Reform Down To The Wire

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A broad bipartisan coalition that carried the bankruptcy reform bill near the goal line threatened to splinter last week just as the end zone beckoned for the credit union-backed measure.

Congressional leaders enlisted credit unions in their effort to hold together the coalition for one last vote before they send the bill on to the President's desk for his signature. But a group of pro-life Republican House members who had supported the bill were threatening to defect over their distaste for a compromise struck on a provision barring individuals convicted of crimes against abortion clinics from shielding their assets under the bankruptcy code.

As many as 60 of the group, calling themselves the "Values Action Team," signed on to a letter to House Judiciary Chairman James Sensenbrenner urging the Wisconsin Republican to get the House-Senate Conference Committee on the bill to reword the so-called Schumer amendment to ease the language that had been carefully negotiated between Sensenbrenner and Sen. Charles Schumer, the New York Democrat.

Many involved in the issue have considered the Schumer amendment all along as an intentional impediment to passage of the bill, one that would make Republican backers responsible for its ultimate demise.

Rep. Henry Hyde, former chairman of the Judiciary Committee and one of the bill's biggest supporters, threatened to walk away from the measure over the amendment because of his opposition to abortion, though he was finally appeased by a compromise with Schumer on the provision's language.

"The reason why this amendment was put in in the first place was as a poison pill," suggested John McKechnie, chief lobbyist for CUNA.

Sensenbrenner last week dispatched lobbyists for both CUNA and NAFCU, which have emerged as the most credible bankruptcy reform advocates, to try and dissuade the pro-life group from defecting from the bill. NAFCU lobbyist Bill Donovan said Republican House leaders wanted to stem the defections before bringing the bill for a final vote to the floor of the House and Senate, lest the issue blow up into a major party fissure.

CUNA was bringing hundreds of credit union executives to Capitol Hill over the past few weeks to lobby their hometown lawmakers in hopes of keeping the precarious coalition together. CUNA lobbyist Gary Kohn said they were working to bring more Democrats on to the bill in the expectation that some Republicans who had previously voted in favor were planning to withhold their support.

"We spent the entire month of August looking at this possibility," said McKechnie. "Our strategy from day one in August was predicated on the possibility that this was going to happen."

The bill, as approved by the House-Senate Conference Committee, retains most of the key credit union-backed provisions, chief among them the means-based test aimed at preventing debtors with significant financial means from filing a Chapter 7 to erase all debts, relegating them instead to a Chapter 13 financial reorganization. It also preserves credit unions' ability to enter into voluntary repayment, or reaffirmation, agreements, of certain debts with members filing for bankruptcy, and requires financial counseling for individuals filing for bankruptcy.

While the Senate could vote on the bill before the House, it appears the upper chamber is waiting to see what the House does with the bill before bringing it to a vote. There has been little vocal opposition to the Schumer amendment in the Senate but major opposition to the bill itself still lurks among a Senate handful, most notably Democrats Paul Wellstone of Minnesota and Russell Feingold of Wisconsin.

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