Tale of Two Bankruptcies | Fault Lines

Double standards. You hear a lot about them in the US these days, particularly from families facing economic disaster while they watch big banks get trillions of public dollars to shore up their bottom lines.

To get a better understanding of what pundits call “populist rage,” we compare the fates of two American institutions: one family, one bank.

Frank and Jeanne Bachard of Bridgeport, Connecticut were both city employees until health problems forced them into unemployment. They turned to their credit cards to pay for household necessities, amassing deep debt. And now they are discovering that – thanks to changes in the bankruptcy laws – they are actually too poor to go bankrupt.

Two years ago Citigroup was the biggest company in the world. Thanks to heavy bets in the risky derivatives market, it has plummeted from those heights, sinking under hundreds of billions in toxic debt. Some economists argue that it is actually bankrupt – a zombie bank that is being kept alive at taxpayer expense (more than $450bn and counting).

One family, one bank. Obviously not comparable in most respects. But both are facing towering debts, both need help to get through this crisis. How did they both end up here? And what will happen to them next? Therein lies the tale …

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