[Congressional Record (Bound Edition), Volume 145 (1999), Part 15]
[Senate]
[Pages 21995-22001]
[From the U.S. Government Publishing Office, www.gpo.gov]



                     BANKRUPTCY REFORM ACT OF 1999

  The PRESIDING OFFICER. The time between now and 5:30 is equally 
divided between the Senator from Utah and the Senator from New Jersey.
  Mr. HATCH. Mr. President, this bill is a bipartisan bill, drafted 
jointly by Senators Grassley and Torricelli. This legislation has been 
developed in a fair and inclusive manner.
  The reforms proposed in this bill have been carefully studied and 
have been deliberated upon at length. Indeed, Congress has been engaged 
in the consideration of this issue now for several years. The National 
Bankruptcy Review Commission spent two years comprehensively examining 
the bankruptcy system. The findings and opinions of the Commission, 
which were reported to Congress, have proved helpful in identifying the 
problems in the bankruptcy system and in finding appropriate solutions.
  Furthermore, the Subcommittee on Administrative Oversight and the 
Courts, which is chaired by Senator Grassley, has held numerous 
hearings on the issue of bankruptcy reform. The subcommittee heard 
extensive testimony on the subject from dozens of witnesses. Again, I 
would like to thank Senators Grassley and Torricelli for their 
leadership in this important consumer bankruptcy reform, and also last 
session's ranking member of the Administrative Oversight and the Courts 
Subcommittee, Senator Durbin, along with other members of the Senate, 
for their hard work on this issue.
  Throughout the process of consideration of this bill, at both the 
subcommittee and full committee level, changes suggested by the 
minority were included in the bill. During this entire process, I have 
expressed my willingness to work to address any remaining concerns the 
minority has about the bill. It is apparent, however, that efforts are 
underway to defeat this important legislation by attaching irrelevant, 
extraneous ``political agenda'' items to it, such as minimum wage, 
guns, abortion and tobacco, to name a few.
  I am open to full debate on relevant issues. Nevertheless, some of my 
friends on the other side of the aisle continue to tie up consideration 
of this bill for what appears to be political points.
  Despite the efforts of those in opposition, I remain hopeful and 
optimistic that we will be able to pass legislation this year that 
provides meaningful and much-needed reform to the bankruptcy system.
  The House of Representatives passed a much more stringent bankruptcy 
reform bill by an overwhelming bipartisan majority earlier this spring. 
The time has come for us to rise above politics and to do what is right 
for the American people. It is time for meaningful and fair bankruptcy 
reform.
  I urge my colleagues to vote for cloture so we may consider the 
substance of this important legislation and make our bankruptcy system 
better for all Americans.
  The Bankruptcy Reform Act of 1999 closes many of the loopholes in our 
bankruptcy system that allow unscrupulous individuals to use bankruptcy 
as a financial planning tool rather than as a last resort.
  Despite the White House's statement of opposition to the House's 
bankruptcy reform bill, H.R. 833, the House of Representatives realized 
that the time has come to restore personal responsibility to our 
nation's bankruptcy system. House Democrats and Republicans alike 
recognized that if we do not take the opportunity to reform our broken 
system, every family in my own State of Utah and throughout the 
country, many of whom struggle to make ends meet, will continue to bear 
the financial burden of those who take advantage of the system. As a 
result, the House bill passed by an overwhelming margin of 313 to 108. 
Half of the House Democratic Caucus joined with every House Republican 
to support the bill. And notably, the House bankruptcy reform bill is 
more stringent in its reforms than the Senate bill before us today.
  More than three decades ago, the late Albert Gore, Sr., then a 
Senator, commented on the moral consequences of a lax bankruptcy 
system. He said:

       I realize that we cannot legislate morals, but we, as 
     responsible legislators, must bear the responsibility of 
     writing laws which discourage immorality and encourage 
     morality;

[[Page 21996]]

     which encourage honesty and discourage deadbeating; which 
     make the path of the social malingerer and shirker 
     sufficiently unpleasant to persuade him at least to 
     investigate the way of the honest man. (Cong. Rec. 905, 
     January 19, 1965.)

