Congress Goes Home With Bankruptcy Bill In Limbo

Register now

The House and the Senate adjourned last week for their extended annual summer vacation, leaving the bankruptcy reform bill hanging yet again.

The credit union lobby was convinced the end of the more-than five-year campaign for the bill was in sight when negotiators for key players announced they had an agreement on the final sticking point in the bill. That was a provision that would bar anti-abortion protesters convicted of crimes against abortion clinics from shielding their assets under federal bankruptcy laws.

The deal cleared the way for the expected passage of the bill in both the House and Senate, where broad bipartisan majorities favor the credit union-backed measure.

Final passage, however, was scuttled at the last minute when a group of pro-life House members balked at the language. Still, credit union lobbyists believe they have enough votes for the bill to finally pass when Congress returns after Labor Day. "I'm still very confident it's going to move in September," CUNA lobbyist Gary Kohn, told The Credit Union Journal.

But the onset of the biennial campaign season, coupled with the rush of pending bills always brings unexpected consequences. The number of pending bills may prevent the House from a final vote on its regulatory relief bill, heavily laden with credit union provisions. Even if the bill is voted on, it won't reach final passage, because there is not a regulatory relief version in the Senate. Still, credit union lobbyists are hopeful that some of the credit union provisions may be attached to another vehicle on its way to passage.

A number of scenarios could still occur to once again scuttle the bankruptcy bill. Several opponents, including Sen. Paul Wellstone, the Minnesota Democrat, have indicated they will work to render the death sentence to the measure.

Among the arguments being honed are that the ongoing economic slowdown and its accompanying job losses should not be exacerbated by a measure making it more difficult for individuals to make a new start, as the bankruptcy bill will do.

The creditors lobby, which includes credit unions, banks, credit cards, retailers and others, will press its case, which some might find hard to believe at this time of decades-low interest rates, that by forcing more debtors to repay their loans it will bring down interest rates for all borrowers. The continuing decline in interest rates will make this a tough sell.

In another scenario, pro-life members of Congress could make the abortion provision a center piece of the issue. That could make it difficult for both pro-life and pro-choice members and give adherents of either side cover to vote against the bill.

Because of its potential for controversy, which members of Congress like to avoid during campaigns, the bill could also be buried.

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