Remember when the banks were so hot to trot on toughening the bankruptcy laws?  This BusinessWeek article looks at why they might now be regretting those tougher rules.

The latest lesson for lenders from the housing crisis: Be careful what
you wish for. Banks and other financial outfits spent eight years and
$40 million lobbying for sweeping new bankruptcy rules that would limit
their losses from deadbeat debtors. But it turns out those changes,
enacted in 2005, are forcing more troubled borrowers to walk away from
their homes—even those who didn’t take on risky mortgages in the first
place. And that’s bad news for lenders, which suffer financially every
time they have to take a troubled property on their books.

Before the new rules kicked in, many consumers could find debt
relief—and keep their homes—by filing for bankruptcy protection. Now
the process is much more onerous and expensive and the benefits more
limited, making foreclosure seem appealing by comparison. A July paper
by David Bernstein, a researcher at the U.S. Treasury, found that
800,000 fewer homeowners have filed for bankruptcy since the rules
kicked in. A quarter of those people, says the report, have likely had
to give up their homes as a result—boosting foreclosures nationwide at
least 4%. "[The rules] are directly responsible for the rising
foreclosure rate," notes another report by investment bank Credit
Suisse (CSR). Counters Philip Corwin, counsel at the trade group American Bankers Assn.: "These studies don’t stand up to scrutiny."

The article doesn’t make clear how the studies might not stand up to scrutiny, so I don’t know if the ABA shill offered any details of their scrutiny, but I tend to believe that the tougher qualifications for bankruptcy had to increase the rate of foreclosures over what they would have been had the laws remained the same.  I don’t believe for a second that the tougher standards are solely responsible for the increase in foreclosures, but they certainly contributed.