Come see my artwork at the Dallas Public Library!

My wife and I will be exhibiting our work together at the Dallas Public Library’s Bradshaw Gallery (4th Floor of the Jonsson Library – Downtown Dallas, main branch) throughout February. We will have an opening reception on February 5th, 6-8pm. Open to the public, all are invited. I suggest parking in the Library’s underground parking, accessible from Wood St. (the street that runs “behind” the library). See some of my artwork at

Published in: on February 4, 2009 at 9:38 pm  Leave a Comment  

88,773 Consumer Bankruptcies filed in January 2009

That’s a 34% increase over January 2008. Wowsa!

If you need bk, check us out:
You’re certainly not alone!

Published in: on February 4, 2009 at 9:34 pm  Leave a Comment  

Ben Bernanke’s Congressional Testimony 9/23/08

Chairman Dodd, Senator Shelby, and members of the Committee, I appreciate this opportunity to discuss recent developments in financial markets and the economy. As you know, the U.S. economy continues to confront substantial challenges, including a weakening labor market and elevated inflation. Notably, stresses in financial markets have been high and have recently intensified significantly. If financial conditions fail to improve for a protracted period, the implications for the broader economy could be quite adverse.

The downturn in the housing market has been a key factor underlying both the strained condition of financial markets and the slowdown of the broader economy. In the financial sphere, falling home prices and rising mortgage delinquencies have led to major losses at many financial institutions, losses only partially replaced by the raising of new capital. Investor concerns about financial institutions increased over the summer, as mortgage-related assets deteriorated further and economic activity weakened. Among the firms under the greatest pressure were Fannie Mae and Freddie Mac, Lehman Brothers, and, more recently, American International Group (AIG). As investors lost confidence in them, these companies saw their access to liquidity and capital markets increasingly impaired and their stock prices drop sharply.

The Federal Reserve believes that, whenever possible, such difficulties should be addressed through private-sector arrangements-for example, by raising new equity capital, by negotiations leading to a merger or acquisition, or by an orderly wind-down. Government assistance should be given with the greatest of reluctance and only when the stability of the financial system, and, consequently, the health of the broader economy, is at risk. In the cases of Fannie Mae and Freddie Mac, however, capital raises of sufficient size appeared infeasible and the size and government-sponsored status of the two companies precluded a merger with or acquisition by another company. To avoid unacceptably large dislocations in the financial sector, the housing market, and the economy as a whole, the Federal Housing Finance Agency (FHFA) placed Fannie Mae and Freddie Mac into conservatorship, and the Treasury used its authority, granted by the Congress in July, to make available financial support to the two firms. The Federal Reserve, with which FHFA consulted on the conservatorship decision as specified in the July legislation, supported these steps as necessary and appropriate. We have seen benefits of this action in the form of lower mortgage rates, which should help the housing market. The Federal Reserve and the Treasury attempted to identify private-sector approaches to avoid the imminent failures of AIG and Lehman Brothers, but none was forthcoming. In the case of AIG, the Federal Reserve, with the support of the Treasury, provided an emergency credit line to facilitate an orderly resolution.
The Federal Reserve took this action because it judged that, in light of the prevailing market conditions and the size and composition of AIG’s obligations, a disorderly failure of AIG would have severely threatened global financial stability and, consequently, the performance of the U.S. economy. To mitigate concerns that this action would exacerbate moral hazard and encourage inappropriate risk-taking in the future, the Federal Reserve ensured that the terms of the credit extended to AIG imposed significant costs and constraints on the firm’s owners, managers, and creditors. The chief executive officer has been replaced.
The collateral for the loan is the company itself, together with its subsidiaries. (Insurance policyholders and holders of AIG investment products are, however, fully protected.) Interest will accrue on the outstanding balance of the loan at a rate of three-month Libor plus 850 basis points, implying a current interest rate over 11 percent. In addition, the U.S. government will receive equity participation rights corresponding to a 79.9 percent equity interest in AIG and has the right to veto the payment of dividends to common and preferred shareholders, among other things.

