[Congressional Record Volume 144, Number 141 (Friday, October 9, 1998)]
[House]
[Pages H10224-H10240]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
CONFERENCE REPORT ON H.R. 3150, BANKRUPTCY REFORM ACT of 1998
Mr. LINDER. Madam Speaker, by direction of the Committee on Rules, I
call up House Resolution 586 and ask for its immediate consideration.
The Clerk read the resolution, as follows:
H. Res. 586
Resolved, That upon adoption of this resolution it shall be
in order to consider the conference report to accompany the
bill (H.R. 3150) to amend title 11 of the United States Code,
and for other purposes. All points of order against the
conference report and against its consideration are waived.
The conference report shall be considered as read.
Mr. LINDER. Madam Speaker, for purposes of debate only, I yield the
customary 30 minutes to the gentlewoman from New York (Ms. Slaughter),
pending which I yield myself such time as I may consume. During
consideration of this resolution, all time yielded is for the purpose
of debate only.
Madam Speaker, House Resolution 586 is a typical rule for conference
reports and will permit House consideration of H.R. 3150, the
Bankruptcy Reform Act of 1998, a bill that is designed to improve
bankruptcy practices and restore personal responsibility and integrity
to the bankruptcy process.
H. Res. 56 waives all points of order against the conference report
and against its consideration. The resolution also provides that the
conference report will be considered as read.
The rules of the House provide for 1 hour of general debate equally
divided between the chairman and ranking minority member of the
Committee on the Judiciary. In addition, House rules provide for one
motion to recommit with or without instructions, as is the right of the
minority.
Madam Speaker, the statistics of U.S. bankruptcy filings are
frightening. Bankruptcies have increased more than 400 percent since
1980, and we expect over 1.4 million bankruptcies in 1998. In the past,
it was possible to blame many bankruptcies on a recession or a poor
economic situation. Today, however, we face record numbers of
bankruptcy filings at a time of economic growth and low unemployment.
If we take these factors into account, we can realistically come to
only one conclusion, bankruptcy of convenience has provided a loophole
for those who are financially able to pay their debts, but simply have
found a way to avoid personal responsibility and escape their financial
responsibilities.
Since the beginning of the 104th Congress in January of 1995, we have
worked to advance the values of personal responsibility. In the welfare
bill, we thought that helping the poor escape the welfare trap,
restoring the dignity of work, and reviving the individual
responsibility would help people rise from generation after generation
of despair. We were, of course, attacked as heartless and cruel.
Today we know that people are relishing personal responsibility and
are moving from welfare to work in record numbers. In fact, in early
1996, simply the prospect of the passage of a welfare reform bill
resulted in people moving from welfare to work.
This bankruptcy bill is the Congress' next step in cultivating
personal responsibility on accountability. I expect we will hear more
hollow charges that we are being heartless and cruel. Nonetheless, the
abusers of bankruptcy laws need to receive a message that Federal
bankruptcy laws are not a haven of personal fiscal irresponsibility.
If a debtor has the ability to pay the debts that have been
accumulated, then they must be held accountable. We believe strongly
that individual responsibility is a fundamental norm that Americans
should accept.
For the average American who believes that these bankruptcies of
convenience do not affect them, we should note that the abusers of the
bankruptcy laws are punishing responsible consumers through increased
prices and higher credit card fees.
We have to ask ourselves whether the American laborer who works 9:00
to 5:00, or longer, and pays his or her bills on time should have to
pay the penalty for those who abuse our current bankruptcy laws. The
answer is no.
We know that many people reach the point where they cannot dig
themselves out of the financial hole they are in. We know layoffs can
hit families at any time. We know that an unexpected medical emergency
can undermine the best laid plans. Under this bill, effective and
compassionate bankruptcy relief will continue to be available for
Americans who need it.
What we cannot condone, however, are those who file for bankruptcy
relief under Chapter 7 and have the capacity to pay at least some of
their debts. In order to ensure that those who can pay actually do pay,
this legislation set in motion a needs-based mechanism.
If the debtor has the ability to pay, the case would be dismissed by
the bankruptcy court or guided toward the more appropriate Chapter 13
where they can repay all or some of the debt.
The gentleman from Pennsylvania (Mr. Gekas), the bill's author,
informed us in the Committee on Rules last evening that the conference
report adopts the Senate's provisions for a post bankruptcy petition
judicial review and includes the House standard for determining the
debtor's ability to repay debts.
It is important to note that this bill is not simply about stopping
the abuses in the system. It is also about protecting consumers and
providing help for those who have found themselves in financial
straits.
H.R. 3150 guarantees consumer credit counseling and personal
financial management education before being discharged from bankruptcy.
It cracks down on misleading credit advertisements and contains
consumer disclosure requirements.
H.R. 3150 also recognizes that American farmers face unique
challenges, and the conference report ensures that bankruptcy laws
protect farmers from the cyclical risks encountered in the agriculture
sector.
I am also pleased that H.R. 3150 ensures the priority treatment
accorded to child support claims, and in fact improves current law by
raising child support and alimony payments to first priority. These are
important protections that are supported by the National Association of
Attorneys General and by child support agencies across the Nation. This
bill also gives priority to the payment of judgments against drunk
drivers and drug users.
Madam Speaker, in conclusion, I admit that I am disappointed that, in
the face of a bankruptcy crisis that threatens to undermine our
economy, I have heard that the President has vowed to veto this common
sense legislation. Congress has done its legislative duty in crafting a
bill that ensures the debtor's right to a fresh start and protects the
system from flagrant abuses from those who can pay their bills.
We have an opportunity to equalize the needs of the debtor and the
rights of the creditor, and I hope the President will not follow
through on his veto threat.
Madam Speaker, I urge my colleagues to support this rule so we can
pass this important legislation and send it to the President for his
signature as soon as possible.
Madam Speaker, I reserve the balance of my time.
Ms. SLAUGHTER. Madam Speaker, I thank the gentleman for Georgia (Mr.
Linder) for yielding me the customary 30 minutes.
Madam Speaker, I yield myself such time as I may consume.
(Ms. SLAUGHTER asked and was given permission to revise and extend
her remarks.)
[[Page H10225]]
Ms. SLAUGHTER. Madam Speaker, I rise in strong opposition to this
rule. I oppose the hasty process the rule embraces. I oppose the damage
to America's children that the rule does not allow us to challenge. I
oppose the fact that the minority party was shut out of the process.
Last year, more than a million American families went through
bankruptcy, leaving millions of creditors without full payment for
their goods and services. Is the record number of bankruptcies a
serious problem? Absolutely. Is this conference report a real answer to
that problem? Absolutely not.
This rule waives clause 2(d)(6) of rule XXVIII that requires the
availability of conference reports 3 days before their consideration.
The House rule allows Members time to read and study the report before
they cast their votes. Since this conference report has been available
to most Members for less than 24 hours, I have grave doubts that most
Members have any real knowledge of what it includes.
The rule also waives House rules that will ensure that the conferees
stayed within the framework of the bills passed by each chamber, an
obviously important rule. But under this rule, the conferees had carte
blanche and rewrote a new bill. Unfortunately, they used the freedom to
craft a creditor-slanted bill and gut consumer protections against
predatory practices.
Despite a more than 200-year-old tradition of carefully weighing
creditors' rights against a new start for the debtor, this rewrite of
the bankruptcy code has been rushed and partisan. The Committee on the
Judiciary's markup was so rushed that germane amendments offered by
committee members were not even considered. In June, the House
considered the bill under the rule that allowed fewer than one-third of
the amendments that Members wanted to offer.
Now we learn that the conference committee, the minority, and some
Members of the majority were left out of the process. In the one public
meeting of the conference, no substantive discussion or proposals were
even allowed.
So today, after this closed process, what do we know about the
provisions of the conference report, legislation that will affect the
lives of millions of families filing for bankruptcy and millions of
creditors, many of them small businesses needing relief? We know that
this legislation does nothing to address a major cause of bankruptcy,
the profligate lending of irresponsible creditors.
Madam Speaker, I submit that every American gets three or four
applications for credit cards a week regardless of their credit
standing. But we did not address that.
We know that the conference report ignores the votes of a majority of
both the House and the Senate that credit card companies should not be
able to charge extra fees to those customers who use their credit cards
responsibly. Indeed, if we pay all of our credit card bill, they will
drop us as a customer.
We know the conference report does virtually nothing to address the
problems of the enormous variations in State laws regarding the
treatments of personal residences. We know that the conference report
has not remedied a major fault to the House-passed bill; the
devastating impact on the legislation will have on 125,000 children
owed child support from a parent who declared bankruptcy.
Just 4 years ago, I introduced the Spousal Equity in Bankruptcy
Amendments. So, Madam Speaker, that provision was my own. I feel pretty
seriously about that. But it gave priority to child and spousal support
payments and bankruptcy proceedings. That legislation became law as
part of the Bankruptcy Reform Act of 1994. Thanks to those amendments
and other enforcement reforms, child support collections have increased
by 68 percent since 1992. This conference report will reverse that
progress.
By making large amounts of unsecured consumer dealt non-dischargeable
in bankruptcy, this legislation would place money owed on credit card
at the same level as alimony and child support obligations. Under this
bill, after a debtor goes through bankruptcy proceedings, he or she
will still have credit card and other types of consumer debt left to
pay. Those debts will compete with child support and alimony for the
limited resources of the post bankruptcy debtor.
While proponents of this legislation claim that they have repaired
the damage the bill does to child support and alimony, those repairs
are only cosmetic.
{time} 0930
They ignore the reality that when aggressive credit card collection
agencies are calling, it will be easier for the debtor to pay them
rather than the former spouse or the powerless child.
For these and other reasons, the legislation continues to be opposed
by consumer groups. One of the original Senate sponsors has promised a
filibuster in the Senate and the administration will veto the bill if
it is sent to the President in its current form.
While I support efforts to truly reform our bankruptcy laws, this
conference report is severely lacking, and we can and should do better.
Madam Speaker, I urge my colleagues to oppose this rule and this
unfair bill.
Mr. LINDER. Madam Speaker, I reserve the balance of my time.
Ms. SLAUGHTER. Madam Speaker, I yield 7 minutes to the gentleman from
New York (Mr. Nadler).
(Mr. NADLER asked and was given permission to revise and extend his
remarks.)
Mr. NADLER. Madam Speaker, I thank the gentlewoman for yielding me
this time.
Madam Speaker, this special interest legislation should not even be
considered by the House today. It is being brought forward at the
eleventh hour from a secret, closed-door conference for which the House
minority was virtually excluded.
This secret, rushed and closed conference report was written by and
for the special interests, perhaps best symbolizing everything that has
gone wrong in this 105th Congress. The majority has ignored the needs
of the American people in favor of the special interests, acting with
recklessness and haste. That is what has happened for the last 2 years,
and perhaps it is fitting that the majority chooses to finish this
Congress with this bill true to form.
There was exactly one meeting of the staff of all of the conferees of
the House and the Senate. There was only one pro forma meeting of the
conferees. Members were not given the opportunity to deal or even to
make any motions dealing with any of the substantive issues at that
meeting. And then there was never another meeting of the conferees and
there was never another meeting of the conferees' staff.
The House minority was resolutely excluded from whatever meetings did
occur. In the final stages of the conference, it was strictly a
majority event.
The extent to which this conference has failed even to pay lip
service to including the minority in the discussions is staggering and
reflects an unprecedented arrogance and contempt for the views of the
minority and of the Americans whom we represent.
This legislation has been written by and for the big banks, the
credit card industry, and other special interest groups. Its sole
purpose, everything else being window-dressing, is to take large
amounts of money from middle income and low-income people in a time of
distress of personal bankruptcy and give it to the big banks and the
credit card companies. Everything else is window-dressing.
All provisions which protected consumers from predatory practices
have been either dropped or gutted. Any provisions which held wealthy
debtors of big corporations accountable for their actions have been
either dropped or gutted.
For example, the conference report includes a provision which would
make judgments from the drunken operation of a watercraft
nondischargeable in bankruptcy. Legislation of this type has already
passed the House and I was proud to support it.
Curiously, however, an amendment accepted by the House Committee on
the Judiciary on a voice vote which would hold tobacco companies
accountable for the debt and injury they have caused with their product
and for the death and injury they have caused by misleading the
American people about the dangers of smoking, that was dropped early in
the conference.
[[Page H10226]]
Thanks to that change, the big tobacco companies, if sued
successfully, will be able to evade responsibility for their
wrongdoing, if that is proven in court, but they will still evade
responsibility by filing for bankruptcy protection.
Another provision which was gutted in conference was one which the
majority in this House, including 100 members of the majority party and
the distinguished Chairman of the Committee on the Judiciary, supported
on a motion to instruct conferees. Section 405 of the Senate bill which
would prohibit a credit card company from discriminating against the
most responsible borrowers, those who pay their bills in full every
month.
Now, we have heard, and I am sure there will be more rhetoric from
the Republican side of the aisle, talking about how people have to be
responsible, how debtors have to be responsible, how they are escaping
in bankruptcy, how we are going to curb the abuses of the dead-beat
debtors. But here we are permitting the banks to punish debtors for
being responsible. If one pays their bills on time, that is terrible.
We are going to punish you by discriminatory fees or by cancelling your
credit card. The conferees would allow credit card companies to cancel
these cards in a discriminatory manner at the end of the term and
entirely delete the prohibition against discriminatory fees for those
who have the nerve to pay their bills in full and on time since the
credit card companies do not get the interest fees, they only get the
activity fees.
This bill still threatens parents attempting to collect child
support, and crime victims seeking compensation from their victimizers,
favoring banks and big government in collection of limited assets. This
problem has not been fixed, despite the careful placement of several
transparent fig leaves.
While the majority fiddles, out there American communities are
suffering from inaction in those aspects of the bankruptcy legislative
agenda which would offer real relief. Chapter 12, which protects family
farmers in crisis, lapsed on September 30. Although we have been urging
for more than a year that this noncontroversial legislation be moved
through this House independently, that has not happened. Now we are in
the middle of a farm crisis, there is no chapter 12 protection, the
farm belt is in crisis, and still the Majority has not acted. America's
family farmers are being held hostage to the agenda of the big banks
and the special interests. If chapter 12 is going to be renewed, it
will be done only in this bill to try to get the agenda of the big
banks. And we know that the President has threatened, has promised us
he will veto this bill, so chapter 12 is being made veto bait in the
hope that maybe it could help save the profits of the big banks.
Similarly, our bankruptcy courts have needed additional judges for
years. We moved a freestanding bill in the House last year, but nothing
has happened. Congress could well leave town with that job undone for
yet another Congress, causing more delays in cases at great cost to all
parties in these cases. We could enact the UNCITRAL Model Law on Cross
Border Insolvencies on which there is general agreement and which might
just come in handy now that there is a global economic crisis, but that
has not happened. We could have taken these noncontroversial steps to
modernize the code and stabilize the financial markets, but that entire
agenda is being held hostage because we must serve the interests of the
big banks.
