[Congressional Record (Bound Edition), Volume 146 (2000), Part 18]
[Senate]
[Pages 26347-26369]
[From the U.S. Government Publishing Office, www.gpo.gov]



       BANKRUPTCY REFORM ACT OF 2000--CONFERENCE REPORT--Resumed

  The PRESIDING OFFICER. Under the previous order, the Senate will now 
resume consideration of the conference report to accompany H.R. 2415, 
which the clerk will report.
  The bill clerk read as follows:

       Conference report to accompany the bill (H.R. 2415) an act 
     to enhance security of the United States missions and 
     personnel overseas, to authorize appropriations for the 
     Department of State for fiscal year 2000, and for other 
     purposes.

  The PRESIDING OFFICER. Who yields time? The Senator from Minnesota.

[[Page 26348]]


  Mr. WELLSTONE. Mr. President, I have up to an hour. I don't know that 
I will take all that time. I might take about a half an hour now. If 
other Senators come down to the floor, then I certainly would yield the 
floor and reserve the balance of my time for tomorrow.
  We are at the final days of the 106th Congress, I hope. Maybe we are 
not. Maybe we are going to be here until Hanukkah or Christmas. I think 
we are in the final days.
  It is bitterly ironic to me that once again we are dealing with this 
bankruptcy ``reform'' bill. Chapter 7 bankruptcy is a major safety net 
program so that if you find yourself in horrible financial 
circumstances, crisis financial circumstances, you can file chapter 7 
and rebuild your life. About 50 percent of the people who do that do it 
because of a medical bill that puts them under or they lose their job 
or have such a tight budget.
  We don't have that kind of tight budget. We make a very high salary. 
But a lot of people don't. So if every month you have to scratch and 
claw to make ends meet, and your car breaks down or, Lord, your child 
has some kind of an infection and you get antibiotics that can cost 
$80-$90, you can find yourself in a tough situation. It is major 
medical bills that are the principal reason.
  At the end of the 106th Congress, a do-nothing Congress, are we doing 
anything during this lame duck session to deal with economic security 
for families? No. Are we considering any kind of health care 
legislation that would make health care coverage more affordable for 
people? No. Are we passing the Elementary and Secondary Education Act, 
which focuses on that issue about which I heard so much in the 
Presidential campaign; namely, education, making sure that there is 
good, high-quality education for every child? No. Have we raised the 
minimum wage yet? No. Have we done anything to deal with catastrophic 
medical expenses, if you should be aged, older, and wind up in a 
nursing home, or you need somebody to help you stay at home so you 
don't have to be in a nursing home? No.
  What do we have before us instead? We have something before us in 
this lame duck session--the majority leader came out yesterday and 
called for another cloture vote--that is 100 percent representative of 
the 106th Congress; that is to say, it will do nothing. It is will do 
nothing because it is going to come to nothing. And it is going to come 
to nothing because the President is going to veto it. In all 
likelihood, we won't be here anyway. It will end up being a pocket 
veto. If we are here, I am convinced we would get the 34 votes to 
sustain the veto. But that is now how we are spending our time.
  This is a do-nothing effort for, unfortunately, a worse than do-
nothing bill because it will do harm to people which will amount to 
nothing in a do-nothing Congress. There is a symmetry to this.
  I observed one thing from the beginning about this bill. It is 
hemorrhaging support. There was a time when there was a stampede for 
``bankruptcy reform,'' but now what has happened is, at least on our 
side, the majority of Democrats are opposed to this bill. Every single 
civil rights organization, labor organization, women's organization, 
children's organization, and consumer organization opposes it. I didn't 
say the credit card companies oppose it or the big financial 
institutions.
  I think we will get a solid vote on Thursday, and it will pass. But 
we will be close to the number of votes that we need to sustain a 
Presidential veto. I thank President Clinton for being so strong on 
this. In any case, in all likelihood we will be gone. I don't even know 
what this exercise is about.
  We can do better in the 107th Congress. We can have a piece of 
legislation that is balanced. We can have bankruptcy reform. We can 
make sure the scope of this legislation deals directly with those 
people who abuse this system, a very small percentage, and we can also 
call upon the credit card companies to be accountable. Instead we have 
this out here, which is going to go nowhere.
  I rise to talk a little bit about how awful this piece of legislation 
is. Supporters have cited the high number of bankruptcy filings in 
recent years as the reason to move forward on what they call 
``reform.'' But there has been a dramatic drop in the last 2 years in 
the number of bankruptcies. That is about the period of time we have 
held up this piece of legislation. In the months since the Senate 
passed bankruptcy reform, any pretense that this legislation is needed 
has evaporated. The number of bankruptcies has fallen steadily over the 
past year. Charge-offs and credit card debt are down significantly, and 
delinquencies have fallen to the lowest level since 1995.
  The proponents and opponents agree that nearly all the debtors who 
resort to bankruptcy do not game the system but do it out of desperate 
financial circumstances, and that only a tiny minority of chapter 7 
filers, as few as 3 percent, could afford repayment.
  Where is the crisis? We are trying to address yesterday's headline. 
But as I have already stated, there really should not be any wonder. 
The credit card industry wants this legislation. They want to be able 
to protect the risky investments they have made. They want to be able 
to pump their credit cards out to our children--everybody has had that 
experience--and they want the Senate to do their bidding.
  Bankruptcy ``reform'' has been nothing more than a filler on the 
Senate calendar. It is a place holder while we wait for some 
appropriations bill, some agreement. That is what this proceeding is 
about.
  Guess what. That is where all the attention is focused. The calendar 
may say that bankruptcy is on the agenda, but I can tell you--and my 
colleagues know this is true--it is not bankruptcy ``reform'' that is 
on the minds of our colleagues. Instead, we are all obsessing over 
negotiations in maybe a smoke-filled room--or maybe it is not smoke 
filled--with very few of us who are party to it. That is why right now 
there is little attention given to this legislation. That is another 
awful thing. We don't get our work done, we don't get these bills out 
here, and it winds up with a few people negotiating and the rest of us 
waiting around like potted plants. None of us worked hard to get here 
for this kind of process. I will tell you something else. None of us 
worked hard to get here for a process where the majority leader can 
take a piece of legislation--the State Department embassy bill--and 
completely gut it, where the only thing left is the number, and put a 
bankruptcy bill in it and bring it over here under the conference 
committee rules. That makes a mockery of the legislative process--a 
mockery.
  I will tell you something else. I will try to say it with a twinkle 
in my eye because it never does any good to get bitter. But even from 
my own caucuses I sometimes don't understand the votes of some 
Democrats on this, because we have discussions in our caucus, and the 
one thing we feel strongly about--and I hope Republicans feel just as 
strongly about this--is that we have to change our modus operandi. We 
cannot continue to do things outside the scope of conference and put 
everything into conference committee. We have to have bills out here, 
we have to have amendments, and we have to have debate. We have to have 
a vital institution again where Senators can become good Senators--not 
wait around for a year and a half where you can hardly do anything. We 
have had that discussion in our caucus, and then some Democrats come 
out and vote for this turkey. I don't understand why. It is such an 
affront to what should be the legislative process and the way this 
institution works.
  I wish to begin by laying out my reasons for opposing this measure, 
and I hope today we will have a thorough discussion. I know a number of 
Senators are going to be speaking in opposition. I am sure some 
colleagues and friends, such as Senator Grassley, will be out here to 
speak for it, or Senator Biden.
  Reasons for opposing the conference report: The legislation, No. 1, 
rests on faulty premises. The bill addresses a crisis that doesn't 
exist. Increased filings are being used as an excuse to harshly 
restrict bankruptcy protection, but the filings have abruptly fallen in 
the last 2 years. Additionally, the

