[Congressional Record Volume 146, Number 139 (Sunday, October 29, 2000)]
[Senate]
[Page S11342]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                               BANKRUPTCY

  Mr. KENNEDY. Mr. President, there are two additional important issues 
that I would like to discuss tonight. There are few clearer examples of 
this Republican Congress siding with powerful special interests against 
average people than the pending bankruptcy bill.
  The bankruptcy conference report targets working men and women who 
comprise the vast number of Americans in bankruptcy. Two out of every 
three bankruptcy filers are workers who have lost their jobs because of 
layoffs or downsizing. One out of every five has huge debts because of 
health care expenses. Divorced or separated people are three times more 
likely than married couples to file for bankruptcy.
  Working men and women in economic free fall often have no choice 
except bankruptcy. Yet, under pressure from the credit card industry, 
this Republican Congress is bent on denying all these innocent victims 
of financial hardship the safety net that the bankruptcy laws have 
provided for a century.
  This legislation unfairly targets middle class and poor families, and 
it leaves flagrant abuses in place.
  Time and time again, President Clinton has told the Republican 
leadership that the final bankruptcy bill must include two important 
additions--a homestead provision without loopholes for the wealthy, and 
a provision that requires accountability and responsibility from those 
who unlawfully--and often violently--bar access to legal health 
services for women. The current bill includes neither of these 
provisions.
  The bill does include a half-hearted, loop-hole filled homestead 
provision. It will do virtually nothing to eliminate fraud. With a 
little planning--or in some cases, no planning at all--wealthy debtors 
will still be able to hide millions of dollars in assets from their 
creditors. For example, Allen Smith of Delaware--a state with no 
homestead exemption--and James Villa of Florida--a state with an 
unlimited homestead exemption--are treated differently by the 
bankruptcy system today. One man eventually lost his home. The other 
was able to hide $1.4 million from his creditors by purchasing a luxury 
mansion in Florida.
  The Senate passed a worthwhile amendment to eliminate this inequity--
but that provision was stripped from the conference report. Surely, a 
bill designed to end bankruptcy fraud and abuse should include a loop-
hole-free homestead provision. The President thinks so. As an October 
12 letter from White House Chief of Staff John Podesta says:

       The inclusion of a provision limiting to some degree a 
     wealthy debtor's capacity to shift assets before bankruptcy 
     into a home in a state with an unlimited homestead exemption 
     does not ameliorate the glaring omission of a real homestead 
     cap.

  Yet there is no outcry from our Republican colleagues about the 
injustice, fraud, and abuse in these cases. In fact, Governor Bush led 
the fight in Texas to see that rich cheats trying to escape their 
creditors can hide their assets under Texas' unlimited homestead law.
  In 1999, the Texas legislature adopted a measure to opt-out of any 
homestead restrictions passed by Congress. The legislature also 
expanded the urban homestead protection to 10 acres. It allowed the 
homestead to be rented out and still qualify as a homestead. It even 
said that a homestead could be a place of business. This provision 
gives the phrase ``home, sweet home'' new meaning.
  The homestead loop-hole should be closed permanently. It should not 
be left open just for the wealthy. I wish this misguided bill's 
supporters would fight for that provision with the same intensity they 
are fighting for the credit card industry's wish list, and fighting 
against women, against the sick, against laid-off workers, and against 
other average individuals and families who will have no safety net if 
this unjust bill passes.
  The hypocrisy of this bill is obvious. We hear a lot of pious 
Republican talk about the need for responsibility when average families 
are in financial trouble--but we hear no such talk of responsibility 
when the wealthy and their lobbyists are the focus of attention.
  The facts are clear. The bankruptcy bill before us is designed to 
increase the profits of the credit card industry at the expense of 
working families. If it becomes law, its effective will be devastating. 
It eminently deserves the veto it will receive if it ever reaches the 
White House.

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