What: All Issues : Government Checks on Corporate Power : Banks/Credit Card Companies : S. 256. Bankruptcy/Vote on Amendment to Limit Conflict-of-Interest Problems in Bankruptcy Restructuring in Republican-Sponsored Bill to Alter Federal Bankruptcy Laws (2005 senate Roll Call 39)
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S. 256. Bankruptcy/Vote on Amendment to Limit Conflict-of-Interest Problems in Bankruptcy Restructuring in Republican-Sponsored Bill to Alter Federal Bankruptcy Laws
senate Roll Call 39     Mar 10, 2005
Progressive Position:
Yea
Progressive Result:
Loss

In this vote, the Senate defeated an amendment offered by Patrick Leahy (D-VT) that would have limited potential conflict-of-interest problems rooted in the language of S. 256, a Republican-sponsored bill to alter federal bankruptcy laws. S. 256 proposed to overturn the existing federal law banning investment bankers from offering advice in bankruptcy restructurings concerning companies with which they have had a close, prior financial relationship. In other words, S. 256 would loosen current conflict-of-interest laws to permit investment banking firms who may have in some way contributed to the circumstances leading a company to declare bankruptcy to offer advice concerning the company's restructuring, a role which includes investigating and determining the course of events leading to the bankruptcy. Progressives argued that this change would represent an unacceptable conflict of interest, particularly at a time where corporate responsibility-or irresponsibility-is the focus of much public attention. Leahy attempted to strike a compromise with his amendment, which would have required a distance of five years between an investment firm's relationship with a company and the firm's subsequent role as an adviser in bankruptcy proceedings. Republicans opposed the amendment, countering that current conflict-of-interest law prevents investment companies that are in the best position due to their previous work to understand a company from offering advice on its restructuring: "there will be many cases when the best suited financial advisers are those who have a history of working with the company, of knowing the company's business, and of knowing the company's financial dealings, and being able to work with them." (Michael Crapo (R-ID).) The amendment was defeated by a vote of 44 to 55, thus leaving in the bill language that would loosen current conflict-of-interest laws to permit investment banking firms that may have in some way contributed to the circumstances leading to a company's bankruptcy to investigate and offer restructuring advice to that company.

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