[[Page 26349]]

bill is based on the myth that the stigma of bankruptcy has declined. 
There is not a shred of evidence for that. In fact, that is part of the 
reason that 116 law professors who teach bankruptcy law in the country 
have said this bill is a mistake, and they point out that it is hardly 
the case that people just abuse it and feel no stigma.
  No. 2, abusive filers are not the majority; they are a tiny minority. 
Let's write a good bill that goes after them. But let's not have some 
sweeping bill that turns the clock back and basically removes a major 
safety net not just for low-income families but middle-income families. 
Bill proponents cite the need to curb ``abusive'' filings as the reason 
to harshly restrict bankruptcy protection. But the American Bankruptcy 
Institute found that only 3 percent of chapter 7 filers could have paid 
back more of their debt. Even the bill's supporters acknowledge that 
the highest percentage you could get would be 10 to 13 percent.
  No. 3, the conference report falls heaviest on the most vulnerable. 
The harsh restrictions in this bill will make bankruptcy less 
protective, more complicated and expensive to file, and this will make 
it much harder for low- and moderate-income people to effectively file 
and get any protection. Unfortunately, the means test and safe harbor 
will not shield any debtor from the majority of these harsh provisions 
and have been written in such a way that they will capture many debtors 
who truly have no ability to pay off significant debt. They won't make 
it with chapter 13. The only way they will have a chance to rebuild 
their lives is to be able to file chapter 7. They won't be able to do 
it under this legislation.
  No. 4, the bankruptcy code is a critical safety net for America's 
middle class. Low- and moderate-income families--especially single 
parent families--are those who most need the ``fresh start'' which is 
provided by bankruptcy protection. This bill will make it much harder 
for them to get out from under the burden of crushing debt.
  Colleagues, this is a very harsh piece of legislation that is going 
to most dramatically hurt the most vulnerable people in this country--
women and children, working income, low- and moderate-income families 
put under.
  About 50 percent of the bankruptcy cases are because of a major 
medical bill. Now, I have no doubt that the credit card industry has 
pumped unbelievable amounts of money into getting this passed. They are 
everywhere. This is a pretty one-sided debate because the people who 
get the protection are the people without the money. They are not the 
big contributors. They are not the heavy hitters. They are not the well 
connected. They are not the players. But why don't we get it right and 
pass a decent bill, not one that hurts those people who are most 
vulnerable?
  No. 5, the banking and credit card industry--is anybody surprised?--
gets a free ride. The bill as drafted gives a free ride to banks and 
credit card companies that deserve much of the blame for the high 
number of bankruptcy filings because of their loose credit standards. 
Lenders can pump those credit cards and they can be involved in all the 
reckless lending--and I will have more to say about that later--and now 
we bail them out. This is a bailout for the big credit card companies 
and the big lenders.
  No. 6, this legislation may cause increased bankruptcies and 
defaults. Another bitter irony. Several economists have suggested that 
restricting access to bankruptcy protection will actually increase the 
number of filings and defaults because banks will be more willing to 
lend money to marginal candidates.
  Indeed, it is no coincidence that the recent surge in bankruptcy 
filings began immediately after the last major ``pro-creditor reforms'' 
were passed by the Congress in 1984. You make it easy for them to do 
this, to be involved in reckless lending, and they know they will be 
able to collect. They know people won't be able to file chapter 7, and 
this will lead to more reckless lending and more bankruptcy.
  No. 7, this conference report is worse than the Senate bill.
  I opposed the Senate bill. However, even that flawed legislation was 
far superior to this conference report. The sham bankruptcy 
``conference'' report has taken big steps backward when it comes to 
balancing fairness.
  No. 8, again, I am going to emphasize this over and over again to 
Democrats and Republicans because we are 50-50; or, we may be 50-50. We 
may be 51-49. But we could be the majority someday. We could very well 
be the majority someday.
  This conference report mocks the legislative process. This is a 
larger issue than bankruptcy reform. It is a question of the 
fundamental integrity of the Senate as a legislative body. Not one 
provision in the original State Department authorization bill--aside 
from the bill number itself--remains a part of this legislation. To 
replace in totality a piece of legislation with a wholly new and 
unrelated bill in conference takes the Congress one step forward to a 
virtual tricameral legislature--House, Senate, and conference 
committee.
  I will tell you something. Again, if there is one thing we had better 
agree to over the next couple of weeks when it comes to shared power, 
it better be that we are going to put an end to the abusive use of 
these conference committees. We never should have moved away from rule 
XXVIII. We should not let unrelated amendments or basically whole new 
bills be put into conference reports and then brought back to this 
Chamber this way. It is an outrageous abuse of the legislative process. 
I think the Senate should vote against this for that reason alone.
  I say to the majority that we could be a majority in the Senate. You 
wouldn't want it done to you either.
  I want to observe that in July my friend from Iowa, Senator Grassley, 
referred to the opposition to this bill as ``radical fringe.'' I think 
he is one of the best Senators in the Senate. But, again, I will repeat 
this. I am in the company of every consumer organization that I know 
of--every labor union, every civil rights organization, every women's 
organization, and almost every children's organization that I know of. 
It is one of the broadest coalitions I have ever seen.
  I say to my colleagues that it is said you can tell a lot about a 
person by who his or her friends are. You can also tell a lot about a 
piece of legislation by who the enemies are.
  I don't see a lot of working families, a lot of hard-pressed 
families, a lot of ordinary citizens around this country, from 
Minnesota to Arkansas to New York to California, clamoring for this 
piece of legislation for which the credit card companies are so gung-
ho.
  There is no doubt in my mind that this is a bad bill. It punishes the 
most vulnerable and rewards the big banks and credit card companies for 
their own poor practices.
  I am for a more balanced bill. I think we can do it the next time. We 
can go after the tiny minority that abuses it. We ought to have some 
standards that these credit card companies have to live up to as well.
  Earlier, I used the word ``injustice'' to describe this bill. That is 
exactly right. It would be a bitter irony if the creditors were able to 
use a crisis--largely their own marking--to encourage Congress to 
decrease more borrowing access.
  We should have a major safety net program for the vast majority in 
this country.
  This is sham reform.
  Real bankruptcy reform would address the concentration of financial 
markets, which is increasing the power and clout of the big banks and 
credit card companies to unprecedented levels.
  Real bankruptcy reform would address the predatory and abusive 
lending.
  Real bankruptcy reform would make working families more economically 
secure.
  Real reform would address skyrocketing and unaffordable medical 
expenses.
  Real economic reform would confront the increasing chasm between the 
wealthy and the rest of America. But instead of lifting up working 
families, and instead of lifting up the majority, the standard of 
living of the majority

[[Page 26350]]

living in this country, this bill punishes them. And I urge its 
rejection.
  I reserve the remainder of my time for debate tomorrow.
  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. DURBIN. 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. DURBIN. Mr. President, I ask unanimous consent to be recognized 
under the time allocated for Senator Leahy on the bankruptcy bill.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. DURBIN. Thank you, Mr. President.
  I come to the floor today, as I did on the last day of October, to 
state my opposition to this bankruptcy conference report. This is an 
issue that I have worked on for the last 4 years. For 2 of those years, 
I served on a subcommittee of the Judiciary Committee with Senator 
Grassley. I worked very closely with many in drafting what I consider 
to be very balanced and very positive bankruptcy reform. That bill was 
called for a vote on the floor of the Senate. Ninety-seven Senators 
voted in favor of that bill. It was the most overwhelming vote on this 
subject to my knowledge that we have seen on the Senate floor in modern 
times. It was a balanced bill. I thought it was a good bill.
  For these last 2 years, I have not served on the Judiciary Committee, 
and it has been Senator Grassley's responsibility to continue this 
effort. He came forward with a bill which I supported on the Senate 
floor.
  Sadly, when this bill left the Senate floor to go to conference 
committee, it got in trouble again. Some of the special interests that 
are interested in this particular bill can't wait for this conference 
committee to literally rip apart the best efforts of the Senate.
  They did it 4 years ago; they have done it this year. They have taken 
what was a generally good bill on bankruptcy and made some rather 
disastrous changes in it. I think that is unfortunate.
  I accept the premise that bankruptcy reform is overdue. I think it is 
unfair to consumers across America to try to absorb all the costs of 
those who go to bankruptcy court, particularly those who have no 
business in bankruptcy court. But I also believe the credit industry 
has a responsibility as well. This bill does not serve the needs of 
balance. This bill, the conference report that is before the Senate 
today, is a conference report that was written entirely by the 
Republican Party. They didn't even invite the Democratic conferees into 
the discussion. It was a slam dunk--take it or leave it.
  As far as I am concerned, I want to leave it. I think we can do a 
better job. If we have to wait for a new Congress to accomplish that, 
so be it.
  Let me say from the outset, I support and am committed to bankruptcy 
reform. There are some things we can and should do to make it a better 
system. What we have today is not balanced. Make no mistake, this 
bankruptcy bill is lopsided in favor of the credit card industry.
  When I came to the floor on November 1 and voted against cloture on 
this particular bill, some of my colleagues asked me why. Why did I, a 
Member who previously voted for bankruptcy reform, now oppose this 
conference report? I oppose it because the bill I voted for was 
decimated in conference. As a result, we have before the Senate a very 
poor work product.
  In 1985, Felix G. Rohatyn, chairman of the Municipal Assistance 
Corporation of New York City, said:

       [Bankruptcy would be] like stepping into a tepid bath and 
     slashing your wrists. You might not feel yourself dying, but 
     that's what would happen.