  I too believe that the complete forgiveness of debt should be 
reserved for those who truly cannot repay their debts. S. 625 provides 
us with the opportunity to prevent people who can repay their debts 
from ``gaming the system'' by using loopholes that are presently in 
place.
  Mr. President, S. 625 provides a needs-based means test approach to 
bankruptcy, under which debtors who can repay some of their debts are 
required to do so. It contains new measures to protect against fraud in 
bankruptcy, such as a requirement that debtors supply income tax 
returns and pay stubs, audits of bankruptcy cases, and limits on repeat 
bankruptcy filings. It eliminates a number of loopholes, such as the 
one that allows debtors to transfer their interest in real property to 
others who then file for bankruptcy relief and invoke the automatic 
stay. And, the bill puts some controls on the ability of debtors to get 
large cash advances on their credit cards and to buy luxury goods on 
the eve of filing for bankruptcy.
  At the same time, the Senate bill provides many unprecedented new 
consumer protections. It imposes penalties upon creditors who refuse to 
negotiate in good faith with debtors prior to declaring bankruptcy. 
Also, it imposes penalties on creditors who willfully fail to properly 
credit payments made by the debtor in a chapter 13 plan, and for 
creditors who threaten to file motions in order to coerce a 
reaffirmation without justification. Moreover, the bill imposes new 
measures to discourage abusive reaffirmation practices.
  Mr. President, S. 625 addresses the problem of bankruptcy mills, 
firms that aggressively promote bankruptcy as a financial planning 
tool, and often end up hurting unwitting debtors by putting them in 
bankruptcy when it may not be in their best interest. The bill also 
imposes penalties on bankruptcy petition preparers who mislead debtors.
  Importantly, the bill makes major strides in trying to break the 
cycle of indebtedness. It educates debtors with regard to the 
alternatives available to them, sets up a financial management 
education pilot program for debtors, and requires credit counseling for 
debtors. I must commend Senator Sessions for his leadership on these 
important credit counseling provisions.
  I am proud that the bill also makes extensive reform to the 
bankruptcy laws in order to protect our children. I have authored 
provisions of the bill to ensure that bankruptcy cannot be used by 
deadbeat dads to avoid paying child support and alimony obligation. 
Under my provisions, the obligation to pay child support and alimony is 
moved to a first priority status, as opposed to its current place at 
seventh in line, behind attorneys fees and other special interests. My 
measures also ensure the collection of child support and alimony 
payments by, among other things, exempting state child support 
collection authorities from the ``automatic stay'' that otherwise 
prevents collection of debts after a debtor files for bankruptcy, and 
by exempting from discharge virtually all obligations one ex-spouse 
owes another. A new amendment will make changes to a number of 
provisions in the bill to clarify that the provisions are not intended, 
directly or indirectly, to undermine the collection of child-support or 
alimony payments.
  The bill includes a provision that I offered, which was accepted in 
the Judiciary Committee, which creates new legal protections for a 
large class of retirement savings in bankruptcy, a measure which is 
supported by groups ranging from the AARP, to the Small Business 
Council of America and the National Council on Teacher Retirement.
  Rampant bankruptcy filings are a big problem. In 1998, 1.4 million 
Americans filed for bankruptcy. That was more Americans than graduated 
from college, were on active military duty, or worked in the post 
office. Indeed, more people filed for bankruptcy in 1998 than lived in 
the states of Alaska, Delaware, Hawaii, Idaho, Maine, Montana, New 
Hampshire, North Dakota, Rhode Island, South Dakota, Vermont, or 
Wyoming.
  Last year, about $45 billion in consumer debt was erased in personal 
bankruptcies. Let me give this number some context. Forty-five billion 
dollars is enough to fund the entire U.S. Department of Transportation 
for a year. Losses of this magnitude are passed on the American 
families at an estimated cost--if we use low estimates--of $400 to 
every household in America every year. That $400 could buy every 
American family of four: five weeks worth of groceries, 20 tanks of 
unleaded gasoline, 10 pairs of shoes for the average grade-school 
child, or more than a year's supply of disposable diapers.
  Under current law, families who do not file for bankruptcy are 
unfairly having to subsidize those who do. Currently, our bankruptcy 
system is devoid of personal responsibility and is spiraling out of 
control. This is our opportunity to do something about it.
  As noted scholars Todd Zewicky of George Mason Law School and James 
White of the University of Michigan Law School recently wrote:

       Current law requires a case-by-case investigation that 
     turns on little more than the personal predilections of the 
     judge. This chaotic system mocks the rule of law, and has 
     resulted in unfairness and inequality for debtors and 
     creditors alike. The arbitrary nature of the process has also 
     undermined public confidence in the fairness and efficiency 
     of the consumer bankruptcy system.

  I am proud to be proposing several enhancements to the bill that 
primarily are designed to protect consumers and further provide 
incentives for consumers to take personal responsibility in dealing 
with debt management.
  In the area of domestic support, as I indicated earlier, Senator 
Torricelli and I intend to build upon the new legal protections we 
created, as part of the underlying bill, for ex-spouses and children 
who are owed child support and alimony payments. The changes will 
further strengthen the ability of ex-spouses and children to collect 
the payments they are owed, and will make changes to a number of 
existing provisions in the bill to clarify that they will not directly 
or indirectly undermine the collection of child support or alimony 
payments.
  In the area of education, Senator Dodd and I, along with Senator 
Gregg, have developed an amendment that will protect from creditors 
contributions made for education expenses to education IRAs and 
qualified state tuition savings programs. This is a significant 
protection for those who honestly put money away for the benefit of 
their children and grandchildren's educational expenses. The potential 
that education savings accounts will be abused in bankruptcy is 
addressed by the amendment's requirement that only contributions made 
more than a year prior to bankruptcy are protected. I believe that 
protecting educational savings accounts is particularly important 
because college savings accounts encourage families to save for 
college, thereby increasing access to higher education. Nationwide, 
there are more than a million educational savings accounts, meaning 
there are more than a million children who would benefit from this 
amendment. As much as I believe that the bankruptcy laws need to be 
reformed to prevent abuse and to ensure debtors take personal 
responsibility, the ability to use dedicated funds to pay the 
educational costs of children should not be jeopardized by the 
bankruptcy of their parents or grandparents.
  I have also developed a debt counseling incentive provision, which 
builds on the credit counseling provisions currently in S. 625. It 
removes any disincentive for debtors to use credit counseling services 
by prohibiting credit counseling services from reporting to credit 
reporting agencies that an individual has received debt management or 
credit counseling, and establishes a penalty for credit counseling 
services that do. Debt management education is vital to reducing the 
number of Americans who, because of poor financial planning skills, are 
forced to declare bankruptcy. Providing crediting counseling--
instruction regarding personal financial management--to current and 
potential filers will help curb bankruptcy filing.

