[Congressional Record Volume 144, Number 132 (Monday, September 28, 1998)]
[House]
[Pages H9140-H9147]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




  APPOINTMENT OF CONFEREES ON H.R. 3150, BANKRUPTCY REFORM ACT OF 1998

  Mr. GEKAS. Mr. Speaker, I ask unanimous consent to take from the 
Speaker's table the bill (H.R. 3150) to amend Title 11 of the United 
States Code, and for other purposes, with a Senate amendment thereto, 
disagree to the Senate amendment, and agree to the conference asked by 
the Senate.
  The SPEAKER pro tempore (Mr. Shimkus). Is there objection to the 
request of the gentleman from Pennsylvania?
  There was no objection.


                Motion to Instruct Offered by Mr. Nadler

  Mr. NADLER. Mr. Speaker, I offer a motion to instruct.
  The Clerk read as follows:

       Mr. Nadler moves that the managers on the part of the House 
     at the conference on the disagreeing votes of the two houses 
     on the Senate amendment to the House bill (H.R. 3150) be 
     instructed to agree to section 405 of the Senate amendment.

  The SPEAKER pro tempore. The gentleman from New York (Mr. Nadler) 
will be recognized for 30 minutes, and the gentleman from Pennsylvania 
(Mr. Gekas) will be recognized for 30 minutes.
  The Chair recognizes the gentleman from New York (Mr. Nadler).
  Mr. NADLER. Mr. Speaker, I yield myself such time as I may consume.
  Mr. Speaker, I am offering this motion in response to a disturbing 
practice that unfortunately has become all too common. Credit card 
companies have told the Congress that they need this bill to provide 
protection from irresponsible borrowers who abuse the bankruptcy system 
to evade debts that they can repay.
  I do not agree with the bill and I do not agree with that contention, 
but even if that were true, the practice that some credit card 
companies have now engaged in is unconscionable. Some credit card 
companies now discriminate against the most responsible borrowers by 
cutting off their credit card or charging other fees to borrowers who 
commit the terrible sin of paying their bills in full and on time each 
month.
  This form of discrimination against the most responsible borrowers is 
intolerable and outrageous. On the one hand they are telling us that 
borrowers are irresponsible and we should do something about that. On 
the other hand, they want the right to discriminate against borrowers 
who act responsibly.
  Mr. Speaker, in response to this phenomenon, the other body adopted 
an amendment offered by the junior Senator from Rhode Island, Mr. Reed, 
which would prohibit this practice. It is an amendment to the Truth in 
Lending Act. It makes sense, it is fair, and it reinforces the theme 
that the sponsors of this bill have been stressing, the theme of shared 
responsibility in lending between borrower and creditor.

                              {time}  1600

  The House bill tightens the noose around the necks of bankrupt 
Americans, but does nothing to ensure that banks are also required to 
act responsibly. This amendment and the others adopted by the Senate 
will help bring some balance to an unbalanced bill.
  Mr. Speaker, this is a real problem. Around the country, credit card 
customers who are most responsible with their borrowing practices have 
received letters from issuers which say, and I am now going to quote,

       Our records indicate this account has had no finance 
     charges assessed in the last 12 months. Unfortunately, the 
     expense incurred by our company to maintain and service your 
     account has become prohibitive; and, as a result, in 
     accordance with the terms of your card holder agreement, we 
     are not reissuing your credit card.

  The message is clear. Be responsible but not too responsible. It 
reveals the true agenda of the supporters of this bill, which is not to 
encourage responsible borrowing but to allow banks to squeeze borrowers 
even further.
  The banks were able to kill an amendment to prohibit the outrageous 
double fees at ATMs, a little balance

[[Page H9141]]

and fairness. Credit card companies have claimed that they need to 
cancel accounts which do not incur finance charges because the cost of 
servicing these accounts is, quote, ``prohibitive.'' That is not true.
  Each year, an average $3,000 is charged to a credit card. The 2 
percent interchange fees on these cards, which equals $60, would seem 
to more than cover the average industry cost of $25 needed to service 
an account for a year.
  Americans hold over $450 billion in consumer debt; and with the 
average interest rate on credit card balances at 17.7 percent in an era 
of low interest rates generally, the overall profitability of credit 
card lending is apparent. In fact, we know that the credit card 
departments are the major profit centers in the banks today.
  This amendment also will not bar lenders from cutting off cards or 
charging fees for other legitimate reasons. It would only block those 
actions if they are used to discriminate against the most responsible 
and conscientious borrowers.
  Mr. Speaker, I urge my colleagues to support the motion to instruct 
the conferees. Let us have a bill which stresses balance and a shared 
responsibility in the credit card market.
  Let me say also, Mr. Speaker, I hope, let me take this opportunity to 
express the hope, that the published reports that we have seen in which 
Members of the majority party have indicated that the Members from this 
House will get together with the majority party members from the other 
House and make an agreement and a deal behind the scenes and by 
implication will shut out the minority and to make a conference a sham, 
I hope that those reports are inaccurate. I hope that will not happen.
  I hope that what has happened in certain other conferences where a 
behind-the-scenes deal is made and the conference is a sham and the 
members of both bodies from the minority party are completely shut out 
and are presented with a completed bill, take it or leave it, I hope 
that is not going to be repeated in this instance. Because if we are 
going to have a responsible bill that the President will not veto, that 
would be a very bad idea if that were to occur.
  Mr. Speaker, I reserve the balance of my time.


