[Congressional Record Volume 146, Number 60 (Tuesday, May 16, 2000)]
[Senate]
[Pages S3965-S3970]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                           BANKRUPTCY REFORM

  Mr. KENNEDY. Mr. President, I want to bring to the attention of the 
Senate the continued deterioration of the position which had been 
accepted previously by the Senate on the issue of bankruptcy.
  That may seem an issue that is distant and remote to many of our 
colleagues or many around this country, but it is an issue that will 
affect basically working women who are disproportionately hit by the 
pressures of bankruptcy because of the allocations of credit at the 
time of separation or their shortage of alimony or the shortage of 
child payments. It hits them disproportionately.
  It hits older workers disproportionately in terms of their medical 
bills. About half of those bankruptcies are a result of the escalation 
and the costs of medical bills, coupled with the fact of prescription 
drug costs and the shortage of prescription drugs. That is another 
matter of priority. That is another matter we believe ought to be 
addressed. The failure of this body to address providing decent quality 
prescription drugs on the basis of need and on the ability to pay is 
also a major gap in our Medicare system. We should be taking action on 
that. When we don't, we find increasing numbers of individuals are 
falling into bankruptcy because they can't afford the prescription 
drugs. The credit cards last for only so long, and the payments they 
receive in terms of working families last only so long, and then they 
get overwhelmed with their payments and they go into bankruptcy.
  There is a third group of individuals who go into bankruptcy as a 
result of being downsized. They worked hard all of their lives. The 
people who go into bankruptcy have the same work habits as those who do 
not. The overwhelming majority are hard-working Americans who fall into 
hard times.
  As has been stated time and time on the floor of this body, it is 
always useful to ask who is going to benefit from a piece of 
legislation and who is going to pay a price with the passage of a piece 
of legislation. I have not seen in this Congress or any recent times 
the scales so unbalanced. Those that are going to benefit are going to 
be the credit card companies, banking interests; those harshly treated 
will be average working Americans who have fallen into difficult times, 
either economically or because of health care needs or because of age 
and the job challenges they are facing.
  Only recently there was an excellent article in Time magazine. The 
total number of individuals going into bankruptcy is declining. Still, 
we have this economic power that is trying to jam this legislation 
through the House of Representatives and the Senate of the United 
States behind closed doors. I was listening to my colleagues talk about 
actions taken behind closed doors. They find out on the bankruptcy 
legislation these are matters that are taking place behind closed doors 
as well.
  The Time magazine article pointed out what is happening to an average 
family. Charles and Lisa Trapp are mail carriers in Plantation, FL, 
where Annelise, 8 years old, developed a muscular disorder and needed 
around-the-clock nursing care. Lisa had to quit her job, and with 
$124,000 in doctor bills, insurance will not cover paying off credit 
cards, which is the least of their worries. They have filed for chapter 
7 bankruptcy. The medical costs are what the Trapp family insurance did 
not cover. They had to use credit cards to buy groceries and they have 
an accumulation of $59,000 in credit card bills. The point is, they 
used the funds available on the credit cards for their groceries so 
they could use what income they had to pay for the needed prescription 
drugs.
  This family, under this Republican bill, is treated harshly and 
poorly. The Trapp family are a brave and courageous family. And this 
situation is being replicated. It is fundamentally wrong.
  Mr. President, for over two years, Congress has been struggling to 
reform the bankruptcy laws. From the beginning, the debate has been 
unfairly slanted toward the credit card companies and banks at the 
expense of vulnerable Americans. It is especially disturbing that the 
final bill may well be drafted without the appointment of conferees or 
even public meetings. The American people deserve a better process and 
a fairer bill.
  A fair bankruptcy reform bill will balance the needs of debtors and 
creditors. It will not allow credit card companies and other special 
interests to take unfair advantage of thousands of citizens who find 
themselves in economic crisis--citizens like the Trapp family recently 
featured in Time magazine.
  The Trapps are not wealthy cheats trying to escape their financial 
responsibilities. They are a middle class family engulfed in debt 
because of circumstances beyond their control. Like half of all 
Americans who file for bankruptcy, the Trapp family had massive medical 
expenses.
  Charles and Lisa Trapp met while working as mail carriers in 
Plantation, Florida. They married and have three children--the 
youngest, Annelise, has a degenerative muscular condition. She requires 
round-the-clock medical care. In her wheel chair or in bed, she uses a 
respirator at least eight hours a day. As a result, the Trapps have 
$124,000 in doctors' bills that insurance won't cover, and $40,000 of 
credit card debt for groceries and other necessities.
