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Legislative Highlights Oct 2001

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Bankruptcy Legislation Hits Latest Wall

The bankruptcy reform legislation was abruptly placed on the Congressional backburner in the wake of September's terrorist attack on the World Trade Center and Pentagon. The first formal meeting of House and Senate conferees had been scheduled for Sept. 12, but House Judiciary Chairman James Sensenbrenner (R-Wis.), the chair of the bankruptcy conference, postponed action indefinitely. A number of other key members who sit on the bankruptcy conference committee—including Senate Judiciary Committee Chairman Patrick Leahy (D-Vt.), Senate Foreign Relations Committee Chairman Joseph Biden (D-Del.) and House Financial Services Committee Chairman Michael Oxley (R-Ohio)—will be immersed in matters related to the attack for some time.

When asked about the fate of the bankruptcy reform legislation, Oxley said it is "too early to tell" what the schedule might permit. Financial Services Committee ranking member John LaFalce (D-N.Y.), an opponent of the bill, expressed a desire to see the bankruptcy legislation dropped. Even before Tuesday's attack, LaFalce acknowledged that the economy was potentially headed for a recession and said it was especially dangerous to shut off the "safety valve" provided by bankruptcy.

Much of Congress's new agenda will be focused on the twin tracks of prosecuting a war on terrorism and stimulating an economy further weakened by uncertainty and fear.

New Chapter 12 Extension Introduced

The latest obstacle to the bankruptcy reform package means Congress is again facing the expiration of chapter 12. On Sept. 10, Rep. Tammy Baldwin (D-Wis.) introduced legislation (H.R. 2870) that would extend chapter 12 bankruptcy protection to family farmers for an additional six months, or until April 1, 2002.

Both the House and Senate passed a previous chapter 12 extension, which was signed by President Bush on June 26 (Pub.L. 107-8). However, this retroactive extension expires on Oct. 1. The bankruptcy overhaul legislation (S. 420/H.R. 333) contains a measure making chapter 12 permanent. Chapter 12 expired last summer.

Journal Date: 
Monday, October 1, 2001

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