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Monday, December 09, 2019 {{ new Date().getDay() }}

Reprinted with permission from MediaMatters

In his new book, conservative author Peter Schweizer argued that Sen. Elizabeth Warren (D-MA) is responsible for federal bankruptcy laws that big businesses have used to their advantage. But Schweizer’s Warren criticism is based on a fabricated and wildly inaccurate history of bankruptcy law, and one expert in the field told Media Matters that Schweizer has a “fundamental misunderstanding of what bankruptcy is about.”

Schweizer, a Breitbart senior editor-at-large and president of the right-wing think tank Government Accountability Institute, is best-known for his 2015 book Clinton Cash, which was riddled with errors, fabrications, and distortions. Despite his sloppy work, Schweizer was aided in promoting his claims by a compliant mainstream press that failed to rigorously investigate his work or needlessly gave his allegations oxygen, as The Washington Post and The New York Times did when they made “exclusive agreements” with Schweizer to promote his work.

Now, as the 2020 presidential election approaches, Schweizer has released another book, Profiles in Corruption: Abuse of Power by America’s Progressive Elite, that levels corruption allegations against several Democrats running for president and other progressive politicians. In a chapter about Warren — who before being elected a U.S. senator in 2012 was a professor at Harvard Law School specializing in bankruptcy legal issues — Schweizer claims that during the 1990s, she was responsible for Congress’ adoption of pro-corporate bankruptcy laws. The claim, which is false, would be contrary to Warren’s presidential campaign platform. 

In his book, Schweizer seizes on the fact that between 1995 and 1997 Warren was the reporter for the National Bankruptcy Review Commission (NBRC), a bipartisan task force created by Congress to suggest changes to the U.S. Bankruptcy Code. As Schweizer relates, Warren’s work on the commission included issues relating to mass torts, which involve many people bringing a lawsuit against one or more corporations. Bankruptcy law is sometimes relevant to the resolution of these lawsuits. 

Schweizer claimed that “Warren was at ground zero in rewriting corporate bankruptcy laws” because of her work with the commission and that “the new laws allowed financially healthy corporations to start using bankruptcies as a way to avoid liability from legal suits.” Schweizer also claimed that “as the New York Times explained, the legislation pushed by Warren led ‘Fortune 500 companies with otherwise solid balance sheets’ to use ‘the bankruptcy courts as part of a broad strategy to resolve potentially ruinous legal woes’” and that “the new bankruptcy laws were a big win for large corporations, from asbestos producers to manufacturers of breast implants.”

Nothing Schweizer wrote here is true — except for the fact that Warren was the reporter for the NBRC commission. Efforts to change bankruptcy laws in the 1990s and 2000s are a complicated subject, but Schweizer’s claim of a connection between Warren’s work on the commission and “new laws” that benefited big businesses is false for one simple reason: There were no “new laws” as a result of the NBRC final report. Congress ignored the recommendations and set its own course, eventually making broad changes to the bankruptcy laws in 2005 (which Warren opposed).

The NBRC delivered its final report to Congress in 1997. As conservative legal scholar Todd Zywicki explained in a 2003 law review article, the NBRC’s “idiosyncratic ideological orientation guaranteed that its recommendations would be dead on arrival” in Congress.  Zywicki, a professor specializing in bankruptcy at the Antonin Scalia Law School at George Mason University, criticized the commission’s recommendations as overly friendly to judges and trial lawyers in his article and explained that they were unappealing to Congress because of ideological disagreements about the personal responsibility people who file for bankruptcy bear.

So instead of adopting the commission’s recommendations, Congress set its own course, which was laid out in a 2006 Department of Justice report that chronicles the history of the NBRC commission through when Congress actually overhauled bankruptcy laws in 2005. Before the final NRBC report was delivered in 1997, legislation that was “in sharp disagreement with the Reports’ consumer provisions was introduced.” That bill failed the following year, but as the DOJ report author Judith Benderson explained, it “rose repeatedly from the ashes in some curiously creative ways.”

In 2000, another version of the bill was passed by Congress, but then it was pocket vetoed by President Bill Clinton. Warren was actually involved in sinking the legislation. In a 2004 appearance on PBS program Now with Bill Moyers, Warren recounted that in the late 1990s she was invited by then-first lady Hillary Clinton to educate her on bankruptcy issues and the bill, which Bill Clinton was considering signing. Warren recalled that Clinton “went back to White House, and I heard later from someone who is a White House staffer that there were skid marks in the hallways when Mrs. Clinton got back as people reversed direction on that bankruptcy bill.” As Warren explained, President Clinton had been considering signing the bill to show “another way that he could be helpful to business”:

ELIZABETH WARREN: President Clinton had been showing that this is another way that he could be helpful to business. It wasn’t a very high visibility bill. And when Mrs. Clinton came back with a little better understanding of how it all worked, they reversed course, and they reversed course fast. And indeed, the proof is in the pudding.

