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WASHINGTON- Another year, another failed attempt to pass bankruptcy reform legislation. The result is the same it’s been in recent years, but the events leading up to this year’s failure were quite interesting and made for a real rollercoaster ride for the credit union industry. Credit unions had a big stake in this year’s edition of bankruptcy reform legislation because it contained three sought-after provisions – means testing, financial education, and voluntary reaffirmations. On Nov. 14, after much anticipation, credit union lobbyists waited with bated breath as the House vote on the rule to bring up the Bankruptcy Abuse Prevention and Consumer Protection Act conference report peaked in a dead heat at 204-204. But, when Republicans realized they would not have enough votes to pass the rule, many jumped ship in a political maneuver so as not to be at odds with the powerful right-to-lifers, opposed to the Schumer amendment. The final vote on the rule turned out to be 172-243. Credit union lobbyists also admitted surprise that bankruptcy proponents lacked the votes in the House to pass the rule and the bill. “Obviously we’re very disappointed and angry,” CUNA Vice President and Senior Legislative Counsel Gary Kohn remarked at the time. “We think Congress missed an opportunity to take abuse out of the bankruptcy system.” “We knew it was going to be a close vote…We were optimistic that it was going to pass but we knew it was going to be close,” NAFCU Director of Legislative and Political Affairs Brad Thaler commented. Credit union lobby groups have spent enormous funds, political capital, and man-hours on the bill, which has failed to be signed into law through several Congresses now. However, one should never deny the power of counter political maneuvering. After stripping H.R. 333 of the controversial violent protestors amendment, the bill was repackaged as H.R. 5745 and brought to a vote again around 2 a.m. on Friday, November 15. The newly restructured legislation easily passed the House by a vote of 244-116. Throughout the week, CUNA and NAFCU kept their grassroots work strong. Prior to the votes, CUNA President and CEO Dan Mica reminded Speaker of the House Dennis Hastert (R-Ill.) in a letter, “As you know from our many previous communications, passage of HR 333 is the number one legislative priority for credit unions, and we view this bill as must-pass legislation. In support of your efforts, our members have been conducting a sustained grassroots effort with their respective Representatives.” On the floor of the House during debate, Congresswoman Sheila Jackson Lee (D-Texas) specifically chastised credit unions for their support of the bill. The Democrat-controlled Senate was furious with the Republican-controlled House for breaking its deal on the compromise to the Schumer amendment regarding violent protestors, which had taken months to achieve. Senate Majority Leader Tom Daschle (D-S.D.) announced the same day that the Senate would not consider the amended bankruptcy abuse reform bill, according to CQ Midday Report. “The House Republicans killed bankruptcy for the year,” Daschle was quoted as saying in CQ. “We had a compromise that was the result of years of work. Even if I wanted to take it up, it would never pass. It would be subject to a filibuster.” Daschle would stay true to his words as the Senate adjourned on Nov. 20 without considering the amended bill. The sticking point for the Senate was of course the Schumer amendment which dealt with the rights of those incurring fines due to abortion protests to declare bankruptcy protection. It was an issue many felt had no place in the bill, and it proved to be the ultimate dagger in the heart of bankruptcy reform. “As I began to say back in July it was unfortunate that a very contentious issue, namely abortion, was injected into the debate and ultimately served to damage the bill beyond repair,” said CUNA SVP of Government Affairs John McKechnie. “Meanwhile back in America credit unions and their members continue to suffer from the abuse of the bankruptcy system that made the bill so necessary in the first place.” McKechnie, who was admittedly in down spirits over the fate of the bill, said CUNA will re-evaluate bankruptcy to “make sure the effort on Capitol Hill is there before we put a lot of effort into it (next Congress).” McKechnie said that credit unions really carried the ball on bankruptcy reform this time around. “I’ve had a number of Hill staffers tell us if it wasn’t for us it wouldn’t have got this far.” He said it’s too early to tell what the next Congress will do, and that CUNA is disappointed in some members of Congress who claimed to be CU friends but did not deliver for bankruptcy. As for those casual observers who may seem miffed that an amendment dealing with abortion protestors – which plays such a minuscule part in bankruptcy – would kill this bill, McKechnie said. “I don’t blame you for being cynical about politics.” Failure to pass bankruptcy reform has become a congressional trend in recent years, but CU trade associations have kept up the pressure on Congress. CUNA maintains that bankruptcy reform is its top legislative priority. Interestingly, while CUNA and NAFCU continue their full-court press to pass bankruptcy reform, credit union charge-offs and delinquencies are at all-time low levels. How dramatically bankruptcies affect the CU industry varies widely from CU to CU. [email protected] Editor Paul Gentile contributed to this story.

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