 Permission To Postpone Electronic Vote On Motion To Instruct Conferees

  Mr. GEKAS. Mr. Speaker, I ask unanimous consent that any recorded 
vote, if demanded, which may be requested on a motion to instruct 
conferees on the bill, H.R. 3150, be postponed until after 5 p.m. 
today.
  The SPEAKER pro tempore (Mr. Shimkus). 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 opposition to the motion made by the gentleman 
from New York.
  The Members should recognize, as in every other case, when a motion 
to instruct conferees takes place that it is kind of a suggestive 
motion, that it is not binding on the committee nor on the conference 
nor on the House itself.
  But as a question of comity and of good faith, if a motion such as 
this should pass, I think the chairman of the conference should bring 
it up at the conference and note for the record that such a motion 
carried in the House.
  If this should carry, I want the gentleman from New York to know that 
I as one will convey in the conference the notions that are expressed 
in the motion.
  There are a couple things, though, that have to be made of record. At 
the start, the subject matter that the gentleman brings to the floor 
via this motion to instruct is probably not germane. If it were a 
complete House measure which we were discovering here, it is possible 
that we would not even be discussing it because the subject matter does 
not pertain to our portion of the bankruptcy realm. But, rather, this 
motion goes to something that is exclusively in the jurisdiction of the 
Committee on Banking and Financial Services. So we have that.
  So just as I say to the gentleman from New York that I pledge to him, 
if this motion should carry, that I will in good faith mention that 
this motion was carried to the conference, I will just as strongly say 
that the House believes on its own that it is not germane, and that it 
should not be considered from a standpoint of other than what it is, a 
Senate proposal at the time of the conference.
  Mr. NADLER. Mr. Speaker, will the gentleman yield?
  Mr. GEKAS. I yield to the gentleman from New York.
  Mr. NADLER. Mr. Speaker, I believe that it is germane simply because 
it is in the Senate bill, and that makes it conferenceable and germane.
  Mr. GEKAS. Mr. Speaker, reclaiming my time, there is no question that 
the conference can deal with it. What I am saying to the gentleman from 
New York is, in companionship with the pledge I make to the gentleman 
that I will carry his wishes as it were through this motion to the 
conference, I will also point out at that time that the House is not 
enamored of and was not enamored of this provision during the regular 
House debate, not only because it was not worthwhile on its merits as 
we would say, but also because it would never reach the floor for 
discussion at all because it is not germane at all to the issue of 
bankruptcy reform as reflected in H.R. 3150. But having said that, I am 
willing to proceed as I outlined in my opening remarks.
  Mr. Speaker, the gentleman from Texas (Mr. Bentsen) had approached me 
at the outset, and I agreed that I would submit to interrogation, so I 
yield to the gentleman from Texas (Mr. Bentsen).
  Mr. BENTSEN. Mr. Speaker, I appreciate the gentleman for yielding.
  Mr. Speaker, it has come to my attention that the bill as written by 
the Senate that we are discussing today would further encroach upon the 
rights of the States to set their own laws and policies with respect to 
homestead.
  As the gentleman knows, I had raised objections to the House bill 
which I realize that he worked quite diligently on trying to temper 
some of the concerns that Members from my State of Texas and I think 
Florida and others had. While I would like to go much further than what 
is in the House bill, in fact I would prefer a complete elimination of 
the homestead provisions, because I think they really are not to the 
point of what the bill is trying to address, I am eager to learn what 
the House position may be with respect to the Senate language.
  I would just tell the gentleman, from this Member's perspective as 
one who did vote for the bill when it came out of the House, if it 
includes the language that is in the Senate bill, I will find it next 
to impossible if not impossible to support a conference report or to 
override a potential veto of the President as has been mentioned.
  Quite frankly, it is still hard. Some of my support, and I think some 
of my colleagues from my State support, on the House bill was with the 
understanding that we might even do better than we did in the House.
  Mr. GEKAS. Mr. Speaker, reclaiming my time, the gentleman from Texas 
(Mr. Bentsen) should know, first of all, that we intend to defend 
strenuously the House position on homestead exemption. We believe it is 
the right course to adopt. We enter the conference unyielding on that 
point.
  We believe that the States should retain the right under even the 
current law to set its own standards for homestead exemption.
  We are buttressed on a couple of points by the fact, number one, that 
one of the gentleman's colleagues from Texas, the gentleman from Texas 
(Mr. Smith), a member of the Committee on the Judiciary, is also 
strongly juxtaposed to this issue and has prevailed upon us to consider 
that position just as the gentleman has on the floor here today. He 
being a member of the Committee on the Judiciary adds weight to the 
argument that the gentleman has advanced.
  Number three, we believe that the Senate, in the final analysis, will 
be able to move closer to our position. We have that by way of rumor or 
innuendo, shall we say, but we hope to press the point to the point 
that that innuendo will turn to support for our portion of this bill.
  So with that, the gentleman should feel confident that at least 
moving into the conference the House position on homestead exemption 
will be the source of staunch defense.
  Mr. BENTSEN. Mr. Speaker, will the gentleman yield?
  Mr. GEKAS. I yield to the gentleman from Texas.

[[Page H9142]]

  Mr. BENTSEN. Mr. Speaker, I appreciate the gentleman's comments. This 
motion to go to conference came up quickly.
  The gentleman will be receiving a letter today, as will the gentleman 
from New York (Mr. Nadler), from myself and a number of my Texas 
colleagues on this issue in staking out our position. I appreciate the 
gentleman's comments and perhaps the members of the other body, if we 
had gone back to where we were prior to the beginning of this century 
when they were elected by their legislatures, would be more favorably 
inclined towards the will of their own legislatures rather than what 
they would seek to impose upon them.
  So I appreciate the gentleman's comments and hope that the House 
stays the course.
  Mr. GEKAS. Mr. Speaker, I reserve the balance of my time.
  Mr. NADLER. Mr. Speaker, I yield myself such time as I may consume.
  Mr. Speaker, I would observe that the distinguished chairman of the 
subcommittee a moment ago, on the motion to instruct, talked about its 
germaneness to the House bill. Although he said it was conferenceable, 
he conceded that it was conferenceable, I am not clear but I think he 
said he objected to it but he did not discuss it on the merits. He did 
not say why it is a good idea or a bad idea.
  I would like to hear whether he agrees with this or whether he thinks 
this is a good idea or a bad idea, whether he thinks that it is right 
that credit card companies are going to cut off the credit or 
discriminate against the 40 percent of credit card holders who pay 
their balances in full each month? In other words, does he oppose this 
or not?
  I would like to know anybody's views on the merits of this.
  Mr. Speaker, I reserve the balance of my time.
  Mr. GEKAS. Mr. Speaker, I yield myself such time as I may consume.
  Mr. Speaker, I think the proper thing for the gentleman from New York 
(Mr. Nadler) and me to do is to ask for a special order and debate his 
proposition for an hour in the well sometime when we are prepared for 
it.
  At this juncture, where we are now, the gentleman should recognize 
that the merits of this proposition have not been debated in full, 
either in our committee, nor analyzed by our staff, nor in any way the 
subject of conversation or informal conference, as it were, between the 
gentleman from New York (Mr. Nadler) and me, but we ought to do it some 
time in the context of a full debate on the floor by way of a joint 
special order, if the gentleman wishes.
  Suffice it to say that I will live up to my pledge, unless he keeps 
on insisting on debating it now, in which case I may have to retract my 
willingness to openly state the gentleman's wishes on this matter.
  Mr. Speaker, I reserve the balance of my time.
  Mr. NADLER. Mr. Speaker, I yield myself such time as I may consume.
  Mr. Speaker, this provision is in the Senate bill. It was fully 
debated on the Senate floor. It has been a matter of discussion. It has 
been debated in the Committee on Banking and Financial Services of this 
House and, frankly, if we were going to have a special order that would 
be after the instructions to the conferees were voted or not voted.
  Frankly, I am a little surprised that no one has anything to say 
about the merits of this idea. Perhaps they think it is self-evident. I 
certainly do.
  The 40 percent of credit card holders who pay their bills on time 
should not have their credit withdrawn for that or be discriminated 
against in other ways. I hope, therefore, the House will vote for this 
motion, which I recognize is not binding on the conferees, any 
instruction is not, but is a good expression of the will of the House, 
which hopefully the conferees will take into account.
  Mr. Speaker, I reserve the balance of my time.
  Mr. GEKAS. Mr. Speaker, I yield myself such time as I may consume.
  Mr. Speaker, I am tempted to go for a full vote of the House just to 
try to get my point across to the gentleman from New York (Mr. Nadler). 
I am withholding my own inclination to disallow this thing wholly on 
the basis of a vote which I believe I can try to muster a majority to 
refuse the gentleman's motion.
  He refuses to understand that as a matter of comity and courtesy, I 
am willing to transfer, to carry his point of view to the conference, 
even though I have strong feelings about the fact that that is not the 
salient point of the conference in total bankruptcy reform.

