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.
Sincerely,
John Podesta
Chief of Staff to the President
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