Copyright 2002 / Los Angeles Times
Los Angeles
Times
May 20, 2002 Monday Home Edition
SECTION: Part A Main News; Part 1; Page 1; National
Desk
LENGTH: 1484 words
HEADLINE: THE NATION;
Abortion
Rule Snags Bankruptcy Bill;
Law: An amendment, aimed at
clinic protesters looking to avoid fines, links the divergent issues.
BYLINE: JANET HOOK, TIMES STAFF WRITER
DATELINE: WASHINGTON
BODY:
Back when Congress first began talking about tightening federal bankruptcy
rules, Bill Clinton was in his first presidential term, Newt Gingrich was just a
troublemaker in a Democratic-controlled Congress and the stock market had yet to
break 10,000.
Now, after a tortuous legislative journey, a bill to
overhaul the bankruptcy code is on the brink of becoming law. Yet it still may
stall, despite bipartisan agreement on its key provisions and backing from a
powerful armada of lobbyists.
The measure would make it harder for
people to unload debts by filing for bankruptcy if they could afford partial
repayment. But it has hit an eleventh-hour snag over an issue far removed from
its core: the use of bankruptcy law by
abortion clinic protesters. Lobbyists for the banks and credit
card companies that stand to gain financially from the bankruptcy overhaul are
fuming. After spending years lobbying for the bill--and funneling millions of
dollars in contributions to the politicians considering it--they are seeing
their legislative priority ensnared by one of the nation's most emotional,
divisive social issues.
"Trying to forge an agreement on abortion is
like trying to solve the problems in the Middle East: It's timeless," said
Thomas Lehner, vice president for government affairs at the American Financial
Services Assn.
The bankruptcy bill's saga is a rich case study in how
Congress works--and doesn't work. Its progress, despite repeated setbacks over
the years, is a testament to the clout wielded by a well-connected, moneyed
lobby. But the last-minute impasse underscores how hot-button issues can derail
broad consensus and contribute to legislative gridlock.
"We've been down
on the 1-yard line before, and now we're on the 1-inch line," said Ed Yingling,
chief lobbyist for the American Bankers Assn. "We're not going to get worked up
until it's called a touchdown."
The abortion-related dispute stems from
different versions of the bill passed by the House and Senate. The Senate added
a provision sponsored by Sen. Charles E. Schumer (D-N.Y.) aimed at preventing
abortion opponents from declaring bankruptcy
to avoid paying fines imposed as a result of violent protests at
abortion clinics. That tactic has been used by several abortion
protesters in recent years, including Randall Terry of Operation Rescue.
Fighting the Schumer amendment is Rep. Henry J. Hyde (R-Ill.), a leading
abortion foe. The conflict could come to a head Wednesday, at a meeting of the
conference committee trying to reconcile the bill's two versions.
Schumer has warned that if a compromise on the abortion issue is not
reached by then, he might try to sidetrack the entire bill.
Almost
forgotten in the jockeying has been the primary thrust of the bill, which is an
effort to stem a steep rise in individual bankruptcy filings over the last
decade. According to the financial services association, a record 1.43 million
bankruptcies were filed in 2001--up 14% over 2000. In 1985, the filings totaled
only 298,000.
Analysts attribute the increase in part to the
proliferation of credit cards and a reduction in the social stigma attached to
bankruptcy.
But the bill's proponents say another factor is growing
abuse of the bankruptcy code by people who have the means to make partial
repayment.
To crack down on that, the bill would force more people to
file under Chapter 13 of the bankruptcy code, which requires debtors to work out
repayment plans for at least part of their debts, rather than under Chapter 7,
which wipes out debts entirely. The bill would establish a "means test" to
determine who qualifies to file under Chapter 7.
The measure's critics,
including consumer advocates, say it would impose unfair burdens on legitimate
bankruptcy filers. They also complain it does not address an important cause of
the spike in bankruptcies: the aggressive marketing of credit cards to people
ill equipped to take on debt, such as college students.
According to the
Consumer Federation of America, which opposes the bill, credit card companies
sent out a record 5 billion solicitations in 2001.
