More than a year ago, the Supreme Court invalidated a law that had been enacted in 1978 to reorganize the bankruptcy courts. The act had given broad powers to bankruptcy judges, but the court held that such powers could only be exercised by so-called Article III judges, those to whom the Constitution gives life tenure and protection against salary reductions. Bankruptcy judges have neither. Congress must, said the court, either reduce the powers of bankruptcy judges or elevate their status so that they have all the protection of other federal judges. The court's order went into effect last Christmas--after a six-month grace period during which remedial legislation was not passed--and since that time little progress has been made.
Understandably, bankruptcy judges are fed up. They don't know with certainty what their powers are or what their future holds. Some have decided to resign, including the District's lone bankruptcy judge, Roger M. Whelan, who has served with distinction for 11 years. Judge Whelan confessed, in his letter of resignation, that "the pride and intellectual satisfaction" he had once experienced as a judge were now "considerably diminished." Because the bankruptcy courts are operating under interim rules not yet approved by the Supreme Court, litigants are uncertain that decisions made by the judges will hold up. Many questions are being taken to District Court judges for approval, a practice that has added to the frustration of the bankruptcy judges. Twenty resigned last year, and 16 have already left the bench this fiscal year.
The Senate has passed a bill that would reduce the powers of bankruptcy judges, and the House Judiciary Committee has reported a measure that would elevate them to the status of Article III judges. But because of a number of side issues--the political question of giving the president the power to appoint 227 new judges with life tenure, the desire of the consumer credit industry to tighten bankruptcy rules--the House has not considered either bill. Action is needed soon, not only to clarify the status of the judges but also to establish in an orderly and constitutional way the procedures that allocate billions of dollars and affect the lives of many Americans.