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Summer Reading "Contest"

posted by Katie Porter

Remember the summer reading programs of your childhood, where you could keep track of your books, maybe prepare a few short reports on why you liked the books, and be entered in a drawing to win a grand prize--a new bike, a gift certificate at McDonalds, etc? Out of the same sense of nostalgia that brought back My Little Pony and Transformers, summer reading programs for adults are flourishing at libraries everywhere. Credit Slips is going to get into the action, in our own small way.

Leave a comment describing the most interesting or provocative book or article that you read this summer. The book/article must be bankruptcy or credit-related or plausibly related to the issues that we discuss on Credit Slips (no Harry Potter, please, unless you can explain how Harry Potter shed light on your understanding of debtor-creditor law). Please give the title, author, a short description, and if available, an online link.

What's the prize? . . . . Hmmm . . . the joy of sharing your love of learning. Isn't that really what motivated you back in elementary school; you didn't actually want those Strawberry Shortcake stickers, did you?  In two weeks, I'll put together a summary of the most popular or interesting nominations, along with the name of the nominating reader.


"Start Late, Finish Rich" by David Bach

With bankrupcty behind me I have read many a book on money. From Suze Orman to "Life After Bankruptcy", no book has been so clear and INSPIRING! After chapter nine I had already called my credit card companys and successfully lowered my APR's, began saving 20% (feels so good), and now I just opened an IRA. I'm a waitress, and this book has set me on a positve path.

What a great idea. Most interesting or provocative? That is a high standard that I cannot meet. For fun, I can offer The Mourning Sexton by Michael Baron, which is a suspense novel that starts with a bankruptcy attorney. It actually doesn't have a whole lot to do with bankruptcy, but there are a few scenes to which Credit Slips readers might relate, such as one client's idea of funding a chapter 13 plan with a wrongful death suit.

I'm about three-quarters of the way through rereading Oliver Twist. Several times, Dickens's description of the hardships of and attitudes toward the working poor have made me wonder whether we're just debating the same issues that we did 150 years ago and make me hope we won't be doing the same 150 years from now.

Just browsing the internet, your blog is very, very interesting.

I never said that I couldn't enter my own contest. I nominate "The Age of Reason: Financial Decisions over the Lifecycle" by Sumit Agarwal, John Driscoll, Xavier Gabaix, & David Laibson. It's available here: http://papers.ssrn.com/sol3/papers.cfm?abstract_id=973790

The paper uses several proprietary datasets from lenders to examine whether the sophistication of financial decisions varies with age. The researchers find that both younger and older adults pay higher interest and more fees, even after accounting for observed risk characteristics (FICO scores, LTV ratios, etc). They document a U-Shaped curve of "financial mistakes" by age. Their finding that charges such as credit card over-the-limit fees are disproportionately born by both younger AND older Americans could change who participates in the debates about consumer credit legislation.

I think summer reading should be light and enjoyable, which is why I recommend "To the Hilt" by Dick Francis. Besides being a great mystery, the plot focuses on the pending insolvency of the family brewery. Set in the U.K., the black sheep of the family is asked to save the family business after the CFO takes all the remaining cash, borrows against the company and then runs off to South America. The protagonist hires an insolvency practitioner to come in and deal with the creditors through a creditors voluntary arangement in order to save the brewery. I find it especially refreshing that the book shows the positive value that debtor's counsel can bring to an insolvent company by enabling it to restructure and stay in business.

Without a doubt, one of the best books that I'm reading this summer (or is it now autumn?) is Postindustrial Peasants: The Illusion of Middle-Class Prosperity, by Kevin Leicht and Scott Fitzgerald. If you want to understand what is happening, and being done, to the middle-class families in this country, this is a must-read!

The authors take a look at the factors that are at the root of our modern-day debt peonage: increased debt loads (from mortgages, education, and credit cards), decreased income (despite significant increases in workers' productivity), persistent transfer of wealth to the wealthiest, and increased taxing of the middle-class. They also devote a chapter to the macro effects of this debt peonage: alienation from community and, of course, increased bankruptcy filings.

I am seriously considering assigning this to the students in my Social Inequality class---Leicht and Fitzgerald write well and provide ample evidence for their argument. Further, I would hope that non-academic folks pick up this book---it shines a bright light on the mechanisms behind the financial screwing of the middle class.

I've been rereading an oldie, but goodie, Lendol Calder's book "Financing the American Dream: A Cultural History of Consumer Credit." It is a fascinating account of the development of consumer credit in first half of the last century. The overall history is excellent, but I have to say that what I'm enjoying the most is the interesting historical tidbits scattered throughout. My favorite one is that usury restrictions were first loosened by Progressive Era reformers in order to encourage legal lenders to provide an alternative to loan sharking.

Not quite a bankruptcy book but it might as well be--a marvelous tale of the shabby-genteel hinterland between hysteria and financial ruin is Rebecca West's 'The Fountain Overflows,' available in a dandy paperback from NYRB Classics.

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