  The plight of the Trapp family is similar to that of many other 
American families confronted with serious illness and injury. Over 43 
million

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Americans have no health insurance, and many millions more are under-
insured. Each year, millions of families spend more than 20 percent of 
their income on medical care. Older Americans are hit particularly 
hard. Too often, each of these families and senior citizens is one 
serious illness away from bankruptcy.
  A report recently published in Norton's Bankruptcy Adviser says,

       The data reported here serve as a reminder that self-
     funding medical treatment and loss of income during a bout of 
     illness or recovery from an accident make a substantial 
     number of middle class families vulnerable to financial 
     collapse . . . For middle class people, there is little 
     government help, so that when private insurance is 
     inadequate, bankruptcy serves by default as a means for 
     dealing with the financial consequences of a serious medical 
     problem.

  The data collected in the report make clear that this problem affects 
both the poor and the middle class. In many cases, health insurance is 
insufficient to protect a family with medical problems. ``The 
bankruptcy courts are populated not only with the uninsured, but also 
with those whose insurance does not cover all the financial 
consequences of their medical problems''--families facing medical debts 
that have outrun their policy limits--facing co-payments beyond their 
means--facing lost income not covered by their insurance.
  When the health care system fails these men and women and children, 
the bankruptcy system catches them before they hit rock bottom. What 
will happen to these families if we fundamentally destroy the 
bankruptcy system?
  What will happen to those who can't pay their bills because they were 
laid off in a merger or downsizing that left them without adequate 
income or basic benefits? Over half of all Americans say that the 
reason they file for bankruptcy is because of job loss. That fact is 
not surprising. Despite low unemployment, a record-setting stock 
market, and large budget surpluses, Wall Street cheers when companies--
eager to improve profits by down-sizing--lay- off workers in large 
numbers.
  Often, when workers lose a good job, they are unable to recover. In a 
study of displaced workers in the early 1990s, the Bureau of Labor 
Statistics reported that only about one-quarter of these workers were 
later employed in full-time jobs paying as much as or more than they 
had earned at the job they lost. Too often, laid-off workers are forced 
to accept part-time jobs, temporary jobs, and jobs with fewer benefits 
or no benefits at all.
  For many hard-working men and women, these job benefits--particularly 
a pension-- can be the difference between a secure retirement and 
poverty. But instead of action by Congress to expand pension benefits, 
an offensive anti-pension provision was quietly slipped into the 
bankruptcy reform bill at the last minute.
  It is wrong for Congress to let credit card companies and other 
lenders pressure workers to give up the protection they now have for 
their pensions in bankruptcy. Clearly this so-called ``pension waiver'' 
provision should be struck from the final bill.
  It would also be a mistake to ``cap'' the amount of pension assets 
that a worker can protect in bankruptcy. Federal law already imposes 
strict limits on pension contributions. Unlike homestead abuses, 
retirement plans can't be used as part of a scheme to divert assets 
before bankruptcy.
  It was the combination of a medical problem and a job loss that 
pushed Maxean Bowen--a single mother--into bankruptcy. Maxean told Time 
magazine that she was a social worker in the foster-care system in New 
York City when she developed a painful condition in both feet that made 
her job, which required house calls, impossible. As a result, she had 
to give up her work and go on the unemployment rolls. Her income fell 
by 50 percent. She had to borrow from relatives, and she used her 
credit cards to make ends meet. Like so many others in similar 
situations, she believed that she would soon be back on her feet and 
able to pay her debts. But, like thousands who file for bankruptcy, 
even when Maxean was able to work again, she owed far more than she 
could repay.
  She was at the mercy of her creditors. ``They would call me on the 
job . . . that was very embarrassing. They call you early in the 
morning. They call you late at night. Sometimes I get calls at 10 
o'clock at night. And they are very nasty.'' Maxean tried paying her 
creditors a few hundred dollars when possible, but it wasn't enough to 
keep her bills from piling up because of interest changes and late-
payment fees. Maxean said she was ``going crazy.''
  If she was going crazy, so are many others. Reports show that by the 
time individuals and families file for bankruptcy protection, more than 
20 percent of income before taxes is going toward paying interest and 
fees on their debts. Time magazine reports that study after study 
proves that Chapter 7 debtors have little if any ability to repay more 
of their debts. ``The notion that debtors in bankruptcy court are 
sitting on many billions of dollars that they could turn over to their 
creditors is a figment of the imagination of lenders and lawmakers.''