                              {time}  1615

  But if he keeps insisting about wanting to continue debate, I may 
want to have a full vote. At this juncture, I will vouch for myself and 
for him, that the pressure is off on this and that we are going to 
proceed to a voice vote.
  Is the gentleman willing to agree to proceed to a voice vote?
  Mr. Speaker, I reserve the balance of my time.
  Mr. NADLER. Mr. Speaker, I yield 4 minutes to the gentlewoman from 
Texas (Ms. Jackson-Lee).
  Ms. JACKSON-LEE of Texas. Mr. Speaker, I thank the gentleman for 
yielding me the time, and I thank the gentleman from Pennsylvania (Mr. 
Gekas). I think we have an expanded opportunity to work out some 
issues. And let me add my expression of concern but also recognition, I 
think the chairman has recognized this issue, and I am delighted that 
the gentleman from New York (Mr. Nadler) has refreshed our memories and 
brought this very important point to our attention; that is, the 
question of those credit users, borrowers who in actuality pay on time 
or pay in full, for those individuals to be deprived of credit or to be 
put in a more disadvantaged position than otherwise.
  Might I cite another example that does not go to this particular 
point, and I believe the gentleman from Pennsylvania (Mr. Gekas) may be 
aware of this, is the complete consumption or being consumed throughout 
the Nation by credit cards. We have found many of my constituents who 
may not, in certain instances, be eligible for credit cards cannot even 
pay with cash. We have heard the stories of not being able to rent cars 
and purchase other large items, if you desire to purchase it without a 
credit card. So this idea of finding out that those who would be 
willing, if they had a credit card, to pay in advance I think is an 
important instruction.
  I look forward to working with both the gentleman from New York (Mr. 
Nadler) and the chairperson on addressing these questions. I might add, 
if I might inquire of the gentleman from Pennsylvania (Mr. Gekas), I am 
concerned, coming from Texas, as to how we might fix the homestead 
problem. It was raised by my colleague, the gentleman from Texas (Mr. 
Bentsen).
  I understand that the Senate bill makes it worse, and it makes it 
very difficult for us in Texas because of the different rules that we 
have. Is the gentleman familiar with the homesteading problem, the cap 
with respect to the amount of monies able to be preserved on one's 
homestead?
  Mr. GEKAS. Mr. Speaker, will the gentlewoman yield?
  Ms. JACKSON-LEE of Texas. I yield to the gentleman from Pennsylvania.
  Mr. GEKAS. Mr. Speaker, I seem to recall that the gentlewoman did not 
support the House bill and in doing so on the whole, it appears that 
she rejected the homestead exemption language that we have in the 
House.
  But I must say to the gentlewoman that the homestead exemption in the 
House, which we believe is the strongest version of that issue that is 
possible, is one that we plan to defend staunchly at the conference. We 
have been in consultation with her colleagues, her governor, and with 
our colleague on the Committee on the Judiciary, the gentleman from 
Texas (Mr. Smith), who has kept us in tune with the wishes of the Texas 
legislature and of the Governor and of his colleagues in the Texas 
delegation in the Congress. So we intend to work hard to preserve the 
exemption that is now part of the House language.
  Ms. JACKSON-LEE of Texas. Mr. Speaker, the gentleman is absolutely 
right. I voted against the bill. I thought it was a bad bill. But that 
bill, as far as I am concerned, did not totally answer the concern that 
I had with the homesteading question. I am very delighted that we will 
try and fix or we will attempt to make it better, both out of the 
Senate and maybe even better than what was reported out of the House.
  My final point will be that I think one of the missing items that 
could be

[[Page H9143]]

worked upon as well is the question dealing with educating credit 
users. I hope that in this conference there will be some discussions 
about those issues and, as well, I particularly raise the concerns I 
had about this bill in its lack of protection for child support and 
alimony.
  With that, I would simply say that it is important that we put 
forward the best bill we can in protecting those who are most in need.
  I rise to support this amendment in response to a disturbing practice 
that, unfortunately, has become all too common.
  Credit card companies have told the Congress that they need 
protection from irresponsible borrowers who try to abuse the bankruptcy 
system to evade debts they can repay.
  Yet, some credit card companies have been discriminating against the 
most responsible borrowers by cutting off the credit cards, or charging 
other fees, to borrowers who pay their bills in full and on time each 
month.
  This form of discrimination against the most responsible borrowers is 
intolerable and outrageous. On the one hand, they are telling us that 
borrowers are irresponsible, and on the other hand, they want the right 
to discriminate against borrowers when they act responsibly.
  In response to this phenomenon, the Other Body adopted an amendment 
offered by the Junior Senator from Rhode Island [Mr. Reed] which would 
prohibit the practice. It is an amendment to the Truth in Lending Act, 
it makes sense, it is fair, and it re-enforces the theme the sponsors 
of this bill have been stressing--the theme of shared responsibility in 
lending.
  The House bill tightens the noose around the necks of bankrupt 
Americans, but does nothing to ensure that banks are also required to 
act responsibly. This amendment, and others adopted by the Senate will 
bring some balance to an unbalanced bill.
  This is a real problem. Around the country, credit card customers who 
are most responsible with their borrowing practices, have received 
letters from issuers which say--and I am quoting here:

       Our records indicate this account has had no finance 
     charges assessed in the last 12 months. Unfortunately, the 
     expense incurred by our company to maintain and service your 
     account has become prohibitive, and as a result, in 
     accordance with the terms of your cardholder agreement, we 
     are not reissuing your credit card.

