[Congressional Record Volume 143, Number 108 (Monday, July 28, 1997)]
[House]
[Pages H5848-H5854]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                    BANKRUPTCY JUDGESHIP ACT OF 1997

  Mr. GEKAS. Mr. Speaker, I move to suspend the rules and pass the bill 
(H.R. 1596) to amend title 28, United States Code, to authorize the 
appointment of additional bankruptcy judges, and for other purposes.
  The Clerk read as follows:

                               H.R. 1596

       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled,

     SECTION 1. SHORT TITLE.

       This Act may be cited as the ``Bankruptcy Judgeship Act of 
     1997''.

     SEC. 2. PERMANENT JUDGESHIPS.

       Section 152(a)(2) of title 28, United States Code, is 
     amended--
       (1) in the item relating to the central district of 
     California, by striking ``21'' and inserting ``25'';
       (2) in the item relating to the district of Maryland, by 
     striking ``4'' and inserting ``5'';
       (3) in the item relating to the district of New Jersey, by 
     striking ``8'' and inserting ``9''; and
       (4) in the item relating to the western district of 
     Tennessee, by striking ``4'' and inserting ``5''.

     SEC. 3. TEMPORARY JUDGESHIPS.

       (a) Appointments.--The following judgeship positions shall 
     be filled in the manner prescribed in section 152(a)(1) of 
     title 28, United States Code, for the appointment of 
     bankruptcy judges provided for in section 152(a)(2) of such 
     title:
       (1) 1 additional bankruptcy judgeship for the eastern 
     district of California.
       (2) 1 additional bankruptcy judgeship for the southern 
     district of Florida.
       (3) 1 additional bankruptcy judgeship for the district of 
     Maryland.
       (4) 1 additional bankruptcy judgeship for the eastern 
     district of Michigan.
       (5) 1 additional bankruptcy judgeship for the southern 
     district of Mississippi.
       (6) 1 additional bankruptcy judgeship for the eastern 
     district of New York.
       (7) 1 additional bankruptcy judgeship for the northern 
     district of New York.
       (8) 1 additional bankruptcy judgeship for the southern 
     district of New York.
       (9) 1 additional bankruptcy judgeship for the eastern 
     district of Pennsylvania.
       (10) 1 additional bankruptcy judgeship for the middle 
     district of Pennsylvania.
       (11) 1 additional bankruptcy judgeship for the eastern 
     district of Virginia.
       (b) Vacancies.--The first vacancy occurring in the office 
     of a bankruptcy judge in each of the judicial districts set 
     forth in subsection (a) which--
       (1) results from the death, retirement, resignation, or 
     removal of a bankruptcy judge, and
       (2) occurs 5 years or more after the appointment date of a 
     judge appointed under subsection (a), shall not be filled.

     SEC. 4. EXTENSION.

       The temporary bankruptcy judgeship position authorized for 
     the district of Delaware by section 3(a)(3) of the Bankruptcy 
     Judgeship Act of 1992 (28 U.S.C. 152 note) is extended until 
     the first vacancy occurring in the office of a bankruptcy 
     judge in that district resulting from the death, retirement, 
     resignation, or removal of a bankruptcy judge and occurring 
     10 years or more after October 28, 1993. All other provisions 
     of section 3 of the Bankruptcy Judgeship Act of 1992 remain 
     applicable to such temporary judgeship position.

     SEC. 5 TECHNICAL AMENDMENT.

       The first sentence of section 152(a)(1) of title 28, United 
     States Code, is amended to read as follows: ``Each bankruptcy 
     judge to be appointed for a judicial district as provided in 
     paragraph (2) shall be appointed by

[[Page H5849]]

     the United States court of appeals for the circuit in which 
     such district is located.''.

  The SPEAKER pro tempore. Pursuant to the rule, the gentleman from 
Pennsylvania [Mr. Gekas] and the gentlewoman from California [Ms. 
Lofgren] each will control 20 minutes.
  The Chair recognizes the gentleman from Pennsylvania [Mr. Gekas].


                             General Leave

  Mr. GEKAS. Mr. Speaker, I ask unanimous consent that all Members may 
have 5 legislative days within which to revise and extend their remarks 
on H.R. 1596.
  The SPEAKER pro tempore. Is there objection to the request of the 
gentleman from Pennsylvania?
  There was no objection.
  Mr. GEKAS. Mr. Speaker, I yield myself such time as I may consume.
  Mr. Speaker, I rise in favor of this legislation, the Bankruptcy 
Judgeship Act of 1997, and urge its adoption by the House.
  We would think it is an anomaly, Mr. Speaker, to have a request for 
new bankruptcy judges at a time when the gross national product seems 
to be in good shape and inflation is down and the economy is in fairly 
good shape, yet the evidence is sound that bankruptcies, personal and 
otherwise, are on the rise. Therefore, the Judicial Conference, on whom 
we rely in the Committee on the Judiciary for the general themes of 
what we can best do to serve the Federal judiciary, has requested that 
these new judgeships be created.
  There would be 7 permanent new judges and 11 temporary judges across 
the 14 Federal judicial districts. It would extend one temporary 
judgeship already in existence in another district.
  Because I personally put so much stock in the findings of the 
Judicial Conference, those findings have formed the basis for the 
hearings that we held in this regard over the last two terms and the 
reports on which we based some of our recommendations.
  The bill that is in front of us has been cosponsored by Members on 
both sides of the aisle. The gentleman from Illinois [Mr. Hyde], the 
chairman of the full Committee on the Judiciary, and the gentleman from 
Michigan [Mr. Conyers] the ranking member on the minority, as well as 
the gentleman from New York [Mr. Nadler] the subcommittee ranking 
member, and this individual, all of us have cosponsored and have urged 
the passage of this legislation.
  Mr. Speaker, I reserve the balance of my time.
  Ms. LOFGREN. Mr. Speaker, I yield myself such time as I may consume.
  (Ms. LOFGREN asked and was given permission to revise and extend her 
remarks.)
  Mr. LOFGREN. Mr. Speaker, I rise in support of the motion to suspend 
the rules and pass the bill, H.R. 1596, the Bankruptcy Judgeship Act of 
1997.
  This legislation is both urgently necessary and long overdue. 
Although bankruptcies continue to rise, over 1 million filings in 1996, 
Congress has failed to provide the necessary resources to do the job. 
We have not provided for any new bankruptcy judgeships since 1992. When 
the cases pile up in bankruptcy court, businesses that are owed money 
are left holding the bag, families trying to straighten out their lives 
face delay, and many cases will receive less attention than they merit.
  I would note that this year the Administrative Office of the U.S. 
Courts has recommended an increase in the number of permanent 
bankruptcy judgeships in the Central District of California by four and 
the addition of a temporary bankruptcy judgeship in the Eastern 
District of California.
  This bill also reflects the improved method instituted by the 
Administrative Office of the U.S. Courts for measuring the work 
required to adjudicate the huge chapter 11 cases. Until recently, the 
largest unit of measure used for the purpose of calculating judicial 
workload was a $1 million chapter 11.
  Under that system of measuring judicial workload, a case involving $1 
million worth of debt was statistically indistinguishable from a $1 
billion case. By failing to measure the actual workload in these cases, 
the Administrative Office of the U.S. Courts consistently failed to 
recommend adequate resources for courts that heard the massive chapter 
11 cases. This bill reflects the newer and more accurate measure.
  We cannot afford to have debtors and creditors held up in court 
because there are not enough judges to hear the cases. H.R. 1596 is a 
measured response to the need for additional bankruptcy judges. I urge 
its adoption and join with the chairman in pointing out that this is 
indeed a measure that has received bipartisan support among its 
sponsors and on the committee.
  Mr. Speaker, I reserve the balance of my time.
  Mr. GEKAS. Mr. Speaker, I yield 5 minutes to the gentleman from 
Virginia [Mr. Wolf].
  Mr. WOLF. Mr. Speaker, I rise in support of the bill, H.R. 1596, and 
I want to thank the gentleman from Pennsylvania [Mr. Gekas] for 
yielding me time to speak on the personal bankruptcy crisis in America.
  In 1996 alone over one million cases for bankruptcy were filed, an 
increase of 27 percent over the 1995 filings, which equaled 926,000. In 
1997 bankruptcy filings have exceeded 100,000 per month across the 
country.
  While the entire Nation needs additional bankruptcy judges to help 
manage the increased caseload, H.R. 1596 is targeting areas most in 
need for additional assistance, with temporary judgeships to be 
authorized for the Eastern District of California, the Southern 
District of Florida, the District of Maryland, the Eastern District of 
Michigan, the Southern District of Mississippi, the Eastern District of 
New York, the Northern District of New York, the Southern District of 
New York, the Eastern District of Pennsylvania, the Middle District of 
Pennsylvania, and the Eastern District of Virginia.
  Also, the legislation calls for an additional four permanent judges 
to be authorized for California, Maryland, New Jersey, and Tennessee.
  Why are we in a personal bankruptcy crisis in America? A recent study 
conducted by SMR Research Corp. in Hackettstown, NJ, looked at the 
bankruptcy crisis and found that while there is no single prime cause 
of bankruptcy, there is a connection between bankruptcy and gambling.
  That study states, and I quote, Mr. Speaker,

