[Public Papers of the Presidents of the United States: WILLIAM J. CLINTON (2000, Book II)]
[June 29, 2000]
[Pages 1349-1350]
[From the U.S. Government Publishing Office www.gpo.gov]



Letter to Congressional Leaders on Bankruptcy Reform Legislation
June 29, 2000

Dear Mr. Speaker:  (Dear Mr. Leader:)
    I write again because I am deeply concerned about recent 
developments concerning bankruptcy reform legislation pending before 
Congress. I understand the House and Senate Republican Leadership has 
reached a conclusion on a package they will soon move through the 
Congress. We have not seen the final language, but, if the reported 
description is accurate, I will veto the bill.
    OMB Director Lew sent a letter to the 
informal conferees, on May 12, 2000, that laid out the principles 
against which I will judge any final bankruptcy bill that comes to my 
desk. I would like to sign a balanced consumer bankruptcy bill that 
would encourage responsibility and reduce abuses of the bankruptcy 
system on the part of debtors and creditors alike. The majority of 
debtors turn to the bankruptcy system, not to escape bills they can 
afford to repay, but because they face real hardship--uninsured medical 
expenses, unemployment, or divorce. We can target the abuses without 
placing unnecessary barriers before those in need of a fresh start who 
turn to bankruptcy as a last resort. I remain concerned about the 
balance in the bill that the informal conferees have produced.
    In addition, in my letter of June 9, 2000, I highlighted five issues 
that could help to determine whether the final bill meets my standards 
of balance and fairness. On three of these issues, the Republican 
resolution is seriously flawed.
    First, I cannot support a bankruptcy bill that fails to require 
accountability and responsibility from those who use violence, 
vandalism, intimidation, and harassment to deny others access to legal 
health services. Some have strategically abused the bankruptcy system to 
avoid the penalties that Congress and the States have imposed for such 
illegal acts. The language that I understand the Republicans will 
include on this subject is inadequate. It would require a finding that 
there was a ``willful and malicious threat of serious bodily injury'' 
before certain debts would be made nondischargeable. Often, no such 
finding is made when holding parties liable for their actions in denying 
others access to legal health services under Federal or State law. The 
final legislation must include an effective approach to this problem, 
such as the one contained in the amendment by Senator Schumer, which 
passed the Senate by a vote of 80-17.
    I am also concerned that the changes proposed to the Fair Debt 
Collection Practices Act would deny an effective remedy to victims of 
abusive check collection practices. We have yet to hear a compelling 
rationale for why check collectors should not be subject to the same 
requirements as those who collect other debts. Moreover, no committee in 
either body of Congress has considered this issue, raised for the first 
time in Conference. At a minimum, the proposal should be subject to full 
Congressional consideration, so that public scrutiny can be applied to 
the implications of the proposed changes.
    The proposed limitation on State homestead exemptions will address, 
for the first time, those who move their residence shortly before 
bankruptcy to take advantage of large State exemptions to shield assets 
from their creditors. But the proposal does not address a more 
fundamental concern: unlimited homestead exemptions that allow wealthy 
debtors in some States to continue to live in lavish homes. In light of 
how other provisions designed to stem abuse

[[Page 1350]]

will affect moderate-income debtors, it is unfair to leave this loophole 
for the wealthy in place.
    I remain concerned that the negotiations have produced a bill that 
has lost some of the balance that the Senate bill had tried to achieve, 
albeit imperfectly from my perspective. As a result of all these 
concerns, I will veto the bill that we understand the Republicans plan 
to forward to my desk. But I continue to urge Congress to reconsider and 
send me a fair bill that meets the test of balance.
         Sincerely,

                                                      William J. Clinton

 Note:  Letters were sent to J. Dennis Hastert, Speaker of the House of 
Representatives; Richard A. Gephardt, House minority leader; Trent Lott, 
Senate majority leader; and Thomas A. Daschle, Senate minority leader. 
An original was not available for verification of the content of this 
letter.