Austerity and financial safety nets: bankruptcy abuse prevention and bank protection in Irish post-crisis policy?

This chapter focuses on the area of bankruptcy or personal insolvency law. The household credit explosion in advanced economies following the neoliberal turn led to the development and/or expansion of “consumer bankruptcy†laws across the globe, and the increased conceptualisation of personal insolvency law as a form of consumer protection. A comparative consumer bankruptcy literature emerged to document and analyse empirically this trend, stressing the importance of such laws in offering a social safety net of last resort in an era of increased household financial risk. Policy documents of many international organisations responding to the crisis of the past decade have ruptured this trend, tending to invoke personal insolvency law less in these protective terms and more as a tool for the prudential regulation of banks (in dealing with “non-performing loans†on bank balance sheets). Vivid debates persist as to whether the crisis was indeed one located primarily in the banking sector or rather a crisis of falling consumption amongst indebted consumers, and so of whether policy responses should have focused on “bailing out†financially troubled banks or households. Policy documents reshaping bankruptcy laws from social safety nets to mechanisms for shielding banks from losses clearly favour the former option, and evidence a prioritisation of Wall Street over Main Street.