       It now appears that gambling may be the single fastest 
     growing driver of bankruptcy. Once limited to Nevada and New 
     Jersey, casino gambling has spread very rapidly through many 
     States. Indian reservation casinos have been one new mode for 
     this growth, and riverboat and coastal gambling boats have 
     been added.

  This is a fascinating and enlightening study which I will submit for 
the Record for all our colleagues to read.
  When we look at the areas where H.R. 1596 targets the need for 
additional bankruptcy court assistance, we can see a link to the areas 
where gambling has proliferated in recent years. The SMR Research study 
states, and I quote,

       The bankruptcy rate was 18 percent higher in counties with 
     one gambling facility and was 35 percent higher in counties 
     with five or more gambling establishments.

  The study continues, and I quote again, Mr. Speaker,

       The effect of gambling on bankruptcy seems quite clear when 
     you look at a map. Among all the counties in Nevada, for 
     instance, we find that the closer you come to Las Vegas and 
     Reno, the higher the bankruptcy rate. In California the two 
     counties with the highest bankruptcy rates are Riverside and 
     San Bernadino. They also happen to be the two counties 
     closest to Las Vegas. The fourth highest bankruptcy rate in 
     California is in Sacramento County, which is closest to Reno.

  If we look at H.R. 1596, we see the Central District of California 
will be authorized four additional permanent bankruptcy judges and the 
Eastern District of California will be getting an additional temporary 
judge to handle the swelling number of bankruptcy filings.
  Mr. Speaker, I will not belabor the point, but I urge our colleagues 
to read the SMR Research report. We see Congress must be educated on 
the effects of gambling in our society. We are acting today to increase 
bankruptcy judgeships, which I believe can be linked to the 
proliferation of gambling today, but we just cannot continue to add 
more and more judges to solve this crisis. Getting to the heart of the 
problem is a challenge not only facing this Congress but the newly 
established National Gambling Impact Study Commission.

[[Page H5850]]

  Mr. Speaker, the SMR information I referred to earlier follows:

                  The Personal Bankruptcy Crisis, 1997

                (Published by SMR Research Corporation)


                       the purpose of this study

       In 1996, SMR Research issued a 56-page study on the causes 
     of wildly rising personal bankruptcy filings. We knew the 
     subject was timely, but little did we imagine the media 
     coverage that would follow.
       The 1996 study was mentioned in major newspapers and 
     magazines across the land, on television, and even became the 
     subject of two stories in the Wall Street Journal.
       Fate is strange. Publicity is nice, but the 1996 study was 
     not exactly a typical SMR production. The explosion in 
     bankruptcies had caused a lot of demand for information from 
     our lending industry clients, especially unsecured lenders. 
     We put together the 56-page piece as a section of our 1996 
     annual credit card market study, and later offered the 
     bankruptcy section by itself to non-credit card issuers.
       Although 56 pages might look big to some folks, it was the 
     shortest research study we have done since 1985. We found 
     ourselves making conclusions in the 1996 study with some 
     statistical backing, but not always definitive proof.
       This study, by contrast, is indeed a standard SMR Research 
     work. The scope is much greater, and allows us to cover the 
     subject completely, with a meaty section on solving (or at 
     least mitigating) the personal bankruptcy dilemma. Where the 
     1996 study focused solely on some of the core causes of 
     bankruptcy, this study covers the full nature of the problem.
       We look at the common misperceptions about bankruptcy and 
     provide the statistics that show why they are such vast over-
     statements. Unemployment is not the primary driver of 
     bankruptcy, nor is the overall consumer debt load. Lender 
     marketing and easy credit also are not the prime cause.
       In fact, there is no single prime cause of bankruptcy. In 
     this study, you'll see coverage of many things that result in 
     bankruptcy, with some quantification of which ones are in the 
     worst. The additional space allows us to cover things we 
     couldn't cover last year, like the connection between 
     bankruptcy and gambling--perhaps the fastest-growing problem 
     of all.
       In addition, this study, for the first time we know of, 
     shows the demographics of bankruptcy, using our county-level 
     statistical database that goes back to 1989.
       Regarding solutions to the problem, they are not easy. The 
     bankruptcy spike is based at least in part on serious, 
     intransigent, worsening, socio-economic problems. This 
     underlying core puts upward pressure on filings, and the 
     upward pressure really explodes when you throw lawyer 
     advertising and bankruptcy's loss of social stigma into the 
     mix.
       Still, we are quite confident that there are steps 
     available to creditors to help control their own bankruptcy 
     loss exposure. We think the best solution of all may be the 
     most radical, which is for creditors to adopt some of the 
     risk-control techniques of the insurance industry. This would 
     mean using actual geographic loss statistics as a 
     supplemental aid in credit scoring, pricing, and marketing. 
     This material appears starting on Page 157.
       SMR has been following the bankruptcy subject, and has been 
     building its database of filings, for eight years. After all 
     that time, we finally have created a research study that we 
     believe addresses all the central issues in the bankruptcy 
     crisis.
       We appreciate your patronage and hope you get good value 
     from the research.


