Democrats Block Bankruptcy Bill; Passage Unlikely

A Democratic revolt led by Sen. Richard J. Durbin has made it all but impossible for Congress to pass a consumer bankruptcy reform bill this year.

The House was expected late Thursday to approve a Republican compromise that generally satisfied credit card companies and banks. But Sens. Durbin of Illinois and Edward M. Kennedy of Massachusetts vowed to kill legislation in the Senate.

"The Republican conferees stripped out every significant consumer protection in the Senate bill and, to add insult to injury, repealed existing consumer protections in the law," Sen. Durbin said.

In the unlikely event that the Illinois Democrat relents, the Clinton administration is likely to veto the bill. "They've come up with a bill we can't sign," said a spokesman for the White House's national economic council. "It would still squeeze middle-income families while leaving loopholes for the wealthy."

Efforts for last-minute deals are under way, but time is short because Congress is expected to adjourn this weekend. Possible compromises include making it easier for consumers to prove in court that they lack enough money to pay their unsecured debts. Also, the administration wants protections against coercive affirmation agreements and some other consumer guards restored.