[Congressional Record Volume 145, Number 42 (Wednesday, March 17, 1999)]
[Senate]
[Pages S2844-S2845]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. SARBANES (for himself, Mr. Durbin, Mr. Dodd, and Mr. 
        Feingold):
  S. 641. A bill to amend the Truth in Lending Act to provide for 
enhanced information regarding credit card balance payment terms and 
conditions, and to provide for enhanced reporting of credit card 
solicitations to the Board of Governors of the Federal Reserve System 
and to Congress, and for other purposes; to the Committee on Banking, 
Housing, and Urban Affairs.

[[Page S2845]]

                    enhanced credit card disclosures

 Mr. SARBANES. Mr. President, I rise today to introduce 
legislation on a subject that was the focus of considerable discussion 
last fall, during the Senate's consideration of bankruptcy reform 
legislation.
  During that debate, the Senate examined whether the increased rate of 
consumer bankruptcies in the Nation resulted solely from consumers' 
access to an excessively permissive bankruptcy process, or whether 
other factors also contributed to this increase. Ultimately it 
concluded that the record increase in bankruptcy filings across the 
nation is due not only to the ease with which one can enter the 
bankruptcy system, but also to the unparalleled levels of consumer 
debt--especially credit card debt--being run up across the country. As 
Senator Durbin noted in his opening statement on the bankruptcy reform 
bill last fall, and as the CBO, FDIC, and numerous economists have 
found, the rate of increase in bankruptcy filings is virtually 
identical to the rate of increase in consumer debt.
  This is not a coincidence. Rather, increased bankruptcies proceed 
directly from the fact that Americans are bombarded daily by credit 
card solicitations that promise easy access to credit without informing 
their targets of the implications of signing up for such credit.
  During last fall's debate, the Senate also concluded that 
irresponsible borrowing could be reduced, and many bankruptcies 
averted, if Americans were provided with some basic information in 
their credit card materials regarding the consequences of assuming 
greater debt. A consensus emerged that credit card companies have some 
affirmative obligation to provide such information to consumers in 
their solicitations, monthly statements, and purchasing materials, in 
light of their aggressive pursuit of less and less knowledgeable 
borrowers.
  As a result of this emerging consensus, last year's Senate bankruptcy 
bill--S. 1301--contained several provisions in the Manager's Amendment 
addressing credit card debt, and requiring specific disclosures by 
credit card companies in their payment and solicitation materials. 
These provisions, which I sponsored along with Senators Dodd and 
Durbin, were vital to the Senate's success in adopting balanced 
bankruptcy reform legislation that placed responsibility for the surge 
in consumer bankruptcies on debtors and creditors alike, and enabled 
the Senate to pass its bankruptcy bill by the overwhelming margin of 
97-1.
  Unfortunately, the House-Senate conference committee struck these 
disclosure provisions from its final conference report, leaving the 
bankruptcy bill again a one-sided document that failed to account for 
the role credit card companies play in the accumulation of credit card 
debt and in increased consumer bankruptcy rates. As a result of the 
conference committee's actions, the conference report died in the 
waning days of the 105th Congress, amid pledges by the majority to 
resurrect it in the early days of the 106th Congress.
  Mr. President, if we are indeed going to enter again into a debate on 
bankruptcy legislation in the 106th Congress, it remains my firm belief 
that Congress must address both sides of the consumer bankruptcy 
equation--both the flaws in the bankruptcy system that make it easy for 
people to declare bankruptcy even if they have the ability to pay their 
debts, and the lending practices that encourage people on the economic 
margins to accumulate debts that are beyond their ability to repay.
  I therefore rise today to introduce legislation that is similar, 
though not identical, to the language included in last year's Senate 
bankruptcy bill. It is my hope that this bill will stimulate discussion 
about the responsibilities of lenders in the bankruptcy equation, and 
that, when the time comes to debate bankruptcy reform, the nature and 
extent of these responsibilities will be a large part of the 
discussion.
  In short, this legislation amends the Truth in Lending Act to require 
credit card companies to disclose the following basic information in 
each monthly statement:
  (1) The required minimum payment on a consumer's monthly balance;
  (2) The number of months it will take to pay off that balance if the 
consumer makes minimum monthly payments;
  (3) The total cost, with interest, of paying off that balance if the 
consumer continues to make only minimum monthly payments; and
  (4) The monthly payment amount if the consumer seeks to pay off the 
balance in 36 months.
  The legislation also requires that when a debtor purchases property 
under a credit card plan, the retailer must disclose to the debtor, if 
applicable:
  (1) That the creditor now has a security interest in the property;
  (2) The nature of the security interest;
  (3) How the security interest may be enforced in the event of non-
payment of the credit card balance; and
  (4) That the debtor must not dispose of the secured property until 
the balance on that account is fully paid.
  My bill calls for the Federal Reserve Board to promulgate model forms 
for these disclosures and, finally, requires credit card companies to 
provide to the Fed, and the Fed to Congress, data regarding credit card 
solicitations.
  This bill is not about restricting access to credit. Rather, it is 
about providing consumers with the information they need to make 
intelligent choices about whether to assume more debt. It advances the 
goal of consumer responsibility that should be at the heart of any 
efforts at bankruptcy reform by Congress, and I therefore urge my 
colleagues to review this legislation carefully and to draw upon it 
when--if--the issue of consumer bankruptcy reemerges in the 106th 
Congress.
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