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The Administration encourages Senate passage of S. 1301 as an important
step toward balanced bankruptcy reform; however, the Administration
ultimately would support enactment of bankruptcy legislation only if the
essential reforms incorporated by the Senate managers' amendment are
preserved and strengthened and the unbalanced and arbitrary elements of the
current House bill are omitted.
The Administration supports bankruptcy reform that asks both debtors and
creditors to act more responsibly. Debtors who genuinely have the ability
to repay a portion of their debts should remain responsible for those
debts. But creditors must also be responsible for treating debtors fairly,
recognizing creditors' superior information and bargaining power.
As reported from Committee, S. 1301 focused heavily on perceived debtor
abuse, with little to curtail abuses by creditors. However, if changes
incorporated in the manager's amendment are adopted, the Senate bill will
take significant steps to address abusive practices by both debtors and
creditors. Essential changes included in the managers' amendments include:
(1) new disclosure requirements to ensure that credit card companies
provide consumers with the information about their accounts that they need
to manage their budgets; (2) procedural protections to avoid inappropriate
and unwise reaffirmations of unsecured and certain secured consumer debts;
and (3) modifications made to the nondischargeability provisions in the
bill so that the bill no longer inappropriately puts credit card debt in
competition with child support, alimony, and other societal priorities like
educational loans and taxes.
The Administration also strongly prefers the discretionary approach to
limiting access to Chapter 7 used in S. 1301 over the rigid and arbitrary
approach in the House bill. We support changes made by the Senate bill to
ensure that those debtors denied access to Chapter 7 under Section 707(b)
of the Bankruptcy Code are those that have a strong likelihood of
successfully completing a Chapter 13 plan.
More can and should be done to produce a truly balanced bill. The bill
must address the potentially coercive effect of allowing creditors to bring
707(b) motions based on any allegation of abuse and strengthen the
protections against coercive reaffirmations.
The Administration also supports financial contract netting provisions in
the bill, which are important to reducing systemic risk in our financial
markets and are based on a proposal from the President's Working Group on
Financial Markets.
The Administration supports Senate passage of the "Omnibus Patent Act of
1998" as an amendment to S. 1301 because that bill supports American
innovation through needed patent law reforms. While the Administration is
disappointed that the bill does not include all of the performance based
organization reforms it proposed, the provision's inclusion of the annual
performance agreement is welcome.
Finally, the Senate is expected to vote on an amendment to raise wages of
12 million Americans and help ensure that parents who work hard and play by
the rules do not have to raise their children in poverty. Two years ago,
the President signed into law a moderate increase in the minimum wage. The
results of that action are clear: it raised the wages of the lowest paid
workers and did not cost jobs. Now we must continue to take actions to
ensure that all Americans are benefitting from our prospering
economy. That is why the Administration strongly supports raising the
minimum wage by $1 over two years.
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