[[Page 21997]]

  In addition, I intend to offer an amendment that is designed to curb 
fraud in filing. This amendment puts in place new procedures and 
provides new resources to enhance enforcement of bankruptcy fraud laws. 
It will require No. 1 that bankruptcy courts develop procedures for 
referring suspected fraud to the FBI and the U.S. attorney's office for 
investigation and prosecution and No. 2 that the Attorney General 
designate one assistant U.S. attorney and one FBI agent in each 
judicial district as having primary responsibility for investigating 
and prosecuting fraud in bankruptcy.
  I also plan to offer an amendment that will allow a victim of a crime 
of violence or drug trafficking offense or another party in interest to 
petition the bankruptcy court to dismiss a petition voluntarily filed 
by a debtor who was convicted of the crime of violence or drug 
trafficking offense. In order to protect women and children who may be 
owed payments by such a debtor, however, the amendment would still 
allow the bankruptcy petition to continue if the debtor can show that 
the filing of the petition is necessary to ensure his ability to meet 
domestic support obligations. Bankruptcy is not an entitlement--it is a 
process by which certain qualifying individuals with substantial debts 
may cancel their debts and obtain a ``fresh start.'' Under this 
amendment, violent criminals and drug traffickers--individuals who have 
chosen to engage in serious, criminal conduct--would be precluded from 
availing themselves of the benefits of bankruptcy protection.
  Again, I thank Senator Grassley, the distinguished chairman of the 
Judiciary Committee's Subcommittee on Administrative Oversight and the 
Courts, for his leadership and dedication to this effort, and look 
forward to working with him and the subcommittee's ranking member, 
Senator Torricelli, in passing this legislation.
  Let's look at a couple of other charts. This one is done by Penn, 
Schoen and Bergland Associates, Inc.: 83 percent of the American people 
favor an income test in bankruptcy reform. Only 10 percent oppose it 
and 7 percent don't know. So we should have an income test in 
bankruptcy reform.
  Americans agree that bankruptcy should be based on need. Ten percent 
believe an individual who files for bankruptcy should be able to wipe 
out all their debt regardless of their ability to repay that debt. Only 
10 percent of our society believe that, and I am surprised that many 
people believe that. If somebody has the ability to pay a debt, why 
should they stiff other people with their debts and why shouldn't they 
have to live up to paying off their debts?
  Four percent refused to answer this. But 87 percent believe an 
individual who files for bankruptcy--all of this yellow--should be 
required to repay as much of their debt as they are able and then be 
allowed to wipe out the rest.
  That makes sense. Otherwise, we have people who are using the 
bankruptcy laws as an estate planning device. We have people who every 
5 years file for bankruptcy after running up all kinds of bills and 
enjoying the life of Riley during those intervening years. What we want 
to do is have people realize there are some disincentives for doing 
that and that they have to pay some of these bills themselves.
  These particular charts show that the American people have their 
heads screwed on right, except for about 10 percent of them. If an 
individual has the ability to repay some of the debt, they ought to be 
able to and they ought to want to, they ought to do what is right, and 
87 percent of the American people believe that is the case. Only 10 
percent believe they should be able to wipe out any debts at any time 
by going into bankruptcy.
  I hope we can get people to vote for cloture on this matter so we can 
proceed and so we will not have any further delay in passing what 
really will be one of the most important bills in this particular 
session of Congress.
  Mr. President, I suggest the absence of a quorum.
  The PRESIDING OFFICER. The clerk will call the roll.
  The bill clerk proceeded to call the roll.
  Mr. HATCH. Mr. President, I ask unanimous consent that the order for 
the quorum call be rescinded.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. HATCH. Mr. President, I suggest the absence of a quorum and ask 
that the time be divided equally.
  The PRESIDING OFFICER. Time will be charged to both sides. The clerk 
will call the roll.
  The bill clerk proceeded to call the roll.
  Mr. WELLSTONE. Mr. President, I ask unanimous consent that the order 
for the quorum call be rescinded.
  The PRESIDING OFFICER (Mr. Crapo). Without objection, it is so 
ordered.
  Mr. WELLSTONE. I thank the Chair.
  Mr. President, I will speak briefly in opposition to cutting off 
debate on S. 625, the Bankruptcy Reform Act of 1999. I say to my 
colleagues, the entire concept of the bill is wrong. It addresses a 
``crisis'' that appears to be self-correcting. It rewards the predatory 
and reckless lending by banks and credit card companies which fed the 
crisis in the first place, and it does nothing to actually prevent 
bankruptcy by promoting economic security for working families.
  To support, if you will, my case on the floor, I will talk about a 
couple of amendments I intended to offer to this bill which I think 
will make a huge difference. Let me give a couple of examples.
  One amendment will prevent claims in bankruptcy on high-cost credit 
transactions in which the annual interest rate exceeds 100 percent, 
such as pay-day loans and car title pawns. Pay-day loans are intended 
to extend small amounts of credit, typically $100 to $500, for an 
extremely short period of time, usually 1 week or 2 weeks.
  These loans are marketed as giving the borrower a little extra until 
pay day, hence the term ``pay-day'' loan. The loans work like this:
  The borrower writes a check for the loan amount plus a fee. The 
lender agrees to hold the check until an agreed-upon date and gives the 
borrower the cash. On the due date, the lender either cashes the check 
or allows the borrower to extend the loan by writing a new check for 
the loan. In any case, the annual interest rate can get as high as 391 
percent.
  We ought to do something about that, Mr. President. I have an 
amendment that will make a difference. I believe I would win if I 
offered this amendment to address this problem.
  Another amendment I want to offer is about making sure banks offer 
low-cost banking services to their customers. For about 12 million 
Americans, having a checking account is a simple convenience which they 
cannot afford. Why? Because quite often there is a large minimum or you 
have fees that are really too high, and therefore people cannot even 
have these accounts. I want to make sure these banks are responsive to 
low-income citizens as well.
  Mr. President, I was on the floor last week for several hours talking 
about the crisis in agriculture. I said that those of us from the farm 
States want an opportunity to pass legislation that would change the 
course of policy and prevent our family farmers from being driven off 
the land and prevent, really, what is right now the devastation of our 
rural communities.
  The minority leader, Senator Daschle, has an amendment to get the 
loan rate up, to get prices up, which I support. I have an amendment--
and Senator Dorgan will join me--which basically says we are going to--
for 18 months, until we pass some antitrust action--put a moratorium on 
a lot of these mergers and acquisitions. We want to have some 
competition in the food industry.
  I think I can get a lot of support from Republicans as well as 
Democrats. I think there will be a lot of support on the floor of the 
Senate for these amendments that try to do something about changing 
farm policy so our producers--whether they be in Minnesota, whether 
they be in Idaho, whether they be in the Midwest, or whether they be in 
the South--are able to make a living and support their families.