                        gambling and bankruptcy

       It now appears that gambling may be the single fastest-
     growing driver of bankruptcy.
       Once limited to Nevada and New Jersey, casino gambling has 
     spread very rapidly through many states. Indian reservation 
     casinos have been one new mode for this growth, and riverboat 
     and coastal gambling boats have added more.
       If you have not been tracking the spread of gambling, you 
     may be in for a shock about how pervasive gambling facilities 
     have become.
       Note that in the state of Nevada, there are only 17 
     counties (most of them very large). But across the nation, 
     there are now 298 counties that have at least one major legal 
     gambling facility: a casino, a horse or dog racing track, or 
     a jai alai game. That's the count in one recent guide to U.S. 
     gambling facilities, and it does not include such things as 
     places where state lotteries or bingo parlors are available. 
     The lotteries and bingo parlors tend to involve small-ticket 
     gambling, whereas the other facilities obviously involve the 
     larger dollars per customer.
     The three addictions & changed mores
       When we published our shorter study on the causes of 
     bankruptcy in 1996, we had suspicions about gambling. But we 
     had not yet put together enough solid data and information to 
     make conclusions, therefore we said little about the subject.
       Actually, since we were looking at events that can cause 
     insolvency, we were suspicious in 1996 about all three of the 
     serious addiction problems in America: alcoholism and drug 
     and gambling addiction. We remain suspicious about all three 
     of those problems. But of the three, it's quite clear that 
     gambling is the fastest-growing phenomenon.
       For those who make and supply alcohol, drugs, and gambling, 
     all are very large businesses. But you don't have to be a 
     sociologist to see that societal mores are changing most 
     rapidly on gambling. Over the last 20 years, state 
     governments themselves have entered the gambling business 
     with lotteries. We see no states as yet that have gone into 
     the heroin trade or where the government itself advertises 
     Jim Beam. So, the concept of gambling now has the tacit 
     blessing of government.
       Meanwhile, private entrepreneurs have created dazzling and 
     sophisticated facilities that have eliminated the ``sleazy'' 
     from gambling and turned it into a recreation. Las Vegas is 
     now a city-sized adult theme park with attractions for the 
     kids, too. American Indians, operating on reservations beyond 
     the authority of state laws, have seized on casinos as a new 
     method to generate cash and improve their standard of living 
     Cruise ships of all sorts have set up table games and slot 
     machines.
       Hard-bitten gamblers of old played poker at tables in a 
     friend's kitchen or sat in cold bleachers to watch the 
     horses. Today's gamblers only enjoy the fines food, free 
     drinks, the best entertainment, super-quality hotels, and the 
     widest variety of gambling adventures that have ever been 
     available. And, of course, all of this now happens at places 
     much closer to most of the larger population centers. 
     Gambling can indeed be fun these days--but some smallish 
     percentage of gamblers do develop problems that translate 
     into bankruptcy.


                  statistics, gambling, and bankruptcy

       As in so many aspects of bankruptcy, perfect data related 
     to the gambling problem don't exist. No one has asked all the 
     bankruptcy filers if gambling contributed to their financial 
     problems, and we strongly suspect that if filers were asked 
     that question, many would be too embarrassed to answer 
     honestly.
       But we can look at evidence in many other ways. Recently, 
     for example, we input into our county-level records the 
     number of gambling places that exist in each county, if any. 
     We obtained the information, covering more than 800 casinos, 
     race tracks, and jai alai ``frontons'' from the 1997 edition 
     of The Gaming Guide: Where to Play in the US of A, published 
     by Facts on Demand Press of Tempe, AZ. The directory provides 
     street addresses and zip codes for the gaming establishments. 
     We used the zips against SMR's Zip Code/County Matching 
     database to put the right numbers of facilities in the right 
     counties.
       Then, we aggregated the bankruptcy rates of those places 
     and compared them to those of counties that have no gambling 
     at all. The bankruptcy rate was 18% higher in counties with 
     one gambling facility and it was 35% higher in counties with 
     five or more gambling establishments.
       This exercise probably understates the seriousness of the 
     problem, since many counties that have gambling facilities 
     also have very small populations, and actually draw their 
     customers from other places.
       So, when we look only at counties with more sizable 
     resident populations and gambling facilities, we see even 
     greater evidence of the problem.
     A look at the map
       The effect of gambling on bankruptcy seems quite clear when 
     you look at a map. Among all the counties in Nevada, for 
     instance, we find that the closer you come to Las Vegas and 
     Reno, the higher the bankruptcy rate.
       In New Jersey, casinos are permitted only in Atlantic 
     City--and that's also where the resident population has by 
     far the highest bankruptcy rate. Generally speaking, the 
     closer you come to Atlantic City, the higher the bankruptcy 
     rate in New Jersey. One exception to this rule is Cape May 
     County, just south of Atlantic City, where the bankruptcy 
     rate is not so high. But Cape May also is a big retirement 
     place with high average age in the population. As shown in 
     our demographics section, high-age populations do not have 
     high bankruptcy rats.
       In California, the two counties with the highest bankruptcy 
     rates are Riverside and San Bernardino. They also happen to 
     be the two counties closest to Las Vegas. The fourth-highest 
     bankruptcy rate in California is in Sacramento County, 
     which is closest to Reno.
       In Connecticut, the map hardly matters. Connecticut is so 
     tiny that everyone has access to the gambling parlors in the 
     middle of the state. This is a state that used to have a 
     bankruptcy rate far below the national average. But Indian 
     casino gambling is now huge and well-entrenched. The smaller 
     of the Indian casinos, the Mohican Sun in Uncasville, boasts 
     3,000 slot machines. In Connecticut, the bankruptcy rate per 
     capita has risen more than twice as fast as the national rate 
     of increase since 1990.


    what the experts say: scope of the problem, and the credit card 
                               connection

       Aside from these observations, we set out this year to 
     interview many of the leading U.S. experts on gambling, 
     gambling addiction, and the financial impact of gambling.
       Their studies have suggested, fairly consistently, that 
     more than 20% of compulsive gamblers have filed for 
     bankruptcy as a result of their gambling losses. They also 
     show that upwards of 90% of compulsive gamblers had used 
     their credit card lines to obtain funds for gambling and then 
     lost. The same studies show that problem gamblers have a lot 
     of credit cards on which to draw.
       ``One of the things we know about problem gamblers is that 
     they tend to have lots and

