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LEXIS-NEXIS® Academic

April 24, 1999, Saturday, FINAL EDITION

SECTION: EDITORIAL PAGE, Pg. 2C

LENGTH: 474 words

HEADLINE: BACKWARDS ON BANKRUPTCY

BODY:

Instead of improving on the bankruptcy-reform bill that Congress justifiably failed to pass last year, the Senate is moving in the opposite direction.

The bill it's considering now would drop many of the most basic controls on an out-of-control credit-card industry that contributes significantly to the U.S. personal bankruptcy problem.

The way the bill is shaping up now, Sen. Charles Schumer's poison-pill amendment -- to stop anti-abortion lawbreakers from hiding behind bankruptcy to avoid court judgments -- may not be such a bad idea. It could stop Congress from passing a bill that does real harm to consumers while trying to please the credit industry. But far better would be if the Senate simply returns to some basic principles it recognized last year when voting 97-1 for a bankruptcy bill that was far more balanced. That effort died when the Senate measure and a much-worse House bill couldn't be reconciled before the end of the session.

This year, the Senate has abandoned many of those principles, despite the fact that the bill has bipartisan support. For instance, the new proposal drops "truth in lending" provisions that would make credit-card bills spell out how long it would take and what the total cost would be if a consumer makes only the minimum payment each month. Many consumers have no idea how much they're being gouged when they pay as little as possible on each bill.

The new bill also omits a provision that would have prevented credit-card companies from dropping consumers who pay off their balances in full each month to avoid interest costs. Banks already make a fee on each transaction. They don't need the additional power to punish people who are trying to hold down their debt and use credit responsibly.

And other reforms that could help keep people out of debt -- such as restrictions on marketing credit cards to teen-agers or others who obviously can't pay, and more disclosure about "teaser" rates used to lure consumers -also are missing.

Schumer's provision is prompted by the outrageous efforts of anti-abortion lawbreakers like Randall Terry, who filed for bankruptcy to avoid paying $ 1.6 million in penalties to women's groups and abortion providers after violating their rights during protests.

People should not be able to avoid court-ordered judgments just by filing for bankruptcy after they've broken the law. However, injecting abortion into the bankruptcy debate is one sure way to kill any reform effort.

If the Senate can restore the reforms in last year's bill and add a few new protections, it would have a bill worth passing. Schumer would be unwise to hold up such a measure with a divisive provision on abortion.

But given what the Senate is crafting so far, it would be no great loss to anyone except the banking industry if the effort goes down.

LOAD-DATE: April 25, 1999