Thursday, November 07, 2019

U.S. Rep. Katie Porter at NCBJ: A Champion of Capitalism

U.S. Rep. Katie Porter, the law professor turned Congresswoman, spoke to the ABI luncheon at this year's NCBJ.    Like many of the speakers, she  had an Elizabeth Warren story.   When she was attending Harvard Law School, she was told that she needed to take tax so she could learn how to study a statutory code.  She couldn't get the professor she wanted so she ended up taking bankruptcy from Prof. Elizabeth Warren.   

She said that capitalism encourages risk taking.  It rewards winners but doesn’t provide for the losers. Bankruptcy protects against the downsides of capitalism.

 She gave her own personal story of the downside of capitalism.   Growing up in a farming community in Iowa, she was riding on the bus one day when it stopped in the middle of town.   The bus driver said, "the bank closed."  Someone (probably Rep. Porter) said, Of course it's closed.  It's after 3:00 o'clock.   However, what the bus driver meant was that the bank had failed.   The future Rep. Porter ended up living through people losing their house, losing their possessions as the farm economy failed.  Bankruptcy is a way to understand why these things happen and how we address them. 

After practicing briefly, she did empirical research into why people filed bankruptcy.  However, she realized wow little we learn about the creditors.  She looked into mortgage companies and realized that they did not do well.

Rep. Porter said that her interest in bankruptcy sets her apart from many of her colleagues.  "Not a lot of people run for congress to work on Sec. 727."   She said that she is concerned with how our free market intersects with our legal and regulatory framework. She said that she sees herself as a champion of capitalism and said that bankruptcy is inextricably part of capitalism.  She said that we need to talk about health of capital markets plus guard rails on the excesses of capitalism.   She described herself as a champion of antitrust enforcement because it strengthens capitalism.   Rep. Porter said that we should reduce barriers to entry, enforce consumer protection and protect the rights of investors.   She said that these are all elements of how we create a strong prosperous capitalist economy.

She gave Purdue Pharma as an example of how bankruptcy can benefit the public.  She said that bankruptcy has a tremendous potential to make people better off with transparency and public participation.  In a case with major public implications such as Purdue, bankruptcy allows us to pause, bring everyone together and have a collective public conversations about how to address claims.

Rep. Porter serves on the Financial Services Committee while bankruptcy is under the jurisdiction of the Judiciary Committee.   She said that committee jurisdiction hampers ability to make policy in bankruptcy.  She added that committee assignments don’t bring all of the right players together.

She described herself as a bankruptcy nerd and damn proud of it.
The Financial Services committee has jurisdiction over student loans.  She said that the taxpayer would gain more than they would lose from from forgiving a large chunk of student loans. She said the best answer is not telling students they have one way ticket to bankruptcy.

Rep. Porter is a member of the College Affordability Caucus.  She said that the sticker price of college is too high so that students have to backfill with scholarships plus debt. She said that you should be able to get through a state university without debt.

I asked her a question about bipartisanship.   She singled out Rep. Van Taylor (R-Texas) as a Republican member she enjoys working with and said that even though she disagrees with Mark Meadows, she gets along with him well.   She said that her least favorite member of Congress is one who uses his time to ask each witness including  Jamie Dimon whether they are a socialist or a capitalist.  Not one person said they were a socialist.

In response to a question from the Wall Street Journal, she said she was not committed to bankruptcy venue reform at this time.  She said that the public aspect of bankruptcy is important, including putting proceedings in the communities where they are happening.  On the other hand, she said that the academic research on concentration of cases in one or two districts is abating.  She said that it is a debate worth having and wondered why there are not more venue transfer motions.

Rep. Porter said that she supports an increase in Chapter 7 trustee fees.  She said there is bipartisan support for this measure but not the bandwidth.

Personal Note:   I first discovered Rep. Porter when she was Prof. Porter and spoke at NCBJ.   As a bankruptcy nerd, I was glad to see someone with her experience running.  Her mother lives in Austin and I attended a fundraiser for her there.  I hope that she changes her view on bankruptcy venue reform since that is important to me.   

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