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Memorandum of Disapproval: The Bankruptcy Reform Act of 2000 (12/19/00)

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                              THE WHITE HOUSE

                       Office of the Press Secretary

For Immediate Release                         December 19, 2000

                         MEMORANDUM OF DISAPPROVAL

     I have withheld my approval of H.R. 2415, the Bankruptcy Reform Act of
2000.  I firmly believe that Americans would benefit from bankruptcy reform
legislation that would stem abuse of the bankruptcy system by, and
encourage responsibility of, debtors and creditors alike.  Unfortunately,
this bill is not balanced reform and it omits critical language to require
accountability and responsibility from those who unlawfully bar access to
legal health services.  I hope the next Congress can work in a bipartisan
spirit to enact balanced legislation.

     Over the past several months, my Administration has engaged in a good
faith effort to reach agreement with the bill's proponents on a number of
outstanding issues.  With this goal in mind, we have pursued negotia-tions
notwithstanding my deep concern that the bill failed to address some
creditor abuses and also unnecessarily disadvantaged all debtors to stem
abuses by a few.

     An agreement was reached in those negotiations on an essential issue
-- limiting homestead exemptions -- with compromises made on both sides.
Unfortunately, H.R. 2415 fails to incorporate that agreement, instead
reverting to a provision that my Administration has repeatedly said was
fundamentally flawed and contrary to the central premise of this
legislation:  that debtors who truly have the capacity to repay a portion
of their debts do so.  The agreement would have benefited not only those
debtors' creditors but also all other debtors through lower credit costs.
In contrast, the current bill's unlimited homestead exemptions allow
debtors who own lavish homes to shield their mansions from their creditors,
while moderate-income debtors, especially those who rent, must live
frugally under rigid repayment plans for 5 to 7 years.  This loophole for
the wealthy is fundamentally unfair and must be closed.  And the inclusion
of a provision that limits -- to some degree -- a wealthy debtor's capacity
to move assets before bankruptcy into a home in a State with an unlimited
homestead exemption does not ameliorate the glaring omission of a real
homestead cap.

     Moreover, I have made clear that bankruptcy legislation must require
accountability and responsibility from those who
unlawfully bar access to legal health services.  Far too often, we have
seen doctors, health professionals, and their patients victimized by those
who espouse and practice violence at health care clinics.  The Congress and
the States have established remedies for those who suffer as a result of
these tactics.  However, we are increasingly seeing the use of the
bankruptcy system as a strategic tool by those who seek to promote clinic
violence while shielding themselves from personal liability and
responsibility.  It is critical that we shut down this abusive use of our
bankruptcy system and prevent endless litigation that threatens the
court-ordered remedies owed to victims of clinic violence.  The Senate was
right in its bipartisan vote of 80-17 to adopt an amendment that would
effectively close down any potential for this abuse of the Bankruptcy Code.
Nonetheless, this critical provision was dropped from the final bill
without public debate, and I fail to understand why the bill's proponents
refuse to include this consensus provision to shut down the use of
bankruptcy to avoid responsibility for clinic violence.

     On the positive side, the bill would improve credit card disclosures
-- although more can and should be done --  and impose limitations on
misleading creditor practices that encourage debtors to reaffirm
dischargeable debts on potentially unfavorable terms.  However, these
beneficial provisions are outweighed by the bill's flaws and omissions.

     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.  I have withheld my
approval of H.R. 2415 because it does not strike the right balance.

                                   WILLIAM J. CLINTON

    December 19, 2000.

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