With the economy picking up steam, however, Sensenbrenner's surprise offer in late February to compromise on a slew of major provisions that had been sticking points has sent key staff members behind closed doors on Capitol Hill to hammer out a version both houses can agree on. Momentum is building for a compromise. After months of silence, Senate Majority Leader Tom Daschle (D-SD) has signaled that he's ready to flex his political muscle to get the bill passed, telling a recent conference of credit union officials that he wants "to see a good bill out of conference and on the President's desk so he can sign it this year." President Bush, who has voiced support for the legislation, is expected to sign a compromise bill.

But that doesn’t mean the going will be easy. Conferees still have to figure out how to resolve two knotty issues. One is a provision that would limit the so-called homestead exemptions allowed in a number of states, including Texas and Florida. The exemptions currently allow homeowners to shield the value of their homes from creditors during bankruptcy proceedings. The Senate bill would cap the value that could be protected at $125,000, while the House bill would limit homestead exemptions to $100,000. That's not an irreconcilable gap, but the real difference between the two bills involves the House's insistence that homeowners who purchased their homes at least two years before filing a bankruptcy petition should be grandfathered.

The Senate bill has no such grandfathering exception—its cap on homestead exemptions would apply no matter when a bankrupt homeowner purchased his or her home. Sensenbrenner is offering to toughen the House grandfathering language by exempting from the cap only homeowners who purchase at least two and a half years before filing a bankruptcy petition, and it's a safe bet that the conferees eventually will agree on an even longer "reach back" period. Although Bush has come under pressure from the congressional delegation from his home state of Texas to veto any legislation capping the homestead exemption, the White House has indicated that it's willing to compromise on that provision.

The other major roadblock to a compromise is language in the Senate bill that would bar persons convicted of certain crimes from using bankruptcy laws to shield themselves from paying court-imposed fines. House conservatives strongly oppose the provision, which they believe was crafted by Senate Democratic sponsors to target abortion clinic protesters. Sensenbrenner's compromise proposal, which would clarify that the provision applies to "willful and malicious crimes of violence," is expected to carry the day.