[Congressional Record Volume 147, Number 97 (Thursday, July 12, 2001)]
[Senate]
[Pages S7539-S7550]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




BANKRUPTCY ABUSE PREVENTION AND CONSUMER PROTECTION ACT OF 2001--MOTION 
                               TO PROCEED

  The ACTING PRESIDENT pro tempore. Under the previous order, there 
will now be a 3-hour period for debate prior to the cloture vote on the 
motion to proceed to the consideration of H.R. 333, with 2 hours to be 
under the control of the Senator from Minnesota, Mr. Wellstone, and 1 
hour to be equally divided under the control of the chairman and 
ranking member of the Judiciary Committee or their designees.
  The clerk will report the motion.
  The legislative clerk read as follows:

       A motion to proceed to the bill (H.R. 333) to amend title 
     11, United States Code, and for other purposes.

  The ACTING PRESIDENT pro tempore. The Senator from Nevada.


                                Schedule

  Mr. REID. Mr. President, as the Chair has announced, we are now going 
to resume consideration of the motion to proceed to the House 
Bankruptcy Reform Act. There are 3 hours of debate, divided as the 
chair has announced, prior to a cloture vote on the motion to proceed. 
Following consideration of this bankruptcy debate, under the previous 
consent order, the Senate will resume consideration of the Interior 
Appropriations Act with a vote in relation to the Nelson of Florida 
amendment. So at 12 o'clock there will be one vote, and at 
approximately 12:20 there will be another.
  The majority leader, Senator Daschle, has asked me to announce that 
he has every hope that we can complete this bill--and the two managers 
last night indicated they believed they were very close to being able 
to complete the bill--at a reasonable time early this afternoon or this 
evening. If we cannot, we will work into the evening. And if we cannot 
finish it then, we will have to come back tomorrow. There is a lot to 
do. We hope we can finish this tomorrow. There are many things that 
both the majority and minority would like to do tomorrow if we have the 
Interior bill out of the way.
  Mr. President, at 11:30, as has been announced, the Senate will swear 
in the new Secretary of the Senate, Jeri Thomson, who has really 
dedicated her whole life to the U.S. Senate. I know for me it is a 
special occasion, as I am sure it is for anyone who knows Jeri. So I 
look forward to that and to a fruitful debate today.
  I ask if there is anything from the minority, they be allowed to 
speak now.
  The Senator from Minnesota is here. I did not see him in the Chamber 
earlier. He has his 2 hours.
  The ACTING PRESIDENT pro tempore. Who yields time?
  The Senator from Minnesota.
  Mr. WELLSTONE. I thank the Chair.
  Mr. President, if I could get the attention of the Senator from 
Alabama.

[[Page S7540]]

  Does the Senator from Alabama--does the minority need the floor right 
now to do some things? If so, I will be pleased to wait; otherwise, I 
am ready to go.
  Mr. SESSIONS. No. I think we are here on bankruptcy and are glad to 
go forward.
  Mr. WELLSTONE. Mr. President, normally I do not do it this way. I try 
not to rely too much on notes. But I want to try to be as detailed and 
as thorough as I can because what I am asking the Senate to do today is 
to step back from the brink and decline to go to conference with the 
House on the so-called bankruptcy reform.
  I am going to be in this Chamber a number of times over the next 
week, maybe over the next several weeks. There is a lot that I want to 
say. There is a lot I think I should say as a Senator from Minnesota 
because I think Congress is about to make--or is headed toward--a very 
grave mistake.
  So I will not attempt to say it all today. What I will do, however, 
is to speak, at least in a broad way, about why I feel so strongly in 
the negative about this bill.
  I ask unanimous consent that several pages I have of titles of 
editorials about the bankruptcy bill be printed in the Record.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

                 Editorials Against the Bankruptcy Bill

       ``Bad Timing on the Bankruptcy Bill,'' Robert Samuelson, 
     the Washington Post, March 14, 2001.
       ``A Bad Bankruptcy Bill,'' San Francisco Chronicle, March 
     15, 2001.
       ``Reform Choice for Mr. Bush,'' the Washington Post, 
     February 19, 2001.
       ``A Debt Bill Bankrupt of Decency,'' the Chicago Sun Times, 
     March 15, 2001.
       ``Quid Pro Quo,'' the Arizona Daily Star, March 3, 2001.
       ``Deeper Hole for Debtors,'' Los Angeles Times, March 2, 
     2001.
       ``Business Dictated Bankruptcy Law,'' the New York Times, 
     March 16, 2001.
       ``Congress, President Side With Banks, Not Consumers,'' the 
     Atlanta Journal Constitution, March 16, 2001.
       ``Compounding Debt,'' the Boston Globe, March, 2001.
       ``Contributors to Irresponsible Acts; Credit-Card Firms Not 
     Blameless in Bankruptcy Rise,'' James Sollisch, the Chicago 
     Tribune, March 20, 2001.
       ``A Bankrupt Law?,'' Businessweek, April 23, 2001.
       ``Quid Pro Quo? Congress Examines Pardons But Overlooks 
     Bankruptcy Bill,'' Arianna Huffington, the Dallas Morning 
     News, March 6, 2001.
       ``Bankruptcy Overhaul Hits Needy as Well as Greedy,'' the 
     Miami Herald, March 19, 2001.
       ``Congress Pushing Usury,'' Bismark Tribune, March 8, 2001.
       ``Hammering Bankrupt Consumers,'' Chattanooga Times Free 
     Press, March 17, 2001.
       ``Protect Consumers as Well as Lenders,'' Chicago Daily 
     Herald.
       ``Down on Your Luck? Tough,'' the Chicago Sun Times, March 
     25, 2001.
       ``Bankruptcy Change Would Hurt Business,'' Crain's Detroit 
     Business, March 19, 2001.
       ``Bankruptcy Bill is anti-Family Measure,'' Intelligencer 
     Journal (Lancaster, PA), April 3, 2001.
       ``Bankruptcy Bill Too Forgiving of Lenders,'' Dayton Daily 
     News, March 18, 2001.
       ``Bankruptcy for Growth? No More,'' Nicholas 
     Georgakopoulos, the Hartford Courant, March 21, 2001.
       ``Not Every Person Who Files for Bankruptcy is a 
     `DeadBeat','' Melinda Stubbee, the Herald Sun, March 20, 
     2001.
       ``A Flawed Bankruptcy Bill,'' the Milwaukee Journal, March 
     23, 2001.
       ``Add Balance to Proposed Law on Bankruptcy,'' the Morning 
     Call (Allentown, PA), March 19, 2001.
       `New Bankruptcy Bill is Still the Wrong Answer,'' the News 
     & Record, March 5, 2001.
       ``Banking on Politics,'' the News Observer, March 7, 2001.
       ``In Bankruptcy Bill, Money, Talks,'' the Oregonian, March 
     18, 2001.
       ``Bankruptcy Bill Will Be Even More of a Headache,'' Jane 
     Bryant Quinn, the Orlando Sentinel, April 18, 2001.
       ``No Interest in Consumers,'' the Palm Beach Post, March 7, 
     2001.
       ``Why Campaign Finance Reform? Look At Bankruptcy Bill,'' 
     the Palm Beach Post, March 20, 2001.
       ``Bankruptcy Bill Exploits Students,'' Kate Giammarise, the 
     Pitt News, March 26, 2001.
       ``Bankrupt Bill; This Reform Will Hurt Americans Who Are 
     Struggling,'' Pittsburgh Post-Gazette, March 17, 2001.
       ``Cruel Bankruptcy `Reform','' the Providence Journal-
     Bulletin, March 15, 2001.
       ``Bankruptcy Bill: So-Called Reforms Make Reckless Lending 
     More Profitable,'' the Sacramento Bee, March 16, 2001.
       ``Bankruptcy Overhaul Lacks the Right Balance; While People 
     Should Be Held Responsible for Their Debts, Creditors Also 
     Should Be Regulated,'' San Antonio Express News.
       ``Bankruptcy `Reform' Bill Helps Guess Who,'' the San Jose 
     Mercury News, March 12, 2001.
       ``A Bad Piece of Legislation,'' the Buffalo News, March 3, 
     2001.
       ``Wiping the Slate Clean,'' Albany New York Times Union, 
     March 1, 2001.
       ``Taking Care of Business,'' Robert Reich, the American 
     Prospect, April 9, 2001.
       ``Bankruptcy Reform Law Supports Banks Interests,'' the 
     Daily University Star (Texas), March 23, 2001.

  Mr. WELLSTONE. ``Bad Timing on the Bankruptcy Bill,'' Robert 
Samuelson, The Washington Post, March 14, 2001; ``A Bad Bankruptcy 
Bill,'' San Francisco Chronicle, March 15; ``A Debt Bill Bankruptcy of 
Decency,'' The Chicago Sun Times; ``Deeper Hole for Debtors,'' Los 
Angeles Times; ``Business Dictated Bankruptcy Law,'' New York Times; 
``Congress, President Side with Banks, Not Consumers,'' The Atlanta 
Journal Constitution; ``Compounding Debt,'' The Boston Globe; ``A 
Bankrupt Law?'' Businessweek; ``Bankruptcy Overall Hits Needy as Well 
as Greedy,'' The Miami Herald; ``Congress Pushing Usury,'' Bismarck 
Tribune; ``Hammering Bankrupt Consumers,'' Chattanooga Times Free 
Press; ``Down on Your Luck? Tough,'' The Chicago Sun Times.
  These are just kind of random samples:
  ``Bankruptcy Bill is Anti-Family Measure,'' Intelligencer Journal; 
``A Flawed Bankruptcy Bill,'' the Milwaukee Journal; ``Banking on 
Politics,'' the News Observer; ``In Bankruptcy Bill, Money Talks,'' the 
Oregonian; ``Why Campaign Finance Reform? Look at Bankruptcy Bill,'' 
the Palm Beach Post; ``Bankrupt Bill; This Reform Will Hurt Americans 
Who Are Struggling,'' Pittsburgh Post-Gazette; ``Bankruptcy Bill, So-
Called Reforms Make Reckless Lending More Profitable,'' Sacramento Bee; 
``Bankruptcy Bill Helps Guess Who?'' San Jose Mercury News; ``Bad Piece 
of Legislation,'' Buffalo News; ``Taking Care of Business,'' Bob Reich 
in the American Prospect. The list goes on and on.