[[Page H5851]]

     lots of credit cards and those credit cards have been maxed 
     out in terms of their credit limits,'' said Rachel Volberg, 
     one of the leading researchers into problem gambling in the 
     U.S. and internationally. Volberg is president of Gemini 
     Research, a consulting firm in Roaring Spring, PA. She is a 
     frequent ``expert witness'' on the problem in state 
     legislative hearings and has done research under contract for 
     various government units in Oregon, Colorado, New York, 
     California, Michigan, Mississippi, Georgia, Louisiana, Iowa, 
     Connecticut, and Canadian provinces.
       Volberg is not the only researcher to note the connection 
     with credit cards. ``It's not unusual for problem gamblers to 
     have eight to 10 credit cards,'' adds Henry Lesieur, 
     professor of criminal justice at the University of Illinois, 
     Normal, another leading authority on compulsive gambling.
       The amount gamblers owe is quite large. According to 
     studies of Gamblers Anonymous members in Illinois conducted 
     in 1993 and 1995 by Lesieur, the median average lifetime 
     gambling debt of those surveyed was $45,000, and the median 
     amount owed at the time they entered GA was $18,000. The 
     median is the midpoint of a list of numbers, with 50% of the 
     numbers being higher and the other 50% being lower.
       However, the mean average debts of problem gamblers were 
     far higher than the median amounts. The mean average lifetime 
     gambling debt of those surveyed was $215,406, with three 
     people saying they owed $1 million or more. The mean debt 
     upon entering GA was $113,640, including one person who said 
     he owed $1 million and another admitting to owing an 
     incredible $7.5 million.
       In another study dated April 1996 by the University of 
     Minnesota Medical School, a survey of problem gamblers in 
     Minnesota found the average lifetime gambling debt was 
     $47,855, although individual amounts ran into the hundreds of 
     thousands of dollars. The median amount was $19,000. Recent 
     debts--those accumulated in the past six months--averaged 
     $10,008, while the median amount was $4,500.
       In late 1995, the Minneapolis Star Tribune examined 105 
     bankruptcy filings made in that city in which it was 
     determined that gambling was a factor. The results of the 
     study appeared in a five-part series that ran in the paper in 
     December 1995.
       The newspaper found that of the $4.2 million of total debt 
     declared by the 105 filers, $1.14 million--or 27%--was 
     comprised of gambling losses. Almost half of the 105 filers--
     52, to be exact--claimed they had gambling losses. Their 
     average debt was $40,066, which was more than the average 
     annual income of $35,244. The average gambling loss was more 
     than $22,000. Filers carried an average of eight credit 
     cards, although many had 10 or 15 cards and one person had 
     25. And heavy debts were being carried on each card.
     Counties with gambling have higher bankruptcy rates
       Let's return to the county-level data. In the table that 
     follows, we divided up the country among counties with 
     gambling facilities and those without. The differences in 
     bankruptcy rates between them are striking. It's quite clear 
     that those counties with legal big-ticket gambling have 
     higher bankruptcy rates than those counties that don't have 
     gambling, and those counties with many gambling houses have 
     higher bankruptcy rates than those places with just a few.
       We examined more than 3,100 counties. For the entire United 
     States, the personal bankruptcy filing rate per 1,000 
     population in 1996 was 4.20. But the national rate for 
     purposes of comparison to counties was 4.22 (using 1996 
     bankruptcies divided by 1995 populations; the 1996 county 
     populations were not available when we did this analysis). 
     For the 2,844 counties without gambling, the bankruptcy rate 
     was lower, at 3.96.
       According to The Gaming Guide, there were 298 counties that 
     had legalized gambling within their borders. In these 
     counties, the bankruptcy filing rate in 1996 was 4.67, or 18% 
     higher than for those counties with no gambling. When we 
     subdivide the universe of counties with gambling between 
     those with five or more locations and those with four or 
     less, we learn more. The places with the most gambling 
     facilities have a much higher bankruptcy rate.
       Of the 298 counties with gambling, 275 had only one to four 
     facilities. Their combined 1996 bankruptcy filing rate was 
     4.53 per 1,000 residents, or 14% greater than the 3.96 rate 
     among counties without gambling. However, in the 23 other 
     counties with five or more gambling facilities, the combined 
     bankruptcy rate was 5.33, a whopping 26% higher than the 4.22 
     national bankruptcy rate and 35% higher than at counties with 
     no gambling at all. Many of these counties with 5+ gambling 
     facilities are in Nevada, but most of them are not.

      BANKRUPTCY FILING RATES IN U.S. COUNTIES WITH GAMBLING FACILITIES \1\ VERSUS COUNTIES WITH NO GAMING      
                                                 ESTABLISHMENTS                                                 
----------------------------------------------------------------------------------------------------------------
                                                                                                         1996   
                                                    Number of      Aggregate       1996 bankruptcy     filings/ 
                                                    counties       population          filings           1000   
----------------------------------------------------------------------------------------------------------------
All counties with gaming facilities.............          298         97,385,935            454,384         4.67
Counties with 5+ gaming facilities..............           23         16,391,661             87,435         5.33
Counties with 1-4 gaming facilities.............          275         80,994,274            366,949         4.53
Counties with no gaming facilities..............        2,844        166,526,572            658,724         3.96
All U.S. counties...............................        3,142        263,912,507          1,113,108         4.22
----------------------------------------------------------------------------------------------------------------
\1\ Gambling facilities include land, tribal, and boat casinos; dog, horse, and harness race tracks, and jai    
  alai frontons.                                                                                                

       Again, these data tell only part of the story, since some 
     gambling parlors (especially tribal casinos) are located in 
     thinly populated places and draw almost all their customers 
     from other places.
       So, it's important to also look at more populous areas 
     located very near to gaming facilities. Indeed, not only do 
     many gambling facilities draw from other nearby population 
     centers within the U.S., but in addition there are many legal 
     casinos in several Canadian provinces. These often are 
     located just beyond the U.S. border and cater to American 
     gamblers in the Detroit area, upstate New York, and other 
     northern states.
       Thus, we believe many counties have high bankruptcy rates 
     tied in part to gambling, yet the county doesn't register in 
     our table as a ``gambling'' county. If we included counties 
     contiguous to those places with legalized gambling, we're 
     sure the numbers would show an even stronger correlation 
     between high bankruptcy rates and gambling. The following 
     mini study of the Memphis, TN, area illustrates our point.
     Las Vegas East: Would you believe it's Tunica County, MS?
       In the table below, we show the 24 counties in the U.S. 
     with the worst U.S. bankruptcy filing rates in 1996 (10.0 or 
     more filings per thousand residents) and where the population 
     is greater than 25,000.
       A significant number of these worst places share one 
     trait--all are within easy reach of major gambling casinos. 
     This is true of just about all of the counties on the list 
     that are located in Tennessee, Mississippi, and Arkansas.
       Neither Tennessee nor Arkansas has legal casino gambling 
     within its borders. In fact, neither state even has a 
     lottery, for that matter. Yet, several of their biggest 
     counties are located near the 10 major riverboat casinos in 
     Tunica County, MS. Tunica is located in the extreme northwest 
     corner of Mississippi, just south of Memphis, TN. According 
     to The Gaming Guide, Mississippi has the largest amount of 
     ``gaming area''--that is, square feet of casino gambling--in 
     any state outside Nevada. And most of that gaming is centered 
     in Tunica County. Major casinos are also located in the 
     Biloxi-Gulfport area on the Gulf of Mexico.
       The profusion of super-high bankruptcy rates among the 
     counties located near the Mississippi River casinos in Tunica 
     County is quite remarkable. Indeed, the counties in the 
     tristate area within the Memphis metropolitan area have some 
     of the highest personal bankruptcy rates in the nation. We 
     view their close proximity to the Tunica casinos as very 
     meaningful.
       Shelby County, TN, where Memphis is situated, easily had 
     the highest county bankruptcy rate in the nation in 1996, at 
     17.28 per 1,000 population--more than four times the national 
     average. It's also by far the biggest county in terms of 
     population among the most bankrupt counties. Memphis also 
     happens to be the headquarters of Harrah's, one of the 
     biggest casino operators.
       Also on the list of worst counties are two Mississippi 
     counties. DeSoto, with a December 1996 filing rate of 10.65, 
     borders Tunica County. Marshall County, at 11.47, is adjacent 
     to DeSoto. Tunica County itself, the likely source of some of 
     this trouble, has a population of just 8,132 souls, and a 
     bankruptcy rate of just 5.78, less than the state average of 
     6.16.
       Also high on the list of most bankrupt counties is 
     Crittenden County, AR, at 11.16. It's the county located just 
     across the Mississippi River from Shelby County. Tipton 
     County, TN, at 10.96, is adjacent to Shelby County on the 
     north. Madison County, TN, at 10.73, is located just east of 
     Shelby. But other counties located near Shelby in Tennessee 
     sport high bankruptcy rates, including Haywood, Lauderdale, 
     Fayette, and Crockett, to name a few. These counties don't 
     appear on our list of worst counties because their 
     populations were less than 25,000.
       The Tunica casinos aren't the only ones catering to 
     Tennessee residents. There's also a casino located upriver in 
     Caruthersville, MO, in that state's southeastern panhandle. 
     It may be part of the reason for the 10.56/1,000 bankruptcy 
     rate in Dyer County, TN, which is located just across the 
     river. Also, Gibson County, TN, just east of Dyer, had a 
     bankruptcy filing rate of 10.12. It's worth mentioning that 
     both Dyer and Gibson Counties are also both within a two-hour 
     drive of the Tunica casinos.
       The next table shows that 9 of the 24 U.S. counties with 
     the highest bankruptcy rates in 1996 also were places located 
     very close to three gambling sites.