Such objections did
not deter the House-Senate conference committee from reaching agreement on the
final wording for the bill's main elements. That, in turn, has increased
pressure on Hyde and Schumer to strike a deal on their dispute.
The
financial services association has stepped up its lobbying, sending New York
bankers to urge Schumer to back down. The association also recently ran
newspaper advertisements targeted to Capitol Hill that called for an end to the
deadlock.
The ad said, "306 congressmen and 83 senators can't be wrong,"
referring to the number of lawmakers who voted for the bankruptcy bill in the
House and Senate last year.
The bill's roots can be traced to 1994, the
last time Congress enacted any change in the bankruptcy code. That measure was
designed mostly to speed up, not deter, bankruptcy cases. And it included a
time-honored tool for resolving the thorniest legislative disputes: It set up a
blue-ribbon commission to recommend additional changes in bankruptcy law.
That commission issued recommendations in 1997, but the nation's banks
and credit card companies opposed them, saying they were tilted against
creditors. The industries formed a lobbying coalition that pressed the case to
make it harder for people to discharge their debts in bankruptcy.
The
lobbyists showered Congress with letters, visits and telephone calls. They
enjoyed access to lawmakers in part because they represented business interests
that are among the nation's top campaign contributors. Since 1990, the Center
for Responsive Politics reports, the financial services industry contributed
about $27 million to the campaigns of members of Congress in
both parties.
What's more, according to the center, the biggest single
source of donations to George W. Bush's 2000 presidential campaign was MBNA
America Bank, a credit card company. Its executives and their families gave more
than $240,000 to Bush. Over the years, the bankruptcy bill
advanced in fits and starts.
In 1998, differing measures were passed by
the House and Senate--each with strong support. But lawmakers failed to agree on
a compromise version.
In 2000, a bill cleared Congress. But President
Clinton, siding with consumer advocates, refused to sign it.
In early
2001, it looked like smooth sailing for the measure, with Bush in the White
House and Republicans controlling the House and Senate. By mid-March, each
chamber had passed its version of the bill.
But in early June, Democrats
seized control of the Senate and sent the bill into limbo. It was not a priority
for the Senate's Democratic leaders. And it took them weeks to reconfigure the
chamber's operations, including the makeup of House-Senate conference
committees.
When that detail was worked out, the bankruptcy panel
finally set a date for its first meeting: Sept. 12. That was canceled after the
Sept. 11 terrorist attacks, and the bill was again shunted aside.
Behind-the-scenes talks resumed early this year, and quiet progress was
made. One of the last major hurdles was cleared this spring, in part because of
the collapse of Enron Corp.
That scandal spotlighted a controversial
loophole in current law that allows bankruptcy filers in several
states--including Texas, where Enron is based--to keep expensive homes. The
bill's prospects abruptly improved in April when negotiators agreed to a
compromise that would limit this so-called homestead exemption for felons and
others convicted of financial misdeeds.
Schumer views his
abortion-related amendment as an effort to give teeth to a 1994 law he wrote
making it a crime to bar access to abortion clinics.
Before the Senate
approved his provision, he made one change to answer criticism that it singled
out a particular type of protester for special punishment. He reworded it to
apply more broadly to anyone who is fined for obstructing access to any lawful
services, not just abortion clinics.
Hyde's objections, though, focus on
the amendment's potential effect on abortion protesters. His main concern is
that the provision could penalize nonviolent demonstrators.
Negotiators
for the lawmakers have spent weeks trading proposals--and mutual accusations
that each side would rather kill the whole bill than be seen as compromising on
abortion.
Schumer said he is growing increasingly pessimistic that an
agreement can be reached by Wednesday's conference committee meeting. "If we
don't resolve it then, I don't see how it will be resolved."
Others who
have been following the bill's path over the years find the prospect of it
collapsing over the abortion dispute hard to imagine.
Terry Holt,
spokesman for House Majority Leader Dick Armey (R-Texas), said: "Too many
lobbyists have too much on the line."
LOAD-DATE: May
20, 2002 