  I have for over 2 years been fighting this bill, with some of my 
colleagues: Senators Kennedy, Boxer, Durbin, Schumer, Leahy, and 
Feingold. I will give myself a little bit of credit as to why we are 
still debating this bill and it has not passed. In truth, a great deal 
of the credit goes to the proponents of the bill because it has been 
their consistent refusal to compromise on the legislation that has made 
the job easier. I will go into some of the greedier aspects of this 
legislation in a moment.
  Some have argued that the tactics have been extreme, that I have been 
at this over and over and over again in trying to block it. I would 
rather be spending my time not stopping the worst but doing the better. 
I much prefer to do that. But this is a disastrous piece of 
legislation. What has been done with this very harsh legislation is 
basically shredding one of the important safety nets, not just for low-
income people but for middle-income people as well. Shredding that 
safety net so that people can no longer rebuild their financial lives 
is truly egregious.
  To argue that the reason we need to do this is because a lot of 
people have been filing chapter 7 in order to get out of repaying their 
debt and that they are untrustworthy, they don't feel any stigma, et 
cetera, simply doesn't hold up under any kind of scrutiny.
  We know in the vast majority of cases, 50 percent of the people who 
file bankruptcy in this country file bankruptcy because of medical 
bills. Is somebody going to say they are lazy or they are slackers or 
cheats? We know beyond that one of the major causes of bankruptcy is 
loss of a job. More and more people are losing their jobs now; 1,300 
taconite workers at LTV Company on the Iron Range of Minnesota just 
lost their jobs.
  Is it divorce? Not surprisingly, many of our citizens who find 
themselves in the most difficulty are women after a divorce. They are 
the ones who are taking care of the children in most cases.
  It hardly holds up that these are a bunch of slackers and a bunch of 
cheats we are going after. As a matter of fact, the evidence is clear--
I will refer to studies later on--that at best there is maybe 3 percent 
abuse. What about the other 97 percent of the people?
  Major medical illness is a double whammy because not only do you have 
to pay the doctor and the hospital charges, but in addition quite often 
you can't work. If it is your child, even

[[Page S7541]]

if it is not you, it is the same issue: it is the medical bills. But 
then you are home taking care of the child. Now you have no other 
choice. You are trying to rebuild your life and file for chapter 7, and 
you can't do it any longer.
  As I said, you can't argue that people overwhelmed with medical debt 
or sidelined because of an illness are deadbeats. This legislation 
assumes they are. It would force them into credit counseling before 
they could file, as if a serious illness or disability is something 
that could be counseled away. I had an amendment to this bill that 
would have created an exclusion for people who were filing for 
bankruptcy because of medical bills. It did not pass.
  Women single filers are now the largest group in bankruptcy. They are 
one-third of all the filers. They are the fastest growing. Since 1981, 
the number of women filing increased by 700 percent. A woman single 
parent has a 500 percent greater likelihood of filing for bankruptcy 
than the population generally.

  Divorce is a major factor in causing bankruptcy in America. Are 
single women with children deadbeats? This bill assumes they are.
  The new nondischargeability of credit card debt will hit hard those 
women who use the cards to tide them over after a divorce until their 
income stabilizes. The ``safe harbor'' in the House bill, which 
proponents argue will shield low- and moderate-income debtors from the 
means test, will not benefit many single mothers who most need the help 
because it is based upon the combined income of the debtor and the 
debtor's spouse, even if they are separated, the spouse is not filing 
for bankruptcy, and the spouse is providing no support for her, for the 
debtor and her children.
  In other words, a single mother who is being deprived of needed 
support from a well-off spouse is further harmed by this piece of 
legislation which will deem the full income of that spouse available to 
pay debts for determination of whether the safe harbor and means test 
applies. It makes no sense whatsoever, and it is incredibly harsh.
  Over the past 2 years, any pretense that this piece of legislation is 
urgently needed has evaporated. Now proponents and opponents agree that 
nearly all the debtors resort to bankruptcy not to game the system but, 
rather, as a desperate measure of economic survival and that only a 
tiny minority of chapter 7 filers, as few as 3 percent, can afford any 
debt repayment, according to the American Bankruptcy Institute.
  Yet low- and moderate-income families, especially single-parent 
families, are those who need most the fresh start provided by 
bankruptcy protection. The bill will make it harder for them to get out 
from under the burden of crushing debt, and that is why I oppose it.
  The second reason why I oppose this legislation is that the timing of 
this bill could not be worse. Basically people are not going to be able 
to file for chapter 7. Chapter 13 is going to be made more unworkable 
for many debtors. We had a situation where 4 years ago, when we first 
started this debate, the big banks and credit card companies were 
pushing so-called bankruptcy reform in good economic times. The stock 
market was soaring. The unemployment rate was coming down. But given 
the economy we find ourselves with right now, given the fact that we no 
longer have the same boom economy, that people are now out of work or 
underemployed, that these are harder times, rushing this bill through 
seems completely divorced from reality.
  What is the most cited reason for filing for bankruptcy? Job loss, 
and the unemployment rate is rising. What is the second most cited 
reason? Excessive medical bills, and the cost of health care is rising, 
as are the number of uninsured. At the same time, we are going to make 
it impossible for people to file for chapter 7 and rebuild their lives.
  While the bill will be terrible for consumers and for regular working 
families even in the best of times, its effects will be all the more 
devastating now because we have a weakening economy. It boggles the 
mind that at a time when Americans are most economically vulnerable, 
when they are most in need of protection from financial disaster, we 
would eviscerate the major safety net in our society for the middle 
class, and that is precisely what this legislation does. It is the 
height of insanity that we would be contemplating doing what we are 
doing given this economy.
  It may be the case that the Congress and the President will ignore 
the plight of these families. Each one of them by themselves is not 
that powerful. Most folks assume this is never going to happen to us. 
Most people and most families never expect they are going to have to 
file for bankruptcy, but at least my colleagues should care about the 
effect on the economy.
  This bill could be a disaster, but I do not want you to take my word 
for it. I want to quote some excerpts from a column by Robert Samuelson 
in the March 14 Washington Post. To put it delicately, Mr. Samuelson 
and I rarely agree on anything. In fact, he likes--I want to be 
intellectually honest about it--he likes the substance of the 
bankruptcy bill. All the more reason, I say to my colleagues, to pay 
attention to him. The title of the editorial is ``Bad Timing on the 
Bankruptcy Bill.'' He writes:

       The bankruptcy bill about to pass Congress arrives at an 
     awkward moment: the tail end of a prolonged boom in consumer 
     borrowing. From 1995 to 2000, Americans increased their 
     personal debts by about 50 percent to roughly $7.5 trillion--
     a figure including everything from home mortgages to student 
     loans.
       Now comes the bankruptcy bill, which would make it slightly 
     harder for consumers to erase debts through bankruptcy. 
     Although the bill is not especially harsh, it could 
     perversely worsen the economic downturn.

  I do not agree with part of his characterization. I am now focusing 
on his argument about the effect of the economy.
  He concludes:

       The real pressures of high debt are now being compounded by 
     scare psychology. ``Drowning in Debt,'' says the cover story 
     of the latest U.S. News & World Report. ``Why you're in so 
     deep--and how to get out before it's too late.'' The 
     bankruptcy bill sends a similar message: Be prudent, don't 
     overborrow. The message is now about four years too late. Now 
     it may simply amplify the growing gloom. This is not a bad 
     bill, but it certainly is badly timed.

  There you have it, I say to my colleagues. Not an opponent but a 
supporter suggesting that now is not the time, that we could end up 
prolonging or actually worsening the downturn in the economy.
  He is not the only one. A May 21 issue of Business Week had an 
article titled ``Reform that Could Backfire.'' The article begins:

       Just as bankruptcy reform seemed headed for certain 
     passage, the economic omens point to a sharp rise in personal 
     bankruptcies over the next few years. The likely results, 
     says economist Mark Zandi of Economy.com, Inc., will be 
     ``much pain for hard pressed households, little if any gain 
     for lenders, and, in the event of even a mild recession, 
     major problems for the overall economy.''

  Again, this is not some leftwing rag; this is the magazine of note 
for corporate America--Business Week. If Business Week and Paul 
Wellstone are in agreement on an issue, then I ask you: How can we be 
wrong?

  The article concludes:

       The drop in bankruptcies in recent years partly reflected 
     the booming economy. Now, with sharply rising unemployment 
     and slowing income gains, Zandi expects high household debt 
     to take its toll. Especially at risk, he believes, are lower 
     income families, for whom debt repayment dictated by the 
     pending bankruptcy reform would entail tremendous hardship. 
     ``If the economy becomes mired in recession or sluggish 
     growth,'' he warns, ``the loss of the spending power could 
     significantly retard the recovery.''

  I ask my colleagues, I ask the majority leader--I am not in agreement 
with him--what is the rush? Why do you want to do this to the economy? 
Why do you want to do this to families? Why are you prepared to go to 
such ridiculous lengths to move this legislation?
  Mr. President, I have received a note, I say to Senator Sessions, 
that he wants a few minutes before 9:30 a.m. I did not see it until 
just now. I will be pleased to yield to my colleague.
  Mr. SESSIONS. I will be returning later.
  Mr. WELLSTONE. Whatever is best for the Senator from Alabama.
  Mr. SESSIONS. Somebody else is going to be replacing me. The Senator 
can go right ahead. I thank the Senator for his courtesy, as always.
  Mr. WELLSTONE. Mr. President, I do not really get this. One of the 
arguments being made is that what we are

[[Page S7542]]

going to see is an increase in bankruptcies because of a slowing 
economy and high consumer debts that are overwhelming families and, 
therefore, we need to pass legislation to curb access to bankruptcy 
relief. Try that on for size.
  For 2 years, while the good times were rolling, the proponents of 
this bill were citing the number of bankruptcy filings as a reason to 
pass the bill, although there actually was a dramatic drop in filings 
taking place. I never understood that argument.
  Now they are turning around and saying we need to rush to do this 
because the economy is slowing down and many hard-working people, 
through no fault of their own, are going to find themselves in dire 
circumstances; therefore, we had better pass legislation that will curb 
their access to bankruptcy relief.
  It is amazing: Increasing hard times, a lot of people finding 
themselves in these impossible financial circumstances, and now they 
want to make it harder for them to get a fresh start. The logic of this 
argument completely escapes me.
  The point Mark Zandi makes in the Business Week article, as other 
economists have done, is that restricting access to bankruptcy 
protection will actually increase the number of filings and defaults 
because banks will be more willing to lend to marginal candidates. 
Indeed, it is no coincidence that the single largest surge in 
bankruptcy filings began immediately after the last major procreditor 
reforms were passed by Congress in 1984.
  This is not a debate about winners and losers because we all lose if 
we erode the middle class in this country. We lose if we take away one 
of the critical underpinnings for middle-class people. Sure, in the 
short run big banks and credit card companies may pad their profits, 
but in the long run our families will be less secure and our 
entrepreneurs will become more risk adverse and less entrepreneurial.
  The whole point of bankruptcy is to allow people to get a fresh 
start. Bankruptcy disproportionately affects the financially 
vulnerable, but it also disproportionately affects the risk takers, 
small businesspeople or entrepreneurs. Our bankruptcy system ensures 
that utter insolvency does not need to be a life sentence, but it can 
be an opportunity to start over, and that is what this bill erodes.
  This is not a debate about reducing the high number of 
bankruptcies. No one can will a piece of legislation that can do that. 
Indeed, by rewarding--I make this argument--the reckless lending that 
got us here in the first place, we are going to see more consumers 
burdened with that.