  Maxean's plight was made worse by the fact that she is a single 
mother. In 1999, over 500,000 women who head their own households filed 
for bankruptcy to try to stabilize their economic lives. 200,000 of 
them are also creditors--trying to collect child support or alimony. 
The rest are debtors struggling to make ends meet. Divorced women are 
four times more likely to file for bankruptcy than married women or 
single men.
  The House and Senate bankruptcy bills are especially harsh on 
divorced women and their children. Under current law, an ex-wife trying 
to collect support enjoys special protection. Her claims--like very few 
others--survive her husband's bankruptcy and provide a realistic 
opportunity to collect support payments from her former husband. Under 
the pending bill, however, credit card companies are given a new right 
to compete with women and children for the husband's limited income 
after bankruptcy.
  It is true that the bill moves support payments to the first priority 
position in the bankruptcy code. But that only matters in the limited 
number of cases in which the debtor has assets to distribute to a 
creditor. In most cases--close to 99 percent --there are no assets, and 
the list of priorities has no effect.
  The claim of ``first priority'' in bankruptcy is a sham to conceal 
the real problem--the competition for resources after bankruptcy. This 
legislation creates a new category of debt that cannot be discharged 
after bankruptcy--credit card debt. And, when women and children are 
forced to compete after bankruptcy with these sophisticated lenders, 
the women and children lose.
  In ways like these, the bankruptcy reform bills currently being 
negotiated by the House and the Senate are a travesty. They remove the 
bankruptcy safety net that has been a life-line for the poor and middle 
class. The credit card companies will receive a huge windfall, and they 
will walk away with few incentives to act more responsibly. And in a 
further insult, the House Republican negotiators want to preserve one 
of the most flagrant fat-cat loopholes--the ability of wealthy debtors 
to escape their responsibilities by using the homestead loophole in the 
current bankruptcy code.
  The Time magazine article makes these points effectively by comparing 
the plight of two debtors--James Villa and Allen Smith. James Villa is 
a 42 year-old stockbroker living in a $1.4 million home in Boca Raton, 
Florida. He was President, CEO and indirect owner of 99.5 percent of 
the stock of H.J. Meyers & Co., Inc--a brokerage firm with offices 
around the country. During the firm's heyday, Mr. Villa bought 
expensive cars, boats, and jewelry. But he fell on hard times when 
Massachusetts securities authorities found that his firm had engaged in 
fraudulent and unethical practices. Before further action could be 
taken, the firm closed its doors and Mr. Villa moved to Florida. That 
state has a broad homestead exemption, which allowed him to protect 
$1.4 million of assets--his Boca Raton home--from creditors, including 
clients of the brokerage firm who had lost their savings.
  How can that be fair, when Allen Smith, a retired security worker, 
has lost everything? Mr. Smith served in the Coast Guard during World 
War II and later went to work at Chrysler. He was eventually laid-off 
during a downsizing. Too young to collect Social Security, he started 
working as a security guard. He and his wife Carolyn

[[Page S3967]]

bought a home and lived a solid middle-class lifestyle until their 
lives started to crumble.
  Beginning in 1984, Mr. Smith's wife lost her toe, then one leg, then 
the other leg to diabetes. To accommodate her disability, Mr. Smith 
renovated their home using money borrowed against the equity. He 
developed throat cancer, high blood pressure, and a heart murmur and 
had to leave his job. The family was $115,000 in debt--double their 
annual income--so the Smiths filed for bankruptcy. They agreed to pay 
$100 a month under the requirements of Chapter 13.
  Carolyn Smith died later that year, and Mr. Smith was left--without 
her companionship or Social Security checks--to struggle alone. 
Eventually--after being hospitalized with a stroke, after cataract 
surgery, and after an irresponsible friend didn't pay his mortgage--Mr. 
Smith's Chapter 13 bankruptcy failed. His situation isn't unusual--two-
thirds of all Chapter 13 plans fail--but the consequences were 
devastating. Mr. Smith will be moved to Chapter 7, and he will lose his 
home.
  Any bill sent to the President for his signature must not make Allen 
Smith's life more difficult while protecting James Villa's ability to 
live in luxury. Congress must pass a better and fairer bill worthy of 
the name reform. The President should not hesitate to veto a bad 
bankruptcy bill that flunks the fairness test.
