By David Cay Johnston
davidcay@mac.com

Senator Joseph Biden’s lakeside home on four acres in a Delaware suburb is his largest asset, worth as much as $3 million. During 35 years in the Senate he has taken out or refinanced more than three dozen loans, most using this home as collateral, with banks in Delaware. Reporters have asked virtually no questions about the senator’s involvement with the banking industry, which benefits from federal laws that enhance the value of Delaware’s state laws that heavily favor banks over borrowers.

1. You pay about $38,700 in mortgage interest annually, more than 15 percent of your annual income from the Senate, your teaching position and your wife’s job. Is that prudent, for a man of your age, 66? You’re in the top 2 percent income group. What does it tell us about your ability to handle your own finances that as you grow older your debt level rises significantly? Why have you saved so little despite your substantial income?

2. What does this reliance on borrowing tell us about your views on government debt, which during your years in Washington has grown by a factor of 30 and will soon reach $10 trillion? What does it tell us about your sense of responsibility to future generations of Americans, who will inherit this burden?

3. You bought your former home for $185,000 in 1975 and sold it in 1996 for $1.2 million, a price that your opponents called inflated.  Does the fact that the purchaser was an executive of MBNA, the big credit card issuer that relied heavily on subtle changes in law to fuel its growth, give you any concerns about the propriety of this deal, especially given that your brother sold his home for $1.3 million to an executive of the Advanta credit card bank? If not, explain the reasons you do not believe others should question the propriety of this sale (other than the appraisal used to justify the new owner’s mortgage).

4. You’ve criticized Senator John McCain for rewarding “greedy” banks, while you voted for the 2005 Bankruptcy Abuse Prevention and Consumer Protection Act  that gave credit card issuers, notably at the time MBNA, much greater power to pursue collection from Americans who go broke even it was through no fault of their own, such as accident, illness or layoff. How is your conduct different from that which you attribute to Senator McCain?

5. How does the 2005 bankruptcy law fulfill your Constitutional duty to “promote the general welfare,” as it applies to those who through accident, serious illness or layoffs cannot repay their unsecured debts? How does it help resolve the current mortgage crisis?

6. In 2,500 words or more (so we get the full flavor of your reasoning) explain the reasons that you felt that banks needed greater leverage through the 2005 bankruptcy law, and in particular weigh that law’s new provisions against the alternative of regulating lending practices such as sending credit cards to young people as soon as they turn 18 regardless of their income, paying hidden fees to colleges to solicit students as borrowers, or using misleading promotions, teaser rates, and extreme penalty rates (29.99% interest) that countless studies by consumer groups and scholars have all said prey on those with little understanding of debt?

7. Given that there are so many banks competing for business, explain the reasons that you consistently did business with MBNA (a major donor of yours whose credit card practices have been widely criticized), Commerce Bank (involved in corruption scandals with government officials in Pennsylvania and New Jersey) and, with what appears to be a single exception, did not borrow from a nonprofit credit union or those banks which, unlike MBNA and Commerce, did not depend heavily on government favors?

8. You and your son, Delaware Attorney General Joseph R. “Beau” Biden, maintained campaign accounts at Commerce Bank, whose fast growth was linked to government influence peddling. What are the reasons you choose this bank? Can you point to a series of actions which ran contrary to the interests of MBNA and of other credit card issuers?

9. Upon graduating from law school, your son Robert was hired by MBNA, though he later left. Did you discuss with him the appearance of this and its propriety? If so what was said? If not, explain the reasons that, as a lawyer on the Judiciary Committee who has taken others to task for not perceiving that their conduct would appear questionable, you did not apply this standard to yourself and the reasons that you believe voters have no cause to question your relationship with MBNA.

10. In 1978, when you were nearing the end of your first Senate term, the United States Supreme Court effectively repealed the usury laws because of a conflict between state and federal banking regulations. The Court advised Congress that it needed to enact new laws governing lending rates. What actions did you take to follow the Supreme Court’s advice and protect low-income consumers from loans that are now advertised at rates as high as 99.25% and can be as high as 1,500 percent?

Senator Biden’s record on world diplomacy and trying to end genocide in Bosnia are well known, but the national press has published little about the senator’s relationships to the banks, despite his going into ever more debt as he ages.  Reporters have done little to examine his reliance on the banking industry for contributions, his actions on their behalf in the 2005 bankruptcy law and other legislation.

The usury law repeal and its significance are explained in my books Perfectly Legal and Free Lunch and in numerous studies.

David Cay Johnston is a former tax policy reporter for the New York Times. He is author of Free Lunch: How the Wealthiest Americans Enrich Themselves at Government Expense (and Stick You with the Bill) and Perfectly Legal: The Covert Campaign to Rig Our Tax System to Benefit the Super Rich — and Cheat Everybody Else. E-mail: davidcay@mac.com

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