[[Page 21998]]

  In all due respect--I hate to say this--bankruptcy is all too 
relevant to what these family farmers are going through. I have an 
amendment that says we ought to do some policy evaluation if we are 
going to be talking about bankruptcy and we are not going to do a darn 
thing to deal with the predatory policies of these credit companies, 
that we are not going to do a darn thing about the ways in which they 
hook people in who have precious little consumer protection, that if we 
are going to talk about low-income citizens, I would like to see some 
policy evaluation.
  I would like to see us have some understanding about what is going on 
in welfare. Where are these mothers and children who are no longer on 
the rolls? What are their wage levels? Is there affordable child care? 
Do these families have health care coverage or do they not have health 
care coverage?
  It is also the case that my colleague who sits right next to me, 
Senator Kennedy, has an amendment he wants to offer to raise the 
minimum wage. I find it interesting that what we have here is a piece 
of legislation that does nothing by way of providing consumer 
protection, does nothing by way of challenging these credit card 
companies, and does absolutely nothing to prevent the bankruptcy in the 
first place.
  We have the evidence that shows that very few people--maybe 3 
percent--have abused the law. And because of that, we are passing a 
draconian, harsh piece of legislation which imposes enormous 
difficulties on the poorest families, on working-income families. Yet 
when some of us say we want to bring some amendments to the floor that 
deal with exorbitant interest rates, to make sure that low-income 
people have access to banking services, and to make sure we do 
something about the economic security for working families--and I 
include family farmers who are going bankrupt--we are told by the 
majority leader we are going to be shut out from being able to offer 
amendments, and therefore the majority leader files cloture.
  We will have a cloture vote. I am going to vote against cloture; I am 
sure many of my colleagues are going to vote against cloture, and then 
I am sure the majority leader is going to pull the bill. If he pulls 
the bill, that will be actually a plus for Americans. This is a deeply 
flawed piece of legislation--great for the credit companies, terrible 
for consumers.
  But if he pulls the bill, also that is basically a message to those 
of us who for weeks now have been saying we want to come to the floor 
with substantive amendments, to fight for the people we represent, to 
do something about making sure they have a decent chance--and I am 
talking in particular about family farmers. Basically what I am hearing 
from the majority leader is: Anytime you say you are going to come to 
the floor with these amendments, I am going to pull the legislation. I 
am not going to give you a vehicle. We are not going to have an up-or-
down vote on minimum wage.
  Apparently, a lot of my colleagues on the other side do not want to 
be on record; we are not going to have an up-or-down vote on getting 
farm prices up; we are not going to have an up-or-down vote on a 
moratorium dealing with these mergers and acquisitions; We are not 
going to have an up-or-down vote on amendments that really do deal with 
these payday loans, with these exorbitant interest rates, making sure 
again that low-income people have access to banking services.
  I think there will not be enough votes for cloture. I do not think 
there should be enough votes for cloture. I want to say today on the 
floor of the Senate, especially to the majority leader--not so much to 
my colleague from Utah--if each and every time, as a Senator from an 
agricultural State, I am going to be shut out from having any vehicles 
whereby I can bring some amendments to the floor to change farm policy 
so these producers do not go under in my State, then I am going to have 
to look for whatever leverage I have as a Senator to force some 
cooperation on the other side so we can have a genuine, substantive 
debate about a lot of issues that are important to people's lives.
  Let's talk about raising the minimum wage. Let's talk about what is 
happening to family farmers. Let's talk about health care policy. Let's 
talk about consumer protection.
  This effort on the part of the majority leader--and I guess, 
therefore, the majority party--to shut us out from introducing 
substantive legislation that would make all the difference in the world 
to the people we represent is just simply unacceptable. I do not think 
this is any way for us to operate as a Senate. I urge my colleagues to 
vote against cloture.
  I yield the floor.
  Mr. GRASSLEY addressed the Chair.
  The PRESIDING OFFICER. The Senator from Iowa.
  Mr. GRASSLEY. I yield 7 minutes to the Senator from Alabama.
  The PRESIDING OFFICER. The Senator from Alabama is recognized for 7 
minutes.
  Mr. SESSIONS. I thank the Senator from Iowa and appreciate his 
steadfast leadership on this issue. I also thank the distinguished 
chairman of the Judiciary Committee, Senator Hatch, for his leadership.
  We have worked over the past several years to produce a much needed 
piece of legislation, a reform of Federal bankruptcy law. Bankruptcy is 
provided for in the U.S. Constitution, and we have seen some remarkable 
changes in the last few years that demand that we reform the system.
  Last year there were over 1.4 million bankruptcies filed in America. 
That comes out to almost 4,000 filings every day of the year. Since 
1990, personal bankruptcies are up 94.7 percent. This dramatic increase 
in personal bankruptcies occurred in spite of the fact that over that 
same period business bankruptcies fell 31 percent and the country 
enjoyed a healthy and expanding economy. These statistics demonstrate 
there is need for reform immediately.
  Bankruptcy exists to provide relief as a last resort for the most 
debt-ridden individuals. It is not a financial planning device. This 
bill was needed last year, but it did not pass due to the same kinds of 
partisanship and political tactics we have seen here today.
  This year, I think Congress will pass this bill. I hope we will 
proceed to it today for a final vote. The majority leader of the Senate 
and the Members of this Senate have a lot of work to do this year. We 
have quite a number of critical appropriations bills, including the 
Defense appropriations that may come up later tonight. We have to 
consider those bills.
  We cannot have a bankruptcy bill like the one that passed this Senate 
last year with 97 votes--a very similar bankruptcy bill which almost 
every single Senator voted for. That bill turned into a Christmas tree 
of amendments on every kind of unrelated issue that any Senator wanted 
to bring up, and I am afraid that the same thing might happen today.
  Why is this happening? I will tell you why. Some Senators do not want 
this bill to pass, but they are afraid to vote against it straight up, 
and so they offer amendment after amendment, and they tell the majority 
leader: We won't have any limit. We want to offer as many amendments as 
we can on a number of unrelated subjects--international affairs, 
economics, whatever they want to bring. This means we could be here for 
weeks on a bill that has been debated for the last 2 years with great 
intensity. The Senate does not need that. The majority leader cannot 
allow that to happen. We will have to not proceed with it, I assume, if 
we cannot get cloture today.
  A bankruptcy bill similar to this passed the House earlier this year 
313-108. Senator Grassley's bill came out of the Judiciary Committee 
14-4. So I am proud to be a key sponsor of this. I think it makes the 
kind of changes we need without changing the fundamental principles 
that if a person is over their head in debt, helplessly unable to pay 
their debts, they ought to be able to wipe out those debts and start 
over. We have no dispute with that principle. That is a fundamental, 
historic principle.
  I know it makes a lot of people mad to think that somebody does not 
have