  For over a century, the bankruptcy laws have provided needed relief 
for those who fall on hard times. This Congress should not be a party 
to unfair reforms designed to benefit the powerful credit card industry 
and wealthy debtors, at the expense of the large numbers of needy 
citizens whom the bankruptcy laws are supposed to help, not hurt.
  The PRESIDING OFFICER. The Senator from Minnesota.
  Mr. WELLSTONE. How much time remains?
  The PRESIDING OFFICER. Under Senator Kennedy's control, Senator 
Wellstone has 7 minutes and Senator Harkin has 7 minutes, and, 
following that, Senator Kennedy retains 2 minutes.
  Mr. WELLSTONE. Mr. President, I am pleased to join Senator Kennedy 
and some of my other colleagues on the floor here today to talk about 
the so-called bankruptcy reform bill. I spoke for about twenty minutes 
yesterday on the same topic and my intent then is the same as that of 
my colleagues today: which is to shine a line on this bankruptcy bill, 
and focus the attention of the Senate on what Congress is poised to do 
to harshly punish working families overwhelmed by debt.
  Yesterday I mentioned the Bartlett and Steel article from Time 
magazine of last week entitled ``Soaked by Congress.'' I commend it to 
my colleagues' attention. And yesterday I also read some excerpts from 
that article to give colleagues an idea of what a typical family 
actually looks like who files for bankruptcy. In all honesty, I think 
many in the House and Senate were hoodwinked last year by a very clever 
media campaign on the part of the big banks and the credit card 
industry. I mean, it shouldn't be too surprising that the bill passed 
with the overwhelming margin that it did if you assumed that colleagues 
focused on the media campaign, the ad campaign, the legions of Gucci 
loafer wearing lobbyist that descended on the Hill. Because, frankly, I 
don't believe that many of my colleagues who did vote for the bill 
would have done so had they known then what they should know now, now 
that there has been some balance to the debate.
  Now the House and Senate leadership have staff burning the midnight 
oil trying to finish this bill so that they can stick it in an 
unrelated conference report. But while they do that, we have 40 million 
Americans without health insurance who we aren't rushing emergency 
legislation to safeguard. The Patients' Bill of Rights is MIA in 
conference for almost a year. We are crawling along--actually not even 
crawling anymore it appears--on Education--though schools are crumbling 
and kids can't learn because we aren't investing what we should into 
their education. I mean these are real emergencies facing millions of 
Americans. And yet it is so-called bankruptcy reform that the House and 
Senate are falling all over themselves to pass. This morning I want to 
focus on the reasons why this bill is being moved at light speed--the 
false reasons as well as the real reasons.
  Bankruptcy does not occur in vacuum. We know that in the vast 
majority of cases it is a drastic step taken by families in desperate 
financial circumstances and overburdened by debt. The main income 
earner may have lost his or her job. There may be sudden illness or a 
terrible accident requiring medical care. Certainly most Americans have 
faced a time in their lives where they weren't sure where the next 
mortgage payment or credit card payment was going to come from, but 
somehow they scrape by month to month. Still, such families are on the 
edge of a precipice and any new expense--a severely sick child, a car 
repair bill--could send a family into financial ruin. Despite the 
current economic expansion there are far too many working families in 
this situation. That is the true story behind the high number of 
bankruptcy filings in recent years and I want to make clear to my 
colleagues that the evidence shows that the very banks and credit card 
companies who are pushing this bill have a lot to do with why working 
families are in this predicament today.
  The bankruptcy system is supposed to allow a person to climb back up 
after they've hit bottom, to have a ``fresh start.'' There is no point 
to continue to punish a person and a family once their resources are 
over matched by debt. The bankruptcy system allows families to regroup, 
to focus resources on essentials like their home, transportation and 
meeting the needs of dependents. Sometimes the only way this can occur 
is to allow the debtor to be forgiven of some debt, and in most cases 
this is debt that would never be repaid because of the debtor's 
financial circumstances. In fact, in over 95% of bankruptcy cases 
creditors receive no distributions from the filer's assets--not because 
folks are able to beat the system--but because in the vast majority of 
cases the debtor simply has no assets left.
  The sponsors of this measure and the megabanks and credit card 
companies behind this bill don't like to focus on those situations. 
