Netting Improvements: What Everybody Wants, Doesn'

Although there have been some efforts to pass netting reform on a stand-alone basis, for the most part this has been but one piece within the larger bankruptcy puzzle, and the delays in its enactment have resulted from that status. President Clinton pocket-vetoed a previous incarnation of bankruptcy reform, in December 2000, because he believed its consumer provisions unfair to insolvent consumers.

In early 2001, there arose a distinction between the two chambers over the treatment of the American investors (or “names”) in Lloyd’s of London, the market that in the 17th century pioneered the very idea of insurance. (Previous HedgeWorld Story) The House was determined to protect the American names, blocking the enforcement of judgments in foreign courts by the U.S. courts if the U.S. creditors could show that they had been the victims of fraud between 1975 and 1993. The Senate initially included a similar provision but quickly backed off, after White House lobbying concerning the potential diplomatic repercussions of such a move. The House, in conference this year, likewise backed off, so the finished bill as of last week did nothing for the names.

The last snag, it seemed, was abortion. The Senate version of the bill prohibited abortion-clinic protestors who incur civil liabilities as a result of those activities from discharging those liabilities in bankruptcy. The House version did not. The conferees drafted language limiting the exclusion to those protestors who intentionally or knowingly violate the law.

Both chambers were set to vote on the bill this week. But the House leadership faced a rebellion by some members of its rank and file, such as by Christopher Smith (R – N.J.). Rep. Smith believes that the bill’s language could still lead to injustices at the expense of peaceful protestors concerned with what he and they regard as a vital moral issue.

Mr. Duncan declined to say whether the issue would be revived later in the session, as that was “pure speculation.” Members will return to work Sept. 4, and they will probably stay for longer than a month, despite their need to return to their home districts for their re-election campaigns because there are “a number of appropriations bills that have to be cleared.”