In the case of Lehman Brothers, a major investment bank, the Federal Reserve and the Treasury declined to commit public funds to support the institution. The failure of Lehman posed risks. But the troubles at Lehman had been well known for some time, and investors clearly recognized-as evidenced, for example, by the high cost of insuring Lehman’s debt in the market for credit default swaps-that the failure of the firm was a significant possibility. Thus, we judged that investors and counterparties had had time to take precautionary measures. While perhaps manageable in itself, Lehman’s default was combined with the unexpectedly rapid collapse of AIG, which together contributed to the development last week of extraordinarily turbulent conditions in global financial markets. These conditions caused equity prices to fall sharply, the cost of short-term credit-where available-to spike upward, and liquidity to dry up in many markets. Losses at a large money market mutual fund sparked extensive withdrawals from a number of such funds. A marked increase in the demand for safe assets-a flight to quality-sent the yield on Treasury bills down to a few hundredths of a percent. By further reducing asset values and potentially restricting the flow of credit to households and businesses, these developments pose a direct threat to economic growth. The Federal Reserve took a number of actions to increase liquidity and stabilize markets. Notably, to address dollar funding pressures worldwide, we announced a significant expansion of reciprocal currency arrangements with foreign central banks, including an approximate doubling of the existing swap lines with the European Central Bank and the Swiss National Bank and the authorization of new swap facilities with the Bank of Japan, the Bank of England, and the Bank of Canada. We will continue to work closely with colleagues at other central banks to address ongoing liquidity pressures. The Federal Reserve also announced initiatives to assist money market mutual funds facing heavy redemptions and to increase liquidity in short-term credit markets.

Despite the efforts of the Federal Reserve, the Treasury, and other agencies, global financial markets remain under extraordinary stress.
Action by the Congress is urgently required to stabilize the situation and avert what otherwise could be very serious consequences for our financial markets and for our economy. In this regard, the Federal Reserve supports the Treasury’s proposal to buy illiquid assets from financial institutions. Purchasing impaired assets will create liquidity and promote price discovery in the markets for these assets, while reducing investor uncertainty about the current value and prospects of financial institutions. More generally, removing these assets from institutions’ balance sheets will help to restore confidence in our financial markets and enable banks and other institutions to raise capital and to expand credit to support economic growth.

At this juncture, in light of the fast-moving developments in financial markets, it is essential to deal with the crisis at hand. Certainly, the shortcomings and weaknesses of our financial markets and regulatory system must be addressed if we are to avoid a repetition of what has transpired in our financial markets over the past year. However, the development of a comprehensive proposal for reform would require careful and extensive analysis that would be difficult to compress into a short legislative timeframe now available. Looking forward, the Federal Reserve is committed to working closely with the Congress, the Administration, other federal regulators, and other stakeholders in developing a stronger, more resilient, and better regulated financial system.

Published in: on September 23, 2008 at 7:55 pm  Leave a Comment  

Are we headed for another GREAT DEPRESSION?

Nouriel Roubini predicts the worst financial crisis since the Great

Depression and the worst U.S. Recession in the last few decades.


New York, July 15, 2008- In a series of recent writings on the RGE Monitor Nouriel Roubini – Chairman of RGE Monitor and Professor of Economics at the NYU Stern School of Business – has argued that the U.S.

is experiencing its worst financial crisis since the Great Depression and will undergo its worst recession in the last few decades. His analysis leads to the following conclusions:

* This is by far the worst financial crisis since the Great


* Hundreds of small banks with massive exposure to real estate

(the average small bank has 67% of its assets in real estate) will go bust

* Dozens of large regional/national banks (a’ la IndyMac) are also

bankrupt given their extreme exposure to real estate and will also go bust

* Some major money center banks are also semi-insolvent and while

they are deemed too big to fail their rescue with FDIC money will be extremely costly.