They paint a picture of profligate abuse of the bankruptcy system by 
irresponsible debtors who could pay their debt but simply choose not 
to. Such people do take advantage of the system, there is no question. 
But this bill casts a wider net and catches more than just the 
bankruptcy ``abusers.''
  ``Soaked by Congress'' does an excellent job of setting the record 
straight. It notes that a study last year by the American Bankruptcy 
Institute found that only 3 percent of debtors who file under Chapter 
7--where debtors liquidate assets to repay some debt while the rest of 
the debtor's unsecured debt is forgiven--would actually have been able 
to pay more of their debt than they are required to under Chapter 7. 
Even the U.S. Justice Department found that the number of abusive 
claims was somewhere between 3 percent and 13 percent. This means that 
the number of people filing abusive bankruptcy claims is astonishingly 
low. But this legislation seeks to channel many more debtors into 
chapter 13 bankruptcy--where the debtor enters a 3-5 year repayment 
plan and very little debt is forgiven. Yet in the pursuit of the few, 
this bill imposes onerous conditions, and ridiculous standards on all 
bankrupts alike. Additionally, under current law, 67 percent of the 
debtors in chapter 13 fail to complete their repayment plan often 
because they did not get enough relief from loans, and because economic 
difficulties continued. So this legislation would take individuals, the 
majority of whom desperately need a true ``fresh start'', and force 
them into a bankruptcy process which \2/3\ of debtors already fail to 
complete successfully. And my colleagues call this reform?
  Furthermore, the consumer credit industry would like this to be a 
debate about financial responsibility. But

[[Page S3968]]

what is apparently not obvious to many of my colleagues is that debt 
involves both a borrower and a lender. Yes, a person should be 
responsible for repaying money lent to them on fair terms. But is it 
not in the lender's interest to not over lend? Should not the banks, 
and the credit card companies, and the retailers bear some 
responsibility for the so-called bankruptcy crisis?
  As high cost debt, credit cards, retail charge cards, and financing 
plans for consumer goods have skyrocketed in recent years, so have the 
number of bankruptcy filings. As the consumer credit industry has begun 
to aggressively court the poor and the vulnerable, bankruptcies have 
risen. Credit card companies brazenly dangle literally billions of card 
offers to high debt families every year. They encourage card holders to 
make low payments toward their card balances, guaranteeing that a few 
hundred dollars in clothing or food will take years to pay off. The 
lengths that companies go to keep their customers in debt is 
ridiculous.
  So any thinking person would ask at this point. Why is the House and 
Senate calling out the stops to pass this bill? What's driving this 
bill? Well as ``Soaked by Congress'' notes, the big banks spent $5 
million last year specifically on bankruptcy lobbyists and another $50 
million on firms that lobbied on bankruptcy as well as other matters. I 
wonder how much money working families overburdened with medical bills 
paid to influence Congress last year? Is that why we weren't listening?
  That makes this a reform issue, a basic question of good government. 
Regardless of how you feel about the bill, this is terrible 
legislating. I don't think that the 100 members of the Senate or the 
435 members of the House came to Congress to be dictated to by secret 
committees formed by the leadership. This week we are debating 
education in the Senate. Can you imagine trying to explain to a 9th 
grade civics class what the House and Senate leadership are trying to 
do? They would learn how minority rights are protected in the Senate, 
about how there are regular procedures--high bars--for the majority to 
overcome to force something to passage over the objections of a 
determined minority. All of that goes out the window for the 4th branch 
of government--the conference committee.
  We don't have time for debate, we don't have time for legislative 
battles in this Congress. We don't have time for the hallowed 
traditions of the Senate. Just form a secret committee and stick in an 
unrelated conference report in the dead of night. What is so essential 
about this bill that the leadership must make such a mockery of the 
legislative process?
  The most expedient means is the best means according to this logic. 
But at what cost? Only a handful of power brokers are at the table. 
Working families aren't represented. Seniors aren't at that table. 
Minorities aren't in the loop. Women and children, and single parent 
families weren't invited.
  So I would say to my colleagues in closing, folks can make the claim 
that big money doesn't buy results in Congress but they won't use this 
bill as the poster boy for that argument. I urge my colleagues on both 
sides of the aisle to go to their leadership. It isn't too late to ask 
them to reconsider this course.