  It is amazing; there is hardly a word in this whole piece of 
legislation that calls for these credit card companies or lenders to be 
accountable as they continue to pump this stuff out to our children and 
grandchildren every day of every week. But this is perfect for them 
because they don't have to worry any longer. They get a blank check 
from the Government. No, this is a debate about punishing failure--
whether self-inflicted--and sometimes it is--or uncontrolled or 
unexpected. This is a debate about punishing failure.
  If there is one thing this country has learned, it is that punishing 
failure doesn't work. You need to correct mistakes. You need to prevent 
abuse. But you also need to lift people up when they have stumbled, not 
beat them down. This piece of legislation beats them down.
  Both the House and Senate bills basically give a free ride to the 
banks and credit card companies, that deserve much of the credit--you 
would not know it from this legislation--for the high number of 
bankruptcy filings because of their loose credit standards. Even the 
Senate bill does very little to address this issue.
  There are some minor disclosure provisions in the Senate bill. But 
even these don't go nearly as far as they should. Lenders should not be 
rewarded for reckless lending. Where is the balance in this 
legislation? If we are holding debtors accountable, why don't we hold 
lenders accountable as well? I know the answer. These financial 
interests have hijacked this legislative process. As high-cost debt and 
credit cards and retail charge cards and financing plans for consumer 
goods have skyrocketed in recent years, so have the bankruptcies. As 
the credit card industry has begun to aggressively court the poor and 
vulnerable, is anybody surprised that bankruptcies have risen?
  Credit card companies brazenly dangle literally billions of dollars 
of credit card offers to high-debt families every year, and they are 
not asked to be accountable. They encourage credit 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 
length to which the companies go to keep customers in debt is 
absolutely ridiculous, and they get away with murder in this 
legislation. After all, debt involves a borrower and a lender. Poor 
choices or irresponsible behavior by either party can make the 
transition go sour.
  So how responsible has the industry been? It depends on how you look 
at it. On the one hand, consumer lending is unbelievably profitable, 
with high-cost credit card lending the most profitable of all, except 
for perhaps the even higher costs on payday loans. We don't go after 
any of these unsavory characters. So I guess by the standard of the 
bottom line, they are doing a great job. This industry is thriving. 
These credit card companies are making huge profits.
  On the other hand, if your definition of responsibility is promoting 
fiscal health among families, educating them on the judicious use of 
credit, ensuring that borrowers do not go beyond their means, then it 
is hard to imagine how the financial services industry could not be a 
bigger deadbeat. The financial services industry is the big deadbeat. 
The problem is that it is the heavy hitter, the big giver, and it has 
so much money that it dominates the politics in the House of 
Representatives and the Senate. That is part of what this is about.

  Theresa Sullivan, Elizabeth Warren, and Jay Westerbrook wrote a book 
called ``Fragile Middle Class.'' I recommend it to everybody. They 
write:

       Many attribute the sharp rise in consumer debt--and the 
     corresponding rise in consumer bankruptcy--to lowered credit 
     standards, with credit cards issuers aggressively pursuing 
     families already carrying extraordinary debt burdens on 
     incomes too low to make more than minimum repayments. The 
     extraordinary profitability of consumer debt repaid over time 
     has attracted lenders to the increasingly high risk-high 
     profit business of consumer lending in a saturated market, 
     making the link between the rise in credit card debt and the 
     rise in consumer bankruptcy unmistakable.

  Credit card companies perpetuate high interest indebtedness by 
requiring--and there is not a Senator who can argue against this 
practice--low minimum payments and, in some cases, canceling the cards 
of customers who pay off their balance every month. Using a typical 
monthly payment rate on a credit card, it would take 34 years to pay 
off a $2,500 loan. Total payments would exceed 300 percent of their 
original principal. That is really what this is all about. A recent 
move by the credit card industry to make the minimum monthly payment 
only 2 percent of the balance rather than 4 percent further exacerbates 
the problem of some uneducated debtors.
  These lenders routinely offer ``teaser'' interest rates which expire 
in as little as 2 months, and they engage in ``risk-based'' pricing 
which allows them to raise credit card interest rates based on credit 
changes unrelated to the borrower's account. It is just unbelievable 
what they get away with.
  Even more ironic, at the same time that the consumer credit industry 
is pushing a bankruptcy bill that requires credit counseling for 
debtors, the Consumer Federation of America found that many prominent 
creditors have slashed the portion of debt repayments they shared with 
credit counseling agencies--in some cases by more than half. This may 
force some of these agencies to cut programs and serve even fewer 
debtors.
  Well, Mr. President, I am sorry. I am glad there aren't a lot of 
Senators on the floor because it is hard to say this because you feel 
as if you are engaging in personal attacking. I don't mean it to be 
that way. I can't say enough about the hypocrisy of this legislation--
not of individual Senators but the content of this legislation. It is 
incredible to me the way in which these banks and credit card companies 
have rigged this system, and we have this harsh piece of legislation in 
increasingly difficult economic times that is

[[Page S7543]]

going to make it impossible for many families to rebuild their lives. 
The vast majority find themselves in these horrible circumstances 
because of medical bills, having lost their jobs, or divorce.
  Do you know what. This legislation doesn't do anything about the 
egregious greed, the exploitive practice of this industry. All of us 
who have children know what they send out in the mail every day.
  So the question is: Paul, if the bill is as bad as you say, how come 
it has so much support? This is a lonely fight. Just a few Senators are 
in strong opposition. I don't mean it in a self-righteous way, and it 
doesn't make us closer to God or the angels. I don't understand why the 
bill is going through. The bill has a lot of support in the Congress, 
and some of those who are supporting it, such as Senator Sessions and 
others, are worthy Senators. We have an honest disagreement. The 
President says he supports it. But the fact of the matter is--and I am 
not talking about a specific Senator; I don't do that because that is 
not what it is really about. At the institutional level, I believe the 
reason this legislation has so much support--I will repeat that--at the 
institutional level, I believe the reason this legislation has so much 
support is that it is a tribute to the power and the clout of the 
financial services industry in Washington.

  Let's call it what it is. Might makes right. It is the financial 
might of the credit card companies and the big banks that are big 
spenders, heavy hitters, and investors in both political parties. It 
doesn't mean individual Senators support this legislation for that 
reason. I can't make that argument. People can have different 
viewpoints. But if I look at it institutionally, I can look at the 
amount of money those folks deliver, their lobbying coalition, and the 
ways in which they march on Washington every day, and I can't help but 
say that is part of what this is about.
  Why has the Congress chosen to come down so hard on ordinary working 
people down on their luck? How is it that this bill is so skewed 
against their interests and in favor of big banks and credit card 
companies? These editorials in a lot of newspapers that say the 
Congress--the House and Senate--comes down on the side of binge banks, 
not consumers, are right. Well, maybe it is because these families 
don't have million-dollar lobbyists representing them before the 
Congress. They don't give hundreds of thousands of dollars in soft 
money to the Democratic and Republican Parties. They don't spend their 
days hanging outside the Chamber to bend a Member's ear.
  Unfortunately, it looks as if the industry got to us first. The truth 
is that, outside of this building, the support for this bill is a 
pittance. I mean the truth of the matter is that if you go outside this 
building, support for this bill is very narrow. The support has deep 
pockets. Apparently the Congress responds to deep pockets--not 
apparently; it does. Everybody knows that. People know it in Nebraska; 
they know it in Alabama; they know it in Minnesota.

  We can agree or disagree about this legislation, but that is the view 
people have. They say when it comes to our concerns about ourselves and 
our families, our concerns are of little concern in Washington. Part of 
that is the mix of money in politics. That is why the vote in the House 
is important and why everybody should know that McCain-Feingold and 
Meehan-Shays is just a step. Lord, we will have to do much more.
  I am trying to win on a cloture vote on which I will get beat badly. 
Outside of this building, and I will stake my reputation on this--I 
hope I have a reputation--outside this building there is no support for 
this, or very little. People are not running up to us in coffee shops 
in Nebraska and saying, please pass that bankruptcy bill because, by 
God, that is the most important thing you can do that will help us.
  People are talking about health care costs, childcare costs, good 
education for their children, a fair price for family farmers, how we 
can keep our small businesses going, the cost of higher education, the 
cost of prescription drugs, concern people will not have a pension, 
what happens when you are 75 or 80, in poor health, and you have to go 
to the poorhouse before you get help in a nursing home or home-based 
care and receive medical assistance. That is what people talk about. 
They don't say, please pass a bankruptcy bill so when we get into 
trouble, no fault of our own, because of medical bills or we lost our 
jobs, we will not be able to rebuild our lives. There isn't any support 
for this legislation outside this building. The deep pocket folks got 
to the Congress first, as they usually do.
  There is opposition. You can know something about a bill by who the 
enemies are. Labor unions oppose the bill. Consumer groups oppose the 
bill. Women and children's groups all oppose the bill. Civil rights 
organizations all oppose the bill. Many members of the religious 
community oppose the bill. Indeed, it is a fairly broad coalition that 
opposes this. Behind them are millions of working families who have 
nothing to gain and everything to lose from this legislation. That is 
why I have been blocking this bill for over 2 years.
  I come from the State of Minnesota. We had a great Senator and Vice 
President, Hubert Humphrey. He once said that the test of a society or 
the test of a government is how we treat people in the dawn of life, 
the children, in the twilight of their lives, the elderly, in the 
shadow of their lives, people who are poor, people who are struggling 
with an illness, people struggling with a disability.
  By this standard, this bill is a miserable failure. There is no doubt 
in my mind this is a bad bill. It punishes the vulnerable and rewards 
the big banks and credit card companies for their own poor practices. 
For all I know this legislation will only get worse in conference. I 
hope that is not the case but it is my fear.
  Earlier I used the word ``injustice'' to describe this bill. That is 
exactly right. It would be a bitter irony if creditors used a crisis, 
largely of their own making, to talk Congress into this legislation.
  Colleagues, it is not too late to reverse the course of the bill. It 
is never too late to pull back from the brink until we have leaped. We 
have not leaped yet. Let's step back. Let's do reform the right way. 
Let's wait until we are not adding to the economic pain that too many 
American families are already feeling. Let's not prolong the pain.
  I urge the Senate to change the course. If I lose on this vote, then 
we will have to have another cloture vote, which will be next week, and 
there will be more discussion. From there, we will see.
  I ask unanimous consent a number of editorials from newspapers all 
across our country be printed in the Record.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