Madam Speaker, this is a flawed bill that will destroy families and
small businesses and make it harder for small creditors, including
custodial parents seeking child support payments from debtors, to
collect what is their due. It still retains the unworkable, one-size-
fits-all means test which bankruptcy judges, trustees, practitioners,
academics and the nation's leading experts have told us time and again
will not work. It fails to balance the responsibilities of debtors with
basic requirements that creditors conduct their businesses in an honest
and fair manner. It also lets wealthy debtors avoid their
responsibilities by preserving loopholes, like unlimited homestead
exemptions, for the very rich.
Now we are going to vote on this special interest legislation handed
out in secret and behind closed doors. This rule even waives the 3-day
layover rule, even though we only received a hard copy of this 300 page
bill Wednesday night and the electronic version was not available to
Members and the public until yesterday. The legislative language runs
301 pages dealing with some of the most controversial and complex
issues of bankruptcy law. I realize we are late in the session, but
that is no reason to act with this kind of haste and ignorance. I urge
my colleagues to vote ``no" on this rule and maybe we will redo this
bill and get a less obnoxious product.
Mr. LINDER. Madam Speaker, I reserve the balance of my time.
Ms. SLAUGHTER. Madam Speaker, I yield 7 minutes to the gentlewoman
from Texas (Ms. Jackson-Lee).
Ms. JACKSON-LEE of Texas. Madam Speaker, I thank the gentlewoman from
New York for her work, and I thank very much the ranking member for his
work.
I had hoped that we would have had a better result today. I voted
initially against this bankruptcy resolution or this bankruptcy
legislation when it came to the floor. However, I had good faith and
good hope that even as the bill was not as I would have wanted it as it
left the House, that we would have an opportunity in a collaborative
and working manner of good men and women working together for what is a
positive idea of balancing the needs of creditors and debtors, that we
would have the opportunity to put before this body a reasonable, a
reasonable bankruptcy reform legislation.
In our Committee on the Judiciary meetings and subcommittee, I worked
extremely hard, and I really appreciate the leadership of the ranking
member, the gentleman from New York (Mr. Nadler), for working equally
hard and for his leadership on issues dealing with balancing the needs
and the burdens of creditors and debtors. Unfortunately, our voices
were not heard, our constituencies were not heard, and this legislation
is simply bad.
This legislation is not bankruptcy reform, it is bankruptcy
recession. Webster's dictionary defines recession as ``the act of
withdrawing and going back.'' That is what this conference report does.
It takes several steps back.
First of all, in order for there to be a conference report, a
conference should first be convened. This conference committee meeting
was a sham. After meeting for a couple of minutes, maybe an hour or so,
listening to our respective opening statements, there was no discussion
about how we could bring about compromise. I thought our constituents
sent us to this body to deliberate, to collaborate, to compromise, to
give exchange and interchange. None of that occurred in the conference
committee. I was appalled as a second-year Member to find out that this
is what represents or is represented to the American people as work.
There was no consideration of any of our concerns, no considerations
of 2 motions that I intended to offer, and I was gaveled down in the
conference committee. What a sham and an outrage.
As we met for opening statements, we did not attempt at that time to
reconcile our opening or our concerns about the bill. The conferees
were never afforded the opportunity to deal with the substantive
issues. This again is not bankruptcy reform, it is bankruptcy
recession.
I was pleased that the homestead exemption capital, $100,000 that was
in the Senate version of the bill, is not in the conference report.
However, I was not pleased to learn that a residency requirement was
added into the conference report that require people in my home State
of Texas to live in Texas for at least 2 years or own a home for at
least 2 years before getting a homestead exemption. This is contrary to
our Texas State Constitution, and it would not serve our State well.
Any suggestions that people rove into the State of Texas and buy big
expensive homes just in order to avoid the process of listing them or
having them counted in bankruptcy is an outrage on the citizens of
Texas, and we should be left to our own ways under our own Constitution
on this issue.
The conference report does not contain certain provisions for the
rights of families and children, as well as the right to a fresh start
for honest debtors. Any bankruptcy legislation that is
[[Page H10227]]
enacted should ensure that the obligations to pay child support and to
compensate victims of wrongdoing are protected, and that eliminates
abuse of the bankruptcy system by both debtors and creditors, and does
not tilt what is ultimately a fair and well run system to an unfair
advantage of particular interest groups. I heard from so many mothers
who receive child support and also heard from those who have to pay
child support. These debts need to be protected.
I truly believe that without these basic protections, the conference
report would merit a presidential veto and that the veto would be
sustained. I am very concerned with the House version passed with child
support and alimony. I offered an amendment that would put child
support and alimony not only as a priority, but would have them paid
first before any secured creditors. One cannot put a mother seeking
child support in competition with those credit card companies who are
trying to get paid. It is an unequal, unequal fight.
This conference report does not do that. It does not list or make
sure that those who need to receive their child support do not have to
fight the other nondechargeable debts like credit card debt. I oppose
creating new nondechargeable debt that could pit post-bankruptcy credit
card debt against child support, alimony, education loans and taxes.
The conference report has not fixed that problem.
This conference report has the language that child support and
alimony would have first priority, but yet still, this debt must still
compete with the nondechargeable debt of secured creditors. The fact
that this provision is in the conference report is outrageous and still
makes the bill nonviable. Again, this is not bankruptcy reform, this is
bankruptcy recession.
I had hoped that we could agree on a conference report that would
avoid taking indiscriminate aim at debtors and fails to address some
troubling practices of creditors. The only indisputable evidence in
this debate is that Americans have significantly more debt than they
have ever had before. The average bankruptcy filer last year had a
debt-to-income ratio of 1.25 to 1, as opposed to .74 to 1, 74 percent
of their income, a few short years ago.
According to bankruptcy law professor Elizabeth Warren of the Harvard
Law School, the debtors that enter bankruptcy are usually experiencing
turbulent times. Sixty percent of bankruptcy filers have been
unemployed within a 2-year span prior to their filing.
{time} 0945
Twenty percent of filers have had to cope with an uninsurable medical
expense. Over one out of three filers, both male and female, are
recently divorced.
The premise of this bankruptcy conference report is that bankrupt
people are deadbeats, that they are trying to avoid the system, that
they are going in and abusing the system. Madam Speaker, this is not
true. If we had had a conference committee working relationship, we
would have been able to present to this body one deeming or deserving
of their consideration.
I think the idea of forcing bankruptcy filers into Chapter 7 versus
Chapter 11 is too harsh and too extreme. The damage of trying to
accomplish this goal through a means test might be irreparable. The
National Bankruptcy Review Commission rejected the means test formula.
This is the main reason why there can be no fair bright line to divide
the irresponsible and fraudulent from the needy and the disadvantaged.
Again, this is not reform, this is bankruptcy recession. The means
test is rigid and arbitrary for determining whether a debtor can use
Chapter 7. In addition, it is very difficult for me to see why those
small businesses who may want to be in a Chapter 11 are forced into a
Chapter 7, all their goods taken.
Madam Speaker, this is not a good conference committee report. It is
not deserving of the House. It should be vetoed. We should vote it
down.
Ms. SLAUGHTER. Madam Speaker, I have no further requests for time,
and I yield back the balance of my time.
Mr. LINDER. Madam Speaker, I urge passage of the rule, I yield back
the balance of my time, and I move the previous question on the
resolution.
The previous question was ordered.
The resolution was agreed to.
A motion to reconsider was laid on the table.
Mr. GEKAS. Madam Speaker, pursuant to House Resolution 586, I call up
the conference report the bill (H.R. 3150) to amend title 11 of the
United States Code, and for other purposes.
The Clerk read the title of the bill.
The SPEAKER pro tempore (Mrs. Emerson). Pursuant to House Resolution
586, the conference report is considered as having been read.
(For conference report and statement, see Proceedings of the House of
October 7, 1998, at page H9954).
The SPEAKER pro tempore. The gentleman from Pennsylvania (Mr. Gekas)
and the gentleman from New York (Mr. Nadler) each will control 30
minutes.
The Chair recognizes the gentleman from Pennsylvania (Mr. Gekas).
Mr. GEKAS. Madam Speaker, I yield myself such time as I may consume.
Madam Speaker, this is an important time in the 3-year saga that has
preceded the moment at hand. That is, for 3 years we have been
attempting, in one way or another, to fine-tune the bankruptcy system,
and, moreover, in the latter stages of that 3-year process, to directly
confront the escalating number of filings that have brought our
economic system to the edge of complete chaos in the bankruptcy system,
over 1.5 million bankruptcies just in one year, 1997.
That alone prompted action on the part of the various communities
involved in the bankruptcy system, and particularly did it cause the
Committee on the Judiciary to entertain hearings and to review the
Bankruptcy Commission report, and to consult on a daily basis with our
Senate colleagues and with everyone concerned in this vast problem.
The final product that the House produced matched the Senate in many
different ways, but in those ways in which there was room for
negotiation and compromise, that, too, was accomplished.
I want to give one example to the gentleman from New York (Mr.
Nadler), if he will give me his attention. The House bill went out of
its way, pursuant to the testimony we received at hearings, primarily
out of the State of New York about the tax provisions that finally
ended up in the House version.
It was largely because of these special interests to which the
gentleman refers, like the taxing authorities in New York, that we were
able to put into place language that reflected their concerns over the
years in a weak bankruptcy code that did not give them the opportunity
to recoup monies from bankrupts.
Here is another example, the same thing.
Mr. NADLER. Madam Speaker, will the gentleman yield?
Mr. GEKAS. I yield to the gentleman from New York.
Mr. NADLER. Madam Speaker, I just want to observe that I was elected
to represent 600,000 citizens or residents of the city of New York, not
to represent the city government of New York, which is interested in
squeezing money out of people it should not be able to squeeze money
out of.
Mr. GEKAS. Reclaiming my time, Madam Speaker, no one accused the
gentleman of anything. I am pointing out how we compromised on this
matter.
The gentleman forgets, in his apology to his constituents, not his
apology but his standing up for his constituents, that when the taxing
authorities in New York or in any other State have a difficult time in
recouping what is due the taxing authorities, every other one of the
gentleman's constituents has to make up the difference in what is lost
in tax revenue. That is the important point there.
I am simply outlining that we in the House were able to adopt these
tax provisions because of the hearings that we held, the testimony we
received, and the concerns that were uttered across the Nation.
Then, in the spirit of compromise, the Senate, which also had taken
up that particular provision, even had stronger language which we were
able to adopt in the compromise. That is the important feature of what
I am discussing here today about how we compromised on a great number
of issues.
Especially did that occur in the means testing. We heard right from
the
[[Page H10228]]
beginning that our means test entry formula was too rigid. This was the
cry from the opposition, that it forced too many people to go from
Chapter 7 to Chapter 13, meaning it was too much to take to force
people who could pay some of their debt back over a period of 5 years,
it was too much for them to take that they would have to do it over a
period of 5 years, even though it only rose to a small percentage of
that debt.
So what did we do? We worked with the Senate and we came up with a
compromise, which is now in this conference report, whereby the 707(b),
that is, that portion of the Senate bill that dealt with abuse, being
the vehicle for the final compromise in the conference report.
This, I want to say to the Chair, was a bipartisan effort,
notwithstanding the rhetoric that we are being pummeled with. The
results in both the Senate and the House of those separate bills
indicate that.
I want the Record to show that in the House, the vote was 306 to 118.
That is pretty bipartisan. On the Senate side it was 97 to 1, even a
greater proportion of bipartisanship that approved their version of the
bankruptcy reform.
Madam Speaker, here we are in a conference report that includes some
of the best ideas in a generation for bankruptcy, including a Bill of
Rights for debtors, a whole panoply of avenues of betterment of the
plight of the debtor who has to go into bankruptcy and to seek a fresh
start.
There is not one poor person or unemployed person in this country,
who by reason of their plight are overburdened with their financial
situation, who cannot seek and cannot gain a fresh start. We guarantee
a fresh start to the poor person, to the person overwhelmed with debt.
We are not even talking about them in the reforms and fine-tuning that
we did.
What we are addressing is the situation of those people over the
median income of our Nation who have a steady income and assets beyond
the poor person or the unemployed person who have an ability to repay.
This conference report, this entire system that we have created here,
would accommodate the repayment of some of that debt over a period of
years. That is the strength of this report and that is the target of
the report, not the person who requires and needs a fresh start. That
will always be the backbone and the heart of bankruptcy. What we are
trying to do is to make sure that that portion is not abused.
In addition to the consumer rights we build into this, I want to say
to the Chair that we also have absolute ironclad guarantees, both from
the Senate version and our version and in the conference report, for
child support on both ends of the spectrum.
That is, we make sure that the person who owes child support will not
be able to discharge that debt. That no matter what straits he finds
himself in, he must pay that child support. Moreover, we even go as far
as making sure that the arrearages that might have piled up are also
protected for the purpose of the family that needs that support, and we
prioritize child support in such a way that it cannot be misread in any
way that the family is being destroyed, which is the rhetoric that we
hear; but rather, we have extraordinary ironclad guarantees of the
priority of support payments. That is in our bill.
On the homestead exemption, to which reference has been made
primarily by our colleagues from Texas and Florida, which have a unique
situation, we believe that the conference report meets the needs, and
we will be able to discuss that as the gentlemen seek time.
When they are recognized, I would be glad to engage in colloquies
with them so that we can firm up the record with respect to the
homestead exemption, so we are satisfied that we work diligently to
provide a solution, and, I might say to my colleagues from Texas, to
ward off those kinds of provisions that would have harmed, I believe,
the autonomy of the Texas positions on homestead exemption.
There were many other points that were of contention, and as I think
of them, I will regain some of my time. I will consult with my staff as
we go along. In the meantime, I want to say one other thing. I think
the gentleman from New York, and by the way, I want to personally thank
the gentleman from New York for staying in the Chamber last night, as
he dutifully did, to shepherd through the Potomac compact.
We were misinformed somehow. We were here. The gentleman from
Maryland, Mr. Bartlett, and I remained on the floor, expecting that the
bill would come up, and then by some miscommunication we were advised
that it would not come up last night and that it would come up today.
The gentleman from New York (Mr. Nadler) stayed on the floor, and I
commend him for that. I am grateful that he was able to help put the
final touches on that important piece of legislation.
By the way, upon the adoption of the conference report, and we also
have advised the minority, I will bring up a concurrent resolution on
unanimous consent that directs the Clerk to make a purely technical
revision to the conference reports' effective date provision.
