House Panel to Vote on Bankruptcy Rules

The House Financial Services Committee is expected to vote this week on a section of legislation updating bankruptcy overhaul laws to include derivatives contracts between companies.

The legislation describes how debts between parties that include derivatives can cancel each other out in a bankruptcy proceeding, a process called “netting.”

In March, the House passed legislation that would overhaul bankruptcy law and included the netting provisions, which economic policymakers including Federal Reserve Chairman Alan Greenspan have endorsed.

But the House is worried that the overhaul, which has since gone to the Senate, may run into trouble and be defeated. This way, the netting provisions would be a separate piece of legislation and could then be implemented.