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The fate of the bankruptcy bill remains unclear at press time. The Senate is in
recess until April 25 and the House is out until May 2. Staff members for the
principals continue to swap proposals and proposed language, with House Judiciary
Committee staff reportedly sending a response back to the Senate's informal offer. No
conferees have been named, with the process still stymied by an inability to achieve
unanimous consent in the Senate over the bifurcation of the bill from the minimum wage
and business tax breaks, included in S. 625.
In response, Republican leaders in both chambers have agreed to negotiate a
compromise bankruptcy package outside the normal conference process. Staffers of Democrat
members have been involved in this process as well. The Senate representatives in this
informal process have generally found a bipartisan consensus. The ranking Democrat on
the Courts subcommittee, Sen. Robert Torricelli (D-NJ), is a strong supporter of
S. 625. The House representatives have not had the same consensus. The ranking
Democrat on the subcommittee, Rep. Jarrold Nadler (D-NY), opposes the bill and
even full committee Chairman Henry Hyde (R-IL) has concerns about the impact of
the means test and other aspects of H.R. 833. Many non-consumer items are also
on the table for negotiation.
The administration has played a background role only, at least to date. Since there
has been no official conference, there has been no administration letter to conferees.
It is expected that at least some of the administration's concerns have been
communicated to Senate Democrats.
Meanwhile, the Senate Democrat leadership, which supports bankruptcy reform, has
assisted Majority Leader Trent Lott (R-MS) by attempting to identify other pending
conference vehicles to attach the compromise package. The current favored vehicle is the
so-called "electronic signatures" legislation now in conference. This legislation has a
complex story of its own.
The bill (also known by "Dig- (for digital) Sig") deals with technologies that
are expected to become essential parts of doing business via the Internet. Dig-Sig
is an essential component of the "e-agenda" promoting e-commerce. Based on a range
of encryption techniques, digital signature systems allow people and organizations to
electronically certify such features as their identity, ability to pay or the
authenticity of an electronic document. Digital signature systems are the subject of
dozens of state laws, so the federal bill would pre-empt the states in some cases.
This has made the legislation controversial with politically active organizations such as
the National Conference of State Legislatures and the growing electronic privacy
community. Due to the length of the House recess, no further action can occur until
May on this vehicle.
In April, two hearings addressed other issues in the mix. The bankruptcy
subcommittee of the House Judiciary Committee held a hearing on the scope of the
automatic stay exception for policy and regulatory actions. Several committee members were
critical of the Federal Communications Commission's (FCC) actions in the NextWave
case. The full hearing testimony is online at the ABI World home page
(http://www.abiworld. org). Both the FCC and NextWave sought to use the
bankruptcy reform bill as a way to clarify the distinction of when the government is
acting as a regulator or a mere creditor.
The Senate Labor Committee held a hearing on protecting retirement assets in
bankruptcy. The committee heard witnesses testify in opposition to a provision in S.
625 that would permit a debtor to waive the protection of retirement assets from
the reach of creditors. The provision, contained in ß303(c), would alter the
anti-alienation rule for such assets. A bipartisan group of Senators also opposed the
provision because they said it would undermine the retirement income security policy.
Now that the issue has been raised, it is likely the provision will either be
modified to cap the exemption, or will be dropped entirely.
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