               [From the Los Angeles Times, Mar. 2, 2001]

                        Deeper Hole for Debtors

       The bankruptcy reform legislation President Clinton vetoed 
     last year because it was unfair to consumers is being rushed 
     through Congress again. This time, if passed, President Bush 
     is sure to sign it into law. That would be a great victory 
     for banks, paid for by consumers in financial trouble.
       Banks and credit card companies pushing for the reform 
     claim that current law is too lenient on those who file for 
     bankruptcy only to avoid paying bills. There are admittedly 
     abuses--3% of bankruptcies are filed by those with enough 
     money to pay at least some of their creditors--but this 
     legislation is too harsh on the genuinely distressed 97%. The 
     House approved its version of the measure Thursday, but there 
     is a chance it will be amended or defeated in the evenly 
     divided Senate next week.
       Credit card companies could hardly ask for a better law. 
     They would have to take no responsibility for ever-more-
     aggressive lending, even to those with poor credit records. 
     The companies know that some of that debt will go sour and 
     they account for it in the high interest rates they charge 
     cardholders. The bankruptcy bill deals them a few more aces, 
     making it harder for debtors to get out from under.
       Lenders, who spent millions of dollars lobbying for the 
     legislation, argue that the current law allows too many 
     consumer to walk away from debt. But a recent study by the 
     independent American Bankruptcy Institute shows that in 97 
     out of 100 bankruptcies, the debtors, facing either 
     catastrophic medical bills or loss of income, have hit bottom 
     and cannot repay. Nearly 90% have no assets and owe, on 
     average, $36,000. They are either renters or live in homes 
     worth less than $100,000. The cars they drive are, on 
     average, eight years old, and seven out of 10 don't earn 
     enough money to cover their living expenses.
       The new law would close the door to many consumers filing 
     under Chapter 7, which does not require repayment, and force 
     them into

[[Page S7544]]

     Chapter 13, where they can lose homes and cars. Even in 
     Chapter 7, creditors can force borrowers to repay some of 
     their debt.
       Sen. Paul Wellstone (D-Minn.) is leading the battle against 
     the unfair legislation, and he has the support of both 
     California senators. He will need the backing of all Senate 
     Democrats and a Republican or two next week when he takes his 
     fight to the Senate floor.
                                  ____


           [From the San Francisco Chronicle, Mar. 15, 2001]

                         A Bad Bankruptcy Bill

       One of the low points in life is about to drop even lower. 
     After soaking up record amounts of special-interest money, 
     Washington is preparing a one-sided overhaul of bankruptcy 
     law, a change that will help the credit industry and further 
     punish debtors.
       Last year, then-President Clinton wisely vetoed a near-
     identical plan. The bill, The Bankruptcy Reform Act of 2001, 
     rewrites historic bankruptcy rules that aim to erase 
     uncollectible debts and let consumers and businesses start 
     over.
       But with the new administration, the revived measure has 
     easily passed the House and is due for a Senate vote this 
     week. President Bush has indicated he will sign the 
     legislation.
       It's hard to know what's worse about this plan: the 
     ingredients making it harder to wipe out debts or the lavish 
     campaign contributions that shadow the bill.
       Bankruptcy filings have grown during the last decade, 
     although the numbers declined last year to 1.3 million cases. 
     Most applicants seek the protection of Chapter 7, a category 
     that allows unsecured debts--generally credit cards--to be 
     canceled, while car and house payments remain.
       The bill would push many more people to file for bankruptcy 
     under Chapter 13, which would impose a 3- to 5-year repayment 
     period for credit-card debt and allow creditors to go after 
     cars and homes in some cases. The concept of bankruptcy as a 
     fresh start will be ended.
       The bill's supporters talk of personal responsibility, 
     abuse of bankruptcy laws by deadbeats and millionaires who 
     pour assets into mansions to shield money from bill 
     collectors. But the real causes of bankruptcy are divorce, 
     illness and layoffs. These are ruinous turning points that 
     bankruptcy was designed to soften.
       The money behind the bill is as overboard as the measure's 
     provisions. Finance and credit-card firms gave $9.2 million 
     to both major parties last year, up from $4.3 million in 
     1996. Bush's largest contributor was MBNA, the world's 
     biggest credit-card issuer.
       As the national economy cools, it's worth thinking about 
     the need for effective bankruptcy rules. The law shouldn't be 
     a haven for well-off debt-dodgers or spendthrifts who won't 
     curb bad habits.
       But these aren't the targets of this bill. Instead, the 
     legislation hobbles a larger group of lower-income Americans, 
     who will be held back by continuing debt for a longer time.
       Debt may be choking the livelihood of more than 1 million 
     Americans. But this problem should not be an opportunity for 
     the credit industry to make even more money. The bankruptcy 
     bill should be rejected by the Senate.
                                  ____


               [From the Washington Post, Feb. 19, 2001]

                       Reform Choice for Mr. Bush

       Last December President Clinton refused to sign a 
     bankruptcy bill, for the good reason that it was too tough on 
     ordinary debtors who seek the protection of the courts and 
     too generous to high-rollers with fancy tax accountants. Now 
     Congress is returning to the subject: A bill recently moved 
     through a House committee, and the Senate is preparing to 
     mark up its version. Lawrence Lindsey, the White House 
     economics adviser, has suggested that President Bush isn't 
     sure whether to support a bill. The administration should 
     make it clear that bankruptcy reform will only be signed if 
     it is fairly balanced.
       The case for reform is that the number of people declaring 
     bankruptcy has nearly doubled over the past decade, and that 
     this represents a damaging cultural shift toward 
     irresponsibility. If the old stigma associated with 
     bankruptcy evaporates, people may get the idea that they can 
     borrow freely and then get off without repaying; this imposes 
     costs on lenders, which in turn may be passed on to honest 
     borrowers in the form of higher interest rates. Up to a 
     point, this case is right--though it is also true that most 
     people who file for bankruptcy do so because of a calamity 
     such as illness, job loss or divorce.
       The challenge for reformers is to limit irresponsible abuse 
     of bankruptcy without being too harsh toward those who 
     deserve second chances.
       The bill Congress produced last year fell short in several 
     ways. It failed to close the egregious homestead loophole, 
     which allows expensively advised debtors to establish 
     residency in Florida or Texas and buy million-dollar homes 
     that they can keep while thumbing their noses at creditors. 
     It did too little to discourage hard-sell tactics by credit 
     card companies, whose relentless come-ons have done much to 
     seduce consumers into debt and to dissuade them from early 
     repayment. And it fails to restrict creditors' abusive 
     practice of pressuring unsophisticated debtors into 
     reaffirming their intention to repay even when they aren't 
     legally obliged to.
       This time around, senators from both parties are preparing 
     amendments that might fix some of these abuses. The credit 
     card industry, on the other hand, will be issuing reminders 
     of the size of its campaign contributions. Experience shows 
     that it will take presidential leadership to tip the scales 
     against the lobbyists. Let's hope Mr. Bush delivers it.
                                  ____


                [From the New York Times, Mar. 16, 2001]

                   A Business-Dictated Bankruptcy Law

       Business interests generously supported Republican 
     candidates in the last election and are now reaping the 
     rewards. President Bush and Republican Congressional leaders 
     have moved to rescind new Labor Department ergonomics rules 
     aimed at fostering a safer workplace, largely because 
     business considered them too costly. Congress is also 
     revising bankruptcy law in a way long sought by major 
     financial institutions that gave Republicans $26 million in 
     the last election cycle. President Clinton wisely vetoed the 
     proposal last year, but a nearly identical bill has passed 
     the House and another version was approved by the Senate 
     yesterday. President Bush fully supports the overhaul.
       The legislation makes it harder for debtors to have their 
     credit card and other unsecured debt erased under Chapter 7 
     of the bankruptcy code. Instead, a rigid formula would 
     require more debtors to file under Chapter 13 and partially 
     repay all their debts.
       The nation's bankruptcy laws have long reflected a delicate 
     weighing of society's interest in giving people in distress a 
     fresh start against the rights of creditors. Proponents of 
     this overhaul claim it is needed to curb abuses by high-
     income debtors who run up big debts and then use the 
     bankruptcy code to avoid repaying them. But the House bill 
     allows wealthy debtors to keep their pricey homes, if owned 
     more than two years, out of creditors' reach, so it hardly 
     furthers that avowed goal. The Senate, to its credit, voted 
     to set a uniform $125,000 limit on the value of a house that 
     can be shielded. We hope this approach prevails.
       On the broader issue, there is scant evidence that 
     bankruptcy abuse is rampant. Studies consistently show that 
     those obtaining Chapter 7 protection are truly in dire 
     straits. That is partly because the credit card industry 
     frequently bombards even low-income Americans who have a 
     checkered credit history with offers for high-interest loans. 
     Now credit card issuers want the government to reduce all 
     risk from their profitable business.
       The legislation will weaken an important protection 
     available to people who fall on hard times as the economy 
     slows. Its timing is as poor as are its merits.
                                  ____


         [From the Atlanta Journal-Constitution, Mar. 16, 2001]

           Congress, President Side With Banks, Not Consumers

       Consumer confidence is slipping lower as 401(k) balances 
     shrink amid a Wall Street collapse. Economists fear that 
     fretful Americans will curtail spending enough to turn the 
     hint of a recession into the real thing.
       What better time to send consumers the clear signal that if 
     hard times befall them, the government will be on the 
     creditor's side, not theirs? With breakneck speed, Congress 
     and President Bush are moving to do just that, so anxious are 
     they to repay the banks and credit companies that showered 
     them with unprecedented torrents of campaign money last year.
       Certainly, the bankruptcy bill rapidly making its way 
     toward the president's desk, written as it was by the 
     creditors' own lobbyists, could be worse. But it could be a 
     whole lot better, and the timing couldn't be farther off-
     base.
       The bill is being sold as necessary to prevent 
     irresponsible high-rollers from escaping debts they could 
     repay. To the extent the bill accomplishes that, it's a good 
     thing. But it also makes it much more difficult for many of 
     us who are middle class by the skin of our teeth to get a 
     fresh start after an unexpected setback, such as a layoff, 
     medical problem or divorce.
       For more than a century, bankruptcy law in this country has 
     allowed insolvent debtors to eliminate or reduce credit card 
     and other debt that is not secured by collateral such as a 
     house. Under Chapter 7 bankruptcy, people can erase most 
     unsecured debt. Chapter 13 bankruptcy allows debtors to 
     retain key assets, such as a house, in exchange for repayment 
     of share of debt under a court-ordered plan. Three of four 
     debtors choose Chapter 7.
       The current bill would bar most people with income above 
     the median ($39,000 nationally) from filing under Chapter 7 
     and eliminating credit card debt. Instead, they would be 
     forced to file under Chapter 13.
       What does this mean for you, if you're a middle-class 
     worker forced into bankruptcy after a temporary layoff or 
     other exigency? Even after you emerged from bankruptcy, the 
     credit card companies would have as strong a claim to a share 
     of your wages as would child support, alimony or other court-
     ordered obligation. In other words, your kids could get less 
     of the pie so the banks could get theirs.
       Although the scamming high-roller has received all the 
     rhetorical attention, the truth is that most filers are 
     anything but that. The median income is $22,000 a year, and 
     about two-thirds file after an extended period of 
     unemployment.