Today marks a major epoch in the history of bankruptcy legislation
reform. The Conference Committee Report on H.R. 3150, the Bankruptcy
Reform Act of 1998, makes substantial and long-needed reforms to
bankruptcy law and practice. The scope and extent of these reforms, it
should be noted, have not been undertaken by Congress since the
enactment of the Bankruptcy Code in 1978, twenty years ago.
The Conference Report reflects the guiding principles of both the
House and Senate's legislative reforms: to restore personal
responsibility and integrity in the bankruptcy system and to ensure
that it is fair for both debtors and creditors.
We adhered to these principles for one simple reason: the
overwhelming mandate that accompanied each bill. In the House, there
was a thoroughly bipartisan vote of 306 to 118 for H.R. 3150. In the
Senate, again, there was a resounding 97 to 1 vote in favor of S. 1301,
the Senate counterpart to our bill. In recognition of these mandates,
the Conference Report retains many of the best provisions from each
bill and, when necessary, appropriate compromises.
We must also not forget that this Conference Report marks the
culmination of more than three years of careful analysis and review of
our nation's current bankruptcy system. Both the House and the Senate
held numerous hearings and heard from many witnesses, representing a
broad cross-section of interests and constituencies in the bankruptcy
community. Every major organization having an interest in bankruptcy
reform participated in these hearings.
With regard to consumer bankruptcy, the Conference Report contains
comprehensive reform measures. Why do we need these reforms? The
answers are not only easy, but obvious. Last year, bankruptcy filings
topped 1.4 million and even exceeded the number of people who graduated
college in that same year. Nevertheless, literally thousands of people
who have the ability to repay their debts are simply filing for
bankruptcy relief and walking away from those debts without paying
their creditors a single penny under the current system.
The Conference Report combines some of the best aspects of both the
House and Senate approaches to ensure debtors who have the ability to
repay their debts are steered into Chapter 13, a form of bankruptcy
relief whereby debtors repay all or a portion of their debts. It
accomplishes this objective by adopting the Senate's provisions for
post bankruptcy petition judicial review and incorporates the House's
standards for determining repayment capacity to provide greater
guidance and predictability.
The Conference Report offers a balanced approach to reform with
regard to consumer debtors. It creates a debtor's ``bill of rights''
with regard to the services and notice that a consumer should receive
from those that render assistance in connection with the filing of
bankruptcy cases. Through misleading advertising and deceptive
practices, ``Petition mills'' deceive consumers about the benefits and
detriments of bankruptcy. The Conference Report responds to this
problem by instituting mandatory disclosure and advertising
requirements as well as enforcement mechanisms.
Most importantly, the Conference bill contains a panoply of
heightened protections especially with regard to the treatment of
domestic support obligations. These claims are accorded the highest
priority to these obligations. This ensures that they will be paid
before all other unsecured creditors, including claims of attorneys and
other professionals. It also requires a Chapter 13 debtor, as a
condition of obtaining a discharge, to pay outstanding arrearages on
these obligations.
The Conference Report also incorporates provisions from both the
House and Senate bills to stem abuse in the consumer bankruptcy system.
These include provisions
[[Page H10229]]
broadening the category of debts that a consumer debtor must repay
notwithstanding his or her bankruptcy filing. It addresses the problem
of abusive use of credit on the eve of filing and protects secured
creditors from having their claims rendered unsecured by Chapter 13
debtors for purchases of personal property made within five years prior
to bankruptcy.
In addition, the Conference bill clarifies the grounds for dismissing
Chapter 7 cases for abuse. While protecting a debtor's homestead
exemption and preserving states' rights, the Conference bill prevents
manipulation of the system by those who seek to take advantage of this
provision to the detriment of their creditors.
Besides consumer bankruptcy reform, the Conference Report creates a
new bankruptcy chapter designed to deal with the special concerns
presented by international insolvencies, a timely and very much needed
reform. It contains sorely needed provisions requiring the collection
of statistics about bankruptcy cases and the implementation of various
studies.
In sum, this Conference Report is a comprehensive restatement of
bankruptcy law that will re-introduce personal responsibility and
integrity into the bankruptcy system while protecting the right of
debtors to a financial ``fresh start.''
I commend my fellow Conferees and the dedicated staff members who
have worked so tirelessly to perfect this legislation. And, I urge my
fellow Colleagues to vote in support of this Conference Report.
Upon its adoption, I will offer a concurrent resolution on unanimous
consent that directs the clerk to make a purely technical revision to
the Conference Report's effective date provision.
Mr. Speaker, I reserve the balance of my time.
Mr. NADLER. Mr. Speaker, I yield myself such time as I may consume.
Mr. Speaker, that the process of the conference report was not open
we addressed during a debate in the Committee on Rules. I am not going
to go back through that.
Let me start by making several general observations about this bill.
This bill deals with a phony crisis, concocted with a $40 million
lobbying and propaganda campaign of the big banks and credit card
companies. It does so by seeking in 30 or 40 different ways to take
large sums of money, in toto, from middle-income and low-income
American families in times of personal crisis, personally bankruptcy,
to enrich the big banks and credit card companies. This bill has no
other purpose, all the window dressing and fig leaves to the contrary
notwithstanding.
Mr. Speaker, we are told that the need for this bill is that the
number of personal bankruptcy filings has increased greatly over the
last 15 years, and that it has gone up to 1.4 million filings last
year. We are told that the reason for this is that Americans are
basically deadbeats. Americans are basically deadbeats. That is a
slander on the American people.
We are told that a couple of generations ago we had moral people in
this country, and they would not go bankrupt and seek a discharge of
their debts unless they were really in an extreme position, unless they
had no other choice, and there was a moral stigma attached to
bankruptcy.
Now, in this era today, nobody cares about morality anymore. There is
no more moral stigma. Therefore, people go bankrupt, they declare
bankruptcy as a financial planning option, or at the first sign of
difficulty, instead of in the last resort. They are deadbeats.
Mr. Speaker, as I said, this is a slander on the American people. It
is total nonsense. In fact, if we look at the statistics we see what
nonsense it is. In 1983, 15 years ago, the average Chapter 7 filer
seeking a discharge of debts in bankruptcy had debts equal to 74
percent of his annual income.
{time} 1000
Today, the average Chapter 7 filer has debts equal to 125 percent of
his annual income. In other words, people are much more reluctant today
to file for bankruptcy than they were 15 years ago. They do not file
for bankruptcy when they have their debts equal to 74 or 75 percent of
their income. They wait, they struggle, they work to resolve their
financial situation until they get to 125 percent debt, 125 percent of
their income, and only then do they file for bankruptcy. They are a lot
more queasy about bankruptcy than they were 15 years ago. They are a
lot more reluctant to enter into bankruptcy than they were 15 years
ago, to the contrary of the arguments of the proponents of this bill.
We are told those who file for bankruptcies, who can pay their debts
but are not because they are given discharges, that this costs every
American family $400; and if we pass this bill, Americans will get $400
more money, or will save $400 a year in lower interest rates on their
credit cards. This is self-evident nonsense.
We all know what has happened since credit cards were deregulated,
since interest rates were deregulated in the early 1980s. They shot up
to an average of 17, 18, 19 percent, which in an era of 17 percent
inflation in 1980 may have been okay; the banks had to charge at least
the inflation rate. We were told when the inflation rate and the cost
of money went down that the interest rates would come down. Well, the
cost of money has come way down, mortgage interest rates have come
down, bank loan rates have come down, the prime rate has come down,
everything has come down, but not interest rates on credit cards. They
are still averaging 17.7 percent.
Yes, we can find some small-town banks that will give us much better
interest rates, but 90 percent of the credit cards, 90-95 percent of
the credit cards' credit comes from the big banks, which can do the
marketing and the advertising on television, and those rates are way
up. If this bill passes, they are not going to lower those rates. They
will just have bigger profits.
The fact is that the profit rates of banks, which vary between 1 and
2 percent of assets, the profit rates of the credit card departments
are between 4 and 5 percent of assets. In 1983, before credit card
interest rates were deregulated, and before the ``bankruptcy crisis''
started, the profitability of the credit card departments was slightly
higher than the profitability of the banks as a whole. Now, it is four
times higher.
In fact, if we want to know the cause of the ``bankruptcy crisis'',
of the increase in filings, we do not have far to look. The increase in
bankruptcy filings tracks directly year-to-year with the increase in
the ratio of debt-to-income in society as a whole. In other words,
people are getting more in debt. They are being lulled by the credit
card companies to take more and more credit cards, get more in debt,
more in over their heads, and the result is not a surprise.
Mr. Speaker, let me outline just some of the problems with this bill,
very briefly. We are told there is a means test. Before we can get a
Chapter 7 bankruptcy, which now is allowed on request, unless it is
abusive, we will have to pass this means test. A means test means that
we should look at the ability of the borrower to repay his debts. What
is his income; what are his real expenses.
But we are not going to look at real expenses in this bill. We are
going to let that wonderful agency the Internal Revenue Agency say what
the average rent expense is in the northeast United States. Who cares?
The question is what is his or her rent expenses. We are going to look
at the average costs for everything else. It does not matter, the real
cost is what are his or her expenses. If an individual has a major
medical problem on an ongoing basis, it does not matter what the
average family spends on medical expenses, it matters what that
individual spends on medical expenses.
Mr. Speaker, this bill expands the nondischargeability of credit card
debts so that they will compete with child support obligations. It
gives creditors powerful new leverage to coerce reaffirmation
agreements, which will compete with child support after bankruptcy. It
requires diversion of family income in chapter 13 to defend meritless
claims of fraud. It adopts a restrictive definition of household goods
so that more household goods will be repossessed, household goods of
little value to the creditors but which are needed by debtors. It
eviscerates all the Senate's consumer protection provisions. It adds
new provisions eliminating punitive damages and class actions for
intentional violations of the bankruptcy stay. It allows wealthy
debtors to plan bankruptcy cases in advance so none of the bill's
provisions will affect them.
In other words, for the rich, they can still use bankruptcy
abusively, but for the low-income and middle-income people, this bill
says we are going to take a lot of their money, we are going to
[[Page H10230]]
evade their chance to get it, we are going to eliminate or restrict
their chance to get a new start, which is the purpose of the bankruptcy
laws, because the big banks must be served.
Mr. Speaker, this bill is one of the worst bills I have ever seen. It
serves only the big banks against the interests of middle- and low-
income Americans. The President, thankfully, has pledged to veto the
bill, and so, ultimately, this bill will do no harm except to our
reputations.
Mr. Speaker, I reserve the balance of my time.
Mr. GEKAS. Mr. Speaker, I yield myself such time as I may consume to
repeat that the vote on the House was 300-something to 118, an
overwhelming bipartisan approval of the language of the bill.
Mr. Speaker, I yield 4 minutes to the gentleman from Tennessee (Mr.
Bryant), a member of our committee.
(Mr. BRYANT asked and was given permission to revise and extend his
remarks.)
Mr. BRYANT. Mr. Speaker, I do rise in strong support of this
conference report on the Bankruptcy Reform Act of 1998. I come to this
floor as someone who has practiced in the bankruptcy court for a number
of years and I realize that bankruptcy is good for America. We have
always been a country that is willing to give people a second chance,
and certainly that is what the bankruptcy code is about, to help people
who are financially distressed in a genuine situation to have a second
chance.
However, over the years, this process, like so many other processes
and so many other laws, gets out of focus, perhaps gets a little out of
balance, and at this time I think the bankruptcy reform that we have
worked so hard on in this Congress is very appropriate to try to bring
the process back into balance; allow the courthouse doors to remain
open to those people who genuinely and sincerely need bankruptcy
relief, but yet give that balance to the creditors out there who, along
with the American citizens, bear the cost of bankruptcy abuse.
There are many reasons for this, and I will not begin to get into a
great discussion about those, but it seems to me what will be heard
today on the floor and what has already been said is probably, in large
part, true. There is enough blame to go around for everyone in terms of
why there are so many bankruptcies. But what I wanted to see done in
this bill was to find this proper balance, to work it through the
process of the House bill, the Senate bill, which were very different,
and then go into conference and work together and come out with a bill
that was more uniform and one that was more consistent, that could be
applied across this country, and perhaps taking out some of the
discretion, some of the discretion, not all of the discretion, that
exists in the current bankruptcy code.
Mr. Speaker, after countless hours of debate and disagreements in
this conference between the Senators and the Members of the House, we
conferees have emerged from our negotiation with a good and a serious
compromise, a bill which, on all sides, has found a workable agreement
in helping solve the endless complications associated with our
bankruptcy system.
What this compromise bill creates is a needs-based bankruptcy system
which will determine the type of relief. Not that an individual cannot
file, but determines the type of relief that a debtor needs. It talks
about the type of relief that a debtor needs and will require people to
fairly repay what they can.
This legislation also removes loopholes that have allowed some
debtors to abuse the system over the years. Our reform puts a greater
priority on child support and alimony payments that are made through
bankruptcy proceedings. But one of the main strengths and one of the
main concerns I have in my district is how the legislation affects
Chapter 12 bankruptcies.
Chapter 12 bankruptcy will expire this year, and this bill extends
that particular provision of the code permanently. This is the
provision that allows our farmers to reorganize when they are in a
disastrous situation; to be able to reorganize and pay back their
debtors and keep those family farms in operation.
We have seen a number of terrible disasters this year, especially in
the south, in my home State of Tennessee, and we expect something in
the nature of some 50 farmers that may have to face the possibility of
some sort of reorganization this year. But given the willingness of our
compromise as a whole within this legislation, this particular
provision will help our family farms have more say in their
reorganization plans.
I do urge my colleagues on both sides of the aisle to pass this
legislation as it is and to give the President the opportunity to sign
it into law. This is not a time to turn our back on the farmers and a
reasonable and an appropriate revamping of the bankruptcy code. This
bill shifts responsibility to the debtors for the first time in a long
while, in a reasonable fashion, while making adequate protections for
those who really need it.
Mr. Speaker, I urge the bill's passage.
Mr. NADLER. Mr. Speaker, I yield such time as he may consume to the
gentleman from Michigan (Mr. Conyers), the distinguished ranking member
of the Committee on the Judiciary.
(Mr. CONYERS asked and was given permission to revise and extend his
remarks.)
Mr. CONYERS. Mr. Speaker, were it not for the gentleman from New York
(Mr. Jerry Nadler), this bill, one of the worst anti-people bills I
have ever seen in the Judiciary, would be quietly going through this
body. The President of the United States, I say to the gentleman from
Pennsylvania (Mr. Gekas), has pledged he will reward the majority with
a veto for not listening to the senior ranking member and going off on
the deep end. He will veto this bill. And even if it is put in an
omnibus bill, he will veto it. So we are talking serious defects.
I want to address the distinguished chairman, the gentleman from
Pennsylvania. He and I have toiled in the Judiciary vineyards together
for so long. How could the gentleman put a provision in, first of all,
that takes out the few good provisions that we had? The bill was bad
enough on its own, but then he gutted the provision, which passed with
over 100 of his Republican colleagues, that would have ended the
practice of credit card companies cutting off accounts. Why?