  I oppose this one-sided bankruptcy conference report on behalf of 
debtors who lack the lobbying dollars of the credit card industry and 
are unable to make their voices heard. We must keep in mind, the vast 
majority of people who go to the bankruptcy court don't want to be 
there. They are people in a very low-income status who have found 
themselves, because of circumstances beyond their control, unable to 
pay off their debts. They go many times with embarrassment to a 
bankruptcy court because they have nowhere else to turn. I oppose the 
bankruptcy conference report on behalf of the hundreds of thousands of 
people in this predicament. I am talking about older Americans, women 
raising families, and unemployed workers.
  When you do a survey of the reasons people end up in bankruptcy 
court, many of the same reasons keep coming forward: Unanticipated 
health care bills can happen to anybody; a divorce which results in one 
of the spouses ending up with custody and very few assets to take care 
of the children; the loss of a job. These sorts of things are totally 
unanticipated, and people find themselves needing to turn to bankruptcy 
to get a fresh start in life.
  Older Americans are less likely to end up in bankruptcy than their 
younger counterparts, but when they do file, a large fraction of them, 
nearly 40 percent, give medical debts as the reason for filing. Another 
reason is jobs. The economic consequences for someone who has worked 
for 30 years and loses his job at age 54 can be catastrophic.
  Both men and women are more likely to declare bankruptcy following 
divorce. Families already laden with consumer debt can't divide their 
income to support two households and survive economically. Divorced 
women file for bankruptcy in greater proportion than divorced men. 
According to the credit industry's own data, women heads of household 
are not only the largest demographic group in bankruptcy; they are also 
the poorest. I remind Members of that fact when we consider the debate 
on this bill.
  Yesterday, my friend, the Senator who chairs the Senate Judiciary 
Committee, Orrin Hatch, came to the floor and made note of the fact 
that there are provisions made in this bankruptcy conference report 
that benefit and improve the status of women and children in the throes 
of bankruptcy. What Senator Hatch failed to add was that there are also 
provisions in this bill which enhance and improve the status of credit 
card companies so that debts that otherwise would have been wiped away 
or discharged linger and continue to plague the limited assets left 
over after a bankruptcy.
  So while it is true you may put the women and children at the head of 
the line, the line is a very short one with very few dollars because 
the credit card industry receives benefits under this bill to allow 
them to continue to pursue the debts of someone who has filed for 
bankruptcy, whereas today they could not.
  More than half the debtors who file for bankruptcy report a 
significant period of unemployment preceding their filings. For single-
parent households, a period of unemployment can be absolutely 
devastating. It is on behalf of these debtors that I opposed this 
unbalanced bankruptcy conference report that gives them little or 
nothing.
  Some of my colleagues may be saying, what is the Senator talking 
about? Doesn't the bankruptcy bill put women and children first, as 
Senator Hatch said yesterday? Indeed, that was the rhetoric we heard. 
Senators came to the floor with large posters claiming how wonderful 
the bankruptcy bill was for women and children.
  Mr. President, the bankruptcy bill does grant first priority to 
alimony and support claims. Unfortunately, the bill places women and 
children first in line to receive little or nothing. Priority is only 
relevant for distributions made to creditors in the bankruptcy case 
itself. However, such distributions are made in only a negligible 
percentage of cases.
  More than 95 percent of bankruptcy cases make no distribution to 
creditors because there are no assets to distribute. So to say to women 
and children, when it is all over we will give you a greater share of 
the assets, in 95 percent of the cases there are no assets to give 
them; the assets have been dissipated and used up already by the credit 
card creditors.
  The real battle for women and children is reaching an ex-husband's 
income after bankruptcy. Right now

[[Page 26351]]

under current law, child support and alimony share a protected 
postbankruptcy position with only two other recurrent collectors of 
debt--taxes and student loans. The credit card industry wants to muscle 
in and get a large piece of a very small pie. They want credit card 
debt and other consumer credit to share in this protected 
postbankruptcy position. They want to shove women and children aside to 
try to collect on their own behalf.
  The simple fact is this: When pitted against the high-powered credit 
card industry, women and children do not have the resources to compete. 
If the credit card industry is permitted to elevate its status to the 
protected postbankruptcy status position already shared by taxes and 
student loans, women and children will lose every single time.
  Later on, I will make reference to a press release recently put out 
by the American Academy of Matrimonial Lawyers. They say in their press 
release: A child is more important than a credit card. Those who vote 
for this conference report believe just the opposite: The credit card 
industry has a greater claim to some sort of support from the Senate 
that the children who are involved in a divorce proceeding.
  My colleagues must ask themselves, if this bill truly puts women and 
children first, why is every major women's group and children's group 
opposing this legislation? We have advocates for women and children who 
are opposed to the bill. I will not go through the long list, but if 
you believe the statements made yesterday by some of my colleagues on 
the floor, you have to ask yourself, are all of these groups wrong? Are 
all of these advocates for women and children opposed to the bill for 
the wrong reason? I don't think so. These are not partisan 
organizations; they are organizations that fight for women and children 
when they know that they are struggling to survive. They read this bill 
as I have, too, and came to the same conclusion. When all is said and 
done, the credit card industry will do just fine. It is the women, the 
mothers, the kids who won't.
  Mr. President, 116 nonpartisan law professors from all over the 
country have written expressing their concerns over the grave effects 
the bill will have on women and children. In addition, to the concerns 
I have already raised, the law professors write:

       Women and children as creditors will have to compete with 
     powerful creditors to collect their claims after bankruptcy. 
     This increased competition for women and children will come 
     from many quarters: from powerful credit card issuers, whose 
     credit card claims increasingly will be accepted from 
     discharge and remain legal obligations of the debtor after 
     bankruptcy; from large retailers, who will have an easier 
     time obtaining reaffirmations of debt that legally could be 
     discharged; and from creditors claiming they hold security, 
     even when the alleged collateral is virtually worthless. None 
     of the changes made to S. 625 and none being proposed in H.R. 
     2415 addresses these problems.
       The truth remains: if H.R. 2415 is enacted in its current 
     form, women and children will face increased competition in 
     collecting their alimony and support claims after the 
     bankruptcy claim is over. We pointed out this difficulty 
     repeatedly, but no change has been made in the bill to 
     address it.

  They go on to say:

       In addition to the concerns raised on behalf of the 
     thousands of women who are struggling now to collect alimony 
     and child support after their ex-husband's bankruptcies, we 
     also express our concerns on behalf of the more than half a 
     million women heads of household who will file for bankruptcy 
     this year alone. As the heads of the economically most 
     vulnerable families, they have a special stake in the pending 
     legislation. Women heads of households are now the largest 
     demographic group in bankruptcy, and according to the credit 
     card industry's own data, they are the poorest. The 
     provisions in this bill, particularly the many provisions 
     that apply without regard to income, will fall hardest on 
     them. Under this bill, a single mother with dependent 
     children who is hopelessly insolvent and whose income is far 
     below the national median income would have her bankruptcy 
     case dismissed if she does not present copies of income tax 
     returns for the past three years--even if those returns are 
     in the possession of her ex-husband. A single mother who 
     hoped to work through a chapter 13 payment plan would be 
     forced to repay every penny of the entire debt owed on almost 
     worthless items of collateral, such as used furniture or 
     children's clothing, even if it meant that successful 
     completion of a repayment plan was impossible.

  I can't get over the fact that we have just finished an election 
season when so many candidates in both political parties spoke of their 
sympathies and their commitments to America's families. They talked 
about the vulnerable in our society, about the need for compassion 
whether you are liberal or conservative, and they spoke to groups about 
their love for children. Yet we turn around here, 4 weeks and a day 
after that last election, and start debating a bill which clearly is 
not designed to help women and children in the most vulnerable 
circumstances. All of these groups, every single one of them that stand 
for the interests of these women and children, have told us this is a 
bad bill.
  If you look at this group, you will not see too many political action 
committees. I don't believe Churchwomen United have a PAC, or many of 
the others. But certainly the credit card industry does. The financial 
institutions do. They have come to get involved in this election 
campaign, as is their constitutional right. Their voice, unfortunately, 
is a lot louder on the floor of the Senate than the voices of those who 
represent the women and children across America.
  Mr. President, I ask unanimous consent the full text of this letter 
by the 116 law professors be printed in the Congressional Record at 
this point.
  There being no objection, the letter was ordered to be printed in the 
Record, as follows:

                                                 December 1, 2000.
     Re The Bankruptcy Reform Act Conference Report (H.R. 2415).

