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House passes bill to toughen bankruptcy lawsWhite House threatens veto
May 6, 1999 WASHINGTON (AllPolitics, May 6) -- The White House is threatening to veto legislation easily passed by the House of Representatives Wednesday that is aimed at making it harder for people to wipe out their debts by declaring bankruptcy. But the bipartisan bill passed by a 313-108 veto-proof margin with solid Republican support and a mixed vote from Democrats. The Senate hasn't voted on a parallel measure. The Clinton Administration was especially critical of the creation of a "means test" based on debtors' income to determine whether they must gradually repay their debts or cancel them entirely while under bankruptcy court protection from creditors. In a statement, the White House called the means test "inflexible and arbitrary," but reaffirmed its support in principle for rewriting the bankruptcy laws. The legislation was prompted by the rising numbers of personal bankruptcies, which hit a record 1.4 million last year despite the strong U.S. economy -- up more than 300 percent since 1980. The House passed bankruptcy overhaul legislation last year that also faced a threatened administration veto. The Senate adjourned without voting on the measure. Credit card companies have mounted a lobbying blitz for the bill, claiming too many people seek shelter from debts by using the more lenient Chapter 7 of the U.S. Bankruptcy Code, which erases debts, when they could afford to restructure debts according to a court-ordered plan under Chapter 13. Big bank-owned credit card networks, mainly Visa and MasterCard, and retail-business groups also say that losses from debts forgiven in bankruptcy have forced them to raise interest rates for consumers who handle credit responsibly. But opponents of the bill, including consumer groups, unions, civil rights groups and bankruptcy attorneys, say the legislation puts corporate profits ahead of the needs of families struggling with debt who need a fresh start. They says credit card companies share the blame for the rise in bankruptcies by flooding consumers with mailed solicitations to entice them into easy credit. Judiciary Committee Chairman Henry Hyde (R-Illinois) and Rep. John Conyers of Michigan, the panel's senior Democrat, attempted to soften the means test provision, which uses the Internal Revenue Service's living expense standards to help determine how much debtors can repay. But the House defeated the amendment in a 238-184 vote. The House did approve, by a voice vote, an amendment requiring credit card companies to clearly disclose late fees and how long it would take customers to pay off balances if they make only minimum monthly payments. The bill also requires companies to clearly state when introductory "teaser rates" expire and to clearly disclose the higher interest rates replacing them. The disclosures also would affect offers for credit card accounts made over the Internet, which have attracted an estimated 7.8 million people in the last five years. Opponents also maintain that the bill, by barring certain credit card debts from being erased in bankruptcy, would force single mothers and children owed support by bankrupt fathers to compete with credit card companies in collecting debts. But the measure's sponsors, led by Reps. George Gekas (R-Pennsylvania) and Jim Moran (D-Virginia), say it gives highest priority among debts to child support and alimony payments, putting them ahead of credit card debt and other obligations. In the Senate, bankruptcy overhaul legislation cleared the Banking Committee last month and went to the full chamber, but the key issue of providing information to credit card users remained unresolved. However, the Senate voted Thursday to adopt a measure aimed at protecting consumers' privacy by making it a federal crime for anyone to misrepresent himself to obtain someone's private financial data. The vote was 95-2 for the amendment to sweeping legislation the Senate is considering that would let banks, securities firms and insurance companies get more deeply into each other's businesses. The measure, proposed by Sen. Phil Gramm (R-Texas), chairman of the Senate Banking Committee, is aimed at alleviating Americans' growing concern over privacy in an era of consolidations creating huge financial institutions selling everything from checking accounts to mutual funds. But in another setback for the administration Wednesday, the Senate defeated, 52-45, an amendment that would have removed provisions in a financial services overhaul bill that Democrats view as an attack on the 1977 Community Reinvestment Act. Gramm wants to exempt small rural banks from the community-lending law and make it harder for the government to use satisfactory community-lending ratings as a requirement for banks being allowed to expand. The Senate also rejected, on a party-line 54-43 vote, a Democratic version of the financial services legislation, which would lift Depression-era barriers separating banks, securities firms and insurance companies. The Associated Press contributed to this report. MORE STORIES:Thursday, May 6, 1999
• Senators call for more support of war crimes tribunal • House passes bill to toughen bankruptcy law • Reno orders review of Los Alamos probe • Senate committee approves report reviewing technology transfer to China • Steele case goes to the jury • House managers honored with musical tribute • Campaign briefs: Lousiana House race; Gore • Senate passes bill allowing financial companies to merge • First lady to tour southwest to help save landmarks • GOP struggling to provide 2000 tax relief amid money crunch • Bush criticizes Clinton's stand against ground troops in Kosovo • Some House Republicans seek vote on campaign finance overhaul • Senators weigh $4.3 billion in emergency aid for farmers |