[[Page 21999]]

to pay their debts, that they can just go to court and wipe out their 
duly signed contract. But this country has always adhered to the view 
that if your debts reach a certain level and you cannot pay them, you 
can start afresh.
  We do not have debtors' prisons. And I certainly agree with that. But 
we do have a growing trend in America in which people making $60,000, 
$80,000, $100,000 a year owe a significant--but not great--debt and 
just go into court and file straight bankruptcy under chapter 7. If 
they make $100,000 a year and they owe $60,000 that they could easily 
pay off in a period of years, they can go into bankruptcy court and 
wipe out their debt. These individuals can file under Chapter 7 and 
just not pay their debts--whether it is the guy next door, the garage 
mechanic, the automobile car dealer, the credit card bank note--that 
debt can simply be wiped out. There is no way a court can stop this 
behavior right now. It is not being stopped. And it is going on 
regularly.
  What Senator Grassley's legislation does is say to the courts: You 
have a duty to look at the debtor's income, to analyze what a person's 
income is. If they are able, over a reasonable period of time, to pay 
back a significant portion of their debt, they ought to pay it back. 
Why? Because it is a moral question. And the moral question is this: 
The man making $100,000, who owes $60,000 in debt--$2,000 of that may 
be to the mechanic who fixed his car--who ought to be paying that?
  Who ought to get the money? The man who did the work for him and 
fixed his car or fixed the roof on his house? Should he be paid, or 
should this man be able to live in his house bankrupt and not pay his 
debt to the people who helped fix it for him? It is just that simple. 
It is a question of justice and right and wrong.
  One provision that I worked hard to put into this bill that I think 
is good and very innovative is a requirement that people at least 
consider an approach to credit counseling before they actually file for 
bankruptcy. There are a number of excellent credit counseling agencies 
in America. They can sit down with people and negotiate with their 
creditors and get them to reduce the interest rates. They can help 
people make payment plans. They help the family put a budget together. 
If somebody is addicted to gambling, these credit counseling agencies 
can get them in Gamblers Anonymous. If they have mental health 
problems, they can help with that. The agencies can help them decide 
which debts ought to be paid first, such as the ones with the highest 
interest. They can negotiate on behalf of their clients delays in 
certain debt so they can pay others first.
  I visited for virtually a full day at a credit counseling agency in 
my hometown of Mobile. I was extraordinarily impressed with what they 
do and the services they offer. This bill would require that, before 
you file for bankruptcy, you ought to at least talk to one of these 
credit counseling agencies.
  We have seen what is happening today before. Senator Grassley saw 
this at just about this time last year. We had a bill that came up and 
cleared the committee by an overwhelmingly bipartisan vote--a bill that 
we got through this body with an overwhelming vote. I believe 97 
Senators voted for it. Yet when it came back up, we had just these 
kinds of dilatory tactics designed to delay and put the bill off to 
avoid a vote. I don't know why that is true.
  There is nothing but fairness and justice and improvement in this 
bill. It is time for us to respond to this growing rush of people who 
are claiming bankruptcy, many of whom don't deserve or need the 
protections of the judicial system to address their debts. We want 
bankruptcy to be available for those who truly need it but not for 
those who view it as an easy way to wipe out debts that they could pay.
  I think we have made some real progress with this bill. I hope 
politics doesn't enter into the Senate's consideration of these 
reforms. If it does, I hope the American people will understand and 
look through the political tactics and the manipulation to see right 
through this.