       Dear Senators: We are professors of bankruptcy and 
     commercial law. We have been following the bankruptcy reform 
     process with keen interest. The 116 undersigned professors 
     come from every region of the country and from all major 
     political parties. We are not a partisan, organized group, 
     and we have no agenda. Our exclusive interest is to seek the 
     enactment of a fair and just bankruptcy law, with appropriate 
     regard given to the interests of debtors and creditors alike. 
     Many of us have written before to express our concerns about 
     the bankruptcy legislation, and we write again as yet another 
     version of the bill comes before you. This bill is deeply 
     flawed, and we hope the Senate will not act on it in the 
     closing minutes of this session.
       In a letter to you dated September 7, 1999, 82 professors 
     of bankruptcy law from across the country expressed their 
     grave concerns about some of the provisions of S. 625, 
     particularly the effects of the bill on women and children. 
     We wrote again on November 2, 1999, to reiterate our 
     concerns. We write yet again to bring the same message: the 
     problems with the bankruptcy bill have not been resolved, 
     particularly those provisions that adversely affect women and 
     children.
       Notwithstanding the unsupported claims of the bill's 
     proponents, H.R. 2415 does not help women and children. 
     Thirty-one organizations devoted exclusively to promoting the 
     best interests of women and children continue to oppose the 
     pending bankruptcy bill. The concerns expressed in our 
     earlier letters showing how S. 625 would hurt women and 
     children have not been resolved. Indeed, they have not even 
     been addressed.
       First, one of the biggest problems the bill presents for 
     women and children was stated in the September 7, 1999, 
     letter:
       ``Women and children as creditors will have to compete with 
     powerful creditors to collect their claims after 
     bankruptcy.''
       This increased competition for women and children will come 
     from many quarters: from powerful credit card issuers, whose 
     credit card claims increasingly will be excepted from 
     discharge and remain legal obligations of the debtor after 
     bankruptcy; from large retailers, who will have an easier 
     time obtaining reaffirmations of debt that legally could be 
     discharged; and from creditors claiming they hold security, 
     even when the alleged collateral is virtually worthless. None 
     of the changes made to S. 625 and none being proposed in H.R. 
     2415 addresses these problems. The truth remains: if H.R. 
     2415 is enacted in its current form, women and children will 
     face increased competition in collecting their alimony and 
     support claims after the bankruptcy case is over. We have 
     pointed out this difficulty repeatedly, but no change has 
     been made in the bill to address it.
       Second, it is a distraction to argue--as do advocates of 
     the bill--that the bill will ``help'' women and children and 
     that it will ``make child support and alimony payments the 
     top priority--no exceptions.'' As the law professors pointed 
     out in the Setpember 7, 1999, letter:
       ``Giving `first priority' to domestic support obligations 
     does not address the problem.''
       Granting ``first priority'' to alimony and support claims 
     is not the magic solution the consumer credit industry claims 
     because

[[Page 26352]]

     ``priority'' is relevant only for distributions made to 
     creditors in the bankruptcy case itself. Such distributions 
     are made in only a negligible percentage of cases. More than 
     95% of bankruptcy cases make NO distributions to any 
     creditors because there are no assets to distribute. Granting 
     women and children a first priority for bankruptcy 
     distributions permits them to stand first in line to collect 
     nothing.
       Women's hard-fought battle is over reaching the ex-
     husband's income after bankruptcy. Under current law, child 
     support and alimony share a protected post-bankruptcy 
     position with only two other recurrent collectors of debt--
     taxes and student loans. The credit industry asks that credit 
     card debt and other consumer credit share that position, 
     thereby elbowing aside the women trying to collect on their 
     own behalf. The credit industry carefully avoids discussing 
     the increased post-bankruptcy competition facing women if 
     H.R. 2415 becomes law. As a matter of public policy, this 
     country should not elevate credit card debt to the preferred 
     position of taxes and child support. Once again, we have 
     pointed out this problem repeatedly, and nothing has been 
     changed in the pending legislation to address it.
       In addition to the concerns raised on behalf of the 
     thousands of women who are struggling now to collect alimony 
     and child support after their ex-husband's bankruptcies, we 
     also express our concerns on behalf of the more than half a 
     million women heads of household who will file for bankruptcy 
     this year alone. As the heads of the economically most 
     vulnerable families, they have a special stake in the pending 
     legislation. Women heads of households are now the largest 
     demographic group in bankruptcy, and according to the credit 
     industry's own data, they are the poorest. The provisions in 
     this bill, particularly the many provisions that apply 
     without regard to income, will fall hardest on them. Under 
     this bill, a single mother with dependent children who is 
     hopelessly insolvent and whose income is far below the 
     national median income would have her bankruptcy case 
     dismissed if she does not present copies of income tax 
     returns for the past three years--even if those returns are 
     in the possession of her ex-husband. A single mother who 
     hoped to work through a chapter 13 payment plan would be 
     forced to pay every penny of the entire debt owed on almost 
     worthless items of collateral, such as used furniture or 
     children's clothes, even if it meant that successful 
     completion of a repayment plan was impossible.
       Finally, when the Senate passed S. 625, we were hopeful 
     that the final bankruptcy legislation would include a 
     meaningful homestead provision to address flagrant abuse in 
     the bankruptcy system. Instead, the conference report 
     retreats from the concept underlying the Senate-passed 
     homestead amendment.
       The homestead provision in the conference report will allow 
     wealthy debtors to hide assets from their creditors.
       Current bankruptcy law yields to state law to determine 
     what property shall remain exempt from creditor attachment 
     and levy. Homestead exemptions are highly variable by state, 
     and six states (Florida, Iowa, Kansas, South Dakota, Texas, 
     Oklahoma) have literally unlimited exemptions while twenty-
     two states have exemptions of $10,000 or less. The variation 
     among states leads to two problems--basic inequality and 
     strategic bankruptcy planning. The only solution is a dollar 
     cap on the homestead exemption. Although variation among 
     states would remain, the most outrageous abuses--those in the 
     multi-million dollar category--would be eliminated.
       The homestead provision in the conference report does 
     little to address the problem. The legislation only requires 
     a debtor to wait two years after the purchase of the 
     homestead before filing a bankruptcy case. Well-counseled 
     debtors will have no problem timing their bankruptcies or 
     tying-up the courts in litigation to skirt the intent of this 
     provision. The proposed change will remind debtors to buy 
     their property early, but it will not deny anyone with 
     substantial assets a chance to protect property from their 
     creditors. Furthermore, debtors who are long-time residents 
     of states like Texas and Florida will continue to enjoy a 
     homestead exemption that can shield literally millions of 
     dollars in value.
       These facts are unassailable: H.R. 2415 forces women to 
     compete with sophisticated creditors to collect alimony and 
     child support after bankruptcy. H.R. 2415 makes it harder for 
     women to declare bankruptcy when they are in financial 
     trouble. H.R. 2415 fails to close the glaring homestead 
     loophole and permits wealthy debtors to hide assets from 
     their creditors. We implore you to look beyond the distorted 
     ``facts'' peddled by the credit industry. Please do not pass 
     a bill that will hurt vulnerable Americans including women 
     and children.
       Thank you for your consideration.
       Signed by 116 Law Professors.

  Mr. DURBIN. Mr. President, some of my colleagues have also asked why 
did I vote for this bill in the first place. When I voted for it, I did 
so in the hopes that the bill would be strengthened in conference. 
Instead, exactly the opposite occurred. The bankruptcy code is a 
delicate balance. When you push one thing, almost invariably something 
else will give. In this bill, the credit card industry pushed, and what 
gave were the debtors. Is that fair? Is that balanced? In a word: No.
  The constant theme that has guided me throughout the consideration of 
bankruptcy legislation is balanced reform. I do not believe you can 
have meaningful bankruptcy reform without addressing both sides of the 
problem, irresponsible debtors and irresponsible creditors.
  The bill that passed the Senate in the 105th Congress was a balanced 
and bipartisan approach. Senator Grassley and I, along with several 
other Senators, worked hard to develop it, and 97 Senators supported 
our efforts and agreed that it was a good, balanced way to deal with 
the problem.
  That bill was killed in conference 2 years ago. Unfortunately, our 
efforts of many, many months did not result in the bankruptcy reform 
legislation that we needed.
  I had hoped this year would be different. This year when I voted for 
it, I did so with the hope that some key provisions of the legislation 
would be strengthened. It didn't happen in conference. Rather, the bill 
we have before us today falls far short of the Senate effort. Perhaps 
if the Democrats hadn't been shut out of conference, we would have a 
more balanced conference bill. Sadly, like so many instances in this 
Congress, Democrats were kept from the table. Rather than negotiate 
with Democrats directly and bring forth a bill the President could 
support, that both creditors and debtors could support, our Republican 
colleagues are trying to force us to take a bad bill. I say don't take 
it, leave it. This bill is not balanced.
  I said in the beginning of my statement and I will say it again, I 
support reform. I for one am willing to reach across the aisle and work 
in a bipartisan fashion in the next Congress to develop a bill. I know 
some of my colleagues on this side of the aisle are anxious to do the 
same. In this Congress, we have, rarely but at some times, worked in a 
bipartisan manner and obtained meaningful results for the American 
people: the reauthorization of the Older American Act, the H-1B visa 
legislation, and the Senior Citizens Freedom to Work Act.
  Despite these accomplishments, Congress has missed opportunities to 
pass a lot of other meaningful legislation such as a Patients' Bill of 
Rights, expanding the current hate crimes law, and passing commonsense 
gun safety legislation. Let's not add bankruptcy to the list. Let's 
pledge to work together in the new, 50-50 split in the Senate, in the 
107th Congress to come up with a balanced bill.
  Although our Republican colleagues may be able to disguise the 
bankruptcy bill by putting it in a State Department authorization bill, 
they cannot hide the simple truth--this bill is not a balanced 
approach. Many of the Members of this Chamber know I am a strong 
proponent of credit card disclosure. I am not in favor of rationing 
credit. I believe Americans should be allowed to make that choice. But 
it should be an informed choice. You should know what you are getting 
into when you sign up for that credit card. The number of people who 
end up overextending on credit cards and finding they cannot meet their 
obligations include quite a few who never understood the terms and 
conditions of their credit card arrangement.
  I am a lawyer. I have been around legislatures and Congress for a 
long time. When I turn over my monthly statement for my credit card and 
look at that fine print, I struggle to figure out what they are trying 
to say to me. There are some basic things people ought to know when 
they sign up for a credit card. What is the interest rate? How much am 
I going to pay and for how long? Is the interest rate going to change? 
If I receive a monthly statement and this is the minimum monthly 
payment, how many months do I have to pay off that minimum payment 
before it is finally gone? During that period of time, how much will I 
pay in principal, how much will I pay in interest?