Why would the gentleman drop the provisions that would prevent the
horrible tobacco companies, the bad guys of American industry, from
using bankruptcy to get out of their judgments? Why would he endanger
youth? I know he is a pro-family man, like me, pro-family values. Why
would he endanger child support, alimony payments, in a bill coming out
of the committee with his name on it?
Why would the gentleman harm small businesses? We represent the
little guys. And now he is putting them in very precarious positions.
And then the gentleman dropped the consumer protection and fair credit
amendments that were in the Senate bill.
Now, these were the things the gentleman took out of the bill. But
before he did that, the bill was a nightmare anyway.
This was the most partisan of anything the Republicans have ever done
in the Committee on Judiciary. And without consulting me, the gentleman
has been hurried and partisan and, really, the whole process was not
the kind that we want.
By the way, the gentleman mentioned how many people voted for the
bill. How many people voted for the open-ended, no-scope inquiry
yesterday? The American people do not want that, and they do not want a
bill like this. The House makes mistakes all the time. Our job is to
correct them. And so I wanted to just outline some of these things, and
I refer the gentleman to the report that we filed of dissenting views
that is in this matter.
I thank the ranking member of the subcommittee, the gentleman from
New York (Mr. Jerry Nadler) for according me so much time.
Mr. GEKAS. Mr. Speaker, I yield myself such time as I may consume to
say that I like the gentleman from Michigan (Mr. John Conyers), and
sometimes, even when he makes sense, he goes to the point of the issue
at hand. Here, though, he has overlooked the fact that the final
conference report, which may or may not have had some of the provisions
which are near and dear to his heart, was the subject of the compromise
that always occurs between the two bodies when each have passed a
similar bill and which then
[[Page H10231]]
converge to a compromise level at the conference level.
{time} 1015
So his disappointment, which heartfelt, should not be visited at the
chairman who has gone to great lengths to try to amalgamate the best
interests of our body, as the gentleman from Michigan knows. But I will
take his words and consult with him later in a private manner in which
we will dispose of our differences.
Mr. Speaker, I yield 1\1/2\ minutes to the gentleman from Michigan
(Mr. Knollenberg) who from the very start has had a special interest in
the best sense of the word in bankruptcy reform.
Mr. KNOLLENBERG. Mr. Speaker, I rise in strong support of this bill
and I thank the gentleman from Pennsylvania (Mr. Gekas) for including
this provision in this bill. This injustice stems from a last-minute
decision back in the 103rd Congress which placed an arbitrary $4
million ceiling on the single asset provisions of the bankruptcy reform
bill. The effect has been to render investors helpless in foreclosures
on single assets valued at over $4 million.
While in Chapter 11, and I want to talk just briefly, H.R. 3150
provides relief to victims by eliminating this arbitrary ceiling. Under
this law, Chapter 11 of the Bankruptcy Code serves as a legal shield
for the debtor. Upon the investor's filing to foreclose, the debtor
preemptively files for Chapter 11 protection which postpones
foreclosure indefinitely.
While in Chapter 11, the debtor will continue to collect the rents on
the commercial asset. However, the commercial property will typically
be left to deteriorate and the property taxes go unpaid. When the
investor finally recovers the property through the delayed foreclosure,
they owe an enormous amount in back taxes, they receive a commercial
property left in deterioration which has a lower rent value and resale
value, and meanwhile the rent for all the months or years they were
trying to retain the property went to an uncollectible debtor.
H.R. 3150 does not leave the debtor without protection. First, the
investor brings a foreclosure against a debtor only as a last resort.
It should be noted, however, that single asset reorganizations are
typically a false hope since the owner of a single asset does not have
other properties from which he can recapitalize his business.
Mr. Speaker, H.R. 3150 is a good bill. I urge my colleagues to
support it.
Mr. NADLER. Mr. Speaker, I yield 3 minutes to the gentlewoman from
Texas (Ms. Jackson-Lee).
(Ms. JACKSON-LEE of Texas asked and was given permission to revise
and extend her remarks.)
Ms. JACKSON-LEE of Texas. Mr. Speaker, I would actually like to speak
to my colleagues who with their best judgment made the determination to
vote for what was initially presented to us as an attempt to rid
ourselves of those people who would abuse the bankruptcy system. Many
of my colleagues came to the floor of the House with good intentions
and seeking to respond to the accusations made by the credit card
industry. I speak to them today because I think they have been sorely
disappointed and their good intentions have been misused. In fact, the
distinguished gentleman from Pennsylvania (Mr. Gekas) notes that the
Senate voted for this bill 97-1. The reason was that Democrats joined
with Republicans in a bipartisan vote. Why? Because there had been the
inclusion of a sizable portion of consumer protections in this bill,
providing for consumer education and counseling. Yet in the dark of
night, these good provisions that would protect you have been deleted.
Frankly it is interesting that this bill uses IRS standards to
determine whether a hardworking American who has fallen upon hard times
with catastrophic illnesses and other tragedies in their family now can
go into the bankruptcy court. It ignores that most bankrupt persons may
have been recently divorced, or they may have been elderly persons with
catastrophic illnesses falling again upon hard times. It ignores
frankly the idea that the credit card industry themselves admitted that
really only 4 percent of the debt in America paid by Americans for
credit cards is defaulted. So where is the problem? Ninety-six percent
of the debt that you owe to credit card companies is paid and paid and
paid and paid. In fact, you all realize that you pay three times more,
or more, for the item by the time you get through paying. Yet the
credit card companies have said to us, ``We need relief.''
Frankly I am concerned about this means test because important items
like child care payments, health care costs, the costs of taking care
of ill parents, educational expenses, are those kind of expenses that
may keep you out of the bankruptcy court or you may have to prove that
they were in fact necessary. Would you imagine that this legislation
also takes good, hardworking businesses, small businesses who likewise
may have come upon hard times but want to keep their doors open by
filing Chapter 11 in order to pay off their debts, it forces them into
Chapter 7 which takes away everything that they own.
Mr. Speaker, this is a bill that needs to be voted down. There are so
many problems with the bill.
Mr. Speaker, I support Bankruptcy Reform legislation, but not this
bankruptcy conference report. This is not bankruptcy reform--this is
bankruptcy recession. Webster's Dictionary defines recession as ``the
act of withdrawing and going back.'' That's what this conference report
does. It takes several steps back. First of all in order for there to
be a Conference Report, a conference should first be convened. This
conference committee was a sham. We met one time to read opening
statements and the democrats were not able to offer any input to
reconcile the differences between the House and the Senate versions of
the bill. The conferees were never afforded the opportunity to deal
with the substantive issues.
This is not bankruptcy reform--this is bankruptcy recession.
I was pleased that the Homestead Exemption cap of $100,000 that was
in the Senate version of the bill is not in the conference report.
However, I was not pleased to learn that a residency requirement was
added into the conference report that would require people in my home
state of Texas to live in Texas for at least two years or own a home
for at least two years before getting a homestead exemption. This is
contrary to our Texas state Constitution and would not serve my state
well.
The conference report does not contain certain provisions for the
rights of families, children, as well as the right to a fresh start for
honest debtors. Any bankruptcy legislation that is enacted should
ensure that obligations to pay child support and to compensate victims
of wrongdoing are protected, eliminates abuse of the bankruptcy system
by both debtors and creditors, and does not tilt what is ultimately a
fair and well run system to the unfair advantage of particular interest
groups. I truly believe that without these basic protections, the
conference report would merit a Presidential veto and that veto would
be sustained.
I am very concerned with what the House version passed with child
support and alimony. I offered an amendment that would put child
support and alimony not only as a priority, but would have them paid
first before any secured creditors. This conference report does not do
that. I oppose creating new, nondischargeable debts that could pit
post-bankruptcy, credit card debt against child support, alimony,
educational loans, and taxes. The conference report has not fixed that
problem.
This conference report has the language that child support and
alimony would have first priority, but yet still this debt must still
compete with the non-dischargeable debt of secured creditors. The fact
that this provision is in the conference report is outrageous and still
makes the bill non-viable. This is not bankruptcy reform--this is
bankruptcy recession.
I hoped that we can agree on a conference report that would avoid
taking indiscriminate aim at debtors and fails to address some
troubling practices of creditors. The only indisputable evidence in
this debate is that Americans have significantly more debt today, than
they have ever had before. The average bankruptcy filer last year had a
debt to income ratio of 1.25 to 1 (125% of their income) as opposed to
just .74 to 1 (74% of their income) a few short years ago.
According to Bankruptcy Law Professor Elizabeth Warren of the Harvard
Law School, the debtors that enter bankruptcy are usually experiencing
turbulent times. Sixty percent of bankruptcy filers have been
unemployed within a two year span prior to their filing. Twenty percent
of filers have had to cope within an uninsurable medical expense. Over
1 out of 3 filers, both male and female are recently divorced.
The version of the bill that passed the House was unacceptable to me,
and I voted against it. I think the idea of forcing bankruptcy filers
into Chapter 13 versus Chapter 7 is too harsh and two extreme. The
damage of trying to accomplish this goal through a means test might be
irreparable. The National Bankruptcy Review Commission rejected the
[[Page H10232]]
means test formula, and this is the main reason why: there can be no
fair brightline to divide the irresponsible and fraudulent from the
needy and disadvantaged.
This is not bankruptcy reform, this is bankruptcy recession.
I strongly oppose a ``means test'' that includes a rigid and
arbitrary approach to determining whether a debtor can use Chapter 7
only to those who genuinely have the capacity to repay a portion of
their debts successfully under a Chapter 13 plan. Bankruptcy courts
must have discretion to consider the specific circumstances of a debtor
in bankruptcy, and the thresholds they consider should be high enough
to ensure that only those with a strong likelihood of success are
affected. If we deny access to Chapter 7 to the wrong debtors, and
those debtors fail to complete required repayment plans, they will
return to Chapter 7 with a diminished capacity to repay their
nondischarged debt--including child support and alimony.
I am also very concerned that some Americans who have small
businesses will be forced into Chapter 7 instead of having a chance to
repay their debts under Chapter 11. Small business owners should not be
allowed to escape their debts unnecessarily, but they should be given
an opportunity for a fresh start.
In our House Judiciary Committee Mark-up, I supported an amendment
that passed by voice vote which would hold tobacco companies liable for
the death and injury that resulted from the use of their deadly
products. The conference report changed this ``reform,'' and now the
tobacco conglomerates will be able to shield themselves from liability
by filing for bankruptcy protection.
This is not bankruptcy reform, this is bankruptcy recession.
There should also be language in the Final Report that addresses
consumer and debt education. It should be the responsibility of the
credit card companies to give more and better information so that they
can understand and better manage their debts. Debtors need to be
protected against predatory creditor tactics to coerce inappropriate
and unwise reaffirmations of unsecured debt and secured debts. The
Consumer education provisions are conspicuous by their absence in this
conference report.
Mr. Speaker, this is not Bankruptcy reform, this is Bankruptcy
recession. This bill pits creditors over families, conglomerates over
women and children, offers no provisions for the farmers of our nation,
and provides loopholes for the wealthy. This so-called Bankruptcy
reform is D.O.A. (dead on arrival) at the White House. This is not
bankruptcy reform, this is bankruptcy recession. I urge you to vote no
on this conference report.
Mr. GEKAS. Mr. Speaker, I yield 1 minute to the gentleman from
Michigan (Mr. Smith).
Mr. SMITH of Michigan. Mr. Speaker, it is common sense in my areas of
Michigan, that if you make it too easy to file bankruptcy and discharge
your debts, a lot of those lenders are going to have to jack up their
interest rates on everybody else to compensate for the money they lose
when that debt is discharged. This legislation provides a better
balance, a golden mean. I would hope both sides could work together to
find compromize so that we don't end up with harder to get loans and
higher interest rates as a result of existing law that makes it easy to
declare bankruptcy and discharging those debts.
I have two bills that are now incorporated in this bankruptcy bill.
One is H.R. 4672, the extension of the Section 12 provision for farmers
and agriculture; the other is a provision suggested to me by an Eaton
County Michigan probate Court official, Tom Robinson. That section does
not allow the discharge of debt for child care that would be owed to a
local court or municipality.
I thank Chairman Gekas for yielding me time and for his perseverance
in developing needed reform to our bankruptcy law.
Mr. NADLER. Mr. Speaker, I yield 4 minutes to the gentleman from
Virginia (Mr. Boucher).
(Mr. BOUCHER asked and was given permission to revise and extend his
remarks.)
Mr. BOUCHER. Mr. Speaker, I want to thank the gentleman from New York
(Mr. Nadler) for yielding this time to me. It is a very generous amount
of time, particularly in view of the fact that my perspective on this
issue differs from his. I want to thank him for recognizing me this
morning.
Mr. Speaker, I am pleased to rise in support of the conference report
on the bankruptcy reform measure and urge its approval by the House of
Representatives. In recent years, the bankruptcy laws have been
subjected to growing misuse by debtors who can repay a substantial part
of what they owe but elect instead to file for the complete discharge
and complete liquidation provisions of Chapter 7 of the bankruptcy
laws.
In the past year, more than 1.4 million bankruptcy petitions were
filed, and that was a 25 percent increase over the prior year's level.
That dramatic increase occurred at a time when we had the strongest
national economy and the lowest unemployment that our Nation has
experienced in decades. Each year, more than $40 billion in consumer
debt is wiped out through bankruptcy discharges, a cost that is passed
along to borrowers and passed along to the purchasers of all goods and
services. That cost amounts to a hidden tax of approximately $400 per
year on the typical American family.
The reform legislation that we consider this morning is a positive
step toward ensuring that individuals with high incomes who need
bankruptcy protection but who can repay a substantial part of their
debts use the debt repayment plan of Chapter 13, rather than the
complete liquidation provisions of Chapter 7. That will ensure that
more of the debt is paid. That will ensure that the $400 tax that is
imposed on the typical family because of increased charges for credit
and the increased prices for goods and services is, to some extent,
reduced and lowered.
By combining the best elements of the House and Senate bankruptcy
reform measures, the conference agreement encourages personal
responsibility in the use of credit in a manner that is fair to debtors
and creditors alike and promotes the interests of all consumers.
It makes a number of other useful changes. Child support and alimony
payments that today have the seventh priority in the distribution of a
bankrupt's estate will be moved to the very first priority. That is a
very significant change. I would note that for people whose concerns
have been expressed with regard to the condition of the single parent.
In Chapter 13 cases, a court under this legislation can require that
all child support and alimony be paid before any other obligations, and
a debtor will not receive discharge of his debts in bankruptcy until
child support and alimony payments have been made.