  The message is clear: be responsible, but don't be too responsible, 
and it reveals the true agenda of the supporters of this bill, which is 
not to encourage responsible borrowing, but to allow banks to squeeze 
borrowers. The banks were able to kill an amendment to prohibit the 
outrageous double fees at ATM's. A little balance and fairness.
  Credit card companies have claimed that they need to cancel accounts 
which do not incur finance charges because the cost of servicing these 
accounts is ``prohibitive.'' That's not true.
  Each year, an overate of $3,000 is charged to a credit card. The 2 
percent interchange fee on these charges, which equals $60, would seem 
to more than cover the average industry cost of $25 needed to service 
an account for a year.
  Americans hold over $450 billion in consumer debt, and with the 
average interest rate on credit card balances at 17.7 percent, the 
overall profitability of credit card lending is apparent.
  This amendment also will not bar lenders from cutting off cards or 
charging fees for other legitimate reasons. It would only block those 
actions if they are used to discriminate against the most responsible 
and conscientious borrowers.
  I urge my colleagues to support the motion to instruct conferees. 
Let's have a bill which stresses balanced and shared responsibility in 
the credit market.
  Mr. NADLER. Mr. Speaker, I yield 4 minutes to the gentleman from New 
York (Mr. LaFalce), ranking member of the Committee on Banking and 
Financial Services.
  (Mr. LaFALCE asked and was given permission to revise and extend his 
remarks.)
  Mr. LaFALCE. Mr. Speaker, I thank the gentleman for yielding me the 
time.
  I rise in support of the motion to instruct House conferees on the 
Bankruptcy Reform Act. I wish to commend my colleague, the gentleman 
from New York (Mr. Nadler) for his leadership in directing the House's 
attention to the important issues raised in the Senate bill by the Reed 
amendment. At a time of escalating consumer debt and record 
bankruptcies, it would be everyone's objective or it should be 
everyone's objective to encourage consumers to be more responsible in 
managing debt, particularly credit card debt.
  This is a primary reason for enacting legislation to create a needs-
based bankruptcy system. Unfortunately, many credit card companies have 
taken an opposite approach. Rather than encouraging responsible use of 
credit cards and reduction of credit card debt, they are imposing 
penalties on the 40 percent of their card holders who act responsibly 
and regularly pay off their credit card balances.
  Press articles began appearing 2 years ago describing how one credit 
card issuer, then another, had begun imposing minimum finance charges 
or maintenance fees on the accounts of card holders who regularly paid 
off the card balances each month. Last year we read that several credit 
card issuers had also begun canceling the accounts of card holders who 
regularly paid their card balances in full.
  These seemingly self-defeating actions were guided by the cynical 
theory that if consumers are going to pay fees anyway, they can be 
induced to run up their card balances and pay interest charges. The 
provisions added to the Senate bankruptcy reform bill by the Reed 
amendment are almost identical to proposals that I introduced in the 
House this summer. They would prohibit a credit card issuer from 
imposing fees or charges on a credit card account or canceling or 
refusing to renew such account solely because the cardholder pays off 
the card balances on time and does not incur finance charges.
  At a time when Congress is seeking to induce debtors to be more 
responsible in managing debt, the credit card companies are actually 
punishing debtors for doing just that. These practices are unfair, they 
are costly to consumers, and they are inconsistent with the purposes of 
the bankruptcy legislation.
  Part of the reason I voted against the bankruptcy legislation was the 
bill's inattention to legitimate consumer concerns in the bankruptcy 
process. The Reed amendment language in the Senate bill offers one 
important area where we can improve this legislation for America's 
consumers.
  Mr. Speaker, we need policies that encourage responsible use of 
credit cards and reduction of consumer debt, not policies that impose 
penalties on consumers who want to repay their debts.
  I urge adoption of the Nadler motion to instruct the House conferees 
to accept these very important provisions in the Senate bankruptcy 
bill.
  Mr. NADLER. Mr. Speaker, I yield myself such time as I may consume.
  Mr. Speaker, I am going to ask for a vote on this motion because I 
understand the intent of the distinguished chairman when he says he 
will convey to the conferees, if we do not seek a vote, he will convey 
to the conferees our views on this matter, but he will also tell them 
it is not germane to the House bill. In other words, he will quietly 
seek, the majority will quietly seek to kill this amendment and we will 
never hear about it again. So I want a vote on this motion.
  This motion really shows what is going on here. Look at this chart 
here. We are told that the increasing number of bankruptcies is because 
middle-income and low-income Americans are generally deadbeats, that 
they are people of no character, that the moral stigma associated with 
welching on your debts is no longer around, people go bankrupt very 
easily. That is the whole basis for this unfortunate bill.
  Whereas in fact, we know that 15 years ago, in 1983, the average 
bankruptcy filer had debts, personal debts equal to 75 percent of his 
annual income. Today the average chapter 7 filer, the average 
bankruptcy filer has debts equal to 125 percent of his annual income. 
So today it is not that people are filing for bankruptcy as the first 
thing when they get into trouble. It is that they are in way over their 
heads. They are in way over their heads, and they do not file until 
they are absolutely desperate. Their debts are 125 percent of their 
annual income.
  The banks, having extended the credit recklessly, now want to do two 
things they want to do to the person who has gotten in over their head, 
because they keep throwing credit cards and credit at people who do not 
have that kind of income, they want us to crack down on bankruptcy so 
people cannot get out from under their debt. That is the chief point of 
this bill.
  Now they also want to say to those people who actually pay their 
debts on time, let us milk them for more

[[Page H9144]]