[[Page 26353]]

  These are not outrageous ideas. It is kind of the basic information 
you would expect to know so consumers can know whether or not they have 
overestimated, whether they are going too far in debt. You would think 
most people in the credit card industry would not fight that. The fact 
is, they did. They don't want to make that disclosure to the American 
people. They are afraid if the American consumers have the facts, the 
American consumers will make some different choices. They might not 
sign up for that extra credit card. They might think twice before just 
sending in a couple of bucks a month if it means they are going to be 
paying for years and pay more in interest than they are on the 
principal.
  During the course of my involvement in the industry, I have tried to 
stress to the credit industry that they have some responsibility in 
this debate as well. There is ample evidence to suggest they are 
hawking credit to children, to college students, and people already 
deeply in financial trouble.
  In 1999 alone, there were 3.5 billion credit card solicitations 
mailed to American households. If you follow this debate, you know 
exactly what I am talking about. You go home every night, open the 
mailbox, take a look at what is there, and throw away all the new 
credit card applications because each of us, particularly in the 
households that are considered creditworthy, received an armload of 
these invitations to sign up for a new credit card on a regular basis.
  Credit cards have been addressed to 4-year-old preschool children 
and, yes, every once in a while the family dog gets an application, 
too. These 3.5 billion credit card solicitations don't take into 
account phone calls at dinnertime, the ads stuck in the middle of 
magazines, or the booths set up on every college campus offering free 
tee-shirts if you just sign up for a credit card. In fact, on many 
college campuses, each time a student buys something at a bookstore 
they often get a credit card solicitation at the bottom of their bag. 
The bags are premade with credit card applications and ads at the 
bottom of the bag. These ads are directly aimed at college students, 
ads such as those for Visa, which say: ``Accepted at more colleges than 
you were.''
  Never mind that these students, many of them young men and women away 
from home for the first time, don't have the skills to navigate what 
could be some choppy waters. Some of these students end up ruining 
their credit before they even get their first real job. Are we supposed 
to believe the credit card industry is not responsible? Regrettably, 
the already minimalist approach to credit card disclosure in the Senate 
bill was weakened further in the conference.
  I continue to believe, as I did in 1998 when we passed strong 
disclosure provisions, that consumers benefit from knowing, for 
example, that paying the 2 percent monthly minimum on a $1,295 balance 
would take 93 months, or more than 7 years to pay off the balance. An 
estimate of the total cost to pay off this $1,295 balance if only the 
minimum payments are made is $2,418--almost twice the original balance. 
If all this information were available, I don't think many consumers 
would consider the monthly minimum payment a very good idea.
  Oh, certainly there could be a month when that is all you can pay. 
But you have to know down the line, if you go along with the credit 
card industry and just make the minimum monthly payment, at the end of 
this you are going to pay a lot more in interest. Maybe that is your 
choice. But shouldn't you know, going in? Shouldn't that information be 
given to you?
  College students might think twice before using their credit cards to 
charge another pizza. The bankruptcy bill in the 105th Congress 
included debtor-specific information that enabled cardholders to 
examine their current credit card in tangible terms, driving home the 
seriousness of their financial commitments.
  Sounds simple, doesn't it? Today's technology is such that it 
probably would not take much to make this happen. So why isn't this 
reasonable provision part of the bankruptcy bill? The credit card 
industry said: No, we don't want to make any additional disclosures, we 
don't want to give consumers more information, we don't want to give 
them a reason to say no. We want to create reasons for them to say yes.
  Frankly, if you take a person who is in a precarious credit situation 
and they sign up for a new credit card and end up in bankruptcy court, 
doesn't the credit card industry bear some responsibility? It was the 
consumer's choice to take the credit card, but how diligent was the 
credit card industry in finding out whether a person really knew the 
terms and conditions of the agreement and whether or not they were 
creditworthy?
  Unfortunately, this industry, not the majority of the American 
people, have the money and resources to make their wishes known, and 
thus the bill we have on the floor. The credit card industry decided it 
was in their best interest not to let the American people know exactly 
what paying only the minimum balance on their 19-percent credit card 
would actually cost them.
  This year, the debtor-specific information was reduced to providing 
cardholders with generic examples, and I accepted this reduced 
operation with some reservations. It is my understanding that it was 
even further weakened in the conference committee.
  It amazes me. The credit card industry, with all of their computers 
and all of their information, when you say to them: When you put down 
the minimum monthly payment on a card, can you put right next to it how 
many months it will take to pay it off? They say: That is just totally 
beyond us; we don't know that our computers could ever figure that out.
  I do not get it. I do not understand how they can say that with a 
straight face. They know that information is readily accessible. They 
know also it may discourage people from putting too much debt on their 
credit cards. That will cost them business, it will cost them interest 
payments, and they will not let it be included in this bill.
  The Republican leadership agreement permits banks with less than $250 
million in assets--incidentally, that is over 80 percent of all banks--
to have the Federal Reserve provide its customers with a toll-free 
number to review their credit card balances for the next 2 years. It is 
unclear whether the banks would be required to provide the service 
themselves after 2 years. The exemption would cover 4,000 banks holding 
about $3 billion in consumer credit card debt.
  The American people are not going to be calling this toll-free number 
to find out what their credit card balances are. You know it, I know 
it, the credit card industry certainly knows it, too. That is why they 
agreed to it. They agreed to a provision that does little to help 
debtors take responsibility for their financial situation.
  This is a departure from a balanced approach. This is a sham. This is 
about as worthless as the warnings on cigarette packages. They do not 
want to give consumers specific information about their credit card 
balances. The credit card industry won that battle in the conference 
report.
  In addition, the current bankruptcy bill provides for a homestead 
exemption that is weaker than the version included in the Senate-passed 
bill. The Senate, in a 76-22 bipartisan vote, agreed to an amendment by 
Senator Kohl of Wisconsin to create a $100,000 nationwide cap on any 
homestead exception.
  You go before a bankruptcy court and say: Here are my assets. In many 
cases, it is the home. Many States decided what the value of that home 
to be exempted by creditors can be. Every State has a different 
standard. Some States have no standard. We have had outrageous 
situations in the past where well-known actors and public figures, 
knowing they were going to file for bankruptcy, bought an expensive 
estate or ranch and put every asset they had in it, walked into the 
bankruptcy court and said: I have nothing but my home. The home happens 
to be palatial, and the home is exempt.
  If we are talking about holding people accountable for their conduct, 
why would we let this kind of thing happen?

