Bankruptcy Bill Survives Minimum Wage Push

Consumer bankruptcy reform cleared a major hurdle Tuesday afternoon when the Senate killed a controversial amendment to raise the minimum wage.

If the proposal by Sen. Edward M. Kennedy, D-Mass., had not been tabled on a 55-to-44 vote, the legislation would have died. Instead, the Senate moved on to consider other amendments with the aim of casting a vote on the overall bill Tuesday night.

Earlier in the day, Rep. George W. Gekas, who sponsored the bankruptcy bill approved in the House June 10, said he is confident that the Senate will approve its own version shortly and that the legislation can be enacted before lawmakers adjourn Oct. 9.

"The Senate is known to act on the last day of a given session on the most dynamic issues facing the land," the Pennsylvania Republican told the National Association of Federal Credit Unions' annual congressional caucus.

Rep. Gekas said the Senate has already appointed representatives for a House-Senate conference committee on the bill, a move he called "another good sign."

In a speech to the same group, House Banking Committee Chairman Jim Leach echoed Rep. Gekas' optimism.

Nevertheless, Rep. Gekas predicted a bruising battle between House and Senate lawmakers over their respective bills, which he called "vastly different."

Most contentious, he said, will be the question of how to structure a "needs-based" bankruptcy system, in which filers who can afford to repay some of their debts are required to do so.

The House wants to use a formula based on the filer's income and living expenses to determine whether he could afford to pay back some debts. The pending Senate bill would let creditors try to persuade a bankruptcy judge that the debtor could afford to repay some of his unsecured debts.

Rep. Gekas said he wants "to stay strong with my needs-based concept." But he admitted it would probably be necessary to compromise on the issue in order to get a bill enacted this year.

- Scott Barancik and Dean Anason

For reprint and licensing requests for this article, click here.
MORE FROM AMERICAN BANKER