Magazine article American Banker

Bankruptcy Bill Hits Late Snag

Magazine article American Banker

Bankruptcy Bill Hits Late Snag

Article excerpt

The House was poised late Thursday to pass terrorism insurance legislation, but the fate of the bankruptcy reform bill was less certain.

The two bills, long-sought by the financial services industry, had languished in deadlocked conference committees for months until House lawmakers resurrected them as part of their last-minute scramble to adjourn for the year.

Both bills had appeared likely to clear the House early on Thursday but late in the day a procedural issue surfaced that raised serious doubts about the prospects for the bankruptcy bill.

The Senate is expected to keep working into next week, and it was unclear how soon the chamber would get to these bills.

On Thursday afternoon the House took up a bill that would ensure the financial capacity of insurers to provide coverage for terrorism risks.

Senate and House leaders long disagreed about whether insurance companies should have to repay the government for its financial assistance and whether terrorism victims should be able to sue employers and others for punitive damages. Ultimately, House leaders caved to pressure from President Bush and agreed to drop language that would limit punitive damages in civil suits.

The House was expected to pass a conference report that would create a federal backstop through 2005. The federal government would pay 90% of claims stemming from terrorism once claims exceeded a certain dollar amount -- $10 billion in the first year, with a gradual adjustment upward each year -- until insured losses reached $100 billion. …

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