The legislation also protects consumers. All credit card users will
benefit from mandatory provisions requiring credit card companies to
disclose on customer statements the effect that only making the minimum
monthly payment will have on the length of time it will take to pay the
balance that is due and also on the overall finance charges that must
be paid. Credit card companies will also be prohibited from terminating
a customer's account because that individual elects to pay his bills on
time and, therefore, is not incurring finance charges.
The measure also enhances debtor protections. The conference report
addresses the unscrupulous practices of some debt relief agencies by
requiring full disclosure to consumers about the bankruptcy process and
about related fees. Reaffirmations by debtors of wholly unsecured debt
must comply with strict new disclosure requirements that are imposed on
creditors, and reaffirmations will also be subjected to review by a
bankruptcy judge.
I urge support for the conference agreement.
Mr. Speaker, I rise in support of the conference report on the
bankruptcy reform measure and urge its approval by the House.
In recent years, the bankruptcy laws have been subjected to growing
misuse by debtors who can repay a substantial part of what they owe,
but elect to file for a complete discharge of all of the debts under
Chapter 7.
In the past year more than 1.4 million bankruptcy petitions were
filed, an increase of more than 25% over the prior year's level. And
this dramatic increase has occurred during the strongest economy, with
the lowest unemployment the nation has experienced in decades.
Each year, more than $40 billion in consumer debt is wiped out
through bankruptcy discharges, a cost which is passed along to
borrowers and to the purchasers of all goods and services. This cost
amounts to a hidden tax of $400 per year on the typical American
family.
The reform legislation is a positive step toward ensuring that
individuals with high incomes who need bankruptcy protection but who
can repay a substantial portion of their debts use the debt repayment
plan of Chapter
[[Page H10233]]
13 rather than the complete liquidation provisions of Chapter 7.
By combining the best elements of the House and Senate bankruptcy
reform measures, the Conference Agreement encourages personal
responsibility in the use of credit in a way which is fair to debtor
and creditors alike and promotes the interests of all consumers.
It makes other useful changes: Child support and alimony payments
will become the first priority in bankruptcy proceedings, a major
change from the seventh priority in current law. In Chapter 13 cases, a
court can require that all child support and alimony be paid before any
other obligations. And, a debtor will not receive a discharge of debts
in bankruptcy until child support and alimony payments are made
current.
The legislation protects consumers: All credit card users will
benefit from mandatory provision requiring credit card companies to
disclose on customer statements the effect of only making the minimum
monthly payments on the overall finance charges paid and on the length
of time required to repay the balance. Credit card companies will also
be prohibited from terminating a customer's account solely because the
customer has not incurred finance charges on the account.
The measure enhances debtor protections: The conference report
addresses unscrupulous practices of some debt relief agencies by
requiring full disclosures to consumers about the bankruptcy process
and related fees. Reaffirmations by debtors of wholly unsecured debt
must comply with strict new disclosure requirements imposed on
creditors and reaffirmations will be subject to review by a bankruptcy
judge.
The House passage of this legislation was supported by \3/4\ of the
membership and by approximately \1/2\ of the Democrats. I encourage
colleagues on both sides to approve this conference report, and to my
Democratic colleagues I would point out that the conference agreement
is somewhat less favorable to the credit industry and somewhat more
favorable to financially hard-pressed debtors than was the House bill.
Therefore, it is my hope that an even larger number of my Democratic
colleagues will support the conference agreement than supported the
original legislation.
In summary, the conference report on H.R. 3150 protects consumers,
reduces abuses of the bankruptcy system by creditors and debtors, and
ensures that an effective ``fresh start'' is available to those who
truly need it. Mr. Speaker, H.R. 3150 is a balanced and responsible
reform of the bankruptcy law.
Mr. GEKAS. Mr. Speaker, I yield 1\1/2\ minutes to the gentleman from
Florida (Mr. Shaw) who has been very helpful in the consultations along
the road to this moment.
Mr. SHAW. I thank the gentleman for yielding me this time. Mr.
Speaker, I would like to congratulate the chairman and all on the
Judiciary Committee who took on a most neglected portion of the law
which has been racked by abuse in the last years and has really brought
us a very, very good bill. I intend to support this bill, but I must
express my disappointment as to a provision that was dropped in the
conference which I feel is very, very important. As the gentleman from
Virginia (Mr. Boucher) has just stated, bringing up child support from
down at a lower level on priorities right up to the top was a very,
very good thing. In order to further implement this, I offered an
amendment which was accepted by the House during the passage of this
legislation which put a mechanism for enforcement of this very
important provision in place. I felt it was very reasonable and I felt
also it was very necessary because so many times a mother receiving
child support does not know the ins and outs and legalities of being
able to enforce her particular priority. I would hope should this bill
come back to the House for any reason whatsoever either because of
action of the Senate or action of the President that they will
reconsider the Shaw amendment and place it back in the bill as a very
reasonable enforcement tool for those millions of American women who
are struggling to raise their children and are in desperate need of the
funds they receive each month in the form of child support.
{time} 1030
Mr. NADLER. Mr. Speaker, I yield 2 minutes to the distinguished
gentleman from Texas (Mr. Bentsen).
(Mr. BENTSEN asked and was given permission to revise and extend his
remarks.)
Mr. BENTSEN. Mr. Speaker, if I could, I would like to engage the
chairman of the subcommittee in a colloquy with respect to sections 126
and 127 of the conference report.
First, if I might, in understanding, does the 2-year residency
requirement mean that once residency is met the debtor enjoys the
benefit of the State's homestead law for so long as he or she is a
resident of that State even if they move from one homestead to another
within that State? And, furthermore, does this same residency apply to
military personnel and expatriates who maintain their residency within
that State but may well be domiciled in another State or another
country?
Mr. GEKAS. Mr. Speaker, will the gentleman yield?
Mr. BENTSEN. I yield to the gentleman from Pennsylvania.
Mr. GEKAS. It is a yes-yes to the gentleman's inquiries. It allows
Texas to set and to keep its homestead exemption theories and laws in
place subject to the 2-year limitation that we place in the bill.
Mr. BENTSEN. So once I have established the 2-year residency, I can
claim homestead on the house I am in now. The house, if I sell that
house and buy another house, that house and each house thereafter, so
long as I maintain the initial 2-year residence.
Mr. GEKAS. That is my interpretation.
Mr. BENTSEN. Would a gain on the sale of a residence once residency
is obtained which is then rolled over into a new residence be
considered an exempt asset or a nonexempt asset?
Mr. GEKAS. I have not thought that through, but it is my impression
that that would be protected because, by then, the exemption has
already been created.
Mr. BENTSEN. And under Section 127, would a routine prepayment within
the 730-day period; as my colleague knows, with one's mortgage
statement they can have a routine prepayment on top of their annual
mortgage payment or a home equity payment, for that matter, which is
carried out within the 730 day period. Would that be considered
routine, or would that be something where the debtor would have to
fight in court to determine that that is not a fraudulent transfer?
Mr. GEKAS. My impression would be that it would be routine.
Mr. GEKAS. Mr. Speaker, I yield 3 minutes to the gentleman from
Virginia (Mr. Goodlatte).
(Mr. GOODLATTE asked and was given permission to revise and extend
his remarks.)
Mr. GOODLATTE. Mr. Speaker, I thank the gentleman for yielding me
this time and for his strong leadership on this issue.
Mr. Speaker, I rise today in support of the conference report. This
important legislation is an honest compromise between the House and
Senate passed bills, and while I have serious concerns about the
retention of certain provisions of the Senate passed bill, the overall
conference report is a strong agreement that is pro personal
responsibility and anti bankruptcy abuse. With a record high 1.4
million bankruptcies filings last year, every American must pay more
for credit, goods and services when others go bankrupt. I cosponsored
and voted for House passage of H.R. 3150 because it is high time that
we relieve consumers from the burden of paying for the debts of others.
The Bankruptcy Reform Act restores personal responsibility, fairness
and accountability to our bankruptcy laws and will be of great benefit
to consumers.
For too long our bankruptcy laws have allowed individuals to walk
away from their debts even though many are able to repay them. That is
not fair to millions of hard-working families who pay their bills,
mortgages, car loans, student loans and credit card bills every month.
The loopholes in our bankruptcy laws have led to a 400 percent increase
in personal bankruptcy filings since 1980 at a cost of $40 billion per
year. These losses have been passed directly to consumers, costing
every household that pays its bills an average $400 per year in a
hidden tax in the form of increased costs of goods that are passed on
by those who are defaulted upon with credit. In real terms that is a
year's supply of diapers or 20 tanks of gas.
The conference agreement retains the strong needs-based formula
included in the House passed version of the bill but would preserve the
right of a debtor in bankruptcy to have a judge review his or her case.
This judicial review would preserve the means test
[[Page H10234]]
that is so necessary for successful bankruptcy reform while allowing a
debtor's unique circumstances to be taken into account.
Under the current system, some irresponsible people filing for
bankruptcy run up their credit card debt immediately prior to filing
knowing that their debts will soon be wiped away. These debts, however,
do not just disappear. They are passed along to hard-working folks who
play by the rules and pay their own bills on time. The Bankruptcy
Reform Act ends this practice by requiring bankruptcy filers to pay
back nondischargeable debts made in the 90 days preceding their filing.
In addition, new debts incurred within 90 days of bankruptcy for luxury
goods over $250 in value would be presumed nondischargeable.
While ending the abuses of our bankruptcy laws, the Bankruptcy Reform
Act is strongly pro consumer in other ways as well. This legislation,
for example, helps children by strengthening protections in the law
that prioritize child support and alimony payments.
Thank you, Mr. Speaker. I rise today in support of the conference
report on H.R. 3150, the Bankruptcy Reform Act of 1998. This important
legislation is an honest compromise between the House- and Senate-
passed bills, and while I have serious concerns about the retention of
certain provisions of the Senate-passed bill, the overall conference
report is a strong agreement that is pro-personal responsibility and
anti-bankruptcy abuse.
With a record-high 1.4 million bankruptcy filings last year, every
American must pay more for credit, goods, and services when others go
bankrupt. I cosponsored and voted for House passage of H.R. 3150
because it is high time that we relieve consumers from the burden of
paying for the debts of others. The Bankruptcy Reform Act restores
personal responsibility, fairness, and accountability to our bankruptcy
laws, and will be of great benefit to consumers.
For too long, our bankruptcy laws have allowed individuals to walk
away from their debts, even though many are able to repay them. That's
not fair to millions of hard-working families who pay their bills--
mortgages, car loans, student loans, and credit card bills--every
month. The loopholes in our bankruptcy laws have led to a 400 percent
increase in personal bankruptcy filings since 1980, at a cost of $40
billion per year. These losses have been passed directly to consumers,
costing every household that pays its bills $400 per year in a hidden
tax in the form of increased costs goods each year. In real terms,
that's a year's supply of diapers, or twenty tanks of gas.
The conference agreement retains the strong needs-based formula
included in the House-passed version of the bill, but would preserve
the right of a debtor in bankruptcy to have a judge review his or her
case. This judicial review would preserve the means test that is so
necessary for successful bankruptcy reform while allowing a debtor's
unique circumstances to be taken into account.
Under the current system, some irresponsible people filing for
bankruptcy run up their credit card debt immediately prior to filing,
knowing that their debts will soon be wiped away. These debts, however,
do not just disappear--they are passed along to hard-working folks who
play by the rules and pay their own bills on time. The Bankruptcy
Reform Act ends this practice by requiring bankruptcy filers to pay
back nondischargeable debts made in the 90 days preceding their filing.
In addition, new debts incurred within 90 days of bankruptcy for luxury
goods over $250 in value would be presumed non-dischargeable.
While ending the abuses of our bankruptcy laws, the Bankruptcy Reform
Act is strongly pro-consumer in other ways as well. This legislation,
for example, helps children by strengthening protections in the law
that prioritize child support and alimony payments. Additionally, H.R.
3150 protects consumers from ``bankruptcy mills'' that encourage folks
to file for bankruptcy without fully informing them of their rights and
the potential harms that bankruptcy can cause.
I think that my friends on the other side of the aisle would agree
with me that none of the parties involved in this debate got everything
that they wanted in this bill, nor would any of us claim to support all
of the provisions included in this bill. I know I certainly do not. But
that is the essence of compromise. On the whole, however, this bill is
a giant step in the right direction and means real reform for our
nation's bankruptcy laws.
Bankruptcy should remain available to folks who truly need it, but
those who can afford to repay their debts should not be able to stick
other folks with the tab. Enactment of this conference report will send
a big signal toward those who would abuse our bankruptcy system that
the free ride is over. I urge my colleagues to support this fair and
reasonable compromise. Thank you.
Mr. NADLER. Mr. Speaker, I yield 2 minutes to the gentleman from
Texas (Mr. Edwards).
Mr. EDWARDS. Beware, senior citizens; beware, middle class working
families; beware, hard-working farmers and ranchers. This bill, if
enacted into law, could put them into debt for the rest of their life.
Mr. Speaker, this is a perfect example of a good idea, the idea of
personal responsibility, being turned into a horrible bill in the last
hours of this Congress behind closed doors by special interests who
simply went too far.
Three points:
First of all, these were the words my Republican colleagues used
about the Internal Revenue Service this year: dictatorial, unfair,
arbitrary. And yet, incredibly, in this bill our Republican friends
turn over the definition of necessary expenses, they turn over to the
IRS the ability to put people in debt for the rest of their lives. They
turn over to that IRS that they have been berating all year long.
Incredibly, under this bill, the Internal Revenue Service could deny
hard-working families the right to use their hard-earned money to pay
for child care for their children, to pay for health care or other
living expenses for their parents that live in their home. Our
Republicans would allow the IRS under circumstances to exclude major
health care expenses.
So, a hard-working family, a responsible family that has a $100,000
health care bill, could be determined by the IRS, be forced into
bankruptcy, actually forced into debt rather, for the rest of their
lives.
Mr. CONYERS. Mr. Speaker, will the gentleman yield?
Mr. EDWARDS. I yield to the gentleman from Michigan.
Mr. CONYERS. The gentleman from Texas is absolutely correct, and our
hearing supported that. The gentleman from New York (Mr. Nadler), our
ranking member, brought in witnesses to point this out without any
shadow of a doubt. Anybody that tries to claim that child support
payments are enhanced by the provisions in this bill really do not
understand it.
Mr. EDWARDS. Absolutely.
This is a bad bill, Members. Vote no.
Mr. GEKAS. Mr. Speaker, I yield such time as she may consume to the
gentlewoman from New Jersey (Mrs. Roukema).
(Mrs. ROUKEMA asked and was given permission to revise and extend her
remarks.)
Mrs. ROUKEMA. Mr. Speaker, I rise in opposition to the provision on
the child support concerns in this bill.
Mr. Speaker, I rise in opposition to this legislation and to
associate my position with the position of Representative Clay Shaw and
the admirable work he has done on child support enforcement.
