Letter from John Podesta to Rep. Dennis Hastert (10/12/00)
                           THE WHITE HOUSE

                    Office of the Press Secretary

For Immediate Release                                         October 12, 2000

October 12, 2000

The Honorable J. Dennis Hastert
Speaker of the
     House of Representatives
Washington, DC  20515

Dear Mr. Speaker:

I understand that the House will take up today the conference report on 
H.R. 2415, which apparently incorporates the text of S. 3186, a recently filed 
version of bankruptcy legislation.  If this bankruptcy legislation is sent 
to the President, he will veto it.  

Over the last few months, this Administration has engaged in a good faith 
effort to reach agreement on a number of outstanding issues in the bankruptcy 
legislation.  The President firmly believes that Americans would benefit from 
reform legislation that would stem abuse of the bankruptcy system by, and 
encourage responsibility of, debtors and creditors alike.  With this goal 
in mind, we have pursued negotiations with bill proponents on a few key 
issues, notwithstanding the President's deep concern that the bill fails 
to address some creditor abuses and disadvantages all debtors to an extent 
unnecessary 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 the Administration has repeatedly said was fundamentally flawed.  The 
central premise of this legislation is that we must ask debtors, who truly 
have the capacity to repay a portion of their debts, to do so.  This would 
benefit not only their creditors but also all other debtors through lower 
credit costs.  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 a rigid repayment 
plan for five to seven years.  This loophole for the wealthy is fundamentally 
unfair and must be closed.  The inclusion of a provision limiting to some 
degree a wealthy debtor's capacity to shift 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, the President has made clear that bankruptcy legislation must require 
accountability and responsibility from those who unlawfully bar access to legal 
health services.  Yet the conference report fails to address this concern.  Far 
too often, we have seen doctors, health professionals and their patients 
victimized by those who espouse and practice violence.  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 
due to victims of clinic violence.  The U.S. Senate was right in voting 80-17 
to adopt an amendment that would effectively close down any potential for this 
abuse of the Bankruptcy Code.  We fail to understand why the bill's proponents 
refuse to include this provision and shut down the use of bankruptcy to avoid 
responsibility for clinic violence.  

I repeat President Clinton's desire to see balanced bankruptcy reform legislation 
enacted this year.  The President wants to sign legislation that addresses these 
known abuses, without tilting the playing field against those debtors who turn 
to bankruptcy genuinely in need of a fresh start.  He will veto H.R. 2415 
because it gets the balance wrong.  


						John Podesta 
						Chief of Staff to the President

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