01-22-2000

BANKRUPTCY: Early Senate Action Ahead on Bankruptcy Bill

Advocates of reforming the nation's bankruptcy laws may find themselves in
the legislative equivalent of a sprint once Congress reconvenes next week.
Various versions of bankruptcy reform legislation have been making the
rounds on Capitol Hill since the 105th Congress, and the House passed a
bill last year. Now the Senate schedule will offer an early, but narrow,
window of opportunity for approval of the controversial legislation in
2000.


The legislation, approved comfortably by the House last May on a 313-108
vote, is designed to make it more difficult for individuals declaring
bankruptcy to avoid paying certain debts, including credit card
obligations.


The Senate was unable to conclude debate last fall on its bankruptcy bill,
which is sponsored by Sen. Charles Grassley, R-Iowa, the chairman of the
Senate Judiciary Administrative Oversight and the Courts Subcommittee, and
Sen. Robert G. Torricelli, D-N.J., the ranking member of the panel. Senate
Majority Leader Trent Lott, R-Miss., has scheduled a vote on cloture,
which could shut off debate on the legislation, for Jan. 25, just one day
after Congress reconvenes.


Mallory Duncan of the National Retail Federation said his group is
planning a "laserlike" lobbying effort on behalf of the
bankruptcy legislation at the start of the session. "I think it will
become extremely difficult [to move the bill] once it becomes clear who
the [presidential] nominees are for the two parties," said
Duncan.


And Jeff Tassey, senior vice president for government affairs at the
American Financial Services Association, agreed that there would be an
extremely brief period in which to lobby once the Senate returns to
Washington. Added Tassey: "There's no real big strategy...just
standard lobbying. If there was a magic bullet, we'd use it."


The lobbyists indeed have their work cut out for them: The Senate cloture
motion is expected to be defeated, which means that a Democrat-led
filibuster against the legislation will continue without limits. That may
doom the bill's prospects for passage, according to several sources, who
believe that it is highly unlikely that Lott will attempt to reschedule
action in 2000.


"I don't know anyone in the financial [community] who thinks that
we're going to win that vote," said one industry source. "That
means [Senators] either work something out by the 25th, or it goes to a
vote, cloture is defeated, and the bill will get pulled for some
significant amount of time."


It is possible that Senate leaders, after they return to Capitol Hill on
Jan. 24, could reach agreement to limit debate and cancel the cloture
vote. But it is hard to envision them achieving a consensus in that brief
period of time.


Last fall, Senate Democrats-led by Minority Whip Harry Reid of
Nevada-offered to pare down their large backlog of pending amendments to
about 15. The catch was that Lott would have had to allow votes on
proposals designed to force gun manufacturers and abortion clinic
protesters who had declared bankruptcy to nonetheless pay certain court
judgments against them. That offer was unacceptable to Lott.


Some sources suggest that last year's Senate stalemate on the bankruptcy
legislation was covertly bipartisan-not only fostered by the leadership on
both sides of the aisle, but assisted by the White House, whose publicly
muted criticisms of the measure appear to have disguised more-serious
objections.


The job of managing the bill on the floor for Senate Democrats was assumed
almost entirely by Sen. Patrick Leahy, D-Vt., the ranking member on the
Judiciary Committee, who voted against the bill in committee. A Leahy
spokesman insisted that Leahy co-managed the bill with Torricelli, who is
considered more amenable to deal-making. A spokesman for Torricelli said
the Senator was willing to take the lead, but deferred to Leahy because of
his Judiciary Committee post.


As for the GOP leadership, Lott refused to schedule debate until the
Senate needed something to do while waiting for the session-ending budget
deal to be completed. Moreover, one involved source said that when the
Democrats tried to corner Lott on the gun and abortion proposals, he did
not appear to seek any creative means for extricating himself.


Given the grandstanding opportunity that bankruptcy reform presents, even
in a less political year, the bill's chances for survival in a
presidential election year appear slim.


At a Glance: Bankruptcy Reform


The Issue: Creditors want bankruptcy reforms to force debtors to pay more
of what they owe, but Republican leaders may decide the issue is too hot
to touch in an election year.


Key Players:


Senate Majority Leader Trent Lott, R-Miss., whose scheduling power could
decide the bill's fate


Sen. Harry Reid, D-Nev., a key Democratic strategist on the issue


Recent Action: The House passed a bankruptcy reform bill in 1999, but the
Senate stopped short of a final vote.


What to Watch: If the Senate proceeds to a scheduled Jan. 25 cloture vote
on the bill, this legislation could be dead for the year.


Pamela Barnnett

National Journal