I want to register my opposition to the dropping in conference, which
would have provided additional protection for a parent trying to
recover child support monies by giving proper notification to the
claimant parent.
While this conference agreement does state that ``nothing shall
prevent the payments of priority child support obligations,'' an
additional provision, offered by Representative Clay Shaw of Florida,
would have required the bankruptcy ``Master'' to notify a claimant
parent. I am sorry to see that this provision has been dropped.
I have a long history of standing up for child support enforcement,
having been a pioneer on child support reforms and having served on the
U.S. commission for Inter-State Child Support Enforcement.
It's a national disgrace that our child support enforcement system
continues to allow so many parents who can afford to pay for their
children's support to shirk these obligations. The so-called
''enforcement gap''--the difference between how much child support
could be collected and how much child support is collected--has been
estimated at $34 billion!
If this bill passes, I will continue to press for reforms legislation
to ensure that claimant parents are not left out of the loop when it
comes to being able to recover in child support cases. Mr. Shaws
reforms should be pursued. This bill seriously erodes that effott.
Mr. Speaker, I will cast my protest vote against this bill.
General Leave
Mr. GEKAS. Mr. Speaker, I ask unanimous consent that all Members may
have 5 legislative days in which to revise and extend their remarks on
the legislation here under consideration.
The SPEAKER pro tempore (Mr. Shimkus) Is there objection to the
request of the gentleman from Pennsylvania?
[[Page H10235]]
There was no objection.
Mr. GEKAS. Mr. Speaker, I yield 3 minutes to the gentleman from
Florida (Mr. McCollum).
Mr. McCOLLUM. Mr. Speaker, I thank the gentleman for yielding this
time to me, and I want to compliment the gentleman from Pennsylvania
(Mr. Gekas) for all hard work in bringing about this conference report.
Much of what was in the original McCollum-Boucher bill and then later
the McCollum-Gekas-Boucher-whatever bill, 3150, is in this report. The
most important portion of it is the needs-based test. Granted, we have
adopted a certain compromise to the Senate that allows for the judge to
have a say over this, but there is a presumption that if somebody can
repay their debt after following the formula that was in the House
bill, to see if they can afford to repay their debt and have enough
money left over to do it after deducting their expenses for secured
credit items and for real living expenses and for child support and so
forth, if once they have done that, then there is a presumption that
they are not eligible for Chapter 7 if they have greater than the
median family income, which is about $52,000 a year for a family of
four, and they will have to file in Chapter 13 where they have to work
out a repayment plan. I think that is an enormous reform of very great
monument in this.
Also, the bill contains reforms to reduce repeat filings to prevent
the gaming of the bankruptcy system such as running credit bills right
before the filing for bankruptcy or filing and dismissing bankruptcies
cases as a stalling tactic.
A crucial part of the conference report addresses the recent crisis
in the financial markets. Title 10 accepts the Senate provision that
deals with the so-called cross product netting provisions that is based
on H.R. 4393 as it passed the House Committee on Banking and Financial
Services. The bankruptcy code and the banking laws contain provisions
that allow market participants to close out net and set off certain
types of contracts when a counter party becomes insolvent. This feature
allows us to reduce the opportunity for the failure of one entity to
infect others. It also encourages market participants to engage in
transactions that add market liquidity which leads to lower cost of
capital.
I have a letter, Mr. Speaker, that is from the Secretary of the
Treasury endorsing this provision. I would like to have it inserted in
the Record at this time.
Department of the Treasury,
Washington, DC, September 30, 1998.
Hon. George W. Gekas,
Chairman, Subcommittee on Commercial and Administrative Law,
Committee on the Judiciary, House of Representatives,
Washington, DC.
Dear Mr. Gekas: I am writing to share the Administration's
views on certain bankruptcy provisions in S. 1301, the
bankruptcy reform bill before the conference committee, and
related provisions in H.R. 4393, the ``Financial Contract
Netting Improvement Act of 1998.''
The Administration supports the financial contract netting
provisions in S. 1301. These provisions are based on a
proposal from the President's Working Group on Financial
Markets, which was the result of an intensive, multi-year
interagency effort to improve the regime governing the
recognition of netting of certain financial contracts in
insolvency situations. As I noted when we transmitted our
recommendations to Congress, the proposed legislation would
reduce systemic risk in our financial markets, reducing the
risk that a failure of a single firm would cause significant
disruption and danger to our financial markets. In
particular, this proposal will help to reduce systemic risk
arising out of activities in the derivatives market.
The Administration also encourages the conferees to include
similar provisions amending the bank insolvency laws, which
are contained in H.R. 4393 as approved by the House Banking
Committee. One of the goals of the Working Group effort was
to harmonize, where appropriate, provisions under the
Bankruptcy Code and the bank insolvency laws. The bank
insolvency provisions in H.R. 4393 would accomplish that
harmonization and would also clarify the power of the Federal
Deposit Insurance Corporation to transfer qualified financial
contracts to another financial institution. This
clarification will help ensure that the resolution of a
failed depository institution can be accomplished at the
lowest possible cost to the deposit insurance funds
administered by the FDIC.
We look forward to working with the conferees to enact
these desirable reforms, in conjunction with moderate and
balanced consumer bankruptcy reform legislation.
Sincerely,
Robert E. Rubin,
Secretary of the Treasury.
The conferees struck a good balance between the House and Senate
bills, I think, and I would like to also comment particularly on
homestead exemption.
This conference report doubles the protections that were in the House
bill. The new protection against abusive use of the exemption includes
the requirement of a debtor to reside in a State for 2 years before
they can take advantage of the State's exemptions, but there is no cap
on the exemption, which is very important to States like Florida and
Texas.
In addition, the conference report prohibits the conversion of
nonexempt assets into exempt homestead property with the intent to
defraud, which I think is also important to note, within 2 years of
filing for bankruptcy. The bankruptcy exemptions should not be used as
a means of hiding assets, and this provision would prevent such an
abuse.
It has become clear that reform of the existing bankruptcy system is
sorely in need. We know we have doubled the number of bankruptcies in
the United States in the 10 years preceding this, and actually last
year we had a 25 percent increase, or thereabouts, in the number of
personal bankruptcies. Most people believe that is because people were
taking advantage of Chapter 7 and filing pure bankruptcies in greater
numbers than ever, and this conference report will solve that with a
needs based test. I encourage the adoption of it, again commend the
chairman again for his hard work.
Mr. NADLER. Mr. Speaker, I yield 1\1/2\ minutes to the gentleman from
Texas (Mr. Green).
(Mr. GREEN. Asked and was given permission to revise and extend his
remarks.)
Mr. GREEN. Mr. Speaker, I thank my colleague from New York for
yielding this time for me and allowing me to speak in opposition to
this ill-advised bill.
I want to support bankruptcy reform, but not this conference
committee report. There are several provisions in this bill that
prevent it from meeting its intended goal, and we have heard that from
lots of Members, particularly Members from Texas, the homestead
protection concerns we have, how it is affecting military personnel.
But, worst of all, however, is that it is doing nothing to slow the
growing trend of young people who have to file for bankruptcy each
year. We are stopping or hindering the filing of bankruptcy on the
inside, but we are not helping the front end. They change the law on
bad business practices that allow the loose availabilty of credit to
young people.
Let me give some examples. Big banks and credit card companies target
teenagers and college students with little or no income, they get maxed
out on their credit cards, and then they only pay the minimum balance.
And so, with 15 or 18 percent interest, they are getting ready to
graduate from college with that huge amount, and when we add in their
student loans that they owe, and that is bad business practices.
And I know that personally because I have two college students that
have very little income, but they get blank checks in the mail from
their credit card companies. Just sign up. Most of their friends in
college are maxed out on their credit cards because they are having to
do it. They have credit availability easy.
Let us make sure we have a bankruptcy farm bill, but let us also make
the people who are making it available and making these young people
graduate from college with such a debt load, they owe a responsibility
to this bill, too, and it is not in this conference committee report.
We should not put that burden on the people who are the next
generation of people who are going to be leading our country.
{time} 1045
Mr. GEKAS. Mr. Speaker, I yield 2 minutes to the distinguished
gentleman from Iowa (Mr. Leach) who is the chairman of the Committee on
Banking and Financial Services, but also he is the savior of this
particular chairman. Last night, he saved us on the floor and, together
with the gentleman from New York (Mr. Nadler), was able to pass the
responsibility to
[[Page H10236]]
the Committee on the Judiciary, which, by miscommunication, I was not
able to handle.
(Mr. LEACH asked and was given permission to revise and extend his
remarks.)
Mr. LEACH. Mr. Speaker, I would like to just comment briefly on
several provisions of this conference report that relate to items under
the jurisdiction of the Committee on Banking and Financial Services.
The conference report contains an amendment to the Truth In Lending
Act designed to protect consumers from having their credit lines
revoked because they fully pay their outstanding debt in a timely
manner. I support this change in law. It is individually
counterintuitive and socially counterproductive that lenders establish
incentives to pull credit from individuals who pay their debt on time.
The Senate, however, originally coupled this provision with a
prohibition against creditors charging any type of fee with regard to
an extension of credit in which no finance charge has been incurred.
While perhaps well-intended, this latter provision amounted to a
public sector dictate and how the private sector should charge to goods
and services. This price fixing provision would have frustrated
responsible free market precepts and would have, if it had been
enacted, resulted in reduction of credit provided to consumers.
Because of concern for this prohibition, many of us voted last week
against a construction of conferees. It also included the earlier
described issue. Now that the conferees have appropriately agreed to
accept the first part of that instruction but not the second, I and
many others who voted against this instruction enthusiastically support
this provision.
In summary, let me just express again my appreciation to the
gentleman from Pennsylvania (Chairman Gekas) as well as the gentleman
from Illinois (Chairman Hyde) and the rest of the conferees for their
willingness to take the Committee on Banking and Financial Services'
perspectives into consideration on the parts of the bill that rested
within the jurisdiction of the Committee on Banking and Financial
Services which, frankly, is not a major part of the bill.
Let me just stress that financial netting section which we worked out
with the administration is of signal significance in this time of
economic turmoil. This is a provision of the bill that is bipartisanly
supported and strongly endorsed by the administration, and it is a
signal reason that this bill should be considered at this particular
very dicy period of time.
Mr. NADLER. Mr. Speaker, how much time do we have remaining on both
sides?
The SPEAKER pro tempore (Mr. Shimkus). The gentleman from New York
(Mr. Nadler) has 5\1/2\ minutes remaining. The gentleman from
Pennsylvania (Mr. Gekas) has 3 minutes remaining.
Mr. NADLER. Mr. Speaker, I yield 1 minute to the gentleman from Iowa
(Mr. Leach).
Mr. Speaker, will the gentleman yield?
Mr. LEACH. I am delighted to yield to the gentleman from New York.
Mr. NADLER. Mr. Speaker, on the provision that this House voted on
the instructions to conferees, we said that the bank should not be able
to cancel the credit card for the sin of the cardholder having paid on
time, and they should not be able to charge an extra fee for that
reason.
The gentleman stated correctly that the conference report eliminated
the second provision, they can still charge an extra fee. But my
understanding is that the conference report says that they can also
cancel the card, albeit only at the end of the term, which is generally
a year or two.
So what is left of this provision to not to penalize responsible
borrowers?
Mr. LEACH. Mr. Speaker, reclaiming my time, the only basis for
canceling the card is if the card would not be in use for better than a
3-month period. That is a fairly common sense circumstance. So a
financial institution does not have to carry the cost of dealing with
people who do not use their card.
Mr. NADLER. Mr. Speaker, if the gentleman will yield further, if the
card was used but the bill is paid on time and with no interest, they
could not cancel it?
Mr. LEACH. Mr. Speaker, reclaiming my time, that is correct. If the
card is in actual use. It is only if the individual did not use the
card could an institution pull it.
Mr. GEKAS. Mr. Speaker, I do not know where we stand parliamentarily.
The SPEAKER pro tempore. The gentleman from New York (Mr. Nadler) had
the time. The gentleman from New York yielded to the gentleman from
Iowa (Mr. Leach).
Mr. GEKAS. Mr. Speaker, are we to close?
The SPEAKER pro tempore. The gentleman from Pennsylvania (Mr. Gekas)
has the right to close.
Mr. GEKAS. Mr. Speaker, has the minority time expired?
The SPEAKER pro tempore. The gentleman from New York (Mr. Nadler) has
4\1/2\ minutes remaining.
Mr. GEKAS. Mr. Speaker, I yield 2\1/2\ minutes to the gentleman from
Virginia (Mr. Moran).
Mr. MORAN of Virginia. Mr. Speaker, I rise in strong support of
bankruptcy reform. I am a lead sponsor of this measure because the
system is broken, and it is up to us to fix it.
What was once the option of last resort is becoming the preferred
option of choice. A legislative fix is vital to distinguish between
those who truly need a fresh start and those who want to game the
system for personal advantage, those capable of assuming greater
responsibility and making good on at least some of what they owe.
Mr. Speaker, unless we take the steps now to reform the bankruptcy
system, while the economic times are good, we will not have the
political resolve to fix it when they are not so good.
Trapped in a broken bankruptcy system where they lack the confidence
that individual borrowers will be able to honor their payment
commitments, lenders and creditors will have no choice but to restrict
credit. We cannot let that happen.
Restricting credit during a downturn in the economy is exactly the
opposite of what should happen. It is exactly the opposite in the
national interest. It only deepens the severity of any recession and
delays the eventual recovery.
Despite this country's strong economy, the rate of personal
bankruptcy filings has increased dramatically. Last year, personal
bankruptcy filings rose nearly 20 percent. They reached a record high
of 1,400,000 filings. Think about it. More people filed for personal
bankruptcy than graduated from college last year. What does that say
about our country in a time of such prosperity?
We can vilify creditors and lenders and mortgage companies and credit
card industry. I am glad to see the Truth in Lending Act was modified
to include an important pro-consumer provision that I tried to offer
here in the House. That provision will disclose the full consequences
of paying only the minimum monthly balance.
But while many of us would like to blame the credit cards industry
for the sharp increase of bankruptcy filings, it is important to note
that the credit card industry is not the impetus of the bankruptcy
crisis.
The vast majority of individuals recognize their personal
responsibility they take in using the credit card. More than 96 percent
of credit card holders pay their bills as agreed to and only 1 percent
ever end up in bankruptcy.
This is not an issue about credit cards trying to rip off people.
Sure there is some unfairness, but that is not what we are having to
deal with. Regardless about how one feels about yesterday's or today's
creditors, the key issue before us is that many borrowers capable of
repaying some or all of their obligations are not acting responsibly.
That is what this is about. It is the principle of moral responsibility
and personal obligation. That is why this legislation should pass.
Mr. NADLER. Mr. Speaker, I yield 15 seconds to the gentleman from
Michigan (Mr. Conyers).
