WASHINGTON - House Judiciary Committee Chairman Henry B. Hyde introduced legislation last week to limit the government's ability to seize assets from accused drug dealers.

In recent years, civil asset forfeiture has become a problem for banks whose customers turn out to be drug dealers. In some cases, properties backing mortgage loans were seized by the government, leaving financial institutions with no collateral on a loan which by then was in default.

Courts have limited the sweep of the forfeiture laws, holding, for example, that the government must prove that a financial institution actually knew it was lending to a drug dealer - not that it "should have known."

However, the Hyde bill goes much further and requires the government to prove by clear and convincing evidence that the property is subject to forfeiture. Currently, prosecutors need make only an initial showing of probable cause.

The bill also gives property owners more time to challenge a forfeiture - 30 days instead of a maximum of 20 under current law -and permits release of a seized property in the event of a substantial hardship, such as disrupting a business.

The bill would also permit property owners to sue the government for negligence in the care of seized property.

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