[[Page S7545]]

       The bill is good business for the credit companies, though. 
     They'll see even higher profits, about 5 percent higher next 
     year. For companies like MBNA, which would see about $75 
     million extra, that's a whopping return on last year's 
     investment in electoral campaigns of $3.5 million.
       Meanwhile, the blizzard of credit card solicitations 
     continue to blow. There probably is no law Congress could, or 
     should, pass to stop credit companies from bombarding even 
     the most bankruptcy-vulnerable consumers with solicitations 
     for easy, high-interest debt. Democrats couldn't even pass an 
     amendment to place limits on credit cards granted to minors 
     without parental approval. The best check on those lenders' 
     practices is the potential for losses when they give credit 
     cards to consumers with bad credit history.
       And we're sure to see a slew of people do just that in the 
     coming year, with or without this bill, as the economic 
     shakeout continues. For most Americans who are only dimly 
     aware of this legislation, the awakening will be rude indeed.
                                  ____


                        [From the Boston Globe]

                            Compounding Debt

       If the credit-card companies really wanted to do something 
     about bankruptcies, they would stop filling the mailboxes of 
     America with ever-more enticing pitches for new credit cards. 
     Instead, they have teamed up with the banks to push a new 
     bill that harshly penalizes families that end up in 
     bankruptcy. Most do so because they lose their jobs, get 
     socked by medical bills, or go through a divorce.
       Senator Edward Kennedy calls the bill the ``turkey of all 
     turkeys.'' Laid-off workers will have even worse names for it 
     if it is enacted and the economic slowdown puts more 
     employees on the street.
       Kennedy and other Senators get their chance this week to 
     amend legislation that swept through the House on a 306-108 
     vote and has already been approved by the Senate Judiciary 
     Committee. President Clinton vetoed a similar bill last year, 
     but President George W. Bush has said he would sign it.
       The bill's major shortcoming is that it makes it too 
     difficult for families drowning in debt to qualify for 
     Chapter 7 bankruptcy, which lets them wipe out credit-card 
     debt and other unsecured loans. Instead, they would be forced 
     into Chapter 13, which requires sometimes onerous repayments. 
     An especially objectionable provision would force parents and 
     children to fight credit-card companies to get their hands on 
     alimony or child support from debtors going through 
     bankruptcy.
       Supporters of the bill, many of them recipients of campaign 
     contributions from credit card companies and banks, in the 
     past election, say it is aimed at the profligate rich who try 
     to walk away from their obligations. In fact, a 1999 study by 
     federal judges found that the median income of debtors 
     seeking bankruptcy protection was $21,500. Another study, 
     done at Harvard, showed that in 1999 no fewer than 40 percent 
     of all bankruptcies were due to unpaid medical bills.
       Also, the legislation specifically ducks a chance to go 
     after affluent debtors by keeping a loophole in current law 
     that lets rich deadbeats in states like Texas and Florida 
     shield their mansions in bankruptcy court. The credit 
     industry had to swallow that provision to get the support of 
     powerful politicians from those states.
       Another less than creditable argument of the credit 
     industry is that the rate of bankruptcy filings is out of 
     control. Although the total did rise from 718,000 at the 
     beginning of the 1990s to peak of 1.4 million in 1998, it has 
     declined in each of the past two years. What has increased in 
     recent years is the deluge of easy credit solicitations with 
     which the industry swamps the country. According to the 
     Consumer Federation of America, the industry sent out a 
     projected 3.3 billion credit-card pitches last year, an 
     increase of 14 percent over 1999. The Senate should tell the 
     industry to cut back on them before it seeks a more punitive 
     bankruptcy law.
                                  ____


               [From the Chicago Tribune, Mar. 20, 2001]

Contributors to Irresponsible Acts; Credit-Card Firms Not Blameless in 
                            Bankruptcy Rise

                          (By James Sollisch)

       Last week the Senate voted 85-13 in favor of tightening the 
     bankruptcy laws and I received nine solicitations in the mail 
     offering me credit lines totaling more than I make in a year. 
     Several were preapproved. The bill is being pushed hard by 
     banks and credit-card companies, including MBNA, the largest 
     donor to the Republican Party this past election year.
       Credit-card companies believe people should take more 
     personal responsibility for their debts. A noble aim. And a 
     perfect time to pose the question, ``Why not make banks and 
     credit card companies take more responsibility for their 
     lending practices?'' Let's make the bill a responsibility in 
     lending and borrowing bill--because there's certainly enough 
     irresponsibility to go around. In 1999, more than 1.3 million 
     Americans filed for bankruptcy. That's up from 650,000 in 
     1990. Last year, lending institutions mailed out more than 33 
     billion solicitations. Coincidence? Only in the same way 
     tobacco companies tried to tell us that smoking and cancer 
     were coincidences.
       We've spent the past eight years making the tobacco 
     companies take responsibility for their misleading practices. 
     Why are we so eager to give credit-card companies a free 
     ride? These are the friendly folks who interrupt your dinner 
     five nights a week to offer you a zero interest credit card 
     for six months if you transfer all 14 of your other balances. 
     And did we mention you're preapproved? These are the good 
     people who send you that fake check three times a week for 
     $58,017--the amount of equity they figure you have in your 
     home.
       These are the decent corporate citizens who target college 
     students, suggesting that a credit card is a smart way to pay 
     for college expenses. Yeah, smart for the company that you 
     repay at 18 percent when you could be repaying a college loan 
     at 8 percent. These are the nice guys who still charge up to 
     24 percent in the states that will let them.
       And these aren't just the small companies on the fringes of 
     the industry--these are respected bricks and mortar 
     institutions. I've gotten three equity lines of credit in the 
     past 15 years on three homes. Each time the bank appraiser 
     found that the value of my home was exactly the inflated 
     number I estimated it to be on my application. How 
     responsible is that?
       Of course, lending institutions want us to be more 
     responsible for our debt. But without more regulation of 
     lending practices, lenient bankruptcy law is a much needed 
     check and balance. If these companies want fewer people to go 
     belly up on them, maybe they should tighten their lending 
     requirements. If I invest in a risky stock--and who hasn't 
     lately?--I'm not entitled to get my money back.
       And that's what consumers are to credit card companies--
     investments. They're banking on our ability to repay them. So 
     if they want safeguards, they should be wiling to give up 
     something in return. How about a solicitation tax? For every 
     solicitation by phone or mail, the institution must pay a 
     tax. The money could be used to educate consumers about the 
     dangers of overextending their credit.
       I'm sure the two chambers, which are about to reconcile 
     their versions of the bill, can come up with additional 
     ideas, some hopefully even more distasteful to the credit 
     card lobby than a solicitation tax.

  Mr. WELLSTONE. While I have the floor, I ask unanimous consent that 
my following remarks be included as part of morning business.
  The ACTING PRESIDENT pro tempore. Without objection, it is so 
ordered.
  (The text of the remarks of Mr. Wellstone can be found in today's 
Record under ``Morning Business.'')
  Mr. REID. Madam President, I suggest the absence of a quorum and ask 
unanimous consent the time be charged equally against the proponent and 
opponents of the cloture motion now pending.
  The PRESIDING OFFICER (Mrs. Clinton). Without objection, it is so 
ordered. The clerk will call the roll.
  The assistant legislative clerk proceeded to call the roll.
  Mr. SESSIONS. Madam President, I ask unanimous consent that the order 
for the quorum call be rescinded.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. SESSIONS. Madam President, I appreciate the opportunity to make 
some remarks about our bankruptcy bill that is now back before the 
Senate again. It is a bill that has been fought over, debated, 
improved, refined, changed and, I think, gained greater and greater 
support as we have proceeded.
  I know there are some people who remain very emotionally in objection 
to it, but when analyzed carefully and the provisions in it examined, 
there is no doubt whatsoever in my mind that this bill is a major step 
forward for bankruptcy procedure in America.
  Let me say what bankruptcy is and what it is not and what the bill is 
about. Bankruptcy occurs when an individual in America may be being 
sued and they can't pay their debt. The bill collectors are calling and 
their income just won't pay their debts. So they can go and file in a 
Federal bankruptcy court for relief under the bankruptcy laws. They can 
file under chapter 13, which says to the court, basically, I believe I 
can pay my debt back, but I can't live and be sued, have creditors 
calling me at home and that sort of thing. I will take a portion of my 
money. I will send it off to the bankruptcy court. You pay all my 
creditors in an orderly fashion, make sure they get paid, but keep them 
from suing me, harassing me, and bothering me, and then I will be able 
to recover and get back on my feet.
  That occurs a lot. In some States it is very small. In some States 
only 5 percent of the individuals file under chapter 13. Other States, 
it is much higher. In my State of Alabama, where chapter 13 originated, 
the number is almost 50 percent of the filers--I believe

[[Page S7546]]

it is 50 percent--in some parts of the districts that file under 
chapter 13. They find it has great advantages. They are able to keep 
their automobile, for example. They are able to keep their home, keep 
more of their goods and services. It allows them to stretch out 
payments, to reduce the interest rates. Normally, the interest rates 
drop down to zero or whatever, and then they pay it off on a regular 
basis. It stops the harassment that comes when people legitimately are 
trying to collect the money the individual owes to them.

  That is a good system. Too few people utilize chapter 13. It has some 
good advantages for themselves, not just for the people they are paying 
off. It has real advantages for them.
  The other process which is more widely used is to file under chapter 
7. You are in debt. You go down to the bankruptcy court and it wipes 
out all your debts. The debts are wiped out. Then the person is able to 
start afresh and not owe anybody. That is the common thing. It is the 
traditional great American value. It is referred to in the Constitution 
that the United States shall establish uniform laws for bankruptcy.
  It has always been thought of as something we would do in the Federal 
Government. Bankruptcy laws are handled in Federal courts, and, 
therefore, to improve them, unlike most collection cases, unlike most 
criminal cases that are in State courts, these are in a separate 
Federal court.
  It is important, since the last 1978 bill that passed, that Congress 
study what has been happening with bankruptcy and see what we can do to 
improve it. That is what has occurred here. It is not unexpected that 
people who are dealing in bankruptcy every day and see how the system 
works would be people who would have some concerns about it and be able 
to make suggestions about how to improve it.
  First and foremost, it ought to be a high value of America that those 
who incur debt should pay it back if they can. We do not need to get to 
a point in this society when people can borrow money from someone, 
promising to pay them back, and just not do so for light or 
insignificant reasons.
  Let me mention the bankruptcy filing issue. We have had a tremendous 
number of filings. In 1980, 2 years after the new bankruptcy act 
passed, there were just 287,000 bankruptcy filings. By 1999, 19 years 
later, the bankruptcy filings had jumped to 1.3 million a year, a 347-
percent increase. How did that happen? There are a lot of reasons for 
it. I suggest that a major factor for it is when you turn on your 
television at night on a cable station, or pick up your shoppers guide, 
there are advertisements and there are even billboards with lawyers 
saying: If you have got debt problems, call me and we will wipe them 
out. People call them. The lawyers don't get paid unless they take you 
to court and file for bankruptcy. So there is an incentive there to do 
that.

