Bankruptcy reform movement advances in Congress.

On Feb. 10, both the House and the Senate took substantive, but familiar, steps in trying to move comprehensive bankruptcy reform legislation in the new, 109th Congress. In the Senate, the Senate Judiciary Committee convened the first of two hearings it is scheduled to hold on S. 256, Bankruptcy Reform legislation, that is being championed by Senator Charles Grassley (R-IA).

In the House, Chairman James Sensenbrenner (R-WI) of the House Judiciary Committee introduced a similar bankruptcy bill on the same day. Chairman Sensenbrenner quickly added that he will wait for the Senate to complete its work on the bankruptcy bill before he begins consideration of his measure. President Bush has already indicated that he will sign a bankruptcy bill if he is presented with one.

Congress has tried repeatedly in the past five years to pass similar legislation that would make the most sweeping changes in bankruptcy law in more than a quarter of a century. Twice in the past seven years, bankruptcy bills have passed both the House and the Senate only to face ultimate defeat. In one instance, President Clinton refused to approve bankruptcy legislation because he thought that it was unfair to consumers. Later, in 2002, House Republicans initially backed a bankruptcy reform bill but later voted it down after an amendment (called the "Schumer Amendment") was attached, that sought to prevent individuals from using bankruptcy to shield them from fines imposed for illegal abortion protests.

The two bills now under consideration in the House and Senate are nearly identical and essentially the same as the language worked out among Judiciary Committee members in the last Congress. The important difference is that both bills lack the controversial Schumer Amendment. The absence of the amendment at this time, plus the Republican leadership's decision to begin deliberations this early in the session, has supporters of the bill, like NACM, hopeful that a bill can be enacted this year.

However, there are still obstacles to overcome. Senator Schumer has already indicated that he will consider offering an amendment to the bill to add his previous amendment. Failure of the Judiciary Committee or of the full Senate to adopt the amendment creates the opportunity for supporters of the Schumer amendment to threaten to filibuster the Senate. With 60 votes needed to halt any filibuster, it is not certain if there are enough votes to overcome the filibuster. This is the same set of dynamics that have existed in the past three years--but with the issue being considered this early, threats to stall important other business on the Senate floor may significantly change the environment and effectiveness of a filibuster ...