition has gone up A LOT.  Plus these snow flakes are being told that an education is all that matters, regardless of which degree it is they end up taking.  OK, sure, blame them for believing it, but why are there people who are allowed to continue lying to them, and then other people willing to lend the money???  Its debt entrapment, for the most part of society.  Make sure kids are in debt from day 1.

The only reason it affects tax payers is because it was the government that was willing to loan the snowflakes the money for their English Lit masters!  The government made a mistake and deserve criticism for it, as well. 

The reason this shit still goes on is because it has become a niche economy.  Real estate owners in university towns benefit, college educators benefit, ADMINISTRATORS (have seen the most growth of all) have benefitted,  restaurants in these towns benefitted (from the cheap labor and customers),  textbook companies, computer and furniture businesses...   Get it? 

These kids were plied with debt to grease the wheels in the rest of the economy.  Now it has outlived its usefulness, because the money borrowed has been spent through the economy, and everyone is saddled with debt, which means less money for discretionary spending.

all-priced-in's picture

So then we should also price future student loans to account for this higher expected default rate.

 

How high of an interest rate would that be?

 

A ruff calculation would make it 20 - 30%  -

 

Which would reduce the future loans and increase future defaults.

 

Oh wait - I bet most want to still price out the future loans at 2 something % even though we expect a default rate of 30%.

 

 

 

Arrow4Truth's picture

And teacher retirement is a huge unfunded liability.

jeff montanye's picture

bankruptcy was the traditional new start for corporations and individuals after the periodic recessions/depressions that were/are characteristic of capitalism.  hardly seems fair in the heyday of the limited liability corporatation, which gets to go into bankruptcy without creditors reaching to the owners' personal funds, to restrict the access of the individual to it. if this increases the pain for lenders other than the government, that would rein in out of control lending to a degree, wouldn't it?  as for the communist teachers, just have to beat them in the marketplace of ideas, i guess.  

King of Ruperts Land's picture

America needs lots of bankruptcies up and down the economic food chain, might as well start here. Assets have become unproductive with inflated prices due to bubbles everywhere due to the zero negative interest rate, never let anything re-adjust or fail monetary policy. So the dollar is worth a nickel now. Asset prices are high supported by mountains of unjustified debt and NK might soon have better missiles than us.

We just need a better hamburger or coffee stand not robots.

We need to re-build and reinvent. That used to be the American way.

TuPhat's picture

That only makes sense if the option of bankruptcy is agreed on before the loan and not afterwards.  It also does not make sense if taxpayers are left holding the bag.  They borrowed the money and spent it.  They should repay or suffer.

Macavity's picture

I take your sentiment, but I wouldn't call it a "bailout". "Lifeline" maybe. What it is is a perpetuation of an economic subsystem on steroids (rampant debt). Just like the rest of the US economy is...or strives to be. The 1tril debt cancellation is an attempt to prevent a crash in this sector of the economy.

If one could, for a moment, forget the disdain for debt slavery and free money, then this solution is brilliant and magical. Of course, we can't, and this is the perpetuation of an economy dependent on debt and banks, which comes as a cost from the productive economy (if that still exists).

One way to economic "equality of opportunity" is for everyone to get in on the free money game and benefit from the debt servitude of others. Welcome to the world, no, welcome to the US.

Countrybunkererd's picture

Since i took an extra year and worked full time to go to school I guess i will stop paying taxes if it passes.  You know, fairness and all.

Arrow4Truth's picture

That's the most reasonable comment thus far. I stopped being a slave about 10 years ago. It's just amazing how most refuse to see the solution to the problem, even though they are standing right in front of the fan. That shit will never wash off.

Offthebeach's picture

I'm not so much not paying taxes as much as I am doing my own Quantitative Easing.   

peippe's picture

expect some kind of kickback for paying down school costs.

2.5k for being a thoughtful human being, maybe?

greenskeeper carl's picture

If this coincides with the govt getting out of the student loan business for good, I hope it passes. Otherwise, it's just going to make a bad situation worse.

Déjà view's picture

Gov out ...BANKS in...'taxplayer' $ponsored...

Command economy...not a peep out of DOJ rating agencies...

JRobby's picture

Right, like the banks are going to take a $700 bil hit?

He discusses "moral hazard" briefly.......

(Laugh Track Deafening !!!)

 

Offthebeach's picture

Morals?  Hazards?  That is so primitive.  Bararbaric.   So, ...um....pre-1913.

/Krugman 

JRobby's picture

Oh1 Ha, Ha, Ha I meant the taxpayers take a $700 B hit. The banks just lose out on the decades of interest. Or will the GOVT (US) pay them that too?

secretargentman's picture

Jubilee! Cancel all debts made in fiat currency, and return to real money. 

Deathrips's picture

Alt Right

 

You're a spam fucker dis-eased with putrid malware. Fuck Off!!

