Bankruptcy Reform Speeds Past House
The reborn bankruptcy reform bill was speedily passed by the House last week, a brief two weeks after its reintroduction, but the long-term prospects of the credit union-backed measure remain clouded by the same issue that killed it last year.
The bill passed the House on a bipartisan 315-113 vote without the controversial abortion protest language that split congressional supporters last year and forced the Senate to let it die in the final days of Congress.
Republican leaders in both the House and Senate have agreed to try to pass the bill this year without the abortion language, which offends the key anti- abortion constituency of the GOP by singling out abortion clinic protesters for special treatment, barring them from shielding their assets under bankruptcy laws.
But the bill faces the same hurdles in the Senate as it did in the last Congress as several Democratic senators have vowed to stage a filibuster to kill the measure unless the abortion protest provision, championed by Sen. Charles Schumer of New York, is included. "We expect a move in the Senate to get the Schumer amendment included," said Murray Chanow, NAFCU lobbyist, shortly after last week's vote.
But John McKechnie, chief lobbyist for CUNA, expressed optimism that the abortion controversy can be avoided this year. "It is extremely encouraging and proves beyond a shadow of a doubt that the Democrats will vote for a bill that does not have the abortion language in it," he said, of last week's vote with 90 House Democrats on board. He said he has had no indication that Democrats in the Senate will stage a filibuster. "No one has said that yet," said McKechnie.
The Schumer amendment has taken on added significance this year as the anti- abortion lobby, emboldened by last year's Republican takeover of the Senate, has begun to flex its muscles on several issues. The latest is a ban on so-called late term abortions that is moving its way through Congress. This sets up the bankruptcy reform bill, once again, as a forum for the abortion rights fight.
Virtually the same bill was passed easily in the House and Senate last Congress but when leaders of both chambers tried to reconcile the differences in the two versions House Republican leaders, pressured by the anti-abortion lobby, stripped the Schumer amendment out.
When the bill, absent the Schumer amendment, was sent over to Senate for its concurrence, the Democratic-controlled Senate refused to vote. The bill passed by the House would create a means test to determine which debtors have some financial means to file a Chapter 7 to erase all debts, relegating those who do to a Chapter 13 financial reorganization, instead. It also includes the credit union priorities of mandatory financial education for bankruptcy filers and a short form retaining credit union's ability to enter into reaffirmations, or voluntary repayment, agreements with bankruptcy filers.
The House also added a provision requested by NCUA which extends the creditor's status of liquidating agent for a credit union (NCUA) in transactions involving financial derivatives.
With the war in Iraq clouding congressional action, it is not clear when the Senate will get to the bankruptcy bill. But McKechnie said Senate leaders have set it as a high priority.