Donald P. Morgan, a vice president for the Federal Reserve Bank of New York, sets forth an analysis that lays significant responsibility for the sub-prime foreclosure crisis at the doorstep of those who pushed through the 2005 bankruptcy reform.

Key findings include:

After the bankruptcy abuse reform (BAR) took effect in October 2005, foreclosures on
subprime mortgages surged nationwide.

Prior to BAR, overly indebted borrowers could file bankruptcy to free up income to pay their  mortgage by discharging unsecured debts; BAR eliminated that option for better-off filers through a means test and other requirements, making it more difficult to save one’s home by filing bankruptcy.

For a state with an average home equity exemption, the subprime foreclosure rate after BAR rose 11 percent relative to average before the reform; given the number of subprime mortgages nationwide, that translates into 29,000 additional subprime foreclosures per quarter nationwide.

While these general conclusions come as little surprise, the report is worth a read for the specific statistics and trends revealed.