[Congressional Record Volume 147, Number 27 (Monday, March 5, 2001)]
[Extensions of Remarks]
[Pages E274-E275]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




    BANKRUPTCY ABUSE PREVENTION AND CONSUMER PROTECTION ACT OF 2001

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                               speech of

                           HON. EARL POMEROY

                            of north dakota

                    in the house of representatives

                        Thursday, March 1, 2001

       The House in Committee of the Whole House on the State of 
     the Union had under consideration the bill (H.R. 333) to 
     amend title 11, United States Code, and for other purposes:

  Mr. POMEROY. Mr. Chairman, I rise in reluctant support of H.R. 333, 
the Bankruptcy Abuse Prevention and Consumer Protection Act of 2001. I 
share my colleagues' belief that personal bankruptcy filings impose a 
cost on all of us, and that debtors should not be allowed to use 
bankruptcy as a financial planning device. I also believe, however, 
that this legislation does not adequately address an important factor 
in bankruptcy reform--the sometimes predatory practices of creditors 
selling unsecured debt.
  Mr. Chairman, there is little dispute that the increase in bankruptcy 
filings represents a disturbing trend that must be addressed. When 
debtors are able to ``game the system'' and walk away from the 
consequences, the cost is transferred to creditors, and ultimately, to 
all American taxpayers. Congress can and should restore integrity to 
the bankruptcy system while ensuring that the system is fair to debtors 
and creditors. H.R. 333 would make several appropriate adjustments 
toward that end.
  While H.R. 333 does make important adjustments to the bankruptcy 
system, I believe that it fails to address several important issues. 
First and foremost, H.R. 333 provides inadequate relief for consumers 
from the misleading and often intentionally deceptive practices of some 
credit card companies. While there are many responsible creditors in 
this country, those that engage in predatory lending cause considerable 
harm, often to unsophisticated and moderate-income debtors. Such 
companies have become more aggressive in selling unsecured credit, 
using tactics like hidden fees and inadequate disclosure statements. 
Not surprisingly, according to the Office of the Comptroller of 
Currency, the amount of revolving credit outstanding (including credit 
card debt) increased seven-fold during 1980 and 1995. Between 1993 and 
1997, during the sharpest increases in the bankruptcy filings, the 
amount of credit card debt doubled. It is simply illogical to me to 
address bankruptcy reform without also examining the marketing 
practices that lead to high rates of consumer debt.
  I am also concerned that this legislation includes an extraneous 
provision that would prevent U.S. courts from enforcing certain civil 
judgments rendered in foreign courts. This provision, Section 1310, is 
inconsistent with U.S. trade policy, interferes with state insurance 
regulation, and unnecessarily intrudes into private business dealings.
  Mr. Chairman, this provision was offered to protect a number of 
American investors from liability for monetary judgment imposed by 
British courts. The New York State Supreme Court for New York County 
and the U.S. District Court in Northern Illinois both found these 
judgments to be valid. The American investors are currently appealing 
these findings to, respectively, the Appellate Division of the New York 
State Supreme Court and the Seventh Circuit Court of Appeals. As the 
cases are currently pending before U.S. courts, I believe that 
Congressional interference is unwarranted. Eight U.S. circuit courts, 
including the Seventh Circuit, have previously held that the original 
dispute between these investors and Lloyd's should be heard in English 
courts.
  In addition, this provision, if enacted, would have serious 
repercussions for international trade policy and could invite 
retaliation by our trading partners. When U.S. businesses enter into 
international contracts, they often negotiate for U.S. courts to have 
jurisdiction over disputes that may arise. We cannot reasonably expect 
other countries to respect the judgments of U.S. courts if we override 
the decisions of foreign courts by legislative fiat. In fact, the U.S. 
State Department has said that this provision would interfere with its 
efforts to negotiate a new international convention on the enforcement 
of civil judgments.
  The National Association of Insurance Commissioners (NAIC) opposes 
this provision as an unwarranted intrusion on the traditional authority 
of states to regulate insurance. The NAIC is specifically concerned 
about the effect this provision could have on the large number of 
American insurance companies that depend on foreign insurers for 
insurance and reinsurance coverage.
  Mr. Chairman, as I stated earlier, I do support reform of the 
bankruptcy system, and will cast my vote in favor of this legislation. 
I am disappointed, however, that this legislation does not do a better 
job of addressing the

[[Page E275]]

concerns I have raised. I am hopeful that those concerns may yet be 
satisfactorily addressed during the 107th Congress, and I look forward 
to working with my colleagues on both sides of the aisle to bring that 
about.

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