  We come to the floor today as Senators to shine a light on the 
bankruptcy bill. I spoke about this bill for some 20 or 30 minutes 
yesterday. I thank two fine journalists, Bartlett and Steele, for their 
fine work, ``Soaked by Congress.'' I sent this article out to every 
Senator. I hope my colleagues will read this article. It is about how 
the House and Senate were hoodwinked last year by a clever media 
campaign on the part of big banks and the credit card industry.
  I point out not to my colleagues but, frankly, to people in the 
country that some of the House and Senate leadership, with the majority 
party taking the lead, have been burning the midnight oil trying to 
finish this bankruptcy bill so they can stick it into an unrelated 
conference report. While they do that, we have 40 million people who 
don't have any health insurance at all. That is not an emergency? While 
they do that, the patient protection bill of rights is barely moving at 
all. It may be crawling; it may not even be crawling. While they do 
that, we don't pass any kind of education measure. While they do that, 
there is no response to 700,000-plus mothers--Sheila and I were proud 
to join them this past Sunday--who came to Washington, DC. They said: 
We are a citizens' lobby. We will take on special interests. We will be 
here for our children. We will be here to reduce violence. We will be 
here for sensible gun control. But there has been no response to that. 
That is not considered to be an emergency?
  But boy, oh boy, when it comes to this bankruptcy bill, some of my 
colleagues, some of the leadership on the other side, can't wait to 
stick this into an unrelated conference report. I think there is a 
reason for that. In the piece that Bartlett and Steele wrote called 
``Soaked by Congress,'' they do an excellent job of getting the record 
straight. As opposed to the media campaign by these banks and credit 
card companies about all of this abuse, it turns out that the American 
Bankruptcy Institute found only 3 percent of debtors under chapter 7 
could have done any better.
  Now, all in the name of a few people who abuse this system, we have 
families my colleague, Senator Kennedy, talked about, with 40 percent 
of them in bankruptcy because of medical bills, and the vast majority 
of the remaining are because someone lost their job or because there 
has been a divorce and now they are a single parent.
  What in the world is going on here? In this piece, ``Soaked by 
Congress,'' Barlett and Steele point out that big banks spent $5 
million last year specifically on bankruptcy lobbyists and another $50 
million on firms that lobbied on bankruptcy as well as other matters.
  I say to my colleague Senator Feingold, and my colleague Senator 
Harkin, and I would say it to my colleague Senator Kennedy if he were 
on the floor, this is the ultimate reform issue. We are talking about 
people, mainly women, mainly senior citizens, mainly working-income, 
maybe low-income people, people without much clout who are completely 
rolled by this bill.
  Now we find out all about the pension grab. Now we find out about all 
sorts of other provisions that are egregious, that I do not have time 
to summarize, that I summarized yesterday. Now we find out that, given 
where this bill is going in conference, it is going to be even more 
harsh toward the most vulnerable citizens in this country. But that 
will not see the light of day; it will get tucked into an unrelated 
conference report.
  I say to my colleagues, we do intend to speak out on this issue. I 
hope the President will make it clear he will veto this bill. It is too 
harsh, there are too many egregious provisions, and right now we are 
not conducting our business the way we ought to as the Senate.
  I yield the floor.
  The PRESIDING OFFICER. The Senator from Iowa is recognized for 7 
minutes.
  Mr. HARKIN. Mr. President, I thank Senator Kennedy and others for 
getting this time to talk about the bankruptcy bill.
  I must at the outset admit that due to the press of business around 
here, and I am not on that committee that formulated this bill, I had 
not really looked at the bankruptcy portions of it in depth. A lot of 
people I admire and have respect for have supported the bill. I 
supported a number of amendments. When the bill finally passed, I had 
some qualms about it. I voted against it. But I had not really delved 
into it in very much depth until a week ago, last week, when Time 
magazine came out with one of the longest stories I have ever seen Time 
magazine do. It has been mentioned by the previous two speakers, a 
story called ``Soaked By Congress.'' It is 12 pages or more long.
  I read it. When I read it, some memories started coming back to me of 
my days when I was a legal aid lawyer before coming to Congress. I was 
thinking about the people we represented at the low end of the economic 
spectrum who could not afford to get another attorney from a private 
law firm, and the people we took through bankruptcy. These were people 
at wit's end. I remember them. Often it was a woman with a couple of 
children, her husband

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took off, there was illness in the family, she racked up a lot of 
bills, and she had nowhere to go.