[[Page 26354]]

If the average mother, fresh from a divorce and trying to raise kids, 
has to scrape together the pennies and dollars she has in savings and 
declare them as assets and put them on the table to be taken by 
creditors, why shouldn't the wealthiest among us be held to the same 
standards and not able to exempt estates and ranches and mansions? It 
seems to make sense, doesn't it? It certainly does not for those who 
are arguing for passage of this bill.
  This amendment we proposed would have closed a major loophole in the 
bankruptcy law: a homestead exemption where a person gets to hide from 
a bankruptcy court the value of their home. It is different in every 
State. In Illinois, it is $7,500. You cannot buy much of a home in my 
State for that amount. In other States, it is a lot more. Florida and 
Texas have no caps whatsoever. In a State such as Texas, wealthy 
debtors are able to file for bankruptcy and keep their mansions. Is it 
fair? Absolutely not. If we are looking for real reform in bankruptcy, 
why haven't we addressed this? Keeping a home worth several hundreds of 
thousands of dollars, if not millions, out of bankruptcy is a ruse; it 
is a fraud.
  I voted in support of Senator Kohl's amendment to close this 
loophole. He placed a hard cap on unlimited State homestead exemptions.
  Unfortunately, the conference report guts this reform to permit 
debtors to avoid any Federal homestead cap. Thus, in States such as 
Florida and Texas, a homeowner who has equity in her home that existed 
prior to the 2-year cut-off can keep all the equity, even if the home 
is valued in the millions of dollars. This provision only benefits the 
wealthiest people in America, and this loophole is unacceptable.
  When we consider that the average income of people who file for 
bankruptcy in America is under $30,000 a year, why in the world would 
we pass a bill which allows folks who are millionaires to literally 
protect their assets and not provide protection for the women and 
children who are most vulnerable going into bankruptcy court because of 
a lost job, a divorce, or medical bills?
  That just tells us what this bill is about. It tells us why so many 
people are so anxious to see it pass. They want to protect the 
wealthiest in our society, and they do not care much about those who 
are on the other end.
  Also, the bill we have before us today fails to include an amendment 
by my colleague, Senator Schumer, known as the clinic violence 
amendment. This Chamber is well aware that the Schumer amendment 
prevented documented abuse of the bankruptcy system by those who 
violated the FACE Act or an equivalent State law. The Senate 
overwhelmingly passed the Schumer amendment 80-17. There is no reason 
not to include it in this bill.
  By failing to include the Schumer amendment, the bill allows many 
perpetrators of health clinic violence to seek shelter in the Nation's 
bankruptcy courts.
  By failing to include the Schumer clinic violence amendment, this 
bill says if someone injures or even kills someone outside an abortion 
clinic or other health care clinic, they can hide under the bankruptcy 
code and have their debts discharged under chapter 13 bankruptcy. 
Student loans are not even dischargeable under chapter 13.
  Why would we allow perpetrators of this violence to usurp our clinic 
protection laws by feigning bankruptcy? The amendment says, no, we will 
not.
  This Senate voted in favor of it. No matter what your position on the 
issue of abortion, I am sure my colleagues will again agree, as they 
did on a vote of 80-17, that perpetrators of clinic violence should not 
be permitted to circumvent our clinic protection laws. Failing to 
include the Schumer amendment that has strong bipartisan support does 
not make sense. It is not balanced.
  So there is no mistake and the record is clear, I support and I am 
committed to bankruptcy reform. I have heard from many groups and my 
constituencies in Illinois urging opposition to this bill.
  Labor organizations, representing a lot of working men and women 
across this country, middle-income workers from virtually every type of 
trade and background, have come out in opposition to the bill. NARAL, 
the National Partnership for Women and Children, the leadership 
Conference on Civil Rights, the Religious Action Center, the Consumers 
Union, the Bankruptcy Center in Illinois, and the 116 nonpartisan law 
professors I mentioned earlier have all urged Members of the Senate to 
vote against it. They are right. We should leave it and work together 
in the 107th Congress for a much more balanced approach.
  Yesterday, I received a letter from the American Academy of 
Matrimonial Lawyers urging Congress to oppose the bill. Its press 
release out of Chicago as of yesterday says:

       The Nation's top divorce and matrimonial attorneys called 
     today for Congress not to approve a little-debated, but 
     heavily lobbied bankruptcy provision currently pending final 
     approval in the lame duck session of Congress, that would 
     take monies away from child support payments for credit card 
     debts when individuals declare bankruptcy.
       ``Children should come before credit card companies,'' said 
     Charles C. Shainberg of Philadelphia, the Academy's new 
     president.
       The provision, part of H.R. 2415, and which has quietly 
     passed both the House and Senate, affects Federal bankruptcy 
     filings. Under Chapter 13 filings, a common form of 
     individual bankruptcy, the individual works out a court-
     approved payment program to pay down debt. However, currently 
     child support and alimony have priority status, meaning that 
     all child support and alimony need to be paid before credit 
     card companies can collect their debts.
       Under this new bill--

  Which we are currently debating--

     the deferral or relief from credit card payments, technically 
     known as their dischargeability, would be limited, so that 
     children and credit card payments would have the same 
     priority and payments would be split between [a child and a 
     MasterCard.]
       There currently are some 1.4 million bankruptcy filings in 
     the United States each year, and more are expected if an 
     anticipated cooling of the economy occurs.
       The bill is backed primarily by Republicans and some 
     Democrats [as the vote showed yesterday]. President Clinton 
     has said he will veto the bill, but it is unclear from the 
     election results what will happen under a new administration.

  Continuing to quote:

       ``The way for the credit card companies to improve their 
     receivables is to limit the millions of cards they offer to 
     poor credit risks, not take money from women and children,'' 
     said Linda Lea Viken of Rapid City, S.D., who chairs the 
     Academy's Federalization of Family Law Committee.
       Another problem presented by the bill, Academy attorneys 
     say, is that past due child support payments and alimony are 
     not dischargeable, so the person who has to make credit card 
     payments in addition to alimony and child support will keep 
     falling farther and farther behind in his or her total 
     payments, eventually resulting in a Chapter 7 bankruptcy 
     filing, or total insolvency.
       The American Academy of Matrimonial Lawyers is comprised of 
     the nation's top 1,500 matrimonial attorneys who are 
     recognized experts in the specialized field of matrimonial 
     law, including divorce, prenuptial agreements, legal 
     separation, annulment, custody, property valuation and 
     division, support and the rights of unmarried cohabitors.
       The purpose of the Academy is to encourage the study, 
     improve the practice, elevate the standards and advance the 
     cause of matrimonial law.

  Yesterday, this letter arrived and made it clear to me that this bill 
has problems that will be felt not by credit card companies but by a 
lot of people in very tragic circumstances for a long time to come.
  Before I yield the floor, I want to mention something curious that 
has happened.
  The Administrative Office of the United States Courts recently 
released its statistics regarding bankruptcy filings for the fiscal 
year 2000 that ended September 30 of this year. They report that 
bankruptcy filings continue to decline. Personal bankruptcy filings 
were down 6.8 percent from the 1,354,376 bankruptcy filings for fiscal 
year 1999. For businesses, filings were down 6.6 percent.
  This is great news for the American people--creditors and debtors 
alike. As the University of Maryland's Department of Economics notes in 
their recent study:

       Not only have personal bankruptcies stopped their explosive 
     growth, but the trend has reversed, and the U.S. per capita 
     bankruptcy rate is actually lower than it was at the time 
     that the bankruptcy bill was introduced.


[[Page 26355]]


