Action on Legislation
Bankruptcy ReformHouse Speaker J. Dennis Hastert has planned votes today on a minimum wage hike and business tax cuts that could bolster the prospects of bankruptcy reform legislation. These votes could let lawmakers sever these controversial issues from the bankruptcy bill and debate them separately.
Otherwise, little progress has been made since the Senate approved bankruptcy reform legislation Feb. 2 on an 83-to-14 vote.
The White House said amendments had made the bill more consumer-friendly but that the President opposes a minimum-wage hike in the legislation as insufficient and objects to some tax-cut provisions. The administration has previously threatened to veto the House bill and has said any compromise must preserve the Senate bill's consumer protection items.
It is unclear how soon a conference committee will be named.
Amendments adopted in the Senate would require credit card companies to warn customers about the cost of making just the minimum monthly payment and to give a standard illustrative example or mathematical tables to help customers estimate their indebtedness. People could call a toll-free number to find out how long it would take to pay off their balances while making just the minimum monthly payment.
Introduced by Sen. Charles E. Grassley, the Senate bill would let bankruptcy judges force debtors who could afford to pay $15,000 or 25% of unsecured credit over five years to file under Chapter 13 of the bankruptcy code. A debtor may appeal based on "special circumstances." Creditors could also ask judges to force a debtor into Chapter 13 reorganization, rather than eliminating their debts in Chapter 7.
In May 1999, on a vote of 313 to 108, the House passed a stricter version, introduced by Rep. George W. Gekas, R-Pa. It would force into Chapter 13 debtors who can pay $6,000 or 25% of unsecured credit over five years. Appeals may be based on "extraordinary circumstances."
The Senate on March 2 passed, 61 to 37, legislation that would let parents put as much as $2,000 per year per child in education savings accounts exempt from tax on the interest earned. The current limit is $500. It also would expand permissible use of the accounts beyond college costs to include elementary and secondary school fees. Eligible expenses would include tuition, transportation, and home computers.
The Clinton administration threatened a veto before the vote because, administration officials argued, the bill would favor upper-income families and divert resources from public schools. Sen. Paul D. Coverdell, R-Ga., the bill's sponsor, argued that 70% of the tax savings would go to families that make $75,000 or less per year, including 10.8 million families with children in public schools.
Electronic SignaturesThe Senate cannot agree on negotiators to meet with House lawmakers to compromise on legislation that would establish the validity of electronic signatures and contracts. Senate Banking Committee Phil Gramm wants to be included, but Senate Democrats are balking. The five-member House negotiating team is led by House Commerce Committee Chairman Thomas J. Bliley Jr.
The Senate approved legislation on Nov. 19. The House on Nov. 9 voted 356 to 66 for a similar bill, sponsored by Rep. Bliley, that would do the same. But unlike the Senate bill, it also would permit financial services companies to make mortgage and other disclosures required by consumer protection laws electronically, instead of on paper.
The Clinton administration opposed the House bill - which is favored by the financial services industry - as anti-consumer and instead endorsed a scaled-down Senate bill offered by Sen. Spencer Abraham. The House adopted an amendment that would require the consent request for electronic disclosures and records to be "conspicuous and visually separate" so customers know what they are signing. And customers would be able to review, retain, and print records. Clinton administration officials have signaled recently that with a few more changes, an acceptable compromise could be reached.
Money LaunderingTreasury Secretary Lawrence H. Summers said March 2 that the administration would work with lawmakers to introduce the International Counter-Money-Laundering Act by the end of this week. The bill would give the Treasury secretary authority to identify countries or overseas financial institutions with weak anti-money-laundering policies, or suspicious types of international transactions. That formal designation would trigger different requirements depending on the situation, ranging from special reporting mandates on U.S. financial institutions that are doing business with the suspect parties, to barring institutions from opening or maintaining correspondent accounts for these entities. House Banking Committee Chairman Jim Leach has scheduled a hearing for today on this proposal and on money-laundering bills pending in the House and Senate.
Government Sponsored EnterprisesRep. Richard H. Baker, chairman of the House Banking capital markets subcommittee, introduced legislation Feb. 29 that would merge the regulators of Fannie Mae, Freddie Mac, and the Federal Home Loan Bank System. The Louisiana Republican plans to hold a hearing within the next two weeks.
Rep. John J. LaFalce introduced legislation March 2 that would prevent banks from partnering with payday lenders to offer high-interest loans. (A payday loan is a short-term advance in which a lender agrees not to cash post-dated checks written by customers until the next payday. In return, the lender collects a fee of about 20%.) His proposal would also extend the Truth-in-Lending Act's credit cost-disclosures and enforcement protections to cover payday lenders.