[Public Papers of the Presidents of the United States: WILLIAM J. CLINTON (2000-2001, Book III)]
[December 19, 2000]
[Pages 2730-2731]
[From the U.S. Government Publishing Office www.gpo.gov]



Memorandum of Disapproval for Bankruptcy Reform Legislation
December 19, 2000

    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 
negotiations 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

[[Page 2731]]

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

 The White House,

 December 19, 2000.