Earlier experiences formative for Prof. Porter's research

09-07-2011

Rex Bossert

Growing up in a small town in Iowa in the 1980s, Katherine Porter, the new bankruptcy and consumer law expert at UCI Law, saw first-hand the human costs that financial hardship can impose.

She remembers vividly riding the school bus home one day in 1986 when hundreds of people crowded in front of the local bank caused the bus to stop. The closing of that bank by the Federal Deposit Insurance Corporation caused a panic that rippled through Afton, Iowa, not unlike the run on the bank in Bedford Falls portrayed in the movie classic "It’s a Wonderful Life."

Returning home to her family farm, Porter asked her mother about the bank, and she told her it ran out of money. That brought to Porter's active mind many more questions about how a bank could fail, and what would happen to her family and the town as a result.

Several years later, as an undergraduate at Yale, Porter studied how people and communities make sense of financial downturns, including plant closings, divorces and lay-offs. That work helped fuel her interest in the effects of economic dislocation.

Next at Harvard Law School, Porter knew after just the first lecture in Prof. Elizabeth Warren's bankruptcy class what she wanted to focus her own career on. She found Warren’s enthusiasm about the field infectious.

"She revealed the human element in bankruptcy law, talking about how bankruptcy affects the lives of consumers who file and also how corporate managers, employees, bankers and others negotiate in bankruptcy situations," Porter said.

"Warren puts bankruptcy in perspective, showing how it relates to American ideals about entrepreneurship and capitalism. She taught us to see bankruptcy as a problem-solving tool, as a way to help people and companies recover from problems and rebuild brighter futures."

After graduating magna cum laude from law school, Porter went on to clerk for Judge Richard Arnold of the 8th U.S. Circuit Court of Appeals, then joined the bankruptcy law practice at Stoel Rives LLP in Portland, Ore. As an attorney in private practice, she handled bankruptcy and creditors’ rights matters for smaller companies.

Though Porter enjoyed the practice of law, she was eager to continue research she began at Harvard on families who file bankruptcy. Her first empirical study found that families in rural areas were often in worse financial straits than families in urban areas by the time they sought relief by filing bankruptcy. That study led to a stint as a visiting professor at William S. Boyd School of Law at the University of Nevada, Las Vegas, which at the time was a new law school, like UC Irvine.

She left Nevada for the University of Iowa College of Law in 2005 and eventually became a full professor. She also has been a visiting professor at the University of Illinois College of Law, UC Berkeley, and her alma mater Harvard.

The Bankruptcy Abuse Prevention Act of 2005, which made it more difficult for consumer debtors to declare bankruptcy and start over, was a huge boost for the field, which for years had been considered not nearly as sexy as other areas of law.

Porter is critical of how the reform law has made the burden of bankruptcy more onerous on borrowers, who should be allowed a chance to make a fresh start. "America is a place where paying your debts is considered a personal responsibility. But it is also a place that allows people a second chance," Porter said.

Like her mentor Warren, Porter sees it as part of her duty as a law professor at a public university to educate not only her students but also the public about financial and consumer issues. She has served as an expert source for media outlets including the New York Times, the Washington Post, the Wall Street Journal, Time magazine, ABC News, CNN, Fox News, and Nightline.

Earlier this year, for instance, she was quoted in USA Today saying the new rules for mortgage servicing companies don't go far enough and lack adequate sanctions. She also contributes to a blog, Credit Slips, which deals with issues involving credit, finance and bankruptcy.

In addition to bankruptcy, Porter counts among her areas of expertise commercial law, consumer law, mortgages, credit and debit cards, and empirical studies of legal systems. She has chapters in two books coming out around the end of the year. One book, to be published by Stanford University Press, is entitled Broke: How Debt Bankrupts the Middle Class. She edited and wrote the introduction, the appendix and a chapter on the financial risks of dropping out of college.

The other book, Shared Responsibility, Shared Risk (Oxford University Press), contains a chapter she co-wrote, "Risk Allocation in Homeownership: Revisiting the Role of Mortgage Contract Terms."

"My research on bankruptcy may help today’s families cope with their fears about financial failure and may contribute to our economy weathering the current economic downturn," Porter wrote in a University of Iowa alumni journal. "My optimism about the future is both academic and personal. My hometown bank reopened and still operates, and those childhood experiences drive my commitment to research that will help American businesses and families rebuild and succeed."