Review by Choice Review
Mother-daughter authors Warren (Harvard Law School) and Tyagi present interesting and provocative findings about bankruptcy patterns in a readily accessible but authoritative and scholarly style. Their findings stem from the Consumer Bankruptcy Project of 2001, which interviewed families that filed for personal bankruptcy around the US. The authors argue that the rate of bankruptcy filings is rising, particularly for middle-class families, but not because of overconsumption, increased immorality, or reduced stigma, as other commentators have suggested. Rather, two-income families have driven up home prices in desirable suburbs, namely those with good public schools. Thus two-income families may actually have less discretionary income and less of a safety net of savings than one-income families had a generation ago. In addition, credit market deregulation has resulted in lower down payment requirements and greater access to unsecured but high-interest-rate credit. The resulting high-debt burden, combined with an unplanned but fairly likely event like serious illness, job loss, or divorce, leads perversely to greater financial vulnerability of two-income families than of one-income families. The authors advocate reregulation of credit markets and avoidance of high fixed expenses such as large house payments in response to this problem. ^BSumming Up: Recommended. General readers; students, lower-division undergraduate and up; and professionals. J. P. Jacobsen Wesleyan University
Copyright American Library Association, used with permission.
Review by Publisher's Weekly Review
Warren, a law professor at Harvard (The Fragile Middle Class) and her daughter Tyagi, a former McKinsey consultant, have joined forces here to argue here that the two-parent middle-class working family is on the brink of financial disaster. The number of families declaring bankruptcy or receiving a foreclosure against their house has shot up dramatically. Presenting carefully researched economic data to support their arguments, the authors contend that, contrary to popular myth, families aren't in trouble because they're squandering their second income on luxuries. On the contrary, both incomes are almost entirely committed to necessities, such as home and car payments, health insurance and children's education costs. When an unforeseen event such as serious illness, job loss or divorce occurs, families have no discretionary income to fall back on. The authors recommend a number of useful societal solutions to get families out of this trap, such as legally prohibiting credit card companies from charging grossly unfair interest rates and exposing banks that employ a loan-to-own strategy that steers minority customers to higher mortgage rates with an eye to future foreclosures. Warren and Tyagi point out that families buy homes they cannot afford in order to live in a neighborhood with better schools. Their proposed solution, however-to institute a public school voucher system with wider choice-is less carefully thought out. Overall, however, this is a needed examination of an emerging social problem. (Sept.) Forecast: The authors are hitting on issues felt by many Americans, and this book-with an author tour and 40-city radio satellite tour-is sure to be discussed. But its bleak warning may not drive readers to the bookstands. (c) Copyright PWxyz, LLC. All rights reserved
(c) Copyright PWxyz, LLC. All rights reserved