  Thank you, Mr. President.
  The PRESIDING OFFICER. The Senator from Iowa.
  Mr. GRASSLEY. Mr. President, first of all, before the Senator from 
Alabama leaves, he needs to be thanked for the outstanding work he has 
done to help put this compromise piece of legislation together that 
came out of committee by a bipartisan vote of 14-4, and also during the 
remarks he just presented for laying out the history of this 
legislation last year in which the bill passed 97-1. He very accurately 
stated what the situation is.
  He also now raises the question, which is a legitimate question: What 
has gotten rotten in Denmark, so that all of a sudden a bill that 
passed 97-1 about a year ago is being filibustered in the effort to 
bring it up, if some people aren't playing some sort of game?
  I thank the Senator from Alabama for his work on this bill.
  I also thank him for reminding the Senate of what that situation was 
a year ago and raising the question of what has changed. Not much has 
changed. It is just that some people want to use tactics behind the 
scenes to keep a bill from coming out in the open when they wouldn't 
express those same views in a vote on the floor of the Senate.
  Also, there was a previous speaker on the other side, a friend of 
mine, who recently spoke against the cloture motion to bring debate on 
this bill to a halt on the motion to proceed and then immediately get 
to the bill; he expressed a view that there ought to be opportunity to 
offer nongermane amendments on the issue of agriculture.
  Normally, I am sympathetic to those opportunities to bring to the 
floor of the Senate the complaints and concerns of an economic crisis 
such as we are facing in agriculture. But I think there are 
opportunities available to do that other than messing up an opportunity 
to bring needed reform to the bankruptcy code.
  Besides, during my remarks today, I am going to point out to the 
Senator from Minnesota how there are opportunities in this very 
bankruptcy bill to help the family farmer. They relate directly to the 
permanent reauthorization of chapter 12 bankruptcy. If that is not 
authorized in this bill--in fact, if this isn't done by the 1st of 
October--there is no chapter 12. Then, instead of using a chapter of 
the bankruptcy code that is written to the special needs of 
agriculture, the farmers are going to have to file for bankruptcy under 
chapter 11. That was written for corporate America. That doesn't fit 
the needs of agriculture. They are going to find, unlike chapter 12's 
existence for reorganization of farmers where 88 percent of them are 
still able to farm and maintain the family farming operation, that 
there will be a very high percentage of farmers forced to file under 
chapter 11, the chapter friendly to corporate structure, and they are 
not going to be farming anymore at all. They won't be farming as family 
farmers, if they farm.
  Mr. President, we are coming soon to a cloture vote on the bankruptcy 
bill. If cloture is not invoked, it will be very unfortunate. I've 
worked very closely with the minority and with Senator Torricelli, who 
is the ranking member on the Subcommittee on Administrative Oversight 
and the courts, to fashion a bill which contains many changes and 
modifications requested by Democrats. For instance, the means-test is 
looser than I would personally prefer. But I have made this change to 
respond to concerns raised by the other side of the aisle.
  I think we're in this situation because we have Members from the 
minority party who want to offer an unlimited number of amendments on 
subjects totally unrelated to bankruptcy. This, of course, is a delay 
and stalling tactic by imposing these nongermane amendments upon a very 
important bill, a bill that will pass this body by an overwhelming 
margin, if we get it up for a vote, but a bill that can be stalled by 
people who maybe don't want this bill to pass and don't want to face it 
head on, because this bill passed by a 97-1 vote in the last Congress.
  From my conversations with the Republican leadership, I think it's 
fair to say that we are willing to accommodate a few unrelated 
amendments from

