Clinton Vetoes Bankruptcy Bill
WASHINGTON (AP) _ President Clinton vetoed legislation Tuesday that proposed the most sweeping changes in the bankruptcy law in 20 years because he said it was unfair to ordinary debtors and working families who fall on hard times.
Supporters of the bill, including credit card companies, have pushed for three years to pass a bill to overhaul the nation’s bankruptcy system. Clinton also favors revamping the bankruptcy laws but thinks the current bill is not evenhanded.
``I would have signed a balanced bankruptcy reform bill that addressed known abuses without tilting the playing field against those debtors who genuinely turn to bankruptcy for a fresh start,″ Clinton said in a statement released Tuesday evening.
The president said the bill would allow debtors who own expensive homes to shield their mansions from creditors while debtors with moderate incomes, especially renters, must live frugally and comply with rigid payment plans for five to seven years.
``This loophole for the wealthy is fundamentally unfair and must be closed,″ Clinton said.
Clinton also criticized the bill’s failure to address the ``abusive use″ of the bankruptcy laws by anti-abortion activists ``who espouse and practice violence at health care clinics″ and then use bankruptcy as a shield against liability.
An early version of the bill would have barred such use of the bankruptcy system, but that provision was dropped in the final legislation that passed Congress.
By leaving the Bankruptcy Reform Act of 2000 unsigned, the president issued a ``pocket veto,″ the fourth indirect veto of his administration. By waiting until the lame-duck congressional session adjourned before vetoing it, he deprived lawmakers of the chance to override the veto.
The veto drew criticism from Sen. Chuck Grassley, R-Iowa, a leading sponsor of the legislation.
``President Clinton let the American people down by pocket vetoing the bipartisan bankruptcy reform bill,″ Grassley said Tuesday. ``This veto means that financially troubled family farmers don’t have protection against foreclosure, that residents of nursing homes that file for bankruptcy can be evicted in the middle of the night and that consumers will continue to pay higher prices for goods and services due to the exploding number of bankruptcies″
Proponents cite as evidence of rampant abuse of the bankruptcy court system a rapid rise in personal bankruptcy filings in the mid-1990s, which reached a record 1.4 million in 1998.
The legislation would have established a complex mathematical formula for determining whether debtors can repay part of their debts under a court-supervised plan rather than have them dissolved.
Consumer groups, unions and other opponents contended the legislation would hurt families hit by job losses, catastrophic medical expenses or other unforeseeable hardships that push them over the edge financially. They also pointed to single mothers and their children who need alimony and support payments from bankrupt fathers.
The banking and retail credit industries strongly backed the measure. The American Financial Services Association said the legislation retained protections for Americans to seek bankruptcy protection. The U.S. Chamber of Commerce had urged Clinton not to veto.
Opponents of the legislation, including Sen. Edward Kennedy, D-Mass., said the president’s veto was no surprise and well-deserved.
``Next year, I hope the credit card industry will revise its punitive legislative proposal,″ Kennedy said Tuesday. ``We should pass a balanced bill that deals effectively with existing problems, without creating new abuses.″