U.S. Senate Supports Identity Theft

Unbelievably, this was sort of lost in the whole bankruptcy debate over the last few weeks...

On March 1st, Bank of America announced it had lost personal financial data of more than 1 million customers, meaning a huge amount of people might experience identity theft, including thousands of federal employees, and even potentially Senators' own staff members. Often times, when you get your identity stolen, it destroys your credit and your entire finances. That’s why two days later Sen. Bill Nelson of Florida introduced legislation to exempt debtors from tougher bankruptcy laws if their financial problems were caused by identity theft. But in a Senate apparently owned by credit card companies and banks, it was voted down by a wide margin.

Consider how disgusting that really is (beyond the truly unfathomable fact that the Senate didn't even care about its own staff members): Your bank can be responsible for losing your personal information and having your identity stolen, and then, when you are faced with the financial consequences of identity theft, your bank can actually use the situation to milk you for more money, because you now have almost no bankruptcy protections.

If, on the other hand, Nelson's amendment had passed and banks were not able to go after you when they contribute to your identity being stolen, Congress would have created a big financial incentive for them to protect your private information. They would know that if they lost it, their own bottom line would be threatened, because they wouldn't be able to go after your debts.

But Congress actually created an incentive (or at least no disincentive) for the opposite – banks can lose your information, and then use their own negligence as an opportunity to bleed you dry with higher interest rates, late fees, and all the other horrible things that are heaped upon citizens as they accrue debt.