  I want to mention something. In this 1998-99 period, we were in a 
very strong economy. Yet we reached the highest point of filings in 
history. This chart is a little bit out of date. It shows a drop in 
1999. Around 2000, it has gone back up. But the numbers are much 
higher--maybe 3, 4 times what they were 20 years ago. We know we have a 
problem. Everybody knows that. I believe we can do something good for 
America.
  Let me say this: After all the debate, we had a number of votes on 
this matter and had strong support each time. It is bizarre to me--and 
I came here in 1997--how hard it is to get a piece of legislation 
passed. The procedural posture of this bill is interesting. In 1998, 
the House passed a bankruptcy bill, and all of these are fundamentally 
similar to what we have today. It passed in the House 306-118. It 
passed the Senate 97-1. In 1999, it came back, and I think we recessed 
or something and we never got it to the President to have him sign it 
into law.
  In 1999, it passed 313-108. In 2000, it passed the Senate 83-14. In 
the House, in 2000, it passed by a voice vote. It passed in the Senate 
70-28 in 2000. In the year 2001, we came back again and the House 
passed it 306-108, and the Senate passed it 83-15. It still hasn't 
become law. How did this happen? At any rate, we are now moving to a 
point where we are going to make this happen. We have discussed and 
debated these issues, and we are excited now that we can perhaps see an 
end to this and have some real reform.
  Let me mention one thing the bill does, which I think is significant. 
The bill provides that before you can go into bankruptcy court, you 
must at least inquire with a credit counseling agency, if there is one 
available in the community. The bankruptcy judge can certify if there 
is not one and would excuse this requirement. But most communities--
virtually all of them--have a credit counseling agency. That agency is 
a voluntary group you can go to and discuss with them your debt 
situation and whether or not you have a chance to work your way out of 
it. They are very good with families. They bring in the mother, father, 
and sometimes the children, and they sit around the table and they 
discuss what is going on in the family's budget.
  They call up this washing machine company that you have a debt with, 
or the bank, or the credit card company, and they say: We are a credit 
counseling company and we are licensed. This family is in trouble 
financially. If you will reduce the required payments, reduce your 
interest, we will commit to you to work with them and see that you get 
paid so much a month, and in a year, 2 years, 3 years, we will have you 
paid off. They may even ask them to reduce the amount owed. They may 
owe you $5,000 and there is no way they can pay that. They might say: 
They are thinking about bankruptcy. If you will agree to reduce your 
debt to $3,000, I believe they will pay you all of that.
  Sometimes these people do that. Sometimes they work out a budget and 
they teach the family how to get out of debt and get on their feet and 
start their lives again. That is a very good thing. My friends in the 
bankruptcy bar don't do that. When people go to them in response to 
their ads on television, they go in and talk to them and they say: You 
have enough debt; we ought to file chapter 7 and wipe this debt out.

  So the debt is wiped out, but nothing has been done to deal with the 
problem in that family that may have caused the debt to begin with. 
Sometimes there is a gambling addiction, a drug or alcohol problem, and 
sometimes there are illnesses and problems that maybe this credit 
counseling agency can help them get help for. Our bill says before you 
can file for bankruptcy, you have to at least talk to a credit 
counseling agency and see if they might have a plan for the debtor that 
might be better than simply filing bankruptcy.
  I think a lot of people would choose that option. I don't know how 
many. It may be 2 percent or it may be 10 percent. But if they know 
about that option, they will find it will be something good for them to 
do. We should consider that.
  Now, my friend from Minnesota is very aggressive about this bill. He 
is emotional about this bill. He says two different things. He says, 
well, only 3 percent of the people will qualify for this thing, so the 
bill should not pass. Then he says that everybody is going to have 
their bankruptcy protections eliminated and it is a harsh bill.
  Let's talk about the core matter within the bill. The core part of 
the bill says if you make above median income in America--which is 
around $45,000 for a family of four--and you are able to pay back a 
certain percentage of the debt that you owe, you ought not to go into 
chapter 7 and wipe out all those debts. You ought to be required to go 
into chapter 13 and pay back the portion of those debts that you can--
but under the court's protection, so nobody can sue you for debts and 
you can't receive phone calls and you are protected from harassment, 
but you pay the debt back. It is our view that if you can pay some of 
your debt, you should do that. I think that is just and fair. I don't 
think the Federal bankruptcy law was ever conceived to create a 
situation in which a person can simply, routinely go in and file and 
wipe out all their debts, even though they can pay them back.
  We have story after story of doctors and lawyers making $100,000-plus 
per year going in and wiping out all their debts and keeping right on 
with the salary they were making. I don't believe that is justice. I 
don't believe that is right. I believe we have a right and a 
responsibility to say if you can pay back some of that debt, you should 
do that.

[[Page S7547]]

  How many people will be covered by that? I don't know. Maybe 10 
percent, or less probably. But 90 percent of the people, because they 
will be making below median income, will be able to file in bankruptcy 
just like they do today with very little change.
  So this catches only what I would say are the abuses. Senator 
Wellstone said it is 3 percent. Maybe it is only 3 percent who make 
above median income. If so, only they will be affected. Even then, if 
your debts are large enough, you will be able to stay in chapter 7 and 
wipe them out if the court finds you can't pay them. But if you are 
making $150,000 and you owe your neighbors and the bank and the 
hospital a total of $150,000, most people would try to work and pay 
those debts down in some fashion. But why should a person making that 
kind of income just wipe them all out? This would say you would go to 
the court and you have to submit a plan. The court will put you into 
chapter 13, and the court may say you ought to be able to pay half of 
those bills, and you will pay them out on a monthly basis over 3, 4, 5 
years, and nobody can sue you, nobody can call you at night and harass 
you. They will take care of the payment of the debt. You simply have to 
set aside a certain amount of your money. You can't throw it all away 
and wipe out debts that you owe.
  It is true that a lot of people go into bankruptcy because of medical 
debt, hospital debt, and things of that nature. They didn't have 
insurance and they owe a lot of money for debts. Well, hospitals are 
not evil people. They are good institutions. Presumably, they supplied 
a need that they gave somebody health care and treatment and an 
operation and surgery, and whatever they needed, or fixed their legs 
that were broken, or whatever. So are we to say just because it is a 
hospital debt and you have the money to pay them and you make above 
median income, that we should never pay a hospital debt?
  What kind of thinking is that? We have this growing mentality in 
America today. It is--I do not know how to describe it, but it reflects 
a rejection of enforcement of contracts and laws and plain meaning of 
words.
  We have this deal where one has an obligation to pay if one can--I 
think people should pay--but if you are not able to and you make below 
median income, you will be able to wipe out all the debts just as in 
current law today.
  A lot of complaints have been made that families will be impacted and 
that this will be damaging to them. It has been said that the bill is 
incredibly harsh; that debtors file for bankruptcy for survival, and 
many do, and that this bill will stop all of that. I do not think that 
is correct. It was said this bill will eviscerate a major safety net in 
this economy for middle America.
  Let me tell you who benefits from this. Women and children benefit 
from this. Under the bankruptcy bill, deadbeat dads with above-median 
income and a moderate ability to repay debts will be required to enter 
chapter 13, just as I noted, supervised by a bankruptcy judge for 5 
years. The deadbeat dads must pay all past due alimony and child 
support before the bankruptcy judge will confirm the 5-year plan. This 
Federal judge will make sure that alimony and child support are paid 
and paid first, ahead of the debts.
  Under current Federal law in bankruptcy--and if we reject this bill, 
we will stay under current law--under current Federal law, child 
support and alimony payments rank seventh in the list of priority debts 
to be paid off in a bankruptcy proceeding. Incidentally, attorney's 
fees are now No. 1. This bankruptcy reform bill, on the other hand, 
reorganizes the priorities in a way that makes sense. Women and 
children come out to be No. 1 every time. This new priority list 
elevates child support and alimony payments to the top priority 
ensuring that those payments are made before any others, even above 
attorney's fees.
  That is a historic step forward for women and children in America. 
Why anyone who claims to want to benefit children to further child 
support payments would want to kill this bill is beyond me.
  It provides an automatic stay which is a trick some debtors have been 
using to get out of paying child support payments after they file for 
bankruptcy. In bankruptcy, they are given an automatic stay. That means 
the child support collection agencies that were trying to sue them for 
child support have to stop their lawsuit when a bankruptcy is filed. 
That is one of the principles of bankruptcy.
  Once a bankrupt files, every litigation against that bankrupt is 
stayed and is brought into the bankruptcy court, not the State courts 
unconsolidated, so the bankrupt can get his life together and not be 
sued in every county and State where he owes money. It is a good thing, 
but that stay can be abused when it comes to child support.
  This legislation ends that practice by exempting child support and 
alimony support obligations from the automatic stay. They have to 
continue to pay and the lawyer or the State child support agency that 
is seeking to collect child support on behalf of a mother and children 
will be able to continue their efforts to collect the money, even 
though the deadbeat dad has filed for bankruptcy.
  What about past due alimony and child support? The bill requires that 
a parent filing for bankruptcy must fulfill both their current and past 
due child support and alimony obligations before a judge can confirm a 
bankruptcy plan. They will ensure that the custodial parent gets 
effective and timely assistance from child support collection agencies 
by requesting the bankruptcy trustee and administrator to notify the 
parent and the State child support collection agency whenever a debtor 
owing child support or alimony files for bankruptcy. This notice will 
provide vital timely information to the custodial parent so that he or 
she can request help from the State child support enforcement agency if 
they desire.