Mr. CONYERS. Mr. Speaker, in my continuing education program for the
gentleman from Virginia, who is a dear friend of mine, the fact that
more are going into bankruptcy is no proof that the bankruptcy laws are
being abused. It is really evidence that the credit card industry is
enticing millions into debt that the should not be, I say to
[[Page H10237]]
the gentleman from Virginia (Mr. Moran).
Mr. NADLER. Mr. Speaker, I yield 30 seconds to the gentlewoman from
Texas (Ms. Jackson-Lee).
Ms. JACKSON-LEE of Texas. Mr. Speaker, I have many good friends in
this chamber, and I would simply like to say, if the credit card
companies would stop sending unsolicited questionnaires and
applications to people who are now deceased and otherwise, we would not
have this problem.
On the issue of child support, let me make it perfectly clear, the
credit card debt now becomes nondischargeable. It survives after
bankruptcy. It competes with that poor working parent who needs that
child support for that child. Tell me, Mr. Speaker, who can survive the
beating and repossession abilities of the credit card company over the
child support. This is a bad bill.
Mr. NADLER. Mr. Speaker, how much time do I have remaining?
The SPEAKER pro tempore. The gentleman from New York (Mr. Nadler) has
3\1/4\ minutes remaining. The gentleman from Pennsylvania (Mr. Gekas)
has 30 seconds remaining. The gentleman from Pennsylvania has the right
to close.
Mr. NADLER. Mr. Speaker I yield myself such time as I may consume.
Mr. Speaker, a couple of comments. First, the gentleman from Virginia
said that, if this bill does not pass, if we continue to have a
bankruptcy crisis, the credit card companies, the banks are going to
restrict credit to people who need it.
I suppose the fact that they will feel the need to restrict credit is
evidenced by the fact that they are inundating people, inundating
college students with credit card solicitations. I suppose the grave
crisis is illustrated by the fact that the credit card departments or
the banks are between two and three times more profitable than the
banks as a whole. It is the profit center of the banks that shows what
a terrible problem we have.
I will reiterate that the real cause of the problem of increased
bankruptcy filings is simply that people are going more and more into
debt. The average chapter 7 filer today is has debt equal to 125
percent of his income, 15 years ago, it was 74 percent, because he is
trapped in paying high interest rates and has taken out too much
credit.
This, to a large extent, is the fault of the companies that are
inundating people with credit cards. That is the real problem. Simply
saying that people who are in over their heads, that we should crack
donor bankruptcy is the wrong solution to the wrong problem, to a
misstated problem.
I heard the distinguished gentlewoman from New Jersey (Mrs. Roukema)
from the other side of the aisle take exception to this bill because of
the provisions on child support. I think the gentlewoman from New
Jersey (Mrs. Roukema), I think most of the Members of this House know
that the gentlewoman from New Jersey (Mrs. Roukema) knows the issues of
support, of collection of child support probably better than most other
Members of the House. She has been working in this area for years.
When the gentlewoman says that this bill will wreck, will increase
the problem of child support collections, we should pay attention.
Mr. Speaker, I am going to introduce a motion to recommit. I have
that motion at the desk, and I would like to simply explain it for a
moment now.
The conference report would allow credit card companies and other
consumer creditors to have their debts survive bankruptcy. That would
mean that those debts would compete with child support, with spousal
support, with debts to drunk driving victims, and other high priority
debts after the bankruptcy case is over.
The motion to recommit will change that. The conferees stripped out
important protections contained in the Senate bill which would have
prevented creditors from using coercion and other illegal and unethical
practices to obtain reaffirmation agreements in which debtors agree to
repay debts which would otherwise be discharged in bankruptcy. We will
deal with that in the motion to recommit.
Reaffirmed debts, because they survive bankruptcy, compete with child
support and spousal support and other high priority debts, which
already survive bankruptcy, for the scarce resources of the debtor
after the case is over. As I mentioned a moment ago, we will deal with
that problem.
The conferees also adopted broad exceptions to the discharge for
credit card companies so that the high risk lending practices would
have the same privilege status as support obligations and tax arrears,
and we will deal with that in a motion to recommit.
The motion to recommit would restore important protections for
families and small creditors that were dumped or gutted in the
conference report. As I mentioned before, that based primarily on these
disastrous changes to the Senate bill, the administration has indicated
that the President will veto this bill, and well he should veto this
bill.
We should sustain this veto unless the motion to recommit is granted
and the provisions of that motion survive subsequent proceedings.
So I urge the Members to vote for the motion to recommit if they care
about child support, if they care about spousal support, if they care
about debts to drunk driving victims, if they care about payments to
victims of crimes, all of which would be endangered by this.
So I urge my colleagues to vote for the motion to recommit and, if it
does not pass, against this very unfortunate bill.
Mr. Speaker, I yield back the balance of my time.
Mr. GEKAS. Mr. Speaker, I yield myself such time as I may consume.
Mr. Speaker, it should be made clear that the support priorities that
we have built into this conference report are endorsed by the National
Association of Attorneys General who supervise all of these matters and
by every major support organization in the country.
{time} 1100
In fact, they tracked along with us as we moved towards this moment,
and approved every set of provisions that we adopted along the way. So
I am confident that support payments and family income are well
protected in this legislation, as are the consumers in a whole litany
of provisions that we have.
Mr. BEREUTER. Mr. Speaker, this Member rises today to express his
support for the conference report for H.R. 3150, the Bankruptcy Reform
Act. In particular, this Member is supportive of the provision which
permanently extends Chapter 12 bankruptcy for family farmers which
would be retroactively applied to October 1, 1998.
First, this Member would thank the distinguished gentleman [Mr.
Gekas], Chairman of the Judiciary Subcommittee on Commercial and
Administrative Law from Pennsylvania, for introducing this bill and for
his efforts in bringing the conference report for H.R. 3150 to the
House Floor. This Member would also like to express his appreciation to
the distinguished gentleman from Illinois [Mr. Hyde], the Chairman of
the Judiciary Committee, for his efforts on this measure.
Unfortunately, Chapter 12 bankruptcy provisions for family farmers
expired on September 30, 1998. Chapter 12 bankruptcy has been a viable
option for family farmers nationwide. It has allowed family farmers to
reorganize their assets in a manner which balances the interests of
creditors and the future success of the involved farmer. If Chapter 12
bankruptcy provisions are not extended for family farmers, this will
have a drastic impact on an agricultural sector already reeling from
low commodity prices. Not only will many family farmers have to end
their operations, but also land values will likely plunge downward.
Such a decrease in land values will affect both the ability of family
farmers to earn a living and the manner in which banks, making
agricultural loans, conduct their lending activities. This Member has
received many contacts from his constituents regarding the extension of
Chapter 12 bankruptcy because of the situation now being faced by our
nation's farm families--although the U.S. economy is generally healthy,
it is clear that agricultural sector is hurting.
The gravity of this situation for family farmers nationwide makes it
imperative that Chapter 12 bankruptcy is permanently extended.
Moreover, this extension must also be retroactively applied since the
Chapter 12 bankruptcy option for family farms has already expired on
September 30, 1998. The provisions in the conference report of H.R.
3150 regarding Chapter 12 are essential.
If the President vetoes this conference report, as he has threatened
to do, then this Member would ask the Judiciary Committee to advance
legislation, through amendment or in stand-alone legislation, to
provide for the immediate extension of Chapter 12 bankruptcy and to
make such an extension retroactive to October 1, 1998.
[[Page H10238]]
In closing, this Member would encourage his support for H.R. 3150,
the Conference Report on the Bankruptcy Reform Act.
Mr. LEACH. Mr. Speaker, I would like to comment briefly on those
provisions of this conference report which amend laws under the
jurisdiction of the Banking Committee.
The conference report contains an amendment to the Truth in Lending
Act designed to protect consumers from having their credit line revoked
because they fully pay their outstanding debt in a timely manner. I
support this change in law. It is individually counter-intuitive and
socially counter-productive that lenders establish incentives to pull
credit away from individuals who pay their bills on time.
The Senate, however, originally coupled this provision with a
prohibition against a creditor charging any type of fee with regard to
an extension of credit on which no finance charge has been incurred.
While perhaps well intended, this latter provision amounted to a public
sector dictate on how the private sector should charge for goods and
services.
This price fixing provision would have frustrated responsible free
market precepts and would have, if it had been enacted, resulted in a
reduction in credit provided consumers. Because of concern for this
prohibition, many of us voted last week against an instruction of
conferees that also included the earlier described issue. The conferees
approximately agreed to accept the first part of the instruction but
not the second. Hence, I and many others who voted against the
instruction can now enthusiastically support the provision.
The conference report does include a number of other amendments
designed to provide consumers more protections, including enhanced
disclosures for credit card debt, which I also support.
In summary, Mr. Speaker, I want to express my appreciation to
Chairman Hyde, Chairman Geka's and the rest of the conferees for their
willingness to take the Banking Committee's views into consideration on
those relatively small parts of the bill that fall under the
jurisdiction of the committee. While there are parts of this bill such
as those related to child support, which I believe are imperfect, as a
whole it represents reasonable reform.
If the President vetoes this bill, he will also veto an approach it
supports to better stabilize the shaky international economy and other
Banking Committee provisions designed to protect consumers.
In this regard, Mr. Speaker, let me stress that the conference report
incorporates the provisions of H.R. 4394, the ``Financial Contract
Netting Improvement Act of 1998'', which the Committee on Banking and
Financial Services reported to the full House on August 21, 1998.
These netting provisions were approved unanimously by the Banking
Committee and are supported by Federal financial regulators and the
Administration. They are designed to minimize the risk of a disruption
within or between financial markets upon the insolvency of an entity
with large holdings of qualified financial contracts. The near failure
of Long-Term Capital Management LP highlights the need for the U.S. to
further refine its bankruptcy and insolvency laws in order to avoid
systemic risk to the nation's financial system in the event of a
failure of a large bank, hedge fund, or securities firm with huge
exposures to interest rate and currency swaps and other complex
financial instruments.
Ms. LEE. Mr. Speaker, I rise to strongly oppose H.R. 3150, the
Bankruptcy Reform Conference Report. I opposed the bill as a member of
the House Committee on Banking and Financial Services when we voted on
this measure in the House because it allows unscrupulous creditors to
continue to exploit uninformed and naive borrowers.
There is a problem with increasing rates of bankruptcy, but this
Conference report places the burden of a bad loan not on those who
knowingly loan to people who are credit risks, but on those who are
least able to recover should a personal disaster strike, like illness
or job loss. Household debt has risen sharply and defaulting on payment
is a serious problem but this bill does not reasonably address these
problems. Instead, the bill allows the lender to effectively entrap a
poor person who needs money to borrow beyond the safety point. The
lending institutions are knowledgeable and sophisticated about the
credit market and they do know to whom they are lending money. If this
bill passes, the government and taxpayers will be forced to protect, by
law, the lending institution, which has deliberately pushed a risky
loan, at the expense of low-income American consumers.
Specifically, this bill will allow credit card companies and other
consumer creditors to compete for repayment with child support, spousal
support, debts to drunk driving victims, and other high-priority debts.
The Conference Report strips important Senate bill consumer protections
which limited undue coercion and the use of other strong-arm practices
to force a debtor to repay.
This bill is blatantly unfair. It protects and even rewards
businesses that use marginally safe lending guidelines and elevates
their collection rights to the same privileged level as child support
and tax arrears.
The President has correctly announced that he will veto this bill. It
is also strongly opposed by the AFL-CIO, the Consumer Federation of
America, Consumers Union, Public Citizen, the National Organization of
Women, the Leadership Conference on Civil Rights, the Association of
Trial Lawyers of America, the National Bankruptcy Conference, the
Commercial Law League, the National Conference of Bankruptcy Judges,
Mothers Against Drunk Driving, and the National Organization for Victim
Assistance.
I believe that our function as legislators is to enact laws that are
fair and that are reasonable, and I believe that we have an obligation
to be aware of vast imbalances of power and to protect those who need
protection from more powerful entities. I urge my colleagues to support
the motion to recommit and to vote against the Conference Report on
H.R. 3150.
Mr. CHABOT. Mr. Speaker, I rise in support of this Conference Report.
I would first like to thank Mr. Hyde, Mr. Gekas, Mr. Hatch and the
other members of the Conference Committee.
The current bankruptcy system, which this legislation seeks to
reform, clearly discourages personal responsibility. Our bankruptcy
laws often allow those who can afford to pay their bills to declare
bankruptcy and walk away debt free instead. As a result, personal
bankruptcies are skyrocketing. In fact, despite economic growth, low
unemployment and rising incomes personal bankruptcies reached a record
1.4 million last year, and are projected to rise even further this
year.
This places a terrible financial burden on consumers who are forced
to pay higher prices for goods and services. In fact, the average
family pays a $400 bad debt tax every year.
The Conference proposal is, I believe, substantial improvement over
current law. This legislation will strengthen the bankruptcy code,
reducing the number of ``bankruptcies of convenience.'' I believe that
the needs-based test that is implemented in this Conference Report will
take substantial steps in reforming this system by reestablishing the
link between one's ability to pay and ability to discharge debt.
The needs-based test is a balance between the House and Senate bills
on this issue. It adopts the bright-line standards for measuring
repayment capacity from the House bill, while at the same time
preserving the right of a debtor in bankruptcy to have a judge review
his or her individual case so that their unique circumstances could be
taken into account.
This legislation also cracks down on a number of ways in which
debtors abuse the system bankruptcy. For example, it makes debts that
are incurred to pay nondischargeable debts, such as taxes, would become
nondischargeable, as well. In other words if a person uses a credit
card to pay their income taxes, this legislation prohibits them from
turning around and declaring bankruptcy, making the credit card company
in effect pay their income taxes.
At the same time, however, it recognizes that there is some real need
for the protections that bankruptcy offers, and it strengthens that
protection. For example, it strengthens child support and alimony
payments, making alimony and child support payments the first priority,
not the 7th, as under current law.
Finally, while I believe that some sections of the House passed bill
would have better addressed some of the problems with the bankruptcy
laws, this strong, pro-consumer bill makes vital reforms to the
bankruptcy system.
I urge my colleagues to support this legislation, Mr. Speaker,
because it takes some significant steps in the right direction in
restoring some personal responsibility to our bankruptcy laws, while
protecting those who need the protections of bankruptcy.
I urge my colleagues to support this Conference Report, and I hope
that the President will sign this important legislation, giving hard-
working American families protection from those who abuse the
bankruptcy system.
Mr. GEKAS. Mr. Speaker, I yield back the balance of my time, and I
move the previous question on the conference report.
The previous question was ordered.
Motion to Recommit Offered by Mr. Nadler
Mr. NADLER. Mr. Speaker, I offer a motion to recommit.