[[Page H5852]]



                               COUNTIES WITH HIGHEST BANKRUPTCY FILING RATES, 1996                              
                                           [Minimum population 25,000]                                          
----------------------------------------------------------------------------------------------------------------
                           County name                              Population        Filings      Filings/1000 
----------------------------------------------------------------------------------------------------------------
Shelby, County, TN \1\..........................................         865,058          14,952           17.28
Coffee County, GA...............................................          32,697             432           13.21
Jefferson County, AL............................................         657,827           8,124           12.35
Bibb County, GA.................................................         155,066           1,912           12.33
Troup County, GA................................................          57,882             705           12.18
Walker County, GA...............................................          60,654             705           11.62
Marshall County, MS \1\.........................................          32,078             368           11.47
Crittenden County, AR \1\.......................................          49,889             557           11.16
Clayton County, GA..............................................         198,551           2,209           11.13
Liberty County, GA..............................................          58,749             650           11.06
Coweta County, GA...............................................          72,021             789           10.96
Tipton County, TN \1\...........................................          43,423             476           10.96
Murray County, GA...............................................          30,032             325           10.82
Madison County, TN \1\..........................................          83,715             898           10.73
Baldwin County, GA..............................................          41,854             448           10.70
DeSoto County, MS \1\...........................................          83,567             890           10.65
Dyer County, TN \2\.............................................          35,900             379           10.56
Manassas City, VA...............................................          32,657             333           10.20
Gibson County, TN \2\...........................................          47,728             483           10.12
Scott County, MS \3\............................................          25,042             253           10.10
Rhea County, TN.................................................          26,833             271           10.10
Talladega County, AL............................................          76,737             774           10.09
Spalding County, GA.............................................          57,306             575           10.03
Ware County, GA.................................................          35,589             357           10.03
----------------------------------------------------------------------------------------------------------------
\1\ Located near casinos in Tunica County, MS.                                                                  
\2\ Located near casino in Caruthersville, MO.                                                                  
\3\ Located near casino in Philadelphia, MS.                                                                    

                             more examples

       Of course, scenarios like this can be seen in other areas 
     of the country. Atlantic County, NJ, is a leading example. It 
     is home to all of that state's legalized gambling casinos, 
     and the 1996 bankruptcy rate was 7.10 filings per 1,000 
     residents. That was 71% higher than the state average 
     bankruptcy rate of 4.16. And most of the time, counties 
     located closest to Atlantic had higher bankruptcy rates than 
     others further away.
       Of course, Atlantic City draws customers from all kinds of 
     places, including many from New York City. Our point is that 
     the resident population in a gambling county has the easiest 
     and most frequent opportunity to use the facilities, 
     therefore we should expect to see some result in the per 
     capita bankruptcy rate.
       Similarly, the 1996 bankruptcy rate in Nevada is more than 
     50% higher than the national average. In Clark County, where 
     Las Vegas is located and where more than half of the state's 
     more than 300 casinos are based, we see the highest 
     bankruptcy rate within the state. Nor is it surprising that 
     the two counties with the highest bankruptcy rates in 
     California are those just across the border from Las Vegas, 
     San Bernardino (7.04) and Riverside (6.77). Those two 
     counties also now have tribal casinos of their own.
       Moving to Maryland, Prince Georges County has by far the 
     highest bankruptcy rate among counties in that state--6.72 
     filings per 1,000 population in 1996, almost 50% higher than 
     the state average of 4.57. By way of comparison, the next 
     highest county bankruptcy rate in Maryland is 5.27, a 
     significantly lower figure. What's going on in Prince 
     Georges?
       The answer is that Prince Georges is the only county in 
     Maryland where casino gambling is legal. Legal casinos are 
     located at charitable organizations, such as Elks and Knights 
     of Columbus halls and volunteer fire departments. These 
     casinos have strict limits on operating hours and betting and 
     don't have the glitz of Las Vegas or Atlantic City, yet they 
     do now exist and the casinos are used. Prince Georges County 
     also has harness racing.
     Gambling & low-bankruptcy States: Would they be even better 
         without it?
       All of the prior information is highly suggestive that 
     gambling influences bankruptcy. Yet, as all the rest of this 
     study shows, there are many other bankruptcy drivers. 
     Therefore, the correlation between bankruptcy and the 
     physical location of gambling facilities is certainly 
     imperfect.
       There are some states, for instance, where there are 
     gambling facilities, yet the bankruptcy rates are reasonably 
     low. These states include South Dakota, Minnesota, and Iowa--
     all located in the moderate bankruptcy ``corridor'' of the 
     upper Midwest.
       It's hard to tell in these areas whether gambling has no 
     effect on bankruptcy, or if, on the other hand, bankruptcy 
     would be even less of a problem without the casinos. The 
     Minnesota university study referenced earlier in this section 
     suggests that bankruptcies in that state are caused at times 
     by gambling.
       Indeed, the notion that gambling is a major negative for 
     bankruptcy in all geographies is supported by information 
     from our interviews and from a lot of local newspaper 
     articles we have reviewed. The actual gambling debts may have 
     become credit card debts prior to the filer entering 
     bankruptcy court, but that doesn't change the cause of the 
     financial trouble. The following material will add more from 
     this review of experts and news articles.