money, too. If you have a credit card and you use it and you pay your 
bill in full on time every month, they are not making enough money off 
you. So they want and they are starting to say, we are going to cancel 
your credit card, or we are going to charge you a higher fee. And the 
Reed amendment says they cannot do that. They cannot charge a higher 
fee to someone who pays his debts in full each month than to someone 
who does not, and they cannot eliminate the credit card for that 
reason.
  It is not a sin to pay your debts on time. Look at that quote from 
the letter I read before from the bank, I forget which bank, to a 
creditor, You pay your debts on time and that is terrible. It costs us 
a lot of money.
  Let us look at this chart here. This chart shows the profitability of 
the credit cards as against the profitability of the banking system. 
Look at it here. The banking system's return on assets has averaged, 
since 1971, about 1 percent. Went down in 1987, with the stock market 
crash, to a little over, about a third of a percent and more recently 
was up at about 1.5 and 1\2/3\ percent, but about 1 percent.
  But look at the profitability of the credit cards. We all know what 
has happened to the credit cards. In the early 1980s, we deregulated 
the banks. We eliminated the interest rate ceiling on credit cards 
because in the late 1970s we had huge inflation and the interest rate 
was below the inflation level and the banks lost money for a couple 
years.
  So we said, no more limits. What happened? Well, the interest rates 
shot up. Interest rates on everything else, car loans, mortgages, cost 
of money to the banks has come way down, but the credit cards have 
stayed up there at almost 18 percent average. Do you know what the 
mortgage rate is today? It is 6.25 or 6.3 percent on a mortgage, on a 
30-year mortgage. It is somewhat similar to single digits for car 
loans. But for credit cards, the average is 17.7 percent.
  So what happened to the profitability? Here is where we deregulated 
the interest rates. It went up to about 5 percent and for the last 17 
or 18 years, it has stayed between 5 and 4 percent, most recent 
measurement about 4\2/3\ percent, 4 times, 3\1/2\ to 4 times higher 
than the general profitability of the whole system.
  So that banks are making out like bandits on the credit cards. They 
are making plenty of money. But it is not enough. After all, they have 
lent recklessly in foreign countries and we have got to really squeeze 
the American consumer to pay the banks back for what they have lost on 
investments in Russia and Argentina and other places. So let us squeeze 
the people. Those who got into, got in over their heads, who have debts 
amounting to more than 100 percent of their annual income and are 
filing for bankruptcy, let us pass this bill. Let us spend $40 million 
in campaign contributions and lobbying to pass this bill to enable us 
to really squeeze these consumers and make it harder for someone in 
over his head to go bankrupt and, for those who go bankrupt, make it 
harder for them to get out of it.
  But that is not enough. Quite separate from this bill, let us tell 
those terrible people who actually pay their debts on time every month, 
we do not want your business, because we are not making enough money 
off you. We are making real money.

                              {time}  1630

  The 2 percent interchange fees on these charges equal $60. The 
average cost of servicing the account is $25. It seems to average, my 
arithmetic tells me, a $35 profit per year without any interest. But 
that is not enough. They are using the ability to cut off people from 
credit or to impose extra fees for the sin of paying their bills on 
time.
  This amendment, Mr. Speaker, does not, unfortunately, deal with the 
other evils in this bill, but this amendment, which the Senate voted 
for, which is in the Senate version of the bill, simply says a creditor 
may not solely, because a consumer has not incurred finance charges in 
connection with an extension of credit, one, refuse to renew or 
continue to offer the extension of credit to that consumer; or, two, 
charge a fee to that consumer in lieu of a finance charge. That is the 
entire amendment.
  So we will have a vote on the floor. Let the American people see who 
in this House thinks that the banks should be able to gouge in this way 
the debtor who pays his debts on time and who does not. I urge the 
Members of this House to vote for this motion to instruct the conferees 
to agree to the Senate amendment and it will show us who cares about 
consumers, at least a little, and who only cares about the 
profitability of the credit card companies.
  Mr. Speaker, I reserve the balance of my time.
  Mr. GEKAS. Mr. Speaker, I yield myself such time as I may consume.
  Just as the overwhelming argument that had been heard throughout the 
bankruptcy bill debate about how the debtor is being crushed by our 
bill, the argument against that is the one that now prevails against 
the argument from the gentleman from New York. We maintain that if we 
do not reform the bankruptcy bill, every consumer in the United States 
is faced with higher consumer costs, higher interest rates, higher cost 
of goods at the supermarket, let alone at the credit market.
  Now, what happens here, if this Senate provision remains in the bill, 
the one to which the gentleman from New York commands our attention, 
then the likely result will be higher annual fees for the rest of the 
debtors who consume credit on the credit market and higher interest 
rates because the losses that might be incurred by the credit companies 
in this particular facet of their enterprise has to be passed on to 
other customers. Who are they? They are all consumers who rely on 
credit across the land for the ability to purchase goods, to feed their 
families, to do all that is necessary to maintain a standard of living 
on the part of everyone.
  So here is the question that is going to be answered by the 
gentleman's vote on the pending question that will come before the 
House on the motion to instruct. If my colleagues want to see higher 
annual fees for credit cards, if they want to see higher interest rates 
for credit cards, if they want to see our students, who want loans, to 
have to pay higher annual fees or higher interest rates, or to see a 
family that needs to borrow some money for improvement of some facet of 
their family life; if my colleagues want them to pay higher annual fees 
and higher interest rates, then they should vote in favor of the motion 
to instruct.
  If, however, my colleagues believe, as I do, that just like 
bankruptcy, if it goes too far and is not controlled, it will cost all 
of us in interest rates, in cost of goods and cost of doing business in 
our country, then my fellow Members will vote against the motion to 
instruct; to preserve the path that we have already prepared to bring 
down interest rates, to reduce the cost of what bankruptcy does to the 
Nation, and to allow our families to be able, without more fees to pay 
and more interest to pay for credit, to be able to add to their 
families' stability.
  Mr. Speaker, I yield such time as he may consume to the gentleman 
from California (Mr. Cunningham).
  Mr. CUNNINGHAM. Mr. Speaker, this is an issue of principal. If an 
individual makes a loan, it is simple, they pay it back. When an 
individual goes in to borrow, whether it is from their colleague, a 
bank, whether it is a savings and loan or whatever, they know what the 
interest rates are and they should adhere to the rules of that loan. If 
they do not, it is called responsibility. They should take 
responsibility for that action and pay it back. And if they cannot, 
then it is called accountability. We must all account for the fact that 
we did not take into account all the different areas in which we cannot 
pay back that loan, whether it is from our brother, a bank or anybody 
else.
  The gentleman speaks about the rich versus the poor and the credit 
card companies making all this money. No one makes an individual go get 
a credit card. No one makes an individual borrow from their uncle or 
father or whatever it happens to be. But if they do, they darn sure 
better pay it back, because we do have laws in this Nation, versus 
someone saying, oh, someone is preying on the other individual.
  Interest rates, according to Alan Greenspan, are below 2 and 8 
percent lower than if a liberal Congress would have ruled since 1994 
because of the balanced budget. Now, think how an 8

