During the most recent Democratic presidential primary debate, Joe Biden and Elizabeth Warren had an awkward and tense exchange over the creation of the Consumer Financial Protection Bureau. The friction between the two of them goes back quite a ways, long before Biden was vice president and Warren became a senator in Massachusetts. The two first butted heads over Biden's support of bankruptcy reform in the late 1990s and early 2000s, back when he represented Delaware in the Senate.

The key detail is the difference between the two kinds of bankruptcy a person can declare: Chapter 7 and Chapter 13. Chapter 7 is known as liquidation bankruptcy and is meant for people with limited income. It allows them sell off what assets they can to pay creditors and then discharge most of the rest of their debts relatively quickly. In contrast, Chapter 13, reorganizing bankruptcy, puts the debtor on a payment plan, so a portion their future income is guaranteed to go to paying back their creditors. If you're a creditor, this is the option you would rather someone take when they owe you money, since you're going to get more out of them over the long run.

The 2005 Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA) was meant, on paper, to prevent people from abusing Chapter 7 bankruptcy. It accomplished that through means testing, making it harder for people to declare Chapter 7 bankruptcy versus Chapter 13. If a person's income exceeds a certain threshold, they're ineligible for declaring Chapter 7. The bill also required people to complete a credit counseling course no more than 180 days before they declare bankruptcy. It also limits the kinds of debt a person can discharge through bankruptcy: If they use a credit card to spend too much money on "luxury goods" or withdraw too much in cash advances, that credit line can't be erased. And, gallingly, the bill made it completely impossible to discharge student loan debt. It may very well be the single piece of legislation most responsible for putting the U.S. in the current student debt crisis.

Biden was one of the bill's major Democratic champions, and he fought for its passage from his position on the Senate Judiciary Committee. He had pushed for two earlier bankruptcy reform bills in 2000 and 2001, both of which failed. But in 2005, BAPCPA made it through, successfully erecting all kinds of roadblocks for Americans struggling with debt, and doing so just before the financial crisis of 2008. Since BAPCPA passed, Chapter 13 filings went from representing just 24 percent of all bankruptcy filings per year to 39 percent in 2017. Melissa Jacoby, a University of North Carolina law professor specializing in bankruptcy, told Politico, "I doubt that the bill reined in the abuses that the bill was premised on, in part because they didn’t necessarily exist in the first place."

Unions, consumer protection groups, and the National Organization for Women all opposed the BAPCPA, but it had heavy support from the credit card industry. Delaware is essentially a domestic tax haven for corporations, and as a result financial institutions like credit card companies hold tremendous power in the state. As political writer Alexander Cockburn once wrote, "The first duty of any senator from Delaware is to do the bidding of the banks and large corporations which use the tiny state as a drop box and legal sanctuary. Biden has never failed his masters in this primary task. Find any bill that sticks it to the ordinary folk on behalf of the Money Power and you’ll likely detect Biden’s hand at work."