                        quantifying the problem

     10% of Filings Might Be Linked to Gambling; 20% of Problem 
         Gamblers Go Bankrupt
       Articles we studied, often quoting attorneys who specialize 
     in personal bankruptcy, suggested that about 10% of 
     bankruptcy filings are linked to gambling losses. That figure 
     could be higher depending on location. Most of the debt is 
     racked up on credit cards.
       According to the experts on compulsive gambling with whom 
     we talked, no comprehensive national study on problem 
     gambling has been conducted in the U.S. since the early 
     1970s. However, several state studies have been done, all 
     concluding that 20% or more of compulsive gamblers were 
     forced to file for bankruptcy protection because of the 
     losses they had incurred.
       In the April 1996 study of compulsive gamblers in Minnesota 
     conducted by two professors at the University of Minnesota 
     Medical School, the researchers reported that 21% of the 
     people in the study had filed for bankruptcy. In addition, a 
     disturbing 94% said they had at least one gambling-related 
     financial problem in their lifetime. Furthermore, 9 out of 10 
     of the subjects said they had borrowed from banks, credit 
     cards, and loan companies to finance their gambling. And, 77% 
     said they had written bad checks to finance gambling sprees.
       The University of Illinois in Normal conducted two surveys 
     of members of Gamblers Anonymous in 1993 and 1995. The 
     combined results found that 21% had filed for bankruptcy, and 
     that another 17% had been sued for gambling-related debts. 
     Additionally, 16% said their gambling led to divorce--another 
     big driver of bankruptcy filings--and another 10% said it led 
     to separation. Compulsive gamblers also have very high rates 
     of attempted suicides, higher even than for drug addicts, the 
     experts said.
       Rachel Volberg, the Pennsylvania-based compulsive gambling 
     consultant we referenced earlier, told us that a study in 
     Wisconsin had found that 23% of compulsive gamblers had filed 
     for bankruptcy, and that 85% of the gamblers said they had 
     used credit cards for gambling money. She also said a study 
     conducted in the Canadian province of Quebec found that 28% 
     of problem gamblers there had sought bankruptcy protection.
       One of the really scary things about these studies is that 
     they are conducted only with people who had sought out 
     professional help for gambling addiction. So, there may be 
     other problem gamblers at risk, too.
       According to several lawyers specializing in bankruptcy who 
     were quoted in newspaper articles that we studied, 10% to 20% 
     of their clients did so due to gambling debts they couldn't 
     pay. These lawyers were located in areas near casinos, so the 
     10% to 20% figures probably doesn't hold for the U.S. 
     population at large. Nevertheless, it's probably not a 
     stretch to say that at least in those areas near major 
     casinos, gambling-related bankruptcies account for a good 10% 
     to 20% of the filings.
     The Explosion in Iowa
       It's also not a stretch to say that the number of people 
     with financial problems stemming from gambling is on the 
     rise, tracking the spread of legalized gambling.
       Tom Coates, executive director of the nonprofit Consumer 
     Credit Counseling Services of Des Moines, IA, told us that 
     10% to 15% of the people his agency counsels have financial 
     problems ``directly related to gambling.'' That's up 
     dramatically from 2-3% when the agency opened its doors 10 
     years ago, before casino gambling was legalized in Iowa. 
     Coates also told us that his service's business is up 30-40% 
     over a year ago, at a time when Iowa's unemployment rate is 
     at an all-time low and its economy stronger than the nation's 
     at large. He blames gambling for much of the surge.
       Probably, much of what we've reported about problem 
     gamblers will not surprise the experienced credit executive. 
     People with gambling addiction are rather obviously at risk 
     to lose a lot of money. But how many such people exist? And 
     how many gamble occasionally? Let's take a look at the 
     numbers, below.
     2.6 million adults may have a gambling problem
       According to the most recent statistics released by the 
     American Gaming Association, the casino industry's trade 
     group, U.S. households made 154 million visits to casinos in 
     1995. That number was up 23% from the previous year and up an 
     astounding 235% from 1990.
       The AGA said 31% of U.S. households gambled at a casino in 
     1995, up from just 17% in 1980. ``Gambling households,'' as 
     the AGA calls them, also made an average 4.5 trips to casinos 
     in 1995, up from 3.9 times the year before and 2.7 in 1990.
       Of course, it is difficult to pinpoint how many of these 
     people have a problem or compulsion--terms that can be a 
     matter of degree or interpretation. Most estimates range from 
     1% of the adult population to as high as 7%.
       The University of Minnesota study estimated that 1% of the 
     state's entire population were ``problem pathological 
     gamblers,'' meaning that they lose control and continue 
     gambling in spite of adverse consequences. If this 1% figure 
     were true for the entire U.S. population, it would represent 
     about 2.7 million people at risk.
       The gaming industry itself says that 2% to 4% of practicing 
     gamblers develop compulsion problems. Since 31% of households 
     gambled at a casino in 1995, the 2% to 4% range would yield 
     numbers very similar to the Minnesota study. (31% of 265 
     million people 82.15 million 3% = 2.5 million compulsive 
     gamblers.)
       Needless to say, people don't become compulsive gamblers 
     until they're first exposed to gambling. Therefore, the rapid 
     spread of casino gambling right now is a major concern.
       Coates, the credit consultant, told us that Iowa 
     commissioned a study of problem gambling in 1989, two years 
     before the state's first riverboat and Indian casinos opened. 
     In that study, it was estimated that 1.7% of the state's 
     adult population were compulsive gamblers.
       In 1995, by which time many casinos had dotted the state, 
     Iowa did a similar study. Using the same methodology, the 
     second study found that 5.4% of the state's entire

[[Page H5853]]

     adult population--not just the population that gambles--were 
     problem or compulsive gamblers, a more than tripling of the 
     rate in just six years.
     Losing everything is common
       For creditors, another problem with gambling-driven 
     bankruptcy is that it is highly likely to result in total 
     loss.
       Even though most bankruptcy filings will represent near-
     total loss of amounts owed to unsecured creditors, the 
     gambling-driven bankruptcies may be the worst. That's because 
     addicted gamblers tend to ``tap out'' completely on debt and 
     deplete savings, leading them into Chapter 7 liquidation.
       These are logical observations, but also are supported by 
     findings in a July 1996 study conducted in Wisconsin. We 
     reviewed this study.


