WASHINGTON - Bankruptcy reform could move to the front burner after a House Judiciary subcommittee vote scheduled today.
"I know it's down to the wire, but things are getting greased up," said Phil Corwin, lobbyist for the American Bankers Association, which is a strong backer of bankruptcy reform.
If the bill is approved by the panel's economic and commercial law subcommittee, Mr. Corwin said, he expects it could be voted out of the Judiciary Committee this week.
"If we don't get a full committee vote by the end of this week, it's dead," Mr. Corwin said. "But as of right now, we have a good chance. Key members of the House and Senate are already talking about the final package."
The bill, introduced by Rep. Mike Synar, D-Okla., mirrors one approved by the Senate in April. If the measure reaches the House floor, it will already be backed by key Senate lawmakers, Mr. Corwin said, circumventing the need to negotiate final legislation in a House-Senate conference.
The measure aims to streamline parts of Chapter 11 of the bankruptcy code, making bankruptcy less expensive for all parties involved. More important for banks and other creditors, it would make it more difficult for individuals to use the bankruptcy courts to evade paying off debts.
It would also prohibit "cram-downs," in which the principal amount of a home mortgage is reduced in value, and debts incurred for the purpose of paying taxes could not be discharged by the courts.
Bankers feel these changes would give them more certainty, thereby reducing the cost of housing-backed credit.