Bankrupture

Bankrupture

Bankrupture

A summary of what's in the major U.S. newspapers.
June 11 1998 7:34 AM

Bankrupture

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and the Washington Post lead with a story tipped last week in the Los Angeles Times--the imminent tightening of bankruptcy laws. The New York Times leads with the Senate's passage of an amendment to the tobacco tax bill that would provide a tax break to low- and middle-income married couples. The LAT goes with its disclosure of a secret agreement under which State Farm Insurance agreed to pay $100 million to 117 homeowner policy holders who suffered damage in the Northridge earthquake. Although State Farm admitted no wrongdoing, the paper explains that--as confirmed by an internal memo it obtained--the company, without notifying policyholders, lowered coverage limits and backed off its previous policy of guaranteed property replacement. The outcome could, says the paper, expose State Farm, the nation's richest insurer, to thousands of similar claims by other policyholders whose coverage was likewise covertly pared.

The House bill says that debtors whose earnings top the U.S. median family income (about $51,500 for a family of four) and who can repay at least 20 percent of their debts, will have to. The bill was backed by credit card companies and other lenders (who, reports the Post, have made campaign contributions at twice the rate of the tobacco companies), who stand to recover plenty once it's implemented. But, say USAT and the WP, many Democrats, including President Clinton, think the bill punishes people who've fallen on hard times while not holding the credit card issuers responsible for promiscuous marketing. Additionally, they argue it will further hamper the ability of ex-spouses of debtors to receive alimony and child support. The WP and USAT note that some of the tougher aspects of the House bill may fall by the wayside when the Senate takes up the issue later this summer.

The Times lead details classic legislative logrolling: The $1.10 per pack tax increase in the tobacco bill, originally all channeled to smoking-related programs, offended many Republicans as classic tax-and-spend, but Republican votes were picked up when the tax-cut provision was added. The paper notes that the bill now not only rewards couples who otherwise would suffer the "marriage penalty" at tax time, but also those who would not. The Times also observes that un-related obstacles to bringing in additional Senate votes remain, including whether and/or how much the bill should fund tobacco price supports or programs for converting tobacco-based communities to other enterprises.

In what a NYT top front story calls the "most significant legal decision yet" on school vouchers, the Wisconsin Supreme Court held Wednesday that Milwaukee could spend public monies to send students to religious schools. The court said that this was not ruled out by current Wisconsin law or the First Amendment because it had neither the purpose nor the effect of advancing religion. This story is also on the USAT front and runs inside at the WP and LAT. The papers' consensus is that this decision is headed to the Supreme Court.

The WP's off-lead tells of a widening schism between traditionally tight partners: big business and the Republican party. It's the age-old conflict between ideologues and accomodationists. Right now the Republican leadership is taking business-annoying stands against increased exports to China and against additional U.S. funding of the International Monetary Fund.

The LAT has a top front-page story about a Florida court's unprecedented award of punitive damages (as part of a $1 million judgment) to survivors of a dead smoker who had sued the Brown and Williamson Tobacco Co. The story, by LAT tobacco specialist Myron Levin, notes that the decision is only the second courtroom loss ever for a tobacco company in such a suit, and is certain to trigger a slew of similar court cases and hence to further dim any fleeting hopes the tobacco companies had of gaining blanket legal liability protection. The story runs inside at the WP and NYT and is flagged in the front-page news box at the Wall Street Journal.

The NYT reports that in an apparent attempt to spare President Clinton embarrassment on his trip to China, officials there ordered bookstores to remove a popular new book detailing the various Clinton sex scandals. The book is called "Clinton: A President of Strong Drives."

The lead story in the "Money" section of USAT is Fed Chairman Alan Greenspan's exuberant remarks about the U.S. economy. "The current economic performance.is as impressive as any I have witnessed in my near half-century of daily observation of the American economy," he's quoted as testifying to a congressional committee. "It is possible that we have moved 'beyond history.'" This story is also on the NYT front, the front of the LAT business section, and runs inside at the WP. Of course, everybody hopes it's true, but the papers have also moved a little beyond history: Somehow these Quotations from Chairman Al stories never mention that Greenspan once, as an outside consultant, gave Charles Keating's financial empire a clean bill of health too.