                    DEALING WITH THE GAMBLING ISSUES

       Like so many of the drivers of bankruptcy, gambling is a 
     frustratingly tough problem to solve.
       Casino gambling is spreading rapidly in part because so 
     many people enjoy it. Most gamblers also are responsible and 
     know their limits. People like gambling and most do it 
     safely, so how do you argue against the further spread of 
     casinos?
       The central problem for bankruptcy is that gambling adds 
     another socio-economic minority group to the high-risk mix.
       Bankruptcy is always driven by socio-economic and 
     demographic minority groups. Most people have health 
     insurance, but the 40 million Americans who don't are a large 
     high-credit-risk minority. Most people don't get divorced, 
     but the 10% of adults who are divorced are a sizeable at-risk 
     minority. If there also are 2.6 million compulsive gamblers, 
     this is just another high-risk group to throw in--and perhaps 
     the most rapidly growing group. Bankruptcies are rising in 
     part because, when you add up all these at-risk minority 
     groups, you end up with a very large number that's no longer 
     minor.
       Still, we believe that much could be done by active 
     creditors to combat the level of the risk. At the moment, if 
     anything, creditors enable and even encourage the problem 
     gambler to go too far. And some state governments seem even 
     more eager than the casino themselves to encourage 
     irresponsible gambling behavior--as we'll see in a moment in 
     New Jersey.
       Here are some of our thoughts on combatting the gambling/
     bankruptcy problem:
     1. Make it tougher for customers to obtain cash advances at 
         gambling casinos
       According to the gaming industry itself, more than half of 
     the money that gamblers play with at casinos is not money 
     they brought with them. It is money they obtained inside the 
     casino or close by from automated teller machines, cash 
     advances from credit card terminals, and the like.
       ``It is no secret in the casino industry that patrons will 
     continue to play a game until their cash runs out. What some 
     operators have discovered, however, is if a consumer is 
     provided with efficient and easy ways to access cash, often a 
     `last time' player will wager for longer than he or she 
     originally planned,'' states a recent article about cash 
     advances in International Gaming & Wagering Business, a 
     gaming industry monthly magazine. In addition, the article 
     says, ``credit customers tend to be more liberal money-
     users.''
       Credit card issuers have been very accommodating to 
     gamblers, making it easy for them to get their hands on large 
     sums of money very quickly. And it may well be that most of 
     this business is profitable for the card issuers. But that 
     may be changing now. In an era of very rapidly increasing 
     bankruptcies, it does not take long for the net losses from 
     bankruptcy filers to exceed the profits from gamblers who 
     responsibly use their cash advances.
       Here is some admittedly over-simplified card issuer math: 
     Let's hypothesize that 1,000 gamblers have used credit card 
     cash advances to obtain $1,000 each. Total receivables for 
     this group will be $1 million. At a 1.5% return on assets, 
     this $1 million will generate $15,000 of net income.
       But the gaming industry itself says that 2% to 4% of these 
     gamblers have an addiction problem. If the average is 3%, 
     then 3% of the 1,000 gamblers we've just looked at are very 
     high risk. This will be 30 people. If, as the earlier data 
     suggests, 20% of these 30 people will file for bankruptcy, 
     then 6 of the original 1,000 gamblers will wind up in 
     bankruptcy court. Against the $15,000 of net income, what 
     will the loss be from the 6 bankrupt compulsive gamblers? 
     Probably, it will be more than $15,000--or at least close 
     enough to make this little piece of the credit card business 
     insufficiently profitable.
       This tells us that card issuers and the ATM associations 
     they partially control may want to reconsider their placement 
     of so many cash machines in casino hotels. Or, at least, card 
     issuers may need to institute new early warning indicators 
     specific to those locations. The heavy users of casino hotel 
     cash machines should be the ones stopped sooner.
       ``If I were a credit guy, I would check better on the ATM 
     transactions,'' said Edward Looney, executive director of the 
     Council on Compulsive Gambling of New Jersey. ``Banks ought 
     to immediately pick up on someone in trouble. You can tell 
     just from the transactions.'' Coates was quoted in the Des 
     Moines Register newspapers in late 1995 claiming that banking 
     sources told him that eight of the 10 busiest ATMs in lowa 
     were located at the casinos.
     2. Help defeat actions in states that would make it easier 
         for gamblers to get credit card cash advances on casino 
         floors
       Here is perhaps the craziest credit risk story yet.
       In New Jersey last September, the state Casino Control 
     Commission passed a regulation that would allow casino 
     patrons to utilize ATM and credit card cash advance machines 
     placed right at the Atlantic City gaming tables.
       Previously, customers had to walk to a different part of 
     the building to use these machines. Under the new proposal, 
     borrowing for blackjack would be faster than ordering a drink 
     from a cocktail waitress. Not even Las Vegas casinos allow 
     this. And, the Atlantic City casinos themselves don't support 
     the measure, which they believe would lead to increased 
     gambling compulsion and would tarnish the industry's 
     reputation.
       In other words, the state government is more eager to push 
     money into the gamblers' hands than the casinos who would 
     profit most in the short run. What's wrong with the New 
     Jersey regulators--and why didn't the banking industry 
     object?
       So far, no Atlantic City casino has taken advantage of the 
     rule change, nor is any likely to in the future, said Keith 
     Whyte, director of research at the American Gaming 
     Association, the industry's trade group.
       ``We definitely opposed in principle New Jersey's 
     regulatory rule change that would let casinos put ATM card 
     swipes right at the table. And in fact no casinos are doing 
     that, and none will, I can almost guarantee you,'' Whyte told 
     us. ``It wasn't a casino-initiated thing. Everybody [in the 
     industry] realized that is probably not a step we would want 
     to take.''
       According to Looney, the New Jersey Compulsive Gambling 
     Council chief, not a single credit card or banking industry 
     representative raised any objection to this rule when it was 
     being debated. Yet, Atlantic City has the highest 
     concentration of big casinos outside Las Vegas and serves 
     millions of gamblers per year. You get the feeling no one in 
     the credit community is paying close attention to gambling's 
     effect on bankruptcy.
     3. Maybe cash machines should be moved out of the casino 
         hotels entirely
       Many of the experts we talked to for this study agreed that 
     the worst thing for a compulsive gambler to have is immediate 
     access to cash when he's on a binge. To the extent that banks 
     control or influence where cash machines are placed, it may 
     be time to reconsider their currently wide availability 
     around the casino hotels.
       If the gambler had to walk down the street to get cash, no 
     doubt some would. But some of the people we interviewed 
     strongly contend that the walk itself would impose a 
     ``cooling off'' period that would stop some compulsive 
     gambling losses.
       ``It's a vulnerable thing for a compulsive gambler to get 
     credit,'' said Looney of the New Jersey council and himself a 
     recovering gambling addict. ``They will be so focused on 
     their gambling that they will gamble everything they can, 
     including all the credit cards they have in their possession. 
     It is important to have ATM and credit card terminals at 
     least some distance from where gambling actually takes place. 
     To some this might seem a small point, but to those of us who 
     deal with compulsive gamblers, this is huge. For many 
     compulsive gamblers, just being forced to walk a couple of 
     hundred feet away from where the gambling is actually taking 
     place is sufficient time for them to rethink whether they 
     really want to gamble any further. That break from gambling 
     is a crucial time for many.''
     4. Challenge more aggressively those bankruptcy filings where 
         it appears that gambling losses are the main reason why 
         the person is filing
       Inside the bankruptcy court, at least some folks contend, 
     creditors should be even tougher on gamblers than they 
     already are.
       ``I think lenders should push for slightly different 
     treatment [in bankruptcy court] for someone who has been 
     shown to run up his debts for gambling,'' said Tom Coates, 
     the Des Moines credit counselor. Credit card lenders would 
     not only be helping themselves but doing the problem gambler 
     a favor, too, he noted.
       Coates, who recently testified before the National 
     Bankruptcy Commission, tried to impress on the panel that 
     discharging gambling debts through a bankruptcy filing 
     doesn't do the gambler any good. ``I tried to impress on the 
     Commission that the compulsive, problem gambler is living in 
     a fantasy world and to go ahead and discharge this debt in 
     bankruptcy court continues to propagate this atmosphere of 
     fantasy land. It will abort the recovery process for that 
     individual. The process of recovery is to bring that person 
     out of their fantasy world into the world of reality, and by 
     discharging those debts, none of it seems real to them.''
       Indeed, in a recent article in the St. Louis Post-Dispatch 
     about gambling and bankruptcy, one gambler was quoted 
     counseling another with money troubles: ``Go file bankruptcy. 
     Then you'll have money to gamble with.''
       U.S. credit card issuers should consider lobbying to change 
     U.S. bankruptcy laws to make it illegal for people to 
     discharge gambling debts in bankruptcy court. That is the 
     current law in Australia, according to Henry Lesieur, the 
     University of Illinois professor. Of course, the card issuers 
     would have to be able to prove that a card cash advance was 
     used for gambling purposes, which might