[[Page H9145]]

percent increase on a credit card would have affected these people. It 
would have been disastrous.
  The other liberal answer is to tax people. And they talk about how in 
1993, that, oh, they balanced the budget by increasing taxes on people. 
Well, they increased the tax on Social Security, some of our poorest 
people in our Nation. They increased the tax on the middle class. They 
cut the COLA of the military and the veterans. But yet now they cry the 
rich versus the poor and the profitability of credit card companies.
  It is based on principle, Mr. Speaker, it is based on responsibility, 
and it is based on accountability; some things my liberals friends fail 
to recognize.
  Mr. NADLER. Mr. Speaker, how much time do I have remaining?
  The SPEAKER pro tempore (Mr. Shimkus). The gentleman from New York 
(Mr. Nadler) has 9 minutes remaining, and the gentleman from 
Pennsylvania (Mr. Gekas) has 15 minutes remaining.
  Mr. NADLER. Mr. Speaker, I yield myself such time as I may consume.
  I would simply observe, Mr. Speaker, that the gentleman from 
California apparently was unaware of the subject matter of this motion. 
We are not talking here about people who are irresponsible, if that is 
what it is; or perhaps just down on their luck; perhaps they did not 
have health insurance and needed an expensive operation; got laid off, 
whatever. We are talking here about people who pay their debts on time 
every month and for whom the credit card companies now want to say they 
cannot get credit because they pay their debts. That is what the 
subject of this motion is. So let us not talk about irresponsibility.
  And let us not debate about the balanced budget. That is a separate 
debate. Let us talk about what we are talking about, and what we are 
talking about is this motion to agree with the Senate amendment, which 
says that the credit card companies should not be able to charge extra 
or to eliminate credit all together to a credit card holder simply 
because he or she commits the terrible sin of paying their debt on 
time. That is the amendment. So let us not talk about responsibility 
here. This person is meeting his responsibility or her responsibility.
  Now, I would like to address the argument of the gentleman from 
Pennsylvania, who says that if the banks are not earning enough money 
from these people because they pay their debts on time, and they are 
not paying, therefore, interest charges; if we do not allow the banks 
to shut off credit to them; if we do not allow the banks to charge them 
a special extra fee, to penalize them for paying their debts on time, 
then that extra cost of the banks will be passed on to the consumer. 
Frankly, that is not true. In fact, it is nonsensical and history 
proves it.
  When we voted in the early 1980s to deregulate interest rates, we 
were told, hey, the inflation rate in 1979 was 17, 18 percent. We 
cannot have an interest rate ceiling of 6 percent. The bank is losing 
money. So we will deregulate the interest rate, we will let the banks 
charge 20, 21 percent and, of course, when general interest rates come 
down, the credit card interest rates will also come down.
  Well, the general interest rates came down. The current Federal 
Reserve rate is 5.25 percent, and they are thinking of lowering it 
further. Mortgage rates have come down, car loans have come down, 
everything has come down except credit card interest rates. They came 
down from 22 to about 18 percent, but they are way up there, and that 
is why the profitability jumped.
  And who in this country really believes that if we allow the banks to 
gouge people who pay their debts on time that this profitability will 
not simply go up? Who believes that banks will pass that savings on to 
the consumer? Who believes that they will lower the interest rates that 
they have held artificially high by semi-monopolistic practices for the 
last 15 years? That is absurd.
  I daresay if I proposed an amendment to mandate that the banks lower 
the interest rates to reflect this cost, people on that side of the 
aisle would say, that is terrible, that is socialistic, I do not know 
what it is, it is paternalistic. But the banks are not going to lower 
the interest rates. They have not for the last 15 years. It is way 
above their costs. And that is why from everything else they do they 
are making a profit in the 1 to 2 percent range. From credit cards they 
are making a profit in the 4 to 5 percent range because they are 
gouging the consumers now. They will continue to gouge the consumers. 
And this is one more way of gouging the consumers they have invented. 
And the gentleman thinks we should not prevent them from enjoying the 
fruits of their inventiveness on a new way to gouge consumers.
  So I hope we pass this; we accede to the Senate amendment, and at 
least have a little control here and a little sympathy for the 
responsible consumer who pays his debts.
  Mr. Speaker, I reserve the balance of my time.
  Mr. GEKAS. Mr. Speaker, I yield myself such time as I may consume.
  It is obvious to me that the gentleman from New York, if I could have 
his attention, does not have much faith in the free enterprise system. 
He keeps insisting that, even with strong competition in the banking 
industry, that somehow they will not allow the market to control 
whether or not credit interest rates will go down or up. But everyone 
knows, who has a scintilla of an idea about the free enterprise system, 
that competition, especially among banks, among credit lenders, is 
severe and that credit competition allows costs, annual fees, interest 
rates to be modified from region to region, from different kinds of 
loans to other different kinds of loans.
  And I daresay that anything that we do, like the proposition that the 
gentleman espouses, that is now contained in the Senate bill and is the 
subject of his motion, if that remains in place, the student who is in 
college, who wants to borrow some money to use for a continuation of 
his studies at college will shop around and find an interest rate or an 
annual fee type of credit charge that best suits his needs. If the 
gentleman prevails in this, that student will have less choice. And 
whatever choice he does have will contain almost automatically annual 
fees that would not have existed before and higher interest charges for 
the purposes that the student wants to use: for books, for maintenance 
of his life-style in college, to perpetuate his existence at college 
even.
  So why does the gentleman from New York want to risk having this 
student, or a family that wants to get together and have some 
additional credit for an addition to their house, or for some joint 
vacation that the family wishes to take, all of a sudden, in this free 
competitive market that we are talking about, the gentleman wants to 
add another burden, another crimp on the competitive angle of the 
enterprise system in the credit industry, and force upon this family 
the possibility of having less credit areas in which to shop for good 
credit, good rates, one that does not have as high an annual fee as 
others and, instead, will force the family to have to look at higher 
annual fees, higher interest costs, and perhaps even force them to 
forego the vacation, or forego the extra semester in college, or forego 
the ability to build an addition to their home, or forego a new 
appliance in their family atmosphere. Why? Because the credit 
companies, those wishing to offer credit, will be constrained one step 
more if they cannot recover some of their losses in different ways by 
being able to impose certain annual fees and credit charges.

                              {time}  1645

  This is a call to increase annual fees, for all of us to increase 
credit rates, interest rates for all of us, in the name of not allowing 
the banks or the credit card companies to get away with fees and credit 
interest costs.
  Mr. Speaker, I reserve the balance of my time.
  Mr. NADLER. Mr. Speaker, I yield myself 1 minute.
  Mr. Speaker, I believe the free enterprise system is by far the best 
economic system that we have discovered thus far in terms of the 
production of wealth in services. It produces a bounty of goods to 
distribute.
  But the free market is not perfect. If it were perfect, we would not 
have this problem. If it were perfect, we would not have to regulate 
HMOs, which gouge their customers and sacrifice the quality of medical 
care to the bottom line, although I am sure some people think that is 
impossible in a free enterprise system.

