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Bankruptcy Reform Unlikely to Change Volume of Bankruptcy Filings, Says Aite
Group

Aite Group - March 6, 2006

Despite the hype surrounding the Bankruptcy Abuse Prevention and Consumer
Protection Act, the long-term impact on banks and other financial
institutions will most likely be limited, according to market research by
Aite Group. The analysts predict that shifts in credit practices, if they
occur, will not be driven by the new rules.

"For the most part, consumers aren't thinking about the possibility of
bankruptcy when they run up their credit cards," says Eva Weber, Analyst,
and author of the report. "So the connection between the new rules, changing
consumer behavior, and an improved lending climate is tenuous at best."

Banks and credit industry players are seen as strong proponents of the new
reform as they seek to protect profits from costly credit charge-offs. Over
the past 15 years, the top 100 commercial banks have charged-off an enormous
amount of credit card debt. Charge-offs are an accepted part of the credit
industry, viewed by some as a sunk cost. But the losses to the industry are
massive in absolute dollars.

"The result of the active credit culture in the United States is that a
small but growing percentage of consumers accumulate debt they cannot repay.
This fact has become accepted by consumers, and it means that institutions
must account for charge-off losses in their lending strategies," said Weber.
"The credit industry hopes the abuse of bankruptcy is curbed by the new
reform. The intended effect is also the reduction of Chapter 7 filings and
the minimization of abuse of the bankruptcy process. But the most immediate
and obvious impact of BAPCPA has been the glut of filings that took place
immediately prior to the enactment of the new law in October, 2005. Once
those filings have made their way through the system, a return to normal in
terms of bankruptcy filings seems likely."

About the market research report

Contact Aite Group for more information on the report, "Bankruptcy Reform:
Sweeping Changes, Limited Long-Term Impact" (Report 200603061).