[[Page 22000]]

the minority. But, it appears that some Members of the minority want to 
turn the bankrupticy bill into a Christmas tree for everything you can 
think of. Obviously, that's not acceptable. So here we are. At some 
point, I hope that this situation is resolved. We Republicans stand 
ready to be reasonable.
  I want to take this opportunity to talk about what is being delayed. 
The bankruptcy bill contains some very important provisions that are 
vital for family farmers, especially Midwestern family farmers, and 
particularly with this economic crisis even in my State of Iowa.
  As we all know from recent debate on the emergency agriculture 
appropriations bill, which is in conference this very night to iron out 
the differences between the House and Senate, many of America's farmers 
are facing financial ruin. We have some of the lowest commodity prices 
in 30 years. Pork producers have lost billions of dollars--not just in 
income but in equity. The price of corn is currently well under the 
cost of production. And the cash market for soybeans has reached a 23-
year low. This is all in addition to the poor weather conditions in 
parts of the Midwest and the drought in the 10 States of the Eastern 
United States.
  Just last week, I sent a letter with a number of farm State Senators 
from both parties, including the Democratic leader, Senator Daschle, 
signing it, to all Senators, discussing the needs for reauthorization 
of chapter 12, which is done in this all-encompassing bankruptcy reform 
legislation.
  As you can imagine, these difficult financial circumstances have sent 
many farming operations into a tailspin. Clearly, we need to make sure 
that the family farmers continue to have bankruptcy protection 
available during this difficult period. But bankruptcy protection won't 
be available if this bill is blocked by turning it into a Christmas 
tree.
  I don't pretend to talk about bankruptcy being needed by the family 
farmers as a substitute for anything that can be done here in the 
Congress or what can be done through the marketplace to bring 
profitability because that is what is absolutely necessary. But under 
any circumstances, in good times or bad times, some farmers are going 
to need to have the protection of chapter 12, just as corporations in 
America have the protection of chapter 11. And farmers are entitled to 
a chapter that fits the needs of agriculture, the same way corporate 
America is entitled to a chapter that fits the needs of corporate 
America.
  Title X of this bill makes chapter 12 permanent and makes several 
changes to chapter 12 to make it more accessible for farmers and to 
give farmers new tools to assist in reorganizing their financial 
affairs.
  As things stand now, chapter 12 will cease to exist by September 30 
unless we get this bill through the Senate, through conference, and on 
the President's desk. It would be a supreme act of irresponsibility if 
we let chapter 12 die and we leave our farmers without a last ditch 
protection against foreclosure and forced auctions.
  Make no mistake about it. By delaying this bill, Senators who vote 
against cloture will leave family farmers across America exposed to 
forced auctions and foreclosures. That is what I urge the Senator from 
Minnesota to be cognizant of as he votes against cloture, as he 
indicated he would do.
  Back in the mid-1980s, when Iowa was in the midst of another 
devastating farm crisis, I wrote chapter 12 to make sure family farmers 
would receive a fair shake in dealing with the banks and the Federal 
Government as a lender of last resort. At that time I didn't know if 
chapter 12 was going to work or not, so it was only enacted on a 
temporary basis. Chapter 12 has been an unmitigated success. As a 
result of chapter 12, many farmers in Iowa and across the country are 
still farming and contributing to the American economy. With a new 
crisis in the farm country, we need to make chapter 12 a permanent part 
of Federal law. This bankruptcy bill provides for permanency for 
farmers.
  Chapter 12 worked in the mid-1980s and it should be made permanent so 
family farmers in trouble today or any time in the future can get 
breathing room and a fresh start. This statement that chapter 12 works 
for farmers is backed up by an Iowa State University study of farmers 
who used chapter 12 during the 1980s. Mr. President, 88 percent of 
those farmers were successfully farming at the time of the study.
  The Bankruptcy Reform Act doesn't just make chapter 12 permanent; the 
bill makes improvements to chapter 12 so it will become more accessible 
and helpful for farmers. First, the definition of a family farmer is 
widened so more farmers can qualify for chapter 12 bankruptcy 
protections. Second, and perhaps more importantly, my bankruptcy bill 
reduces the priority of capital gains tax liabilities for farm assets 
sold as a part of a reorganization plan. This will have the beneficial 
effect of allowing cash-strapped farmers to sell livestock, grain, and 
other farm assets to generate cash-flow when liquidity is essential to 
maintaining a farming operation. Together, all of these suggested 
reforms will make chapter 12 more effective in protecting America's 
family farms during this difficult period. These reforms will never 
happen if the bill is continually blocked by Senators offering 
unrelated and nongermane amendments.
  It is imperative we keep chapter 12 alive. Before we had chapter 12, 
banks held a veto over reorganization plans. They wouldn't negotiate 
with farmers and the farmer would be forced to auction off the farm, 
even if the farm had been in the family for generations. The fact is 
that fire-type sales under these circumstances actually drive down 
prices at those auctions so both the creditor and the debtor end up 
with less. Now, because of chapter 12, the banks are willing to come to 
terms.
  We must pass this bankruptcy reform bill to make sure America's 
family farms have a fighting chance to reorganize their financial 
affairs. Unless things change, this bill may be set aside because of 
stalling tactics by some Members on the other side of the aisle.
  I ask unanimous consent to have printed in the Record a letter signed 
by five Members, including Senator Johnson of South Dakota, Senator 
Brownback of Kansas, Senator Bob Kerrey of Nebraska, and Senator Tom 
Daschle of South Dakota.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

                                                      U.S. Senate,


                                   Committee on the Judiciary,

                               Washington, DC, September 13, 1999.

           Support Bankruptcy Protections for Family Farmers

       Dear Colleague: As the Senate returns to work for the final 
     months of the first session of the 106th Congress, we will 
     likely consider S. 625, ``the Bankruptcy Reform Act.'' We are 
     writing to ask your support for Title X of S. 625, which 
     contains vital protections for America's family farmers.
       By now, we are sure that you are aware that the 
     agricultural sector of our economy is experiencing severe 
     distress. Due to grain, livestock, cotton, rice, and 
     commodity indexes plunging to record lows this summer, many 
     family farmers are in the midst of an economic crisis. 
     Farmers across the nation are suffering some of the lowest 
     farm commodity prices in 30 years. Pork producers have lost 
     billions of dollars in equity, the price of corn is currently 
     well under the cost of production and the cash market for 
     soybeans has reached a 23 year low. This is all in addition 
     to the poor weather conditions in parts of the Midwest.
       In the midst of desperate times in farm country, we believe 
     that the important reforms contained the Title X of S. 625 
     are essential. Title X makes Chapter 12 of the bankruptcy 
     code permanent. As it stands now, Chapter 12 will expire at 
     the end of this fiscal year. If that happens, millions of 
     family farms may face foreclosure and forced auctions. We 
     believe that Congress has an affirmative responsibility not 
     to leave financially troubled family farmers without the 
     protections of Chapter 12.
       Title X also alters Chapter 12 to make it more accessible 
     and helpful for farmers. First, the definition of family 
     farmer is widened so that more farmers can qualify for 
     Chapter 12 bankruptcy protections. Second, Title X also 
     reduces the priority of capital gains tax liabilities for 
     farm assets sold as a part of a reorganization plan. This 
     will have the effect of allowing cash-strapped farmers to 
     sell livestock, grain and other farm assets to generate cash 
     flow when liquidity is essential to maintaining a farming 
     operation. Together, we believe that these reforms will make 
     Chapter 12 even more effective in protecting America's family 
     farms during this difficult period.

[[Page 22001]]

       While floor debate may focus on other provisions of S. 625, 
     we ask that you support Title X.
     Chuck Grassley.
     Tim Johnson.
     Sam Brownback.
     Bob Kerrey.
     Tom Daschle.

  Mr. GRASSLEY. I yield the floor and ask unanimous consent that a 
quorum call I suggest be equally charged to both sides.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  The clerk will call the roll.
  The legislative clerk proceeded to call the roll.
  Mr. FEINGOLD. Mr. President, I ask unanimous consent that the order 
for the quorum call be rescinded.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. FEINGOLD. Mr. President, I will say a few words about the cloture 
vote we will have shortly on the bankruptcy bill, S. 625. I understand 
many in this body want to pass bankruptcy legislation this year. 
Certainly, the credit card industry is eager for the Senate to act. I 
want to be able to vote for what I consider a balanced bankruptcy bill.
  Hardball tactics of this kind will not move this body closer to that 
goal. By filing a cloture motion a few seconds after he brought up the 
bill, the majority leader is predetermining the outcome. Cloture, I am 
glad to say, will not be achieved this afternoon. Cloture should not be 
achieved until Senators have a chance to offer amendments to the bill.
  Bankruptcy is, of course, a very complicated area of the law. We have 
not had real bankruptcy reform and change since 1978. It has an impact 
upon millions of American consumers and businesses. Unfortunately, S. 
625 is a very one-sided piece of legislation. I have found an amazing 
virtual unanimity among all the experts on bankruptcy. Whether talking 
to academics or judges or trustees and even practitioners--of course 
you expect to hear this from debtors' attorneys but also from many 
creditors' attorneys--they all say this bill as it stands today should 
not pass.
  The only way to make it work, the only way to improve it, is to amend 
it. However, many of the amendments we want to offer--and they are very 
much relevant to the bankruptcy issue--could not be offered if we 
invoke cloture today.
  So I am hopeful and believe Democrats will vote today against 
cloture, to protect their right to offer bankruptcy amendments to this 
bankruptcy bill.
  Let me also take a moment to remind my colleagues that this body 
passed a bankruptcy reform bill last year by a vote of 97 to 1. I voted 
for it. We had nearly a unanimous vote for a bill. That bill could have 
become law if the conference committee had not disregarded the wishes 
of the Senate. Let me just be clear, in response to the comments a few 
minutes ago of the Senator from Iowa, there is nothing fishy going on 
here. It is not as if the same bill that passed 97 to 1 is before us. 
It is very much the opposite. This is the hard nosed, one-sided 
legislation that in my mind is the fantasy of the other body in this 
institution. It is not the bill I was comfortable voting for and was 
pleased to vote for last year.
  This bill is not the balanced approach that the Senate came up with 
last year. So amendments, many amendments, frankly, are needed. The way 
to reduce the number of amendments is to accept some of them. Many of 
the amendments I and my colleagues are going to offer on this bill are 
reasonable, moderate, and widely supported. They will make this a more 
fair and balanced piece of legislation.
  I urge my colleagues to vote ``no'' on cloture. And even more, I urge 
the majority leader and the proponents of this bill to simply face the 
honest policy disagreements that need to be resolved either through 
amendments or through negotiations. Strong-arm tactics like filing for 
cloture right off the bat on a bill of this magnitude and complexity 
are not going to work.
  I yield the floor.
  I suggest the absence of a quorum.
  The PRESIDING OFFICER. The clerk will call the roll.
  The legislative assistant proceeded to call the roll.
  Mr. DORGAN. Mr. President, Mr. President, I ask unanimous consent 
that the order for the quorum call be rescinded.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. DORGAN. Mr. President, I ask consent to speak for 10 minutes as 
in morning business.
  The PRESIDING OFFICER. Is there objection? Without objection, it is 
so ordered.

                          ____________________