Trades rally to reverse Democratic opposition to bankruptcy reform's CU reaffirmation carve-out

WASHINGTON - The CU reaffirmation carve-out wording was barely dry on the paper of the House "informal" conference's counteroffer to the Senate bankruptcy reform bill (S. 625)-sent to the Senate on May 11-before strong opposition emerged in the persons of Democratic Judiciary Committee Senators Patrick Leahy (Vt.) and Robert Torricelli (N.J.). That opposition melted, however, May 16 in the face of withering CU grassroots political action and Capitol Hill lobbying that included quick-reaction letters to the White House and Congress by CUNA President Dan Mica and NAFCU President Fred Becker. In their letters the trade association CEOs threatened their own kind of opposition in the matter-but their's would have been to the overall bill, if the carve-out were eliminated, not the carve-out itself. "At about three o'clock or so yesterday afternoon they came around," CUNA Senior Legislative Counsel Gary Kohn said May 17 of the reversal, referring to it as a "miracle." "We're in the document," he said. The Leahy/Torricelli opposition-jeopardizing as it did a non-negotiable CU requirement that a member's right to voluntarily repay debt had to be preserved without too much red tape-had chilled initial CU exuberance over House carve-out language that replaced unacceptable Senate language in the matter. The House conference's language-fought for by CUNA and NAFCU-took out a complicated "income and expense" report requirement in the Senate's reaffirmation provision and replaced it, for CU filers, with a simple statement acknowledging the filer's understanding of and intent to reaffirm. Such a change would allow credit unions to more easily process reaffirmations without judicial review, as long as an attorney is involved. "They (Leahy and Torricelli) object(ed)...to the part of the proposal which would have allowed credit unions to use the shortened form rather than the longer form (in the reaffirmation process)...," NAFCU Director of Legislative Affairs Murray Chanow had said of the opposition. "It's a very big deal for credit unions." But that was before the Mica/Becker letters and the full weight of the trade associations' grassroots and lobbying efforts could be brought to bear. "My understanding is that the informal Senate conferees have not yet accepted the House counteroffer on reaffirmations," Mica said in his hand-delivered, May 15 letter to White House Deputy Chief of Staff Steve Ricchetti. "If the final language does not adequately protect credit unions on reaffirmations, we will have no choice but to work for the defeat of the legislation... . I am asking for your help in preserving reaffirmations in the way proposed by the House counteroffer." Mica's letter also went to Leahy and Torricelli, and to 16 other lawmakers. Citing a National Bankruptcy Review Commission official finding that credit unions' record of working cooperatively with bankruptcy filers argues for treating "nonprofit credit unions...differently from other creditors as a general matter," NAFCU President Fred Becker, jr., in his May 16 letter to all members of Congress, urged adherence to this advice by accepting the "language that was offered by the House last week (on the reaffirmation carve-out) in its counteroffer to the Senate." -gmcorrigan@mindspring.com