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| July 5, 2000 KEN
GREENE'S LEASE AND LAW LETTER Greetings, Leasing Colleagues! There is much activity on Capitol Hill regarding the pending changes to the Bankruptcy Code. I have thus devoted most of this newsletter this month to that issue. CURRENT
DEVELOPMENTS IN LAW AND LEGISLATION: This has become a political hot potato, and has had almost as much drama as the Monica scandal (no cigars yet though)! A few weeks ago, Senate Majority Leader Trent Lott said that he suspects that President Clinton will veto the bankruptcy bill because "[Clinton] does not really want people to have to live up to their debts." Lott's remarks came as the legislation remains stalemated over a handful of issues identified in a White House letter and veto threat. President Clinton's letter to House and Senate leaders states that while he "sincerely hopes that balanced, bipartisan bankruptcy reform legislation will be completed this year," he will "not hesitate to veto unfair legislation that fails the test of balance." Believe it or not, the most intractable of the issues involves abortion. A comment I received from our friend Ginny Young, president of Brava Capital, queried how abortion could possibly impact the progress of bankruptcy legislation changes. One seemingly reasonable answer is that the President's letter weighs in heavily in favor of the so-called Schumer amendment adopted by the Senate which would broadly make nondischargeable any debts (including damages, fines, and attorney fees) arising from a debtor's actual, attempted or alleged violation of state, federal or local laws, or a court order protecting access to an abortion clinic. Rep. Henry J. Hyde, chairman of the House Judiciary Committee, and other abortion foes, objected to the scope of the language. The current product of the informal House-Senate conference would prohibit a discharge of debts arising from "willful and malicious threat of serious bodily injury," similar to, but broader than the exception to discharge that now exists under existing law. Since Sen. Schumer opposes the underlying bill, he's not likely to find any alternative acceptable. President Clinton also indicated concern with two other provisions he deemed unacceptable, including (1) the exception to the Fair Debt Collections Practice Act for abusive check collection practices ("We have yet to hear a compelling rationale for why check collectors should not be subject to the same requirements as those who collect other debts", said the President) and (2) the homestead exemption language ("unlimited homestead exemptions allow wealthy debtors in some states to continue to live in lavish homes. In light of how other provisions designed to stem abuse will affect moderate-income debtors, it is unfair to leave this loophole for the wealthy in place" asserted the President.) The letter/veto threat now leaves the ball in the court of Congressional Republicans who have negotiated the bill's terms. The bill has passed both the House and Senate by veto-proof margins in the past, but has never had such an explicit veto threat attached. Republicans, if they find a vehicle to attach the bill, can force the issue with the administration. Otherwise they can attempt to negotiate further on the items mentioned. The abortion and homestead issues, however, evoke strong passions from some among the majority. They will be difficult, if not impossible, to reconcile with the President's position, which is what the bill opponents hope. We will keep you posted as this soap opera, one of great importance to our economy, unwinds! HOUSE CONSIDERS RENEWAL OF CHAPTER 12 OF BANKRUPTCY CODE: On Monday, June 26, the House of Representatives agreed to a 3-month extension of Chapter 12, commonly known as the "Family Farmer Act." Chapter 12 is due to expire on July 1 unless reauthorized by Congress. The bill would extend the law until October 1. A permanent extension of chapter 12 is included in the stalled Bankruptcy Reform Bill. NEW LEGISLATIVE DEVELOPMENTS: E-SIGS GIVEN LEGAL VALIDATION: Not unexpectedly, President Clinton signed into law a measure that gives electronic signatures and documents the same force in law as their paper counterparts. Under the new law, consumers and businesses will be able to sign checks, complete loan applications and contract services all online. According to Senator John McCain (remember him?), the law will cut costs while boosting confidence in consumers who are timid about security and protection when using the Internet to conduct business. Clinton has said of the legislation that "by marrying one of our oldest values -- our commitment to consumer protection -- with the newest technologies, we can achieve the full measure of the benefits that e-commerce has to offer." Consumers will still be able to choose whether to use an electronic or traditional handwritten signature, and the new law still requires that certain documents be sent on paper to carry their full force. That would include cancellation of basic services like water, power and gas as well as court orders, eviction notices, cancellation of health or life insurance, product recalls and paperwork to accompany shipments of hazardous materials. Some industry experts have expressed skepticism about how quickly electronic signatures will enter the broader marketplace. Skeptics have said that businesses should ask vendors what kind of measures are in place to ensure authentication of signatures, what risk protection is there against fraud, whether customer data is protected and privacy guarded and how technically secure, legally binding electronic signatures can be integrated into operations. That's
it for now. Any questions, please feel free to send a reply e-mail, or call us
at (415) 925 0700. Ken
Greene The
foregoing is meant to provide general information to the leasing industry. It
is not meant as an endorsement or legal opinion and readers should consult counsel
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