NEW YORK TIMES NEWS SERVICE

July 26, 2002

WASHINGTON - Congressional negotiators announced yesterday that they had reached agreement on a bill that would rewrite the bankruptcy laws, making it much harder for people to escape their debts when they declare bankruptcy.

The agreement, a victory for the nation's credit-card companies and other lenders, came late yesterday after members of a conference committee reached a compromise on the language of an abortion-rights provision that had threatened to scuttle the overall bill.

The compromise will restrict the ability of anti-abortion protesters to use the bankruptcy laws to shield themselves from paying court fines resulting from protests at women's health-care clinics.

The overall bankruptcy bill, which has been passed by both houses of Congress by overwhelming margins, appears destined for final approval in the House and Senate, and the White House has suggested that President Bush will sign it.

The House could vote on the agreement as early as today, when it is scheduled to begin a monthlong summer recess.

"We have worked hard for a year to make this a better and more balanced bill, and we have succeeded," said Sen. Patrick Leahy, D-Vt., who is chairman of the Senate Judiciary Committee and who led the conference committee. "I look forward to working on a bipartisan basis to get it passed."

The bill approved by the conference committee would end the ability of millions of Americans to use the bankruptcy system to wipe out credit-card bills and other loans that are not secured by homes or other assets.

Many of those debts would instead have to be paid back over time.

Credit-card companies and other lenders have contended that they are being unfairly penalized as a result of the nation's growing rate of bankruptcy filings. There were 1.45 million filings last year, a record, up 19 percent from 2000.

The timing of a final agreement was intriguing, given that it is a clear victory for the interests of corporate America over consumers at a moment when large corporations are otherwise under siege on Capitol Hill because of recent scandals, many of them involving accounting abuses.

The bill, which has been vigorously opposed by consumer-rights groups, had long been the top legislative priority of credit-card companies and some banks, which insist that many debtors are abusing the bankruptcy laws to escape debts they should be able to pay.

The companies had drastically stepped up campaign contributions to members of Congress in recent years as they pushed for the legislation.

Among the biggest beneficiaries of the measure would be the MBNA Corp. of Delaware, which describes itself as the world's biggest independent credit-card company. Ranked by employee donations, MBNA was the largest corporate contributor to President Bush's 2000 campaign.

The company also recently acknowledged that it gave a $447,000 debt-consolidation loan on favorable terms to a key House supporter of the bill only four days before he signed on as a lead sponsor of the legislation in 1998.

Both MBNA and the lawmaker, Rep. James Moran, D-Va., have denied that there was anything improper about the loan.

Sen. Charles Grassley, R-Iowa, who began work on the legislation in 1998, said that yesterday's agreement would "close loopholes exploited by big spenders who have the ability to repay their debts, and better protect consumers who have been left to pay higher prices for goods and services as a result."

A leading opponent of the bill, Sen. Paul Wellstone, D-Minn., said through a spokeswoman that the bill is "dastardly for consumers, especially in these economic times," and that he would fight to stop it on the Senate floor. "It should be embarrassing for people to vote for this."

The deliberations of the conference committee had been stalled for months over the abortion provision.

The provision had been sought by abortion-rights supporters, led by Sen. Charles Schumer, D-N.Y. They had cited cases in recent years in which anti-abortion advocates had filed for bankruptcy to avoid paying court fines and judgments owed as a result of illegal clinic protests.

But anti-abortion advocates in Congress, led by Rep. Henry Hyde, R-Ill., had argued that the provision could restrict the free-speech rights of anti-abortion protesters and that it was unfair to single them out for punishment in the bankruptcy bill.

The final wording of the compromise provision was not immediately made public last night, but Schumer said in an interview that it "contains language that says that those who use violence or blockades to close or harass clinics are not protected by bankruptcy for their liabilities." He described the result as "a victory for women."

REPRINTED from the San Diego Union Tribune July 26, 2002