* In a few years time there will be no major independent broker

dealers as their business model (securitization, slice & dice and transfer of toxic credit risk and piling fees upon fees rather than earning income from holding credit risk) is bust and the risk of a bank-like run on their very short term liquid liabilities is a fundamental flaw in their structure (i.e. the four remaining U.S. big brokers dealers will either go bust or will have to be merged with traditional commercial banks). Firms that borrow liquid and short, highly leverage themselves and lend in longer term and illiquid ways (i.e. most of the shadow banking system) cannot survive without formal deposit insurance and formal permanent lender of last resort support from the central bank.

* The FDIC that has already depleted 10% of its funds in the

rescue of IndyMac alone will run out of funds and will have to be recapitalized by Congress as its insurance premia were woefully insufficient to cover the hole from the biggest banking crisis since the Great Depression

* Fannie and Freddie are insolvent and the Treasury bailout plan

(the mother of all moral hazard bailout) is socialism for the rich, the well connected and Wall Street; it is the continuation of a corrupt system where profits are privatized and losses are socialized. Instead of wiping out shareholders of the two GSEs, replacing corrupt and incompetent managers and forcing a haircut on the claims of the creditors/bondholders such a plan bails out shareholders, managers and creditors at a massive cost to U.S. taxpayers.

* This financial crisis will imply credit losses of at least $1

trillion and more likely $2 trillion.

* This is not just a subprime mortgage crisis; this is the crisis

of an entire subprime financial system: losses are spreading from subprime to near prime and prime mortgages; to commercial real estate; to unsecured consumer credit (credit cards, student loans, auto loans); to leveraged loans that financed reckless debt-laden LBOs; to muni bonds that will go bust as hundred of municipalities will go bust; to industrial and commercial loans; to corporate bonds whose default rate will jump from close to 0% to over 10%; to CDSs where $62 trillion of nominal protection sits on top an outstanding stock of only $6 trillion of bonds and where counterparty risk – and the collapse of many counterparties – will lead to a systemic collapse of this market.

* This will be the most severe U.S. recession in decades with the

U.S. consumer being on the ropes and faltering big time as soon as the temporary effect of the tax rebates will fade out by mid-summer (July).

This U.S. consumer is shopped out, saving less, debt burdened and being hammered by falling home prices, falling equity prices, falling jobs and incomes, rising inflation and rising oil and energy prices. This will be a long, ugly and nasty U-shaped recession lasting 12 to 18 months, not the mild 6 month V-shaped recession that the delusional consensus expects.

* Equity prices in the US and abroad will go much deeper in bear

territory. In a typical US recession equity prices fall by an average of 28% relative to the peak. But this is not a typical US recession; it is rather a severe one associated with a severe financial crisis. Thus, equity prices will fall by about 40% relative to their peak. So, we are only barely mid-way in the meltdown of stock markets.

* The rest of the world will not decouple from the US recession

and from the US financial meltdown; it will re-couple big time. Already

12 major economies are on the way to a recessionary hard landing; while the rest of the world will experience a severe growth slowdown only one step removed from a global recession. Given this sharp global economic slowdown oil, energy and commodity prices will fall 20 to 30% from their recent bubbly peaks.

* The current U.S recession and sharp global economic slowdown is

combining the worst of the oil shocks of the 1970s with the worst of the asset/credit bust shocks (and ensuing credit crunch and investment

busts) of 1990-91 and 2001: like in 1973 and 1979 we are facing a stagflationary shock to oil, energy and other commodity prices that by itself may tip many oil importing countries into a sharp slowdown or an outright recession. Also, like 1990-91 and 2001 we are now facing another asset bubble and credit bubble gone bust big time: the housing and overall household credit boom of the last seven years has now gone bust in the same way as the 1980s housing bubble and 1990s tech bubble went bust in 1990 and in 2000 triggering recessions. And a similar housing/asset/credit bubble is going bust in other countries – U.K., Spain, Ireland, Italy, Portugal, etc. – leading to a risk of a hard landing in these economies.