[[Page H5854]]

     often be difficult. On the other hand, if the law were 
     changed, perhaps filers who lie about gambling losses would 
     risk penalties, so at least some might be honest.
     5. Finance research into problem gambling and finance help 
         for compulsive gamblers
       From time to time, creditors provide funds to all sorts of 
     charitable outfits. If they helped finance research into 
     compulsive gambling, such spending would play a dual role. It 
     would be a public contribution, and it would help creditors 
     learn more about the seriousness of the tie between gambling 
     and bankruptcy.
       Quite a bit of money is spent on alcohol and drug addiction 
     research and rehabilitation. Both of those problems are 
     viewed (at least by some people) as medical. Apparently, the 
     public view toward gambling addiction is quite different. 
     There's no drug involved, and little is spent on research or 
     rehab. Yet, gambling addiction can indeed be viewed as a form 
     of emotional or metal illness--and it's the one addiction 
     that is growing most quickly in its impact on creditors.
       In our research for this study, we found very little new 
     research being conducted on compulsive gambling. The experts 
     we interviewed said that no national survey of compulsive 
     gamblers has been done in more than 20 years; only a handful 
     of studies have been done by various states from time to 
     time. Much of the available research has been done in 
     academia with modest financial support, and it gets little 
     followup attention.
       Card issuers spend millions on sporting events, the 
     Olympics, and even on the Smithsonian museums (Discover 
     Card). These expenditures have a marketing value. A 
     fractional amount diverted to gambling research could have an 
     even better bottom line impact.
  Ms. LOFGREN. Mr. Speaker, I yield 2 minutes to the gentleman from New 
Jersey [Mr. Rothman].
  Mr. ROTHMAN. Mr. Speaker, I thank the gentlewoman from California for 
yielding me this time.
  Mr. Speaker, I rise today in support of H.R. 1596, the Bankruptcy 
Judgeship Act of 1997. I come to the floor today to speak not only as a 
Member of Congress but as a former county surrogate court judge. I am 
very concerned about the bankruptcy system in the United States, not 
that it does not work but that with the sheer number of cases being 
filed, Americans cannot be assured of speedy bankruptcy filings.
  As the gentlewoman from California said, that means that individuals 
and businesses who are owed money by individuals and companies that 
take advantage of our bankruptcy laws, they will not receive their just 
compensation in a timely enough fashion. So as Members of Congress, as 
legislators, it is our responsibility to equip the judiciary with the 
tools they need to ensure fair and speedy bankruptcy trials for 
Americans.
  In 1996 there were over a million bankruptcy filings in the United 
States. This was an increase of 27 percent over 1995 and more than 
triple the number filed since 1984. In my home State of New Jersey 
there were more than 34,000 filings in 1996, up almost 23 percent from 
the previous year.
  While this number continues to rise, one thing has not changed. Since 
1992, no new bankruptcy judges have been added. New Jersey's 34,000 
bankruptcy cases were handled by only eight bankruptcy judges. It is, 
therefore, unreasonable to think that eight judges can adequately 
handle 34,000 cases, and that turns out to be the fact.
  This number is too high. We cannot expect cases of this number to be 
heard expeditiously as well as thoroughly and fairly and creditors to 
be paid promptly if the number of judges does not increase. It is 
unfair for all of the parties involved.
  We will be increasing with H.R. 1596 the number of new bankruptcy 
judges by 6 percent over 1992, even though the caseload went up 30 
percent. I think that this is a good start, Mr. Speaker. H.R. 1596 puts 
into action the Judicial Conference's recent recommendation to add 7 
permanent and 11 temporary judgeships nationwide, and I strongly urge 
my colleagues to vote for H.R. 1596.
  Mr. HOYER. Mr. Speaker, I rise in enthusiastic support of H.R. 1596, 
the Bankruptcy Judgeship Act of 1997.
  Spurred by credit card debt, bankruptcy claims in the United States 
have escalated by more than 20 percent over the past 5 years, 
increasing from 971,000 in 1992 to 1.2 million in 1996. This has 
translated into expanding caseloads for U.S. bankruptcy courts and 
placed a substantial added burden upon bankruptcy judges and staff. The 
district of Maryland is among those jurisdictions affected most 
severely by the rise in bankruptcy filings, experiencing a staggering 
35.8 percent jump in the last year, and an astounding 544 percent 
increase over the 12-year period beginning December 31, 1984, and 
ending December 31, 1996.
  The Bankruptcy Judgeship Act will help to alleviate the mounting 
stress on the most severely overburdened U.S. bankruptcy courts by 
establishing an additional 7 permanent and 11 temporary bankruptcy 
judgeships in various jurisdictions around the country. Under H.R. 
1596, Maryland would receive one permanent and two temporary bankruptcy 
judgeships.
  I would like to commend the bill's lead sponsor, Mr. Gekas, chairman 
of the Judiciary Subcommittee on Commercial and Administrative law, and 
the rest of my colleagues on the Judiciary Committee, including 
Chairman Henry Hyde, ranking member John Conyers, and the ranking 
member of the subcommittee, Mr. Nadler, for taking this action to help 
bankruptcy courts meet the challenge of rapidly expanding caseloads.
  Enactment of this legislation will bring much-needed relief to the 
U.S. bankruptcy court system and more expeditious adjudication of 
bankruptcy claims. I strongly encourage all of my colleagues to support 
this important and timely legislation.
  Mr. GEKAS. Mr. Speaker, I have no further requests for time, and I 
yield back the balance of my time.
  Ms. LOFGREN. Mr. Speaker, I have no further requests for time, and I 
yield back the balance of my time.
  The SPEAKER pro tempore. The question is on the motion offered by the 
gentleman from Pennsylvania [Mr. Gekas] that the House suspend the 
rules and pass the bill, H.R. 1596.
  The question was taken; and (two-thirds having voted in favor 
thereof) the rules were suspended and the bill was passed.
  A motion to reconsider was laid on the table.

                          ____________________