  What does all this mean? Jonathon Burris, of the California Family 
Support Council, put it in an open letter to Congress: The provisions 
included in this bill are ``a veritable wish list of provisions which 
substantially enhances our efforts to enforce support debts when a 
debtor has other creditors who are also seeking participation in the 
distribution of the assets of a debtor's bankrupt estate.''
  In addition, Philip Strauss of the district attorney's Family Support 
Bureau--and most district attorneys around the country have as one of 
their obligations collecting child support on behalf of indigent 
spouses and children--wrote to the Judiciary Committee to express his 
unqualified support for the bill.
  He notes that he has been in the business of collecting child support 
for 27 years. He knows what he is talking about. Mr. Strauss notes that 
the National Child Support Enforcement Association, the National 
District Attorneys Association, and the Western Interstate Child 
Support Enforcement Council support his views and support this bill.
  I think that should put to rest any allegation that somehow we are 
abusing children in this legislation, that somehow it is harsh and not 
actually beneficial to them.
  When a parent who is not paying child support and makes above-median 
income is forced into chapter 13 for 5 years, they are under a Federal 
judge's watch and order that entire time. During that 5 years, they 
have to send their money for child support or they can be held in 
contempt of court by the bankruptcy judge or have their bankruptcy 
benefits all thrown out. That to me is a benefit for families and 
children that is little understood.
  There has been a lot of talk about credit cards. Remember, our bill 
focuses on how to process bankruptcy cases in bankruptcy courts. What 
kinds of notices that go on credit cards, how they declare their 
interest, what kinds of rules should cover them is a banking matter 
that is covered by an entirely different committee of this Congress, 
the Banking Committee.
  The chairman of the Banking Committee has agreed to allow some 
provisions to be put in this bill, but he asserts his prerogative and 
the Banking Committee's prerogative, and has done so, to handle any 
major reform of credit card laws.
  That is not what we are about in this legislation. This is bankruptcy 
court reform. It is not to reform all problems of credit in America, 
although we have some, and I am sure we will make progress on them.
  I inquire, Madam President, about the time.

[[Page S7548]]

  The PRESIDING OFFICER. The Senator has 34 minutes remaining.
  Mr. SESSIONS. I suggest the absence of a quorum.
  The PRESIDING OFFICER. The clerk will call the roll.
  The senior assistant bill clerk proceeded to call the roll.
  Mr. GRASSLEY. Madam President, I ask unanimous consent that the order 
for the quorum call be rescinded.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. GRASSLEY. Madam President, we are about to vote on the cloture 
motion to proceed to the bankruptcy bill. I strongly urge my colleagues 
to vote for cloture.
  I would like to say at the outset that I am pleased Senator Daschle 
has decided to move forward with the bankruptcy bill. It's only fair 
that we go through the regular order on bankruptcy, which is to take up 
the House-passed version, substitute that with the Senate-passed bill, 
and then proceed to conference to resolve differences between the two 
bills. The Senate bill, S. 420, went through proper procedure--in the 
107th Congress, the Judiciary Committee held a hearing and markup of 
the bill, and then there was extended debate and amendments on the 
floor. In March, S. 420 passed out of the Senate by a vote of 83 to 15.
  But, to tell you the truth, a bankruptcy bill should have been signed 
into law last year. We've been working on bankruptcy legislation for 
three Congresses now. The bill has passed both houses several times. 
Last year, the bill was unfortunately pocket-vetoed by President 
Clinton at the very last minute. The main reason we don't have a bill 
enacted into law is because of the determined efforts of certain 
Senators to delay and obstruct the process, even though a large 
bipartisan majority of the Congress supports bankruptcy reform. Certain 
Senators have made a point of impeding progress on this important 
reform measure every step of the way. They've done this because left-
wing interest groups think that bankruptcy should be easy. But the 
majority of us here in Congress don't think that should be the case.
  The bill reforms the bankruptcy system to require repayment of debts 
by individuals who have the ability to pay their bills, by 
reinstituting personal responsibility in a bankruptcy system that is 
now all too often being used as a financial tool for deadbeats. It is 
clear that the bill reinjects an individual's personal responsibility 
in regard to his or her financial situation, while at the same time 
protecting the right of debtors to a financial fresh start when they 
are in a situation where they cannot repay their debts or have fallen 
on hard times through no fault of their own. I repeat, the bill does 
not eliminate bankruptcy as a recourse for people who come on hard 
times. In fact, the bill clearly indicates that it there is a change in 
the circumstances of a debtor, that will be taken into account. And 
that includes the loss of a job or unexpected medical expenses.
  Furthermore, the bill strengthens protections for child support and 
alimony payments by making family support obligations a first priority 
in bankruptcy, up from number seven. What could help women and children 
more than moving family support obligations to the first priority in 
bankruptcy? We can't move them higher than number one, we've put women 
and children at the top. The bill makes staying current on child 
support a condition of discharge--debt discharge in bankruptcy is made 
conditional upon full payment of past due child support and alimony. So 
the bill makes payment of child support arrears a condition of plan 
confirmation. In addition, the bill gives parents and state child 
support enforcement collection agencies notice when a debtor who owes 
child support or alimony files for bankruptcy.
  The bill requires bankruptcy trustees to notify child support 
creditors of their right to use state child support enforcement 
agencies to collect outstanding amounts due. I think that these 
provisions will help ensure that women and children are up front when 
there is a bankruptcy.
  The bill does a lot more to help reform the bankruptcy system. For 
example, the bill makes permanent chapter 12 bankruptcy for family 
farmers and lessens the capital gains tax burden on financially 
strapped farmers who declare bankruptcy. As you know, we just extended 
chapter 12 for a few more months. It's high time that Congress get down 
to business and make chapter 12 permanent. I know that this is an 
important provision for many Senators out in farm country.
  In addition, the bill creates new protections for patients when 
hospitals and nursing homes declare bankruptcy. This was the subject of 
a hearing that I held in the Aging Committee when I chaired that 
committee, and so the bankruptcy bill will provide a ``patient's bill 
of rights'' to the elderly residents of bankrupt nursing homes.
  Finally, the bill requires that credit card companies provide key 
information about how much people owe and how long it will take to pay 
off their credit card debt by only making a minimum payment. To help do 
that, the bankruptcy bill provides a toll-free number to call where 
individuals can get information on the length of time it will take to 
pay off their own credit card balances if they make minimum payments.
  The bill prohibits deceptive advertising of low introductory rates, 
and provides for penalties on creditors who refuse to renegotiate 
reasonable payment schedules outside of bankruptcy. The bill 
strengthens enforcement and penalties against abusive creditors for 
predatory debt collection practices. And the bill includes credit 
counseling programs to help avoid and break the cycle of indebtedness. 
So, the bankruptcy bill that the Senate passed actually contains some 
of the most pro-consumer provisions we've seen directed toward the 
credit industry in years.
  The reality is that a large majority of the Senate voted for this 
bill. It's clear to me that the majority of Senators want a bankruptcy 
bill to pass. We've worked on bankruptcy legislation for three 
Congresses now, and it is time for us to get down to the business of 
getting this bill over the goal line once and for all.
  We already had an overwhelming vote on the Senate bill--83 to 15 
votes. So I'm urging my colleagues to vote for cloture.
  Madam President, since I do not see other people ready to speak, I 
suggest the absence of a quorum. I ask unanimous consent the time for 
the quorum call be evenly divided.
  The PRESIDING OFFICER. Without objection, it is so ordered. The clerk 
will call the roll.
  The senior assistant bill clerk proceeded to call the roll.
  Mr. HATCH. Madam President, I ask unanimous consent the order for the 
quorum call be rescinded.
  The PRESIDING OFFICER. Without objection, it is so ordered. The 
Senator from Utah.
  Mr. HATCH. Madam President, I am pleased to be here today to support 
the motion to proceed to H.R. 333, the Bankruptcy Abuse Prevention and 
Consumer Protection Act of 2001. As my colleagues may remember, the 
Senate counterpart to this legislation, S. 420, passed this Chamber in 
a bipartisan vote of 83-15 on March 15. Additionally, the conference 
report to last year's bill, H.R. 833, passed the Senate by a similarly 
wide margin just last December, but was pocket-vetoed by President 
Clinton at the very end of the legislative session.
  Today, we are beginning what I hope will be the final leg of a 
legislative marathon, a leg I hope we can complete soon. This bill has 
passed both bodies in the 105th, 106th, and now the 107th Congress. It 
is time to wrap up this debate, reach consensus and present a good bill 
to the President for his signature so American consumers can reap the 
benefits.
  I would like to briefly recount the legislative history of S. 420 
during this Congress. S. 220, the Bankruptcy Reform Act of 2001 was 
introduced by Senator Grassley in January and contained the same 
language as last year's conference report. That bill was given a 
hearing and amended in mark-up by the Judiciary Committee. After that 
the committee's bill was reintroduced as S. 420 by Senator Grassley and 
others, and, after extensive floor debate and the adoption of several 
important amendments, it passed the Senate in an overwhelming vote. As 
you can tell, many compromises and agreements have already been reached 
on this bill. I look forward to working with members of the conference 
to reconcile the

[[Page S7549]]

few remaining differences between the two bills.
  Let me just take a minute at this point to talk about the highlights 
of this legislation.
  First, it includes new consumer protections under the Truth in 
Lending Act, such as new required disclosures regarding minimum monthly 
payments and introductory rates for credit cards. It also protects 
consumers from unscrupulous creditors with new penalties for creditors 
who refuse to negotiate reasonable payment schedules outside of 
bankruptcy.
  This bankruptcy reform act also requires credit counseling to help 
people avoid the cycle of the indebtedness. It provides for protection 
of educational savings accounts, and gives equal protection to 
retirement savings in bankruptcy.
  The legislation would also put a stop to letting deadbeat parents use 
bankruptcy to avoid paying child support. It will also put an end to 
paying the lawyers ahead of children who rely on child support. It 
gives child support and other domestic support obligations first 
priority status. I am proud to have worked with Senators Torricelli and 
Dodd on these important reforms. I am also proud to have cosponsored 
Senator Clinton's amendment that further improved these provisions.
  Current bankruptcy law simply is not adequate, and frankly I was 
outraged to learn of the many ways deadbeat parents are manipulating 
and abusing the current bankruptcy system in order to get out of paying 
their domestic support obligations. The bill is a tremendous 
improvement for children and families over current law. That is why 
there is such overwhelming support for this legislation from the child 
support professionals across the country--the very people who go after 
deadbeats to get children the support they need. In fact, this bill 
includes a key provision that makes the full payment of past due child 
support and alimony a condition of getting a discharge in bankruptcy.
  I also am pleased to have worked with the chairman of the Judiciary 
Committee, Senator Leahy, to include for the first time, privacy 
protections in bankruptcy. That language protects personally 
identifiable information given by a consumer to a business debtor by 
adding new privacy protections to the bankruptcy code and by creating a 
consumer privacy ombudsman to appear before the bankruptcy court.
  Now, I am the first to acknowledge that there are things I would like 
to see changed in the bill, but I recognize that we all have cooperated 
and compromised in order to enact this legislation that provides new 
consumer protections, helps children in need of child support, and 
makes other necessary reforms to a system that is open to abuse.
  I want to emphasize emphatically that his legislation does not make 
it more difficult for people to file for bankruptcy, but it does 
eliminate some of the opportunities for abuse that exist under the 
current system. Our current system allows certain people with the 
ability to pay to continue to abuse the system at the expense of 
everyone else. People with high incomes can run up massive debts, and 
then use bankruptcy to get out of honoring them. In the end, all of us 
pay for the unscrupulous who abuse the system. In fact, it has been 
estimated that every American family pays as much as $550 a year in a 
hidden tax for these abusers. The bankruptcy reform legislation will 
help eliminate this hidden tax, by implementing a means test to make 
wealthy people who can repay their debts honor them. I support we could 
call this a tax cut for the responsible person.

