Letter from John Podesta to Rep. Richard A. Gephardt (10/12/00)
                            THE WHITE HOUSE

                      Office of the Press Secretary

For Immediate Release                                         October 12, 2000

						October 12, 2000

The Honorable Richard A. Gephardt
Democratic Leader
House of Representatives
Washington, DC 20515

Dear Mr. Leader:

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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