  At that time in Iowa, we were also debating a bill in the Iowa 
Legislature to limit the amount of interest that could be charged on a 
credit card. The Iowa Legislature in fact at that time passed a limit 
of 15 percent. It did not hurt the State at all. I remembered that, 
reading this article.
  When you heard the debate out here on the bankruptcy bill, you would 
think these were people out living high on the hog, going to the best 
restaurants, taking foreign vacations, driving Mercedes Benz cars and 
BMWs, they have beautiful homes and stuff, and all of a sudden they 
decide they have been living the life of Riley and they do not want to 
pay their dues, so they go into bankruptcy court. That is the image of 
the average person filing bankruptcy that came out here on the Senate 
floor during that debate. That is a very bad misrepresentation.
  As the Time magazine article pointed out, the median characteristics 
of a person discharging chapter 7 bankruptcy: Gross income, $22,800--
gross; reported expenses, $20,592; total debt, $42,000, of which 
miscellaneous debt--medical bills is about $10,000; unsecured debt, 
credit card, about $23,000; and secured debt, a car, about $9,000.
  Another thing I remembered from my days as a legal aid lawyer: Most 
of the people going into bankruptcy were women. It has not changed. As 
the Time magazine article points out, 497,000 single women filed for 
bankruptcy last year compared to only single 367,000 men.
  What are the reasons? Because of a job loss, 51 percent; 46 percent 
because of medical reasons; 19 percent because of a family breakup. The 
reason that adds up to more than 100 percent is that people said: I 
lost my job and my family broke up. That is why most people are going 
into bankruptcy court today, not because they have been living high on 
the hog and they are out there trying to get away.
  We heard statements made on the floor that bankruptcy is not as 
shameful as it used to be. I beg to differ. Most of the people who go 
into bankruptcy court are embarrassed, they are ashamed. I remember 
them from my days as a legal aid lawyer. They fell on hard times, the 
interest charges keep piling up and piling up, and they could never get 
ahead of it. They have kids to care for, and they have expenses they 
have to keep up just to take care of their families. That is who is 
going into bankruptcy court. It is not because of living high on the 
hog.

  The real deviousness of the expected final version of the bill, what 
is really bad, is, for example, as Time magazine pointed out, an 
individual who had made millions of dollars sort of scamming the system 
on investments--Villa, his name is. James Villa is a 42-year-old one-
time stockholder who lives in a $1.4 million home in Boca Raton. They 
contrasted him to 73-year-old Allen Smith, a retired autoworker with 
throat cancer who lives in an $80,000 home in Wilmington, DE.
  They go through the whole story. I do not have the time. You can read 
it. But Villa profited handsomely, he bought Ferraris, he bought a 
$22,000 Rolex watch for his wife, a 3-carat $44,000 wedding ring, 
$9,000 diamond earrings. In October 1988, Massachusetts securities 
authorities ruled he had been engaging in fraudulent and unethical 
practices. They revoked their broker-dealer registration. He packs up, 
moves to Florida, takes his money, and buys this huge $1.4 million 
house. Guess what. It is beyond the reach of his creditors thanks to 
the homestead exemption in Florida.
  How about 73-year-old Allen Smith of Wilmington, DE? He served in 
World War II, worked hard all his life as an auto mechanic, and, guess 
what. He lost his job, then his world started falling apart, and now he 
has cancer. He has filed chapter 13, and now they can take his house 
away from him.
  We stopped that abuse in the Senate version of the bill. But, 
unfortunately, I am told that the loophole filled provision in the 
House that will allow this practice to continue is likely to be in the 
final measure. This bill is bad, it is getting worse.
  The PRESIDING OFFICER (Mr. Enzi). The time of the Senator has 
expired.
  Mr. FEINGOLD. How much time do Senators Kennedy and Wellstone have 
remaining?
  The PRESIDING OFFICER. Senator Kennedy has 5 minutes remaining.
  Mr. FEINGOLD. I ask unanimous consent I be yielded Senator Kennedy's 
time.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. FEINGOLD. Mr. President, I am pleased to join my colleagues on 
the floor this morning to talk about the bankruptcy bill. We need to 
talk about this bill because what is now going on is that those who 
desperately want to pass the bill are acting in secret to try to avoid 
the public scrutiny that might lead to some changes in the bill that 
will benefit average people.