[[Page H9146]]

  The market is not perfect. If it were perfect, interest rates on 
credit cards would not average today's 17.7 percent. It is an 
oligopoly. Yes, there are some banks, banks we never heard of in some 
small town somewhere that will offer a credit card at 11 percent or 9 
percent. But the big ones that have 90 percent of the business, that 
spend a lot of money on marketing, they are up in 17 and 18 and 21 and 
19 percent, and they get away with it because the free market is not 
perfect. We need this protection.
  Mr. GEKAS. Mr. Speaker, how much time do I have remaining?
  The SPEAKER pro tempore (Mr. Shimkus). The gentleman from 
Pennsylvania (Mr. Gekas) has 11\1/2\ minutes remaining.
  Mr. GEKAS. Mr. Speaker, I yield myself such time as I may consume.
  Mr. Speaker, now we hear that the HMOs gouge and the banks gouge. I 
suppose lawyers and doctors and dentists gouge, and the mom-and-pop 
grocery store gouges and everybody else gouges. Maybe the gouges are in 
the free market so people can select between gouges and thus reduce the 
cost of goods, et cetera.
  The gentleman from New York (Mr. Nadler) overlooks the fact that in 
this competitive system that we have, that 11 percent which he mentions 
in the hometown, in the small town, will be very attractive to this 
student that I am talking about. He is not going to go to the big bank 
where 18 percent is charged. He has got a choice.
  What we are saying is that the more constraints we put on the big 
banks and the little banks, that student will not be able to get the 11 
percent anymore because that 11 percent company is going to have to 
raise its interest rates if some of these artificial constraints are 
put on them.
  By his very example, he demonstrates why his motion should not carry. 
His motion is a constraint on the free market. His motion to instruct 
the conferees dampens the right and the ability of a student who 
requires credit to continue in college, constrains the family that 
needs extra credit for family needs and stability. For the economy 
itself, where we need fewer restraints on free enterprise, the 
gentleman offers even more ways to strangle it.
  I hope that the body will vote an energetic ``no'' on the motion to 
instruct conferees on this bad idea.
  Mr. Speaker, I reserve the balance of my time.
  Mr. NADLER. Mr. Speaker, how much time do I have remaining?
  The SPEAKER pro tempore. The gentleman from New York (Mr. Nadler) has 
4 minutes remaining.
  Mr. NADLER. Mr. Speaker, I yield 1 minute to the gentlewoman from 
Texas (Ms. Jackson-Lee).
  Ms. JACKSON-LEE of Texas. Mr. Speaker, I thank the gentleman from New 
York (Mr. Nadler) for yielding.
  The motion of the gentleman is so obviously reasonable that I am 
unsure why we are even furthering the debate. As I understood the 
remarks of the chairman early on, if we had taken a voice vote we might 
have moved this forward. But I simply want to correct some of the 
comments made as to the enormous burden on our credit card companies.
  The hearings that we held, few that they were, evidenced that there 
were very, very few default problems and loaded monetary problems or 
impact with our credit card companies. So I think that we are 
distorting this guilt that we are promoting in suggesting that our 
credit card companies, our banks, are suffering.
  But I wanted to emphasize women in this particular motion, for many 
of my constituents came to me, particularly on the drastic and 
dastardly provisions impacting alimony and child support which still 
have not been corrected. But certainly many of them said that we try to 
manage our money and in managing our money, many of them have credit 
cards and attempt to pay off those credit card bills either in full or 
certainly timely. Women are being denied credit by this kind of 
legislation. The motion of the gentleman from New York (Mr. Nadler) 
should be passed.
  Mr. GEKAS. Mr. Speaker, may I ask how much time is remaining?
  The SPEAKER pro tempore. The gentleman from Pennsylvania (Mr. Gekas) 
has 10 minutes remaining. The gentleman from New York (Mr. Nadler) has 
3 minutes remaining.
  Mr. GEKAS. Mr. Speaker, I yield myself such time as I may consume.
  Mr. Speaker, there is another element of this that is being 
overlooked by the gentlewoman from Texas (Ms. Jackson-Lee) and the 
gentleman from New York (Mr. Nadler), all of those who are criticizing 
so vehemently the free enterprise system and the people who are in 
business to extend credit, when the entire country, our family 
strongholds, run on the basis of credit extension, the entire system. 
That is such an obvious basic standard under which we live that it 
always galls me to listen to the rhetoric that would tear apart a 
credit system that enables us to have the highest standard of living 
that the world has ever known.
  I am saying to my colleagues, and I would like to see anyone refute 
it, that the high standard of living that we have is 85 to 90 percent 
based on the fact that we have a marvelous credit extension system.
  Now, having said that, I will always be mindful of the fact that 
credit unions, the most basic of neighborhood organizations and groups 
that are eager to extend credit to their membership, credit unions 
would be harmed by what the gentleman wishes to do here.
  We have debated on this floor many, many times the value of credit 
unions, how people get together in the workplace, form a credit union, 
and then on a very tight system of profitability offer to each other 
the ability to have credit and to be able to purchase household goods, 
et cetera. The credit unions have to very carefully balance their books 
through annual fees and what interest rates they are going to charge, 
et cetera. They are very competitive.
  Why in the world must we entertain always propositions that put the 
constraints on the credit extension on which the whole basic economy of 
our country is based?
  Mr. Speaker, I reserve the balance of my time.
  Mr. NADLER. Mr. Speaker, I yield 2\1/2\ minutes to the gentleman from 
Massachusetts (Mr. Kennedy).
  Mr. KENNEDY of Massachusetts. Mr. Speaker, first of all let me 
commend the gentleman from New York (Mr. Nadler) for the fine work that 
he has done on this bill despite long odds early on in this debate.
  I rise in strong support of the motion to instruct. This motion 
instructs conferees to insist upon the provisions in the Senate bill 
which outlaw the outrageous credit card practices that encourage higher 
debt and more bankruptcies.
  All year long Congress has been teaming with credit card lobbyists 
pushing for legislation making it harder for consumers, for working 
Americans, to get relief from crushing debt woes. Some people think 
this bill only deals with credit card debt. The truth of the matter is 
all credit will be subject to these kinds of provisions.
  These lobbyists were quite clever. Rather than admitting that their 
agenda was even greater profits in an industry characterized by 22 
percent interest rates and mushrooming finance charges, they said 
bankruptcy reform was pro-consumer. The same people that send out 
hundreds of millions of dollars in unsolicited credit card offers each 
year argued that consumer debt was too high. The same people that 
buried consumers teetering on the verge of bankruptcy with 22 percent 
interest rates and unconscionable fees, argued that there were too many 
bankruptcies.
  The simple truth is, Mr. Speaker and members of the committee, let me 
explain: Just last week my son, who is yet to turn 18, will turn 18 
next week, received an unsolicited credit card offer of $3,000 from a 
credit card company. It is these kinds of unsolicited offers that go 
out to kids across America.
  I sent my staff into high schools around this city and found that in 
every high school class we visited credit card companies were offering 
kids under the age of 18 credit cards without any provisions as to 
whether or not the kids can pay their debts back. Then what happens? We 
see in BJ's Holding Company, whatever it is, the name of the firm, that 
if they pay their bill on time, BJ's cancels their credit card.
  The GE fee, if they pay their bill on time, if they are a good hard-
working

