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Document 14 of 65.

October 13, 2000, Friday

SECTION: NEWS;Pg. A-8

LENGTH: 423 words

HEADLINE: Legislation would make it tougher to file for bankruptcy

BYLINE: Jackie Koszczuk; KNIGHT RIDDER NEWS SERVICE

BODY:
WASHINGTON -- Congress is on the verge of approving a long-delayed bill to make it tougher to file for bankruptcy, but the White House yesterday threatened a veto, saying the measure favors credit card companies and other creditors over consumers.

Republicans, who control the Senate and House of Representatives, broke an eight-month logjam blocking the legislation yesterday, when the House passed a compromise version by a voice vote. The Senate is expected to sign off on the deal. Important GOP constituencies, including banks, credit card companies and the retail industry, champion the crackdown on personal bankruptcies.

Supporters say it will reduce the cost of credit for everyone by weeding out abusers, whose bad debts must be covered by other customers.

"Parents across America work hard every day to teach their children that actions have consequences," House Majority Leader Dick Armey, R-Texas, said yesterday. "Our laws should reflect and reinforce that basic principle."

But the White House outlined several objections, and sent a veto threat to Speaker Dennis Hastert, R-Ill.

The top White House objection is that the legislation does not crack down on debtors who shield millions of dollars in home equity from creditors through so-called homestead exemptions.

"Unlimited homestead exemptions allow debtors who own lavish homes to shield their mansions from their creditors, while moderate-income debtors, especially those who rent, must live frugally under a rigid repayment plan for five to seven years," White House Chief of Staff John Podesta wrote. "This loophole for the wealthy is fundamentally unfair."

President Clinton also complained that Republican lawmakers left out a provision that would have made it difficult for anti-abortion protesters convicted of violent crimes to file for bankruptcy in order to avoid paying legal bills.

It is unclear whether congressional backers have the votes necessary to override a Clinton veto.

The House passed its original bill, 313-108, last year and the Senate passed one, 83-14, in February.

Those margins are larger than the two-thirds necessary to override a presidential veto.

But party loyalty could lead Democrats who voted for the bill to stick with their president and vote to sustain his veto.

Since the bill passed the House and Senate, Republican leaders have worked behind the scenes with the White House to find a compromise. But those talks broke down recently, and GOP leaders decided to move ahead with a bill to their liking.

LOAD-DATE: October 16, 2000

Document 14 of 65.


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