David Broder's recap of the role credit card companies played in pushing bankruptcy "reforms" through the House ["Morally Bankrupt Creditors," op-ed, May 16] may have left readers with the erroneous impression that the House-passed bill would rein in wealthy debtors who "put all their assets into lavish homes in states with high homestead exemptions and laugh when their creditors try to collect."

It does not. The House-passed bill would subject poor and middle-income debtors to elaborate new filing restrictions while doing nothing to stop wealthy debtors from buying expensive homes in one of the handful of states -- such as Texas or Florida -- that have an unlimited homestead exemption, declaring bankruptcy and continuing to enjoy a life of luxury while their creditors get little or nothing.

These are people like the owner of the failed Ohio savings and loan who paid off only a fraction of $300 million in bankruptcy claims while keeping his multimillion-dollar Florida ranch. Or the Miami physician with no malpractice insurance, who was named in four separate malpractice actions, filed for bankruptcy protection and kept a $500,000 home with a 100-foot swimming pool. Or the movie actor Burt Reynolds, who was more than $10 million in debt but kept his $2.5 million home while his creditors received 20 cents on the dollar.

While hardly a frequent occurrence, such abuses bring the fairness and rationality of the bankruptcy system into disrepute. That is why the National Bankruptcy Review Commission urged Congress to place a uniform national cap on the amount of equity that could be claimed under the homestead exemption. And that is why I offered an amendment to the subcommittee to cap the exemption at $250,000. My amendment was overwhelmingly approved.

But when the full committee took up the bill, a further amendment was added to allow individual states to opt out -- in effect, returning us to current law. Supporters of the opt-out provision argued that a federal cap on the homestead exemption would violate "states' rights." Yet by setting the cap at $250,000, we had already taken care to defer to state legislatures, leaving in place the (lower) thresholds in effect in every one of the 45 states that have established caps of their own.

To say that Congress should set no cap in the name of "states' rights" is to say we must stand by while a handful of states undermine the uniform enforcement of the federal statutory scheme embodied in the Bankruptcy Code. That would be like legislating a federal income tax that leaves it to the state legislatures to determine what will count as a business deduction.

By refusing to fix this problem, the authors of the bill revealed the double standards by which they have gone about these "reforms." They ask us to perpetuate the current inequities in the treatment of debtors who live in different states and to create new inequities in the treatment of debtors of differing financial means.

Efforts to cap the homestead exemption will be renewed when the Senate takes up its version of the bankruptcy bill, which could happen as early as this week. Here's hoping they have more success.

WILLIAM D. DELAHUNT

U.S. Representative (D-Mass.)

Washington