[[Page H9147]]

American and they pay their credit card bill on time, what does GE do? 
They cancel their credit card. These are the provisions that we ought 
to be standing up and making certain are contained in this bill.
  I know my friend the gentleman from Pennsylvania (Mr. Gekas) has a 
great deal of consumers that I am sure he represents, and I hope that 
he would support the provisions in the Senate bill that incorporate 
these basic protections against the consumer.
  Mr. GEKAS. Mr. Speaker, how much time do I have remaining?
  The SPEAKER pro tempore. The gentleman from Pennsylvania (Mr. Gekas) 
has 8 minutes remaining. The gentleman from New York (Mr. Nadler) has 
30 seconds remaining.
  Mr. GEKAS. Mr. Speaker, I yield myself such time as I may consume.
  Mr. Speaker, the gentleman from Massachusetts (Mr. Kennedy) 
misapprehends the entire argument here in debate. His very concern 
about consumers, his stated concern about consumers is what drove us in 
the first place to bring about bankruptcy reform, because the consumers 
of our Nation have had to pick up the tab right across the board for 
those who fail to repay their debts even when they have the ability to 
repay their debts. Now, that is the core of the problem in bankruptcy.
  Yet, while the detractors of our efforts on bankruptcy reform were 
attacking it on the consumer basis, they were also saying part of the 
problem is that credit card companies are too free, just like the 
gentleman from Massachusetts (Mr. Kennedy) is saying, in distributing 
these cards to everybody and these people pick them up and use credit.
  Now he is in favor of an amendment of the Senate that tightens up, 
that does not permit the extension of credit to some people. He wants 
to make it easier yet for people to have credit cards. That is a 
position against his own position. If his motion carries and this is 
removed, there will be creditors who are willing to have even more 
credit extended, and more consumers will want more credit and have 
nothing to stop them from more credit, exactly the position that he 
says causes the problem in the first place.
  It is a convoluted argument. On one hand he says credit card 
companies swamp the American public with credit cards. Now this one 
which says that a credit company should be more discriminating in how 
to extend credit, then we have got to remove that discrimination, make 
the credit card company more easily distribute credit cards all over 
the place.
  Mr. KENNEDY of Massachusetts. Mr. Speaker, will the gentleman yield?
  Mr. GEKAS. I yield to the gentleman from Massachusetts.
  Mr. KENNEDY of Massachusetts. Mr. Speaker, I appreciate the gentleman 
yielding.
  The truth is that what we are talking about here is not whether or 
not we should be allowing tens of thousands, for every single American 
10 new credit cards provided each year. The question is whether or not 
we should be allowing companies to cancel only those credit cards that 
are being paid on time. That is what these companies are doing.
  I am not in favor of expanding credit to those people that cannot 
pay. We are asking the companies that cancel credit cards when an 
individual simply pays on time to outlaw that practice.
  Mr. GEKAS. Mr. Speaker, reclaiming my time, the gentleman makes an 
argument that I am certain the Committee on Banking and Financial 
Services would entertain at any given time, if only he would present it 
to them. Because that has to do with the whole competitive system of 
banks and credit cards and nothing really to do with the debate that 
brought about bankruptcy reform which is contained in 3150. This was 
added at the last moment.
  But, in general, his argument has to do with the right of the credit 
card company to discriminate as to whom to give a credit card. He still 
maintains that they are too free in sending out thousands of credit 
cards to people, but then he says we should not let the credit company 
discriminate as to whom they should issue a credit card. How can we 
sustain both arguments? It does not make any sense.
  What he is really saying, I say to the gentleman from Massachusetts 
(Mr. Kennedy), is that this is an issue on credit card extension and 
credit extension generally that belongs in the Committee on Banking and 
Financial Services, on issues that have nothing to do with the narrow 
scope of the bankruptcy bill. It has to do with the ability of people 
to repay debts and allowing a channel for doing so.

                              {time}  1700

  That is exactly what the bankruptcy bill does. I believe very 
strongly that to adopt the motion that has been made here and to allow 
the Senate amendment to survive would mean increased costs for 
consumers generally across the land, all of us who use credit cards, 
for those who need to make available to students a credit system that 
will allow them to get credit, without the specter of higher annual 
fees or higher interest rates, which can be forced upon them if you 
insist that credit card companies would have to extend credit the way 
you want them to do it, not the way that the market itself demands. You 
insist that they should not be able to cut off someone and charge an 
annual fee because you know better than they what the market conditions 
are at a particular time, for which their profit margins and cost 
margins dictate that they have got to charge an annual fee, even to the 
good customer, or else they would not be able to offer credit to 
anybody. But you would substitute your judgment and say, by darn, they 
have got to do that, while the at the same time you say the credit card 
companies are too free in sending out credit cards all over the 
landscape. It makes no sense at all.
  I maintain that in the motion to instruct, we ought to vote no to 
preserve the stability of the competitive system in credit extension.
  Mr. Speaker, I yield back the balance of my time.
  Mr. NADLER. Mr. Speaker, I yield the balance of my time to the 
gentleman from Massachusetts (Mr. Kennedy).
  The SPEAKER pro tempore (Mr. Shimkus). The gentleman from 
Massachusetts is recognized for 30 seconds.
  Mr. KENNEDY of Massachusetts. Mr. Speaker, let me just say that there 
is a bizarre twisting of the truth. What we have here is a situation 
where, yes, we want people to have access to credit, but we do not want 
people to have access to credit that the credit card companies simply 
know cannot pay back their bills. That is true with young kids, that is 
true with people that are overindebted, and it is true when we have a 
situation where the credit card company is not interested in costs, 
they are interested in profits. What they do not want is they do not 
want people who pay on time, because they cannot charge the 22, 25 and 
30 percent interest rates, which is where they make their money.
  Vote for the Nadler bill, vote for the motion to instruct; stand up 
for the American consumer.
  The SPEAKER pro tempore. Without objection, the previous question is 
ordered on the motion to instruct.
  There was no objection.
  The SPEAKER pro tempore. The question is on the motion to instruct 
offered by the gentleman from New York (Mr. Nadler).
  The question was taken; and the Speaker pro tempore announced that 
the noes appeared to have it.
  Mr. NADLER. Mr. Speaker, I demand a recorded vote.
  The SPEAKER pro tempore. Pursuant to the order of the House of today, 
further proceedings on this motion will be postponed.

                          ____________________