* But over time inflation will be the last problem that the Fed

will have to face as a severe US recession and global slowdown will lead to a sharp reduction in inflationary pressures in the U.S.: slack in goods markets with demand falling below supply will reduce pricing power of firms; slack in labor markets with unemployment rising will reduce wage pressures and labor costs pressures; a fall in commodity prices of the order of 20-30% will further reduce inflationary pressure. The Fed will have to cut the Fed Funds rate much more – as severe downside risks to growth and to financial stability will dominate any short-term upward inflationary pressures. Leaving aside the risk of a collapse of the US dollar given this easier monetary policy the Fed Funds rate may end up being closer to 0% than 1% by the end of this financial disaster and severe recession cycle.

* The Bretton Woods 2 regime of fixed exchange rates to the US dollar and/or heavily managed exchange will unravel – as the first Bretton Woods regimes did in the early 1970s – as US twin deficits, recession, financial crisis and rising commodity and goods inflation in emerging market economies will destroy the basis for it existence.

Published in: on July 15, 2008 at 11:09 pm  Leave a Comment  

Bankruptcy Affecting More and More Americans, According to Harvard Law Prof.

“The rise in bankruptcies is not about something that happened last week or last month,” said Elizabeth Warren, a Harvard Law School professor and a bankruptcy expert. “It’s about the fundamentals. It’s about declining wages, rising costs, inadequate health insurance, job instability. More hardworking middle-class families simply can’t make it in this economy, and it’s only getting worse.”

I couldn’t agree more.  95% of the people that walk into my office needing bankruptcy aren’t traditionally “poor”; most are employed or had been employed for years before losing their job to layoffs that were beyond their control.  Most have families that they’re trying to support.  Without health insurance, with the credit crisis and with the devastating effects of Adjustable Rate Mortgages, many people are quickly swallowed up by the common, albeit tragic, events we read about in the papers and watch on the news.  Unfortunately, our society presents a double-standard that makes it hard for many people to take the appropriate steps to help themselves: Our legal system offers bankruptcy as a practical way to solve these problems, but at the same time our notions of pride, and perceptions of social stigma that go with bankruptcy, often keep people from taking action soon enough. 

So here’s my advice: If you’re reading this and you think you may need a bankruptcy – even if you don’t think you need it yet, call a bankruptcy lawyer.  DO NOT borrow against your 401(k) or other retirement account without talking to a bankruptcy lawyer first.  I cannot emphasize that enough.  Even if you are a financial planner and have a PHD in Economics, if you do not know about bankruptcy, do not borrow against your retirement before talking to a bankruptcy attorney!  Find someone you’re comfortable with.  If you want to check me out, go to my website at  

Published in: on May 28, 2008 at 1:28 pm  Leave a Comment  

Hello world!

My name is Thad Bartholow, I’m a bankruptcy and consumer law attorney living and working in Dallas, Texas.  My law firm is Bartholow & Bartholow, and our firm’s website is aka  The majority of my business is helping people file Chapter 7 bankruptcy, Chapter 13 bankruptcy, stopping foreclosure, fighting fraud by mortgage companies and mortgage servicers, suing bad faith debt collectors under the Fair Debt Collection Practices Act and Texas Debt Collection Practices Act, helping people restore their credit through the Fair Credit Reporting Act, and just generally sticking up for the little guy.  I graduated from Cardozo Law School (in New York City) in 2002, and I have been practicing exclusively bankruptcy law since 2005. 

Recently, I attended Max Gardner’s Bankruptcy Boot Camp, a specialized, intensive four day seminar on representing debtors in bankruptcy against predatory lenders, stopping fraudulent fees and charges by creditors, and fighting fraudulent practices by mortgage servicers.  Let me just say that Max Gardner is a great, not just good, but a great man whose compassion for people who need help the most and courage to stand up to some of the most powerful adversaries in the world – banks – set an example for all lawyers to follow.  I consider it a huge honor and privilege to be one of the 250 or so lawyers who have attended his Boot Camp. 

I’m new to the blogging thing, so I’ll stop for now.  If you need to find me, check out my website above, or search Google for Dallas Bankruptcy Attorney. 

Published in: on May 22, 2008 at 5:56 pm  Comments (3)