Elizabeth Warren and the Transparent Debtor

(Note: much of the facts in this blog are quoted from the Wikipedia article on Elizabeth Warren)

I have long admired, and will probably always admire, Elizabeth Warren. Since before my career began in 1985 as an aspiring bankruptcy lawyer (I was in law school then, to graduate in 1986) Elizabeth Warren has been a strong supporter of consumers’ rights. Hers has always been one of the most prominent voices in support of families in our country. Ms. Warren is a professor of bankruptcy law at Harvard, certainly a deep well of legal pedigree in our country (don’t believe me? Watch the Pilot for the USA original series “Suits“: Top NY law firm Pearson Harden only hires out of Harvard Law School). Beginning in the late 1990’s Ms. Warren leapt to national prominence with her strong opposition to the changes the credit card cartel sought to impose on the U.S. bankruptcy laws through BAPCPA (Bankruptcy Abuse Prevention and Consumer Protection Act). She and the rest of the commission appointed by Congress to review the proposed changes all agreed that BAPCPA is an abomination, but never mind: in 2005 at the beginning of GW Bush’s second term in office, BAPCPA became the law of the land.

Not long after BAPCPA became law our national economy began to suffer the meltdown we all know too well: crashing stock market prices, bottomless real estate values, rampant corporate layoffs. Elizabeth Warren stepped up and is running for office to become the US Senator for Massachusetts. She is involved in a hotly contested fight for the seat against Republican incumbent Scott Brown. She ran unopposed in the Democratic primary, receiving a record 95.77% of the delegates. Everything is set for Elizabeth Warren to speak truth to power on Capitol Hill, but now she has hit a roadblock.

Apparently Warren identified herself as a minority in a directory of law professors from 1986 to 1995, specifically a native american. She claims that “she had heard family stories about her Cherokee ancestors her entire life.” Indeed, according to Michael Dean of the Oklahoma Historical Society, as intermarriage had been common in the 1890s in Oklahoma (Warren’s home), many individuals refer to having some Native American ancestry. Unfortunately, the Boston Globe reported on May 25 of this year that “both Harvard’s guidelines and federal regulations for the statistics lay out a specific definition of Native American that Warren does not meet.” Even a Cherokee group has protested.

This controversy is a shame, as it drowns out the really important national discussion on how to help families and our economy. However, if the charges are true, Professor Warren should know better. Honesty is the lynchpin of our consumer bankruptcy system. Schedules of assets, debts, income and expenses are largely presented on the honor system: the bankruptcy process would become hopelessly clogged if each debtor’s sworn financial statements had to be independently verified. The penalty for lying on your schedules is denial of discharge, as explained in this video. This is true whether or not the omission is material. In every court in the country, bankruptcy judges will rule without fail that a discharge in bankruptcy is reserved for only honest debtors.

So it is with our political representatives. As a bankruptcy professor, Elizabeth Warren knows better than most the premium of honesty required to obtain the enormous privilege of a political office or a discharge of debts in bankruptcy.

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