  There are numerous examples of people who take advantage of loopholes 
today at the expense of everyone else. A few months ago, I heard from 
the president of a credit union in Wisconsin, who told me about a young 
couple who wanted a ``clean financial slate'' before they got married. 
What did they do? They ran up their credit card purchases. One of them 
prepaid on a car loan with the credit union to have the other cosigner 
released. Then, although they were both employed full time, they filed 
for bankruptcy to wipe out all their debt. The credit union--and its 
members--had to eat the $3,000 in credit card debt and another couple 
of hundred dollars on the car.
  Bankruptcy relief was never meant to allow this kind of abuse. 
Hardworking Americans, including the members of credit unions 
nationwide, have been victimized by abusers of the current bankruptcy 
system long enough.
  Bankruptcy abuse also hurts our nation's small businesses. Without 
reforms from this bill, losses from bankruptcy abuse will continue to 
break the backs of the Nation's small businesses and retailers, which 
work with slim profit margins and have even smaller margins for error.
  Make no mistake: Misrepresentations about this legislation are still 
running rampant by those who oppose any meaningful bankruptcy reform. 
Yet despite the allegations of opponents of reform,the poor are not 
affected by the means test. The legislation provides a ``safe harbor'' 
for those who fall below the median income, so they are not subjected 
to the means test at all.
  Another misrepresentation I have heard again and again is that this 
legislation won't let people file for bankruptcy relief when they need 
it. The fact is, this legislation does not deny anyone access to 
bankruptcy relief, it just requires those who have the means to repay 
their debts based on their income to do so. It is that simple.
  Opponents of this legislation have also waged the claim that it 
somehow hurts women and children. This falsehood is a particularly 
disturbing for me to hear, because I have had a long history of 
advocating for children and families on Congress, and I have worked 
tirelessly, provision by provision, to make this legislation 
dramatically improve the position of children and ex-spouses who are 
entitled to domestic support.
  It can be difficult to get the word out, when misrepresentations 
abound, about what bankruptcy reform legislation really does.
  I am optimistic that this much needed bankruptcy reform legislation 
will be signed into law this year. We have a no-nonsense President in 
the White House, who understands the importance of personal 
responsibility. Let's get through these necessary housekeeping votes 
and move to enact meaningful bankruptcy reform.
  I said many times during the debates on bankruptcy that the American 
people have waited long enough to have these improvements in the 
bankruptcy code that are fair to everybody and that basically require 
people to be responsible instead of irresponsible.
  I yield the floor.
  The PRESIDING OFFICER (Mrs. Carnahan). The Senator from Minnesota.
  Mr. WELLSTONE. Madam President, I heard the Senator from Alabama, and 
I believe I heard the Senator from Utah as well, say that the core of 
the bill is the means test, and all the means test does is force people 
to go into chapter 13. Therefore, the benefit doesn't affect low-income 
people, contrary to what I have said in this debate.
  The means test is only 9 pages out of a 200-page bill. If the means 
test was all this bill consisted of, then this bill would have passed 2 
years ago or 2\1/2\ years ago.
  The bankruptcy bill purports to target abuses of the bankruptcy code 
by wealthy scofflaws and deadbeats who make up, by the way, 3 percent 
of all the filers, according to the American Bankruptcy Institute. Yet 
hundreds of thousands of Americans file for bankruptcy every year, not 
gaming the system--I need to say it more times--but because they are 
overwhelmed with medical bills.
  Unfortunately, there are at least 15 provisions in S. 420 that make 
it harder to get a fresh start, regardless of whether the debtor is a 
scofflaw or a person who must file because they are made insolvent 
because of their medical debt or because they have lost their jobs or 
because of a divorce in the family and they are now a single parent 
with children. These measures not only include but also are in addition 
to the means test. If the means test was the whole piece of 
legislation, it would be quite a different story.
  Neither the means test nor the safe harbor in the bill apply to the 
vast majority of new burdens that are placed on debtors.
  Under S. 420, debtors will face these hurdles to filing regardless of 
their circumstances.
  An analysis in the Wall Street Journal last week put it this way. 
These are not my words:

[[Page S7550]]

       The bill is full of hassle-creating provisions, some 
     reasonable, and some prone to abuse by aggressive creditors 
     trying to get paid at the expense of others. In a thicket of 
     compromises, Congress is losing sight of the goal of making 
     sure that most debtors pay their bills while offering a fresh 
     start to those who honestly can't.

  That is the Wall Street Journal analysis.
  This amendment will preserve the fresh start for those debtors who 
honestly can't make it because they are drowning in medical debt.
  My colleague from Alabama said this is a bankruptcy bill. It only 
deals with the bankruptcy code and bankruptcy court reform, including 
banking measures targeted at credit card companies that Senator 
Wellstone suggested is inappropriate.
  Why is it inappropriate? If the point of this legislation is to 
reduce bankruptcy, then it would seem to me that we might want to take 
a look at the big banks and credit cards that have been pushing for 
their legislation. They are the only ones pushing for this legislation. 
You are hard pressed to find a bankruptcy judge that supports this 
legislation. You are hard pressed to find a bankruptcy law professor, a 
bankruptcy expert of any kind, anywhere, any place in the U.S.A. that 
backs this bill. This bill was written for the lender. It is that 
simple.
  That is why this piece of legislation doesn't hold them accountable. 
It has basically been written for them.
  It is ridiculous on its face that this legislation divorces 
irresponsible behavior of the credit card companies from the high 
number of bankruptcies. All of the evidence points to the fact that 
lenders and their poor practices are a big part of the problem. It is 
outrageous that we don't confront them. There isn't a parent in this 
country that is not well aware of the ways in which these credit card 
companies are constantly pushing these loans onto our children or onto 
our grandchildren. Everybody knows we are bombarded with it all the 
time.
  Both the House and Senate bills basically give a free ride to banks 
and credit card companies that deserve much of the blame for the high 
number of bankruptcies because of their loose credit standards. But 
even the Senate bill does very little to address this issue. There is a 
minor disclosure provision, and that is it. It is pathetic. Lenders 
should not be rewarded for reckless lending.
  Where is the blame? If we are holding the debtors accountable, why 
aren't we holding the lenders accountable?
  Again, I want to make the argument one more time. I think we know the 
answer. This legislation has the support of a lot of people, and the 
President says he supports it. As a matter of fact, there are going to 
be precious few votes against cloture.
  I am going to come back out here next week again and try to delay 
this bill. I am not arguing one-to-one correlation of any one Senator's 
vote on this legislation, but at an institutional level in terms of, if 
you will, where the mobilization of bias is. It seems to me it is 
crystal clear that this legislation is a tribute to the power and clout 
of the financial service industry in Washington. Let's call it what it 
is. This legislation is a tribute to the power and the financial might 
of the industry that has plowed millions and millions of dollars into 
this Congress.
  Why has Congress come down so hard on ordinary folks who are down on 
their luck? Why is it that this legislation is so skewed towards the 
interest of big banks and big credit card companies?
  I think the people who are going to be affected in a very harsh way 
are the 50 percent who file for bankruptcy because of medical bills. It 
is a double whammy--a medical bill you can't afford to pay, and maybe 
you can't work because of your illness or sickness or maybe it is your 
child's sickness or illness. A large part of the rest are people who 
are either out of work or because of the dramatic rise in single adult 
households by women because of divorce with children.
  Do you want to say these people are deadbeats? I think these families 
just do not have these million-dollar lobbyists representing them. They 
do not get hundreds of thousands of dollars in soft money such as 
either the Democratic Party or the Republican Party. They do not spend 
their days hanging outside the Senate Chamber to bend a Member's ear. I 
think what happened is the industry just got to us first.
  The truth is--and I will conclude on this note--outside this building 
there is hardly any support for this legislation. It is a bad bill. It 
punishes the vulnerable and rewards the big banks and credit card 
companies for their poor practices.
  I will tell you something. I am just trying to delay this, and then 
we will do it again next week. There are going to be very few votes, 
but I will say, even to my colleague from Iowa, who I insist is 
probably one of the best Senators in the Senate--I believe that; 
otherwise, I would not say it--this bill makes no sense to me. First of 
all, it made no sense to me when we started on this issue a number of 
years ago because the arguments were sort of outpaced by the data 
because all the bankruptcies supposedly were taking place. We were 
chasing a problem that did not exist, according to all the studies.
  Now we are heading into difficult times. We are heading into hard 
economic times. More people are losing their jobs and medical costs are 
going up. We are going to make it hard for people to rebuild their 
lives. We are going to make it hard for people to rebuild their 
financial lives.
  This piece of legislation is too one-sided, and it is too harsh. I 
will tell you, it is just testimony to the power of this industry. I do 
not do any damage to the truth when I say that when I am in a coffee 
shop in Minnesota, I do not--I repeat this again--have people running 
up to me saying: Please, Senator Wellstone, pass that bankruptcy 
``reform'' bill because we think you ought to go after all the 
deadbeats and all the people cheating, although you have no evidence to 
support that you have a lot of cheaters--not when 50 percent of the 
people who file it do so because of medical bills, with more and more 
people losing their jobs, and, as I say, the most dramatic rise is 
among single adult women who head households.
  People do not come up to me and say: Please, do that. They want to 
talk about the health care costs going up. They want to talk about a 
fair price, if they are farming. They want to talk about their children 
and education. They want to talk about the struggle to find a good job 
that pays a good wage so they can support their families. They want to 
talk about the costs of higher education. They want to talk about their 
concern that they will not have a pension. That is what they want to 
talk about.
  What in the world is the Senate doing making this a priority? The 
folks with the clout, with the power, and with the money got here 
first. I think that is what this is all about. I am going to continue 
to oppose this legislation.
  I yield the floor and I suggest the absence of a quorum.
  The PRESIDING OFFICER. The clerk will call the roll.
  The legislative clerk proceeded to call the roll.
  Mr. DASCHLE. Mr. President, I ask unanimous consent that the order 
for the quorum call be rescinded.
  The PRESIDENT pro tempore. Without objection, it is so ordered.

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