 

RIPS

RSDallas's picture

Screw you! Alt is right in the sense that the middle class, white, American is getting the shaft! I can't write my kids education off and get a free ride. I can't run up bad debt and get the government to bail me out. I can't get the government to pay for my cell phone bill. I can't get the government to pay for the emergency room visit I made when I had to take my child in. I can't get the government to pay for my grocery bill. I couldn't get the government to pay for the child that my wife gave birth to at the hospital. I can't get the government to subs my housing costs. Screw you!

Deathrips's picture

Do you make $1500 a month spamming sites with malwalre in your spare time?

Is that the middle class these days. Check your computer if you clicked that fuckers link you have malware.

 

RIPS

JRobby's picture

There must be a reason it has not been banned?

RSDallas's picture

I am with you Alt! I am freaking tired of carrying the weight. Inflation is making it unbearable and it has to stop! As far as these student loans, no surprise, another example of the idiotic governance from our duly elected terds. 75% (my estimate) of this student loan debt is coming from "alternative degrees" like hair dressers, chefs, auto mechanics, truck drivers, online colleges, junior colleges and community colleges. Most all of these educational outlets can't produce a graduate that can even think about supporting himself. Not to mention the caliber of student enrolling! Socialism never works. It always fails.

Canary Paint's picture

Wait a sec... How is paying out the ass for education a form of socialism? 

True Blue's picture

Not to mention the "students'" cars, rent, beer tab, and spring breaks in Cancun. 'Student loans' aren't just used to pay extortionate tuition.

Start repossessing these fuckers 'brains' when the loan goes belly up. The taxpayer gets fleeced enough already!

Yog Soggoth's picture

My step sister did drugs with the money, and then they lent her more! Then she started doing a little pole dancin',an  getting in accidents on purpose to scam the insurance companies. Must be that hookers and blow economy you guys always talk about.

Kidbuck's picture

Onward Free Shit Army. Marching as to war!

Canoe Driver's picture

Student loans were previously dischargeable in bankruptcy. They were only made nondischargeable relatively recently, and when this was done, it was viewed as a disgrace, because the standards already required that the petitioner requesting discharge must be destitute. Barring discharge altogether produced harsh results, like people who went bankrupt due to large medical bills, but were still required to carry student loans which they were entirely unable to pay anyway.

goober's picture

"This is why Dear Leader Obama nationalized the student loan business."  How many ways did BHO buy support and votes with our own tax dollars and call it something else ? This student loan thing is no different, just more blatant and obvious. You must admit, BHO and crew were very good at selling people their own money ! I often wonder why nobody in congress or any Trumpites are not talking about the 100 billion + stolen from various fed agencies like Fanny and Freddy to keep OBamacare alive in the last 7 years. That stolen money is the only reason it did not collapse 4 or 5 years ago. And that does not include the massive amount of funds wasted in the many state exchanges that failed or the many websites that failed like in Oregon, where $315 million dissapeared and has never been accounted for. Democrats run the entire state and judiciary so it has all been simply covered up although the governor had to resign because his girlfriend was caught up in using the funds wrongly. Nobody was investiagted or charged, just allowed to resign as if that solved any of it and the money was never accounted for ?

So how many other democrat run states had similar outrageous scams that failed and the taxpayer ate ? And none of it is ever discussed and the criminals walk freely ? Reminds me far too much of the J Corzine sham with MFG. They knew at the time they would not be prosecuted so they went balls to the wall in all of their schemes and here we are holding trillions in the giant scams that failed.

There is no fix for what is represented as health care. It is not health care at all , just a consortium of many special interest milking the taxpayer. The only real issue is the cost and the services rendered. The majority of it is a serious bad joke and does not HEAL anybody. In fact it is designed to create higher cost's and be sure to capture a persons assets at death. Simple as that. We now have drugs advertised to relieve the symptoms of other drugs and only doctors can dispense these marvels of science ! There now is a drug for Opiod induced constipation, is that insane or health care ? You be the judge. Anybody that believes any of it deserves what they get. 

Deathrips's picture

Responsibles get to pay for it twice? No shit?

Mob rule sucks.

 

RIPS

NidStyles's picture

College started becoming a scam when student loans became a life altering prison of debt.

Bankruptcy allows people to move on after making such mistakes, seeing as how as a society every just doesn't give a shit about the youth and their ability to live a decent life, but who cares right boomers? You got yours, so you're good....

I joined the military instead...

shovelhead's picture

I bought a Mercedes I can't afford.

Can I keep the car anyway without paying?

New_Meat's picture

Of course you can keep your German car.  Just pay Elizabeth Warren for a decade or two and she'll take care of you as she's taken care of her union budz.

Fed Supporter's picture

Nid and Shovel one thing that is rarely discussed is the fact the the possibility for Bankruptcy makes for better decisions for underwriting and limits losses.   The only problem here is the fact that no degrees are underwritten to assess if the degree will earn enough to pay back the loan.  Let bankruptcies take place but start putting a limit on how much each degree can borrow along with the odds that the student will make it to graduation.  This will alos stop the skyrocketing of tuition prices as well.  But the universities will never let this happen as long as the gov does the lending.  Bankruptcy is the universities friend in this situation, not proper underwriting.