  The latest rumor is that the bankruptcy bill's sponsors want to 
combine it with the ``e-signature'' bill and a bill that has never even 
been considered on the Senate floor--the bill to increase the number of 
H-1b visas--and bring it to us as a package. Supposedly this will make 
it more appealing to some people who oppose one or another of those 
bills. But I think combining major pieces of legislation in a package 
like this just makes things worse. We are talking here about doing an 
end run around the legislative process simply to get things done for a 
narrow set of special interests. I think that's a disgrace and I hope 
my colleagues will resist it.
  This is a bill that gets worse the more you look at it. I am 
disturbed by reports that the final bill will look more like the House-
passed bill than the bill that passed the Senate. But it does not 
surprise me that this is happening, since a bill that is worked out 
behind closed doors is much more likely to favor powerful financial 
interests. A public process generally serves the public interest. So no 
one should be shocked that the private process that the bill's 
proponents have been following is going to yield a bill that leaves the 
public behind.
  I commend to all my colleagues a major investigative story in the May 
15th issue of Time Magazine by reporters Donald Bartlett and James 
Steele. Bartlett and Steele have done a masterful job in explaining how 
bankruptcy reform legislation ended up being a wish list for the credit 
card industry. Even more important, they show us the kinds of people 
who will be hurt by this bill--honest debtors who are down on their 
luck, forced into bankruptcy by the loss of a job or divorce or 
catastrophic medical bills. The bill is particularly detrimental to the 
interests of women. They constitute the largest segment of bankruptcy 
filers in 1999. These are the people that this bill turns its back on, 
at the same time that it gives the credit card industry virtually 
everything that it asked for.

  Now I don't deny that there is need for some reform in our nation's 
bankruptcy laws. But what happened with this bill is that when monied 
interests were given an inch to correct some abuses they took a mile. 
One area that I devoted a lot of time to on the Senate floor was the 
treatment of tenants under this bill. The landlord-tenant provision of 
this bill is typical of the sledgehammer approach that the bill takes 
to alleged abuses by people declaring bankruptcy.
  It started with stories of people repeatedly filing for bankruptcy in 
order to avoid paying rent. But to address that situation a provision 
was inserted in the bill that completely eliminates the protection of 
the automatic stay for tenants in bankruptcy. And when I suggested in 
an amendment that tenants who had never before filed for bankruptcy and 
were willing to pay their rent during the bankruptcy proceedings should 
be protected from being thrown out on the street, the proponents of 
this bill said no. The National Association of Realtors and other 
groups representing landlords adamantly opposed any weakening of the 
extreme provision in the bill. And they got their way.
  That is the kind of excess that you get in legislation when one side 
is dumping money into the process and the other side is not or cannot. 
Common Cause just put out a stunning report recently on the amount of 
money that the credit industry has contributed to members of Congress 
and the political parties in recent years. $7.5 million in 1999 alone, 
and $23.4 million

[[Page S3970]]

in just the last three years. One company that has been particularly 
generous is MBNA Corporation, one of the largest issuers of credit 
cards in the country. In 1998, MBNA gave a $200,000 soft money 
contribution to the Republican Senatorial Committee on the very day 
that the House passed the conference report and sent it to the Senate.
  This year, MBNA gave its first large soft money contribution ever to 
the Democratic party--it gave $150,000 to the Democratic Senatorial 
Campaign Committee on December 22, 1999, right in the middle of Senate 
floor consideration of the bill.
  So it is no mystery to me why this bill is so anti-consumer, and I 
don't think it's a mystery to the public either. The bill contains 
precious little to address abuses by creditors in debt collection and 
reaffirmation practices, and it contains very weak credit card 
disclosure provisions. The credit card industry has ridden the rise in 
personal bankruptcies to get the changes in the law that it wants, but 
has resisted efforts to inform consumers of the risks of overuse of 
credit cards. Better disclosure might reduce the number of bankruptcy 
filings in this country, but the credit industry has successfully 
prevented the Congress from requiring such disclosure.
  There is still time to step back from the brink. Nonpartisan experts 
have many recommendations to reform the bankruptcy laws in a balanced 
and fair way to get at the abuses, without causing undeserved misery to 
thousands of powerless and defenseless Americans. Let's listen to them 
rather than the credit card issuers who are lining our campaign 
treasuries.
  I again thank the Senators from Massachusetts, Minnesota and Iowa and 
my other colleagues who are here this morning to call attention to this 
crucial issue, and I yield the floor.
  The PRESIDING OFFICER. The Chair recognizes the Senator from Delaware 
for up to 10 minutes.

                          ____________________