The SPEAKER pro tempore. Is the gentleman opposed to the conference
report?
Mr. NADLER. In its present form I am, Mr. Speaker.
The SPEAKER pro tempore. The Clerk will report the motion to
recommit.
The Clerk read as follows:
Mr. Nadler moves to recommit the Conference Report on the
bill H.R. 3150 to the Conference Committee with instructions
that the Managers on the part of the House
[[Page H10239]]
disagree to section 110 of the Conference Report and agree to
section 210 and section 211 of the Senate Amendment; and
disagree to section 149 of the Conference Report and agree to
section 315 of the Senate Amendment.
The SPEAKER pro tempore. Without objection, the previous question is
ordered on the motion to recommit.
There was no objection.
The SPEAKER pro tempore. The question is on the motion to recommit.
The question was taken; and the Speaker pro tempore announced that
the noes appeared to have it.
Mr. NADLER. Mr. Speaker, I object to the vote on the ground that a
quorum is not present and make the point of order that a quorum is not
present.
The SPEAKER pro tempore. Evidently a quorum is not present.
The Sergeant at Arms will notify absent Members.
Pursuant to clause 5 of rule XV, the Chair will reduce to a minimum
of 5 minutes the period of time within which a vote by electronic
device, if ordered, will be taken on the question of adoption of the
conference report.
Without objection, each of the 4 possible votes on postponed
suspensions will be 5-minute votes.
There was no objection.
The vote was taken by electronic device, and there were--yeas 157,
nays 266, not voting 11, as follows:
[Roll No. 505]
YEAS--157
Abercrombie
Ackerman
Allen
Andrews
Baldacci
Barrett (WI)
Becerra
Blagojevich
Blumenauer
Bonior
Borski
Brady (PA)
Brown (CA)
Brown (FL)
Brown (OH)
Campbell
Capps
Carson
Clay
Clayton
Clyburn
Conyers
Costello
Coyne
Cummings
Davis (IL)
DeFazio
DeGette
Delahunt
DeLauro
Dicks
Dingell
Dixon
Doggett
Doyle
Edwards
Engel
Eshoo
Etheridge
Evans
Farr
Fattah
Filner
Ford
Fox
Furse
Gejdenson
Gephardt
Gonzalez
Green
Gutierrez
Hall (OH)
Hastings (FL)
Hefner
Hilliard
Hinchey
Hinojosa
Holden
Jackson (IL)
Jackson-Lee (TX)
Jefferson
Johnson, E. B.
Kanjorski
Kaptur
Kennedy (MA)
Kennedy (RI)
Kildee
Kilpatrick
Kind (WI)
Klink
Kucinich
LaFalce
Lampson
Lantos
Lee
Levin
Lewis (GA)
Lipinski
Lofgren
Lowey
Luther
Maloney (NY)
Manton
Markey
Martinez
Mascara
Matsui
McCarthy (MO)
McCarthy (NY)
McDermott
McGovern
McHale
McIntyre
McKinney
McNulty
Meehan
Meek (FL)
Meeks (NY)
Menendez
Millender-McDonald
Miller (CA)
Mink
Moakley
Murtha
Nadler
Neal
Oberstar
Obey
Olver
Ortiz
Owens
Pallone
Pascrell
Pastor
Payne
Pelosi
Pomeroy
Price (NC)
Rahall
Rangel
Reyes
Rivers
Rodriguez
Roukema
Roybal-Allard
Rush
Sabo
Sanchez
Sanders
Sandlin
Sawyer
Schumer
Scott
Serrano
Skaggs
Slaughter
Spratt
Stabenow
Stark
Stokes
Strickland
Stupak
Thompson
Thurman
Towns
Traficant
Turner
Velazquez
Vento
Visclosky
Waters
Watt (NC)
Waxman
Wexler
Woolsey
Wynn
Yates
NAYS--266
Aderholt
Archer
Armey
Bachus
Baesler
Baker
Ballenger
Barcia
Barr
Barrett (NE)
Bartlett
Barton
Bass
Bateman
Bentsen
Bereuter
Berry
Bilbray
Bilirakis
Bishop
Bliley
Blunt
Boehlert
Boehner
Bonilla
Bono
Boswell
Boucher
Boyd
Brady (TX)
Bryant
Bunning
Burr
Buyer
Callahan
Calvert
Camp
Canady
Cannon
Cardin
Castle
Chabot
Chambliss
Chenoweth
Christensen
Clement
Coble
Coburn
Collins
Combest
Condit
Cooksey
Cox
Cramer
Crane
Crapo
Cubin
Cunningham
Danner
Davis (FL)
Davis (VA)
Deal
DeLay
Deutsch
Diaz-Balart
Dickey
Dooley
Doolittle
Dreier
Duncan
Dunn
Ehlers
Ehrlich
Emerson
English
Ensign
Everett
Ewing
Fawell
Fazio
Foley
Forbes
Fossella
Fowler
Frank (MA)
Franks (NJ)
Frelinghuysen
Frost
Gallegly
Ganske
Gekas
Gibbons
Gilchrest
Gillmor
Gilman
Goode
Goodlatte
Gordon
Goss
Graham
Granger
Greenwood
Gutknecht
Hall (TX)
Hamilton
Hansen
Harman
Hastert
Hastings (WA)
Hayworth
Hefley
Herger
Hill
Hilleary
Hobson
Hoekstra
Hooley
Horn
Hostettler
Houghton
Hoyer
Hulshof
Hunter
Hutchinson
Hyde
Inglis
Istook
Jenkins
Johnson (CT)
Johnson (WI)
Johnson, Sam
Jones
Kasich
Kelly
Kim
King (NY)
Kingston
Kleczka
Klug
Knollenberg
Kolbe
LaHood
Largent
Latham
LaTourette
Lazio
Leach
Lewis (CA)
Lewis (KY)
Linder
Livingston
LoBiondo
Lucas
Maloney (CT)
Manzullo
McCollum
McCrery
McHugh
McInnis
McIntosh
McKeon
Metcalf
Mica
Miller (FL)
Minge
Mollohan
Moran (KS)
Moran (VA)
Morella
Myrick
Nethercutt
Neumann
Ney
Northup
Norwood
Nussle
Oxley
Packard
Pappas
Parker
Paul
Paxon
Pease
Peterson (MN)
Peterson (PA)
Petri
Pickering
Pickett
Pitts
Pombo
Porter
Portman
Quinn
Radanovich
Ramstad
Redmond
Regula
Riggs
Riley
Roemer
Rogan
Rogers
Rohrabacher
Ros-Lehtinen
Rothman
Royce
Ryun
Salmon
Sanford
Saxton
Scarborough
Schaefer, Dan
Schaffer, Bob
Sensenbrenner
Sessions
Shadegg
Shaw
Shays
Sherman
Shimkus
Shuster
Sisisky
Skeen
Skelton
Smith (MI)
Smith (NJ)
Smith (OR)
Smith (TX)
Smith, Adam
Smith, Linda
Snowbarger
Snyder
Solomon
Souder
Spence
Stearns
Stenholm
Stump
Sununu
Talent
Tanner
Tauscher
Tauzin
Taylor (MS)
Taylor (NC)
Thomas
Thornberry
Thune
Tiahrt
Upton
Walsh
Wamp
Watkins
Watts (OK)
Weldon (FL)
Weldon (PA)
Weller
Weygand
White
Whitfield
Wicker
Wilson
Wise
Wolf
Young (AK)
Young (FL)
NOT VOTING--11
Berman
Burton
Cook
Goodling
John
Kennelly
McDade
Poshard
Pryce (OH)
Tierney
Torres
{time} 1122
Mrs. KELLY, Mrs. WILSON, and Messrs. BATEMAN, ROTHMAN, KNOLLENBERG,
GILLMOR, WALSH, WICKER, WHITE and HYDE changed their vote from ``yea''
to ``nay.''
Messrs. HOLDEN, McNULTY, BORSKI, LIPINSKI, HASTINGS of Florida,
ETHERIDGE, McHALE, and SPRATT changed their vote from ``nay'' to
``yea.''
So the motion to recommit was rejected.
The result of the vote was announced as above recorded.
The SPEAKER pro tempore (Mr. Shimkus). The question is on the
conference report.
The question was taken; and the Speaker pro tempore announced that
the ayes appeared to have it.
Recorded Vote
Mr. NADLER. Mr. Speaker, I demand a recorded vote.
A recorded vote was ordered.
The SPEAKER pro tempore. This is a five-minute vote.
The vote was taken by electronic device, and there were--ayes 300,
noes 125, not voting 9, as follows:
[Roll No. 506]
AYES--300
Aderholt
Andrews
Archer
Armey
Bachus
Baesler
Baker
Ballenger
Barcia
Barr
Barrett (NE)
Bartlett
Barton
Bass
Bateman
Bentsen
Bereuter
Berry
Bilbray
Bilirakis
Bishop
Blagojevich
Bliley
Blumenauer
Blunt
Boehlert
Boehner
Bonilla
Bono
Boswell
Boucher
Boyd
Brady (TX)
Bryant
Bunning
Burr
Burton
Buyer
Callahan
Calvert
Camp
Campbell
Canady
Cannon
Capps
Cardin
Castle
Chabot
Chambliss
Chenoweth
Christensen
Clement
Coble
Coburn
Collins
Combest
Condit
Cook
Cooksey
Cox
Cramer
Crane
Crapo
Cubin
Cunningham
Danner
Davis (FL)
Davis (VA)
Deal
DeLay
Deutsch
Diaz-Balart
Dickey
Dicks
Dooley
Doolittle
Dreier
Duncan
Dunn
Ehlers
Ehrlich
Emerson
English
Ensign
Etheridge
Everett
Ewing
Fawell
Fazio
Foley
Forbes
Fossella
Fowler
Fox
Frank (MA)
Franks (NJ)
Frelinghuysen
Frost
Gallegly
Ganske
Gekas
Gephardt
Gibbons
Gilchrest
Gillmor
Gilman
Goode
Goodlatte
Goodling
Gordon
Goss
Graham
Granger
Greenwood
Gutknecht
Hall (TX)
Hamilton
Hansen
Harman
Hastert
Hastings (WA)
Hayworth
Hefley
Herger
Hill
Hilleary
Hobson
Hoekstra
Holden
Hooley
Horn
Hostettler
Houghton
Hoyer
Hulshof
Hunter
Hutchinson
Hyde
Inglis
Istook
Jenkins
Johnson (CT)
Johnson (WI)
Johnson, Sam
Jones
Kasich
Kelly
Kennedy (RI)
Kim
Kind (WI)
[[Page H10240]]
King (NY)
Kingston
Kleczka
Klug
Knollenberg
Kolbe
LaHood
Largent
Latham
LaTourette
Lazio
Leach
Lewis (CA)
Lewis (KY)
Linder
Livingston
LoBiondo
Lucas
Maloney (CT)
Maloney (NY)
Manzullo
Matsui
McCarthy (NY)
McCollum
McCrery
McHale
McHugh
McInnis
McIntosh
McIntyre
McKeon
Menendez
Metcalf
Mica
Miller (FL)
Minge
Mollohan
Moran (KS)
Moran (VA)
Morella
Myrick
Neal
Nethercutt
Neumann
Ney
Northup
Norwood
Nussle
Oxley
Packard
Pappas
Parker
Pascrell
Pastor
Paul
Paxon
Pease
Peterson (MN)
Peterson (PA)
Petri
Pickering
Pickett
Pitts
Pombo
Pomeroy
Porter
Portman
Price (NC)
Quinn
Radanovich
Ramstad
Redmond
Regula
Riggs
Riley
Rivers
Roemer
Rogan
Rogers
Rohrabacher
Ros-Lehtinen
Rothman
Royce
Ryun
Salmon
Sandlin
Sanford
Sawyer
Saxton
Scarborough
Schaefer, Dan
Schaffer, Bob
Sensenbrenner
Sessions
Shadegg
Shaw
Shays
Sherman
Shimkus
Shuster
Sisisky
Skeen
Skelton
Smith (MI)
Smith (NJ)
Smith (OR)
Smith (TX)
Smith, Adam
Smith, Linda
Snowbarger
Snyder
Solomon
Souder
Spence
Spratt
Stearns
Stenholm
Strickland
Stump
Sununu
Talent
Tanner
Tauscher
Tauzin
Taylor (MS)
Taylor (NC)
Thomas
Thornberry
Thune
Tiahrt
Turner
Upton
Velazquez
Walsh
Wamp
Watkins
Watts (OK)
Weldon (FL)
Weldon (PA)
Weller
Weygand
White
Whitfield
Wicker
Wilson
Wise
Wolf
Wynn
Young (AK)
Young (FL)
NOES--125
Abercrombie
Ackerman
Allen
Baldacci
Barrett (WI)
Becerra
Bonior
Borski
Brady (PA)
Brown (CA)
Brown (FL)
Brown (OH)
Carson
Clay
Clayton
Clyburn
Conyers
Costello
Coyne
Cummings
Davis (IL)
DeFazio
DeGette
Delahunt
DeLauro
Dingell
Dixon
Doggett
Doyle
Edwards
Engel
Eshoo
Evans
Farr
Filner
Ford
Furse
Gejdenson
Gonzalez
Green
Gutierrez
Hall (OH)
Hastings (FL)
Hefner
Hilliard
Hinchey
Hinojosa
Jackson (IL)
Jackson-Lee (TX)
Jefferson
Johnson, E. B.
Kanjorski
Kaptur
Kennedy (MA)
Kildee
Kilpatrick
Klink
Kucinich
LaFalce
Lampson
Lantos
Lee
Levin
Lewis (GA)
Lipinski
Lofgren
Lowey
Luther
Manton
Markey
Martinez
Mascara
McCarthy (MO)
McDermott
McGovern
McKinney
McNulty
Meehan
Meek (FL)
Meeks (NY)
Millender-McDonald
Miller (CA)
Mink
Moakley
Murtha
Nadler
Oberstar
Obey
Olver
Ortiz
Owens
Pallone
Payne
Pelosi
Rahall
Rangel
Reyes
Rodriguez
Roukema
Roybal-Allard
Rush
Sabo
Sanchez
Sanders
Schumer
Scott
Serrano
Skaggs
Slaughter
Stabenow
Stark
Stokes
Stupak
Thompson
Thurman
Towns
Traficant
Vento
Visclosky
Waters
Watt (NC)
Waxman
Wexler
Woolsey
Yates
NOT VOTING--9
Berman
Fattah
John
Kennelly
McDade
Poshard
Pryce (OH)
Tierney
Torres
{time} 1130
The Clerk announced the following pairs:
Mr. DICKS and Ms. RIVERS changed their vote from ``no'' to ``aye.''
So the conference report was agreed to.
The result of the vote was announced as above recorded.
A motion to reconsider was laid on the table.
____________________