Deja vu All Over Again With Bankruptcy Process

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The 108th Congress began for real last week, at least from the credit union perspective, with hearings on bankruptcy reformm, deposit insurance, and several other issues of lesser interest for the movement.

The bankruptcy hearings left one with a sense of d?j? vu as witness after witness traipsed through the same arguments why rising consumer bankruptcies should prompt us to pass a system making it harder for debtors to erase all of their financial obligations. Once again, the credit union lobby will be counted on to play a key role in the effort to get the bill passed.

The bill is expected to glide right through the House in almost identical fashion to the same bill that passed easily in the last Congress, and the Congress before that. Then the same bill is expected to be introduced in the Senate, where it passed easily in the last Congress, and the Congress before that.

There's just one hurdle waiting; and that was the same hurdle over which the creditor's lobby stumbled in the last Congress. That's the abortion protest provision which Democrats insist is necessary to bar abortion clinic protesters from shielding their assets under bankruptcy law, as was done in at least one recent high-profile case. Republican leaders in the House have avoided that provision and introduced a bill without it. And the Republican leaders in the Senate will try to do the same. But that won't be easy as Democrats are expected to make a stand on this hot-button issue, especially those vying for the Democratic presidential nomination as the primary season approaches.

It looks as if we're going to have a filibuster over the issue. That means Republicans are going to need 60 votes, eight of them Democrats, to close off debate on the abortion protest language. Otherwise, this baby is going down again, a fourth straight time.

In the interim, there will be committee hearings, and mark-ups (drafting sessions), and votes, but the real action won't come till later on down the line.

That's why it's a little early to be getting too excited over this bill again.

Meantime, the credit union lobby is treading water on the deposit insurance reform bill. They really don't care if it passes, but if it does, they insist that all federally insured credit unions have their coverage limits lifted, probably to $130,000 per account from the current $100,000, just like the banks and thrifts.

Next on the docket: regulatory relief.

The House Financial Services Committee is expected to introduce a new regulatory relief package, looking a lot like the old regulatory relief package, later this month.

That bill will have plenty in it for credit unions. Prospects for that bill are good in the House but it won't go anywhere unless the Senate takes up the issue. That's why it died last year, too.

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