  I said it before, and I will say it again: I support balanced 
bankruptcy reform. But the momentum and impetus behind this reform was 
the complaints of the credit industry that so many people were filing 
for bankruptcy. It was a curiosity, when they came with this complaint, 
we were in the midst of the largest economic expansion in the history 
of this country. You would wonder, if we are doing better as a nation, 
why are more people filing for bankruptcy?
  I am not sure it is the right answer, but it is the one that may be 
right. People tend to believe, in good times, there will never be bad 
times. They overextend themselves. They see their neighbors doing well 
and buying things, and they may want to join them, when they should 
think twice, and then they find themselves in bankruptcy court.
  When the national mood starts to change, people worry a little about 
the economy. They take care in terms of their credit responsibilities 
and their credit obligations. That may account for this decline in the 
filing of bankruptcies. It certainly should give pause to those who 
think this is an emergency measure which should be considered by a lame 
duck Congress.
  I believe any serious reform must be balanced and take into 
consideration the people behind all the statistics.
  Unfortunately, the bankruptcy bill before us today--the one 
masquerading as a so-called State Department authorization conference 
report--falls short of the Senate effort. The bankruptcy bill before us 
today, like its predecessor in the 105th Congress, has been decimated 
in a partisan conference. This bill should meet the same fate as that 
earlier bill.
  I will oppose this report and urge my colleagues to do the same.
  Mr. President, I yield the floor and suggest the absence of a quorum.
  The PRESIDING OFFICER (Mr. Burns). The clerk will call the roll.
  The assistant legislative clerk proceeded to call the roll.
  Mr. TORRICELLI. 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. TORRICELLI. Mr. President, for 4 years, my colleague, Senator 
Grassley, has shown extraordinary leadership in addressing the failings 
of the current bankruptcy system. He has enormous patience and has 
exhibited extraordinary leadership. I have been very proud to be his 
partner in this effort which now comes to a critical phase. This has 
not always been a popular fight. But it is certain to be a very 
important one.
  I think everyone agrees that our bankruptcy system is in need of 
repair. It is only over the question of how to fix the bankruptcy 
system that there is any issue at all.
  In the last Congress, efforts to pass bankruptcy reform legislation 
came extremely close. It failed simply in the waning days of the 
session. Having come so close in the 105th Congress, I inherited the 
role of the ranking member on the subcommittee with jurisdiction over 
the legislation. I felt some considerable optimism that this time we 
would be successful.
  The bill passed the floor by very wide margins. The issues had 
narrowed. There was an overwhelming sense that there was a need to 
reform bankruptcy. I think that my optimism was well placed.
  Since that time, I have spent countless hours working with Senator 
Grassley and many other Members of the Senate on both sides of the 
aisle dealing with very difficult issues in crafting this bill. I am 
very grateful to Senator Grassley. I am very grateful to the Members on 
both sides of the aisle for having brought us to this point with this 
bipartisan bill that commands the support of over two-thirds of the 
Members of the Senate on both sides of the aisle.
  I do not contend that it is a perfect bill. No bill that commands 
such broad support and that is this controversial could be perfect. 
Indeed, if I were drafting the bill on my own, or if any Member of the 
Senate were drafting this bill on their own, it would be different in 
some ways and in some fundamental respects.
  But is it a fair and balanced bill? Yes. Does it deserve the support 
of the Senate? Absolutely. Will it improve the functioning of the 
bankruptcy system without injuring vulnerable Americans who need 
bankruptcy protection? Yes, it will. If it didn't, it wouldn't have my 
name on it.
  For these reasons, I believe the bill deserves--as indeed clearly it 
will have--broad bipartisan support.
  There is obviously speculation that although the bill will pass the 
Senate by a wide margin--it passed the House of Representatives by very 
wide margins--it might be vetoed when it reaches the White House.
  I want to take a moment to outline for you, Mr. President, the 
reasons I believe a veto on this legislation would be a very serious 
mistake.
  First, as I mentioned before, the bill is a product of extensive 
bipartisan negotiations--negotiations in which the White House has been 
a vocal and integral part. Many of the improvements that we have seen 
in the bill have been concessions to the White House demand that it be 
more consumer friendly. The President appropriately asked that consumer 
protection from credit card abuse--particularly for the young, the 
uninformed, and for the elderly--be in this bill. It is in this bill, 
and the President can take great pride in it.
  We should not forget that there is also a very real possibility that 
the next administration may not have as strong a commitment to consumer 
issues as this administration, thus rendering the bankruptcy bill to 
emerge in the next Congress potentially significantly worse.
  This is critical for the Clinton administration to understand. No one 
knows how this Presidential election is going to be resolved, and we 
may not know before this Congress leaves. There is a real chance that 
the next President of the United States is not going to share Bill 
Clinton's commitment to consumer protection or other objectives in the 
bill, meaning that from the administration's perspective this bill may 
be the best that we can get. And to veto it is to lose a real chance 
for meaningful consumer protection in bankruptcy law.
  On substance, this bill provides a very important fix in our flawed 
bankruptcy system. Indeed, it may be tougher than current law. As I 
think the administration will concede, it also includes fair changes.
  At a time when people in the United States are enjoying the most 
prosperous economic period in our history, there has been a rapid rise 
in consumer bankruptcy. In 1998 alone, 1.4 million Americans sought 
bankruptcy protection. That is a 20-percent increase from 1996 and a 
staggering 350 percent increase since 1980.
  While filings dipped by 100,000 in 1999 to just 1.3 million, they are 
still far too high. It is estimated that 70 percent of those filings 
were done under chapter 7, which provides relief from most unsecured 
debt. Conversely, just 30 percent of petitions filed under chapter 13 
require a repayment plan.
  A study released last year by the Department of Justice indicated as 
many as 13 percent of debtor filings under chapter 7. A staggering 
182,000 people each year could afford to repay a significant amount of 
their debts. They could, but they won't because they are indeed using 
those chapters of the bankruptcy code to allow them to escape debt that 
they are capable of paying.
  If, indeed, this were not the case, and if the bankruptcy reform that 
we are offering the Senate were in place, an extraordinary $44 billion 
would be returned to creditors--banks, to be sure; credit card 
companies, obviously; but also small businesses, small contractors, 
family companies, mom-and-pop stores, companies that cannot afford to 
have the bankruptcy system of our country misused. The larger banks and 
the credit card companies will always cover this abuse. They have the 
financial resources. They can absorb the loss. It is not for them that 
I stand here today supporting this bill. It is for the thousands of 
small businesses that cannot afford to absorb $4 billion of 
inappropriate bankruptcy. This bill before the Senate ensures that 
those

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debtors with the ability to repay these debts will do exactly that.
  Despite what we hear from opponents of the bill, the core of the bill 
now before the Senate is a bipartisan agreement reached in May after 
months of informal negotiations. It is very similar to a bill that 
passed this body by a vote of 83-14, but in my judgment is a better 
bill than that legislation that commanded 83 votes in this Senate. 
Critics of bankruptcy reform have charged that the bill denies poor 
people the protection of the bankruptcy system. This is simply untrue. 
No American is denied access to bankruptcy under this bill--nobody.
  What this legislation does is assure that those with the ability to 
repay a portion of their debts do so by establishing clear and 
reasonable criteria to determine repayment obligations. But it also 
provides judicial discretion to ensure that no one genuinely in need of 
debt cancellation will be prevented from receiving a fresh start. 
Bankruptcy protection allowing all Americans a clean slate, a second 
chance at their economic lives, should not lose that chance and, under 
this bill, will not lose that chance. Judicial discretion remains where 
a good case can be made.
  To ensure that this will remain the case, the bill before the Senate 
contains a means test virtually identical to that passed in the Senate 
bill. Under current law, virtually anyone who files for complete debt 
relief under chapter 7 receives it. This bill simply changes that 
criterion to a needs-based system which establishes a presumption that 
chapter 7 filings should be either dismissed or converted to chapter 13 
when the debtor has sufficient income to repay at least $10,000 or 25 
percent of their outstanding debt.
  Isn't that fair? If some small business has provided a product or a 
service, you are the recipient of it, and you have demonstrated ability 
to pay $10,000 of your obligation or demonstrated the ability to pay 
that percentage of your obligation, shouldn't you have to pay it? That 
is the test that is being applied. I think it is fair.
  Even so, the presumption may be rebutted if the debtor demonstrates 
special circumstances requiring expenses above and beyond those the 
court has considered in applying the means test. We give an escape 
clause: Yes, you have the ability to pay this, but you have special 
circumstances. We will still exempt you. This is a flexible, yet 
efficient screen to move debtors with the ability to repay a portion of 
their debt into a repayment plan, while at the same time ensuring 
judicial discretion for a review of the debtor's circumstances.
  In addition to this flexible means test, the bill before the Senate 
also includes two key protections for low-income debtors that were part 
of the Senate-passed bill. The first is an amendment offered by Senator 
Schumer to protect low-income debtors from coercive motions. This will 
ensure that creditors cannot strong-arm debtors into promising to make 
payments they simply cannot afford to make. Poor debtors will not be 
forced to reaffirm these debts if they cannot afford to make them. That 
was asked to be put in the bill to protect low-income people, and it is 
in the bill.
  The second is an amendment offered by Senator Durbin, a mini screen, 
to reduce the burden of the means test on debtors between 100 and 150 
percent of the median income. This is a preliminary, less intrusive 
look at the debts and expenses of the middle-income debtors, to weed 
out those with no ability to repay those debts and move them more 
quickly to a fresh start.
  So it is a special category and a mini screen, if you are in that 100 
to 150 percent of the poverty level, to ensure that you are given this 
extra degree of protection.
  In addition to a flexible means test, in addition to the Schumer safe 
harbor and the Durbin mini screen, the bill contains other provisions 
not a part of the original Senate bill to protect low-income debtors:
  One, a safe harbor to ensure that all debtors earning less than the 
State median income will have access to chapter 7 without 
qualification. Less than median income, no question, no qualifications, 
you are in chapter 7. We are not interested in denying protections to 
particularly low-income people.
  Two, a floor to the means test to guarantee the debtors unable to 
repay less than $6,000 of their outstanding debt will not be moved into 
chapter 13. If that is the limit of your resources, that is all you can 
pay back, we are not interested in you; you get full protection.
  Three, additional flexibility in the means test to take into account 
a debtor's administration expenses and allow additional moneys for food 
and clothing expenses. So even if you have the money, even if on the 
bill's face you can pay back that portion of your debt, if indeed that 
money is needed for basic human items--food, clothing--we are removing 
you from provisions of the bill. You will not be paying back those 
bills. You will be subject to full, complete protection.
  This should convince my colleagues that it will not make it more 
difficult for those in dire need to sweep away their debts and obtain a 
fresh start. It will not be more difficult; it will be easier. The bill 
has been drafted very carefully to protect people in exactly these 
circumstances. Absolutely no one--no one--will be denied, therefore, 
access to bankruptcy and the discharge of their obligations. But every 
one of these additional five provisions makes that even less likely for 
people with low income.
  All the bill does, therefore, is establish a process to move debtors 
who can afford to repay a substantial portion of their debt from 
chapter 7, where they can now sweep away all those debts, into chapter 
13, where they have a repayment plan. That is the bill. Demonstrated 
ability to pay; a repayment plan for your debts.
  Critics, however, have also argued that the bill places an unfair 
burden on women and single-parent families. This is the most important 
emphasis that must be made about this bill. That is not true. I 
wouldn't vote for this bill, I wouldn't cosponsor this bill, I wouldn't 
have worked for this bill for 2 years, I wouldn't stand here today if 
there was anything to the argument that women, single-parent families, 
children, have any vulnerability because of this legislation. Nothing 
would be more important to me than protecting these vulnerable 
citizens.
  Indeed, the bill contains the following: An amendment that I offered 
with Senator Hatch to facilitate the collection of child support by 
requiring the bankruptcy trustee to give the person to whom support is 
owed information on the debtor's whereabouts. Fine for bankruptcy; 
there is a chance this can impact, obviously, a single mother or a 
child. We are now affording the ability to locate the person who has 
the obligation in order to help the single mother or the child.
  Most important, the bill protects single-parent families by elevating 
child support from its current seventh position in line seeking the 
resources of the person in bankruptcy to first. The single mother, the 
child, who right now is behind financial institutions, behind the 
Government, will now be behind no one; they are the first claim on 
assets.
  Finally, the bill requires that a chapter 13 plan provide for full 
payment of all child support payments that became due after the 
petition was filed. Meeting family obligations must be in the repayment 
plan, which is not required under current law. These provisions put 
both families and the States in a better position than under current 
law.
  But it doesn't stop there. The bill also includes a number of other 
provisions designed to ensure protections for other vulnerable people 
in American society. It protects the rights of nursing home patients 
when a nursing home goes bankrupt. The bill requires that an omsbudsman 
be appointed to act as an advocate for the patient and provide clear 
and specific rules for disposing of patient records, a protection not 
now available for people in nursing homes.
  The bill includes a permanent extension of chapter 12 programs to 
provide expedited bankruptcy relief for farmers, a provision not now in 
the bankruptcy law.
  Finally, and most importantly, I have always said it is critical the 
bill

