Washington-Consumer advocates, unions, women's groups and

religious leaders are protesting legislation that would make it tougher for

people to erase debts through bankruptcy.

Officials of the groups and some Democratic lawmakers yesterday assailed

the millions in campaign contributions by banks and credit card companies

pushing the bipartisan legislation.

Prospects for its enactment appear stronger than in previous years. But the

recent agitation against the legislation already seems to have had an effect:

Sen. Charles Grassley (R-Iowa), said he would remove a provision from the

Senate-passed bill that would let credit card companies take some bankrupt

consumers' retirement assets to pay off debts.

The bankruptcy overhaul legislation "represents all the ways in which Big

Money dominates" Congress, said Sen. Paul Wellstone (D-Minn.), an outspoken

liberal who often has broken with fellow Democrats.

A recent report by watchdog group Common Cause found the banks and credit

card companies gave more than $23.4 million in party-building "soft money" and

donations to Democratic and Republican candidates during the past three years.

During that time, the bankruptcy legislation has been before Congress in

different forms.

Proponents of the legislation say an overhaul is needed to stem abuse by

people who can afford to repay their debts. They point to the rise in personal

bankruptcies of Americans in recent years, which reached a record 1.4 million

in 1998, despite the strong economy, up more than 300 percent since 1980.

Wellstone appeared in a news conference in Washington with Democratic Sens.

Edward Kennedy of Massachusetts and Russell Feingold of Wisconsin, and Rep.

Jerrold Nadler of New York. They were flanked by about a dozen members of the

autoworkers' and steelworkers' unions, some wearing bright blue union jackets

and caps, as well as representatives of consumer organizations.

The Senate overwhelmingly approved the bill in February. Grassley has said

he was seeking to prevent wealthy debtors who file for bankruptcy protection

from shifting their assets into protected retirement accounts to escape

repaying debts.

But critics said his provision would encourage credit card companies, banks

and retail businesses to put into fine print waivers requiring consumers to

forfeit pensions and retirement funds if they go bankrupt.

Grassley said yesterday he would seek to replace the provision with one

that would limit to $1 million the amount of money that some bankrupt consumers

could keep in their retirement accounts.

The Senate bill and a similar measure passed by the House last year, also

by a veto-proof margin apply new standards for determining whether people

filing for bankruptcy should be forced to repay their debts under a

court-approved reorganization plan instead of having them dissolved.

House and Senate negotiators must meld the two bills into one to be

approved by both chambers and sent to President Bill Clinton.

Talks have stalled over whether to remove a Senate provision to raise the

$5.15 hourly minimum wage to $6.15 over three years and give billions in new

tax breaks to small businesses.

The administration supports rewriting the bankruptcy laws but says both

versions are too hard on debtors. The White House also opposes the business tax

breaks and wants to see the minimum wage increase over a shorter period of

time.

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