Amendment Sidetracks Reform Bill

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In an agonizing change of fortune for the credit union lobby, House Republican leaders pulled the bankruptcy reform bill from a final vote last week after pressure from a key constituency threatened to break into a major schism in the GOP.

The move puts in jeopardy the credit union-backed measure that was almost certain to pass both chambers, having received broad bipartisan support from the House and Senate.

But the controversy over the so-called Schumer amendment, barring abortion clinic protestors from shielding their assets under the bankruptcy laws, prompted a group of around 60 Pro-Life Republican House members to mobilize the anti-abortion lobby nationwide and cause a major split within the GOP's key constituencies. A representative of one of the House members said Pro-Life groups were being urged to call their lawmakers in opposition to the bill and were scoring the vote for use in the upcoming mid-term congressional elections.

CUNA lobbyist John McKechnie, who had helped convince House leaders to move the bill to a final vote last week, expressed disappointment after the leadership changed positions and decided to pull it from consideration in order to avoid an intra-party blow-up.

"It's a shame that the most controversial issue in American politics can get mixed up with something that was non- controversial," McKechnie said. "This shows you how difficult it is to pass legislation. It's much easier to block it."

Though the credit union lobby will continue to push for final passage, McKechnie was sanguine about House leaders changing their minds. "What's going to be any different next week?" he said.

Still, he said, CUNA will continue to lobby for a vote, possibly working to get the Senate to act first, giving House members a push, he said.

NAFCU lobbyist Bill Donovan continued to be optimistic, suggesting the House could still vote on the bill this week. "I am an optimist," said Donovan. "Until the final gavel falls (on the congressional session) I believe this issue is going to stay alive. If brought to a vote, I'm very optimistic the votes are there for passage."

If the bill is not voted on it will be the second straight Congress that passed the bankruptcy reform measure only to have the bill die by procedural nuance. The last Congress passed the bill, but it was killed when President Clinton refused to sign it into law, thereby rendering a "pocket veto."

In this Congress the bill has passed both the House and Senate by wide margins last year but has languished for months in the House-Senate conference committee over several issues, including the Schumer amendment. But lawmakers from the House and Senate came to final agreement on all of those issues in June before they adjourned for their summer recess. McKechnie referred the Pro-Life Schumer amendment opponents to the position of Rep. Henry Hyde, an ardent opponent of abortion, who helped craft the final wording for the amendment and pledged support.

Late last week the amendment was also drawing fire from labor groups that have opposed the bill all along. The AFL-CIO wrote a letter to Congress suggesting the amendment would bar union pickets and other labor tactics.

"If this provision were enacted into law, individuals and organizations that engage in lawful demonstrations associated with the most successful social movements in our nation's history would be exposed to financial ruin," wrote the AFL-CIO.

Seven Years of Work

Credit unions have been one of the leading lobby groups on bankruptcy reform for the past seven years, working first for a national panel to review the bankruptcy laws, then for introduction of a bill five years ago. The key feature of the bill is a "means-based" test preventing those with some financial means to repay from filing a Chapter 7 to erase all debts, requiring them instead to file a Chapter 13 to reschedule their obligations.

It would also create a uniform format for reaffirmations, under which debtors in bankruptcy volunteer to repay some debts in order to maintain their credit. CUs were able to negotiate a "carve out" on this provision so they could maintain their own agreements with members.

The measure has several other credit union priorities, including mandatory financial counseling for debtors filing for bankruptcy.

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