The last bill that came before President Clinton was that bankruptcy bill that was passed by the House and the Senate in 2000 and he vetoed it. And in her autobiography, Mrs. Clinton took credit for that veto and she rightly should. She turned around a whole administration on the subject of bankruptcy. She got it.

As the DOJ report explains, a modified version of the bill was again introduced in 2005. That bill, the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA), became law after it was passed by Congress and enacted by President George W. Bush. As Vox explained, “Warren opposed the bill so vehemently that its passage inspired her transition from a Harvard bankruptcy law professor, who studied middle-class economics, to a senator and now a presidential hopeful.” 

According to legal publication Lexology, “between 1997 and 2005, numerous bills intended to address consumer bankruptcy abuse were presented to the house or senate floors. Consumer lending businesses are widely reported to have been the dominant lobby behind these bills,” and BAPCPA became the largest change in bankruptcy laws in 35 years. The primary purpose of the law was to make it more difficult for individuals to file for bankruptcy.

Reached by phone, bankruptcy expert and University of Chicago Law School professor Douglas Baird said the notion that Warren supported or helped enact pro-corporate bankruptcy laws was “ridiculous” and “baffling.” Baird emphasized that he is “not a supporter of Warren” and that the two have had significant public disagreements about bankruptcy policy, jokingly referring to himself as a “conservative force of darkness” compared to Warren. Still, Baird said he wanted to explain what Warren’s views were when they were traveling in the same circles during the 1990s, such as when they were both members of the National Bankruptcy Conference.  

Baird said that during the late 1990s and early 2000s, Warren “took positions that were so pro-consumer” on bankruptcy that they were repudiated by large financial institutions, and that “the idea she was taking positions that made her the tool of large organizations is ridiculous.” Baird described Warren’s role as reporter for the NBRC commision as something like an “executive director” or even a “cat herder.” While offering some criticism of how Warren used that role, Baird emphasized that she was not the “policymaker” and mentioned, as others have, that Congress didn’t take up the commission report’s findings anyway. 

Reached for comment by Media Matters about Schweizer’s claims, Seton Hall Law professor Stephen Lubben wrote by email that “the 2005 bankruptcy amendments did very little to change corporate bankruptcy law (it was mostly about personal bankruptcy)” and “that, combined with the fact that the Commission’s work had little to no impact on the 2005 amendments, would seem to massively undercut [Schweizer’s] claims.”

Schweizer inserts more misrepresentations in his book, making claims about Warren and Section 524(g) of the Bankruptcy Code in order her paint her as having pushed corporate interests. The provision was added by Congress in 1994, and is relevant to companies facing legal claims over asbestos exposure. Relying on a legal declaration issued by Warren in 2002 about her consulting work with Congress during the 1990s, Schweizer wrote that “she was also a key advisor on an obscure but profoundly important section of the bankruptcy law called U.S.C. 524(g)” and claimed the law benefits big corporations. 

The 524(g) provision of the Bankruptcy Code is a codification of a process used by a federal bankruptcy court to resolve the Johns Manville asbestos bankruptcy case. According to Warren’s 2002 legal declaration, some members of Congress “hoped that the [NBRC] Commission would develop a more comprehensive approach to replace” 524(g) and that in its final 1997 report the commission did make further recommendations (which Congress ignored). In his book, Schweizer characterizes 524(g) as legislation “pushed by Warren” and claims it was a way for corporations to “avoid liability.”

But according to Baird, describing what Warren did on 524(g) issues as pushing corporate interests is a conclusion that someone who “doesn’t understand the law” would reach, as in Baird’s view, 524(g) is not an anti-consumer law. Baird added that “nothing that Warren was doing was contrary to the interests of tort victims” in that litigation area and that she was “involved in coming up with a sensible mechanism” to resolve certain legal disputes.

Overall, Baird said that Schweizer’s characterizations of Warren’s work with Congress on bankruptcy laws and the conclusions that he drew from them show a “fundamental misunderstanding of what bankruptcy is about.” 

Schweizer has been touting his smear of Warren across conservative news outlets, appearing on Fox News shows Special Report and Fox & Friends and on Fox News contributor Mark Levin’s radio show and claiming that Warren helped rewrite bankruptcy laws — sometimes while also falsely saying that she did so to benefit corporate interests.

More reputable outlets would be wise to give Schewizer’s false claims attention only when they’re debunking them.

Photo Credit: Gage Skidmore
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