[[Page 26357]]

not only address debtor abuse of the bankruptcy system, but also 
overreaching by the credit card industry. From the beginning, we 
insisted that consumer protection from abuse in credit card 
solicitation and sales must be in any balanced bill. The credit card 
industry now has more than 3.5 billion solicitations a year. That is 
more than 41 mailings for every American household, 14 for every man, 
woman, and child in the Nation.
  We recognize it is out of control and in some cases irresponsible. 
The bill addresses the problem. Vetoing the bill accomplishes nothing. 
Voting against the bill means voting against consumer protections that 
otherwise will never be in the law. This is the chance to do something 
about credit card abuse. Opposing the bill and vetoing the bill means 
we do nothing about credit card abuse.
  The problem is substantial because it is not the sheer volume of 
solicitations, it is also who is targeted. High school and college 
student solicitations are at record levels. Since the decade began, 
Americans with incomes below the poverty line have doubled their uses 
of credit. The result is not surprising. Mr. President, 27 percent of 
families earning less than $10,000 a year have consumer debt that is 
more than 40 percent of their income.
  I in no way advocate that less credit should be made available to 
low-income and moderate-income consumers, but rather that consumers be 
given more complete information so they can better understand and 
manage their debts. That is what this bill does. The bill contains 
provisions, which I authored with the help of Senators Schumer, Reed, 
and Durbin, to ensure consumers have the information necessary to help 
them better understand and manage their debts. The bill now requires 
lenders to prominently disclose: First, the effects of making only the 
minimum payment on your account each month. That is not in the current 
law. It will be in the law if this bill becomes law. Next, that 
interest on loans secured by dwellings is tax deductible only to the 
value of the property. That is not in current law. It will be if this 
bill is signed. Also, when late fees will be imposed, and the date on 
which introductory or teaser rates will expire and what the permanent 
rate will be after that time.
  In addition, the bill prohibits the cancelling of an account because 
the consumer pays the balance in full each month and thus avoids 
incurring a finance charge.
  Indeed, there is one other issue we will also hear discussed on the 
floor--the question of debtors who seek to discharge the judgments they 
owe because of their violence against abortion clinics. This is the 
final issue. And for many Members of the Senate it may be the central 
issue in deciding whether or not to vote for this bill. It may be 
determinative of whether or not the President signs this bill.
  Let me personally, therefore, begin a discussion of it by making 
clear that I support Senator Schumer in his efforts to have his 
amendment included in the bill. I voted for it. Given the opportunity, 
I will vote for it again. I believe it is a provision that is both 
necessary and appropriate.
  But I also recognize the reality of the situation. The Republican 
leadership is not going to include Senator Schumer's amendment in this 
bill. It is not going to happen. That leaves the Senate with a very 
real choice. The family businesses, the financial institutions, the 
family contracting companies that face bankruptcy every day because 
they cannot collect debts owed to them will be jeopardized. The 
consumer protection that was put in this bill for people who have 
problems with the credit card industry, who cannot manage their debts, 
who need more information, will be lost without this bill. Bankruptcy 
reform will simply not occur for yet another Congress. Indeed, if 
George W. Bush becomes President of the United States, our best chance 
at balanced, bipartisan bankruptcy legislation will be lost for 4 
years. That is a high price to pay for Mr. Schumer's amendment on 
abortion clinics.
  Since the bill only maintains the status quo, it may not improve the 
situation on abortion clinics but it does not worsen it either. We live 
to fight another day on that narrow issue, but we make all this 
progress on so many other issues. Enactment of this legislation will 
impact many people involved in so many parts of our economy. I urge my 
colleagues to think carefully about this bill. Overwhelmingly, you have 
voted for it before. It is now better than it was when you voted for it 
previously, and 84 Senators voted for it previously. I urge the 
President to think very carefully about vetoing this legislation for 
the most narrow of provisions.
  The FACE legislation that was offered and adopted previously by this 
Congress did much to protect abortion rights. If it needs to be 
strengthened again, we can do so again. But to lose bankruptcy reform 
protections that I believe are contained in this bill for women and 
children, for small businesses, to lose the restraints on the credit 
industry and credit card solicitations--that is a high price to pay; to 
lose 4 years of work for this balanced bipartisan approach.
  I urge adoption of the bill. I am proud to be its coauthor with 
Senator Grassley, proud of the work we have done together. I urge its 
adoption and I urge its signature.
  I suggest the absence of a quorum.
  The PRESIDING OFFICER (Mr. Santorum). The clerk will call the roll.
  The assistant legislative clerk proceeded to call the roll.
  Mr. GRASSLEY. 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. GRASSLEY. Mr. President, I seek recognition to speak on the 
pending business, which is the bankruptcy bill. I had an opportunity to 
hear about one-fourth of the presentation of my good friend, the 
Senator from New Jersey, Mr. Torricelli. I heard him compliment my 
efforts as author of this legislation. In fact, this bill has been so 
successful in the Senate only because Senator Torricelli, as ranking 
Democrat on the Courts Subcommittee, has been so cooperative, 
recognizing there is a problem that should be addressed and working in 
a bipartisan way to make sure such a bill was put together and 
introduced by me and him, and then working through a long hearing 
process in the subcommittee and the full committee to develop a bill 
that would be reported out of the Judiciary Committee, a committee that 
tends to be very evenly divided on a lot of issues, by a very wide 
margin. Our bill came out with a fair sized majority. Then it passed 
overwhelmingly in the Senate with only 14 dissenting votes.
  We had a very difficult time conferencing this bill, but there was 
finally an effort to go to conference. Senator Torricelli was very 
helpful in working out the details of the conference.
  This afternoon, I saw, and the people of this country saw, through 
his remarks that continued cooperation, and that continued cooperation 
evidently goes way beyond what is going on in this Chamber on 
bankruptcy reform. It continues, through his own admission, through his 
recommendation to the President, when the President gets this bill, 
that the President should sign this bill. There will be people from the 
other side requesting the President not sign this bill.
  I hope the President knows this bill has broad bipartisan support. We 
not only saw it in that vote of only 14 dissenting votes when it passed 
the Senate several months ago, but we also saw it yesterday in the vote 
on cloture where there were 67 Senators, 7 more than needed, to stop 
debate on this bill.
  That brings me to the issue of how this bill has finally been 
conferenced and brought to the floor and has passed through the House 
of Representatives already, to be presented to the President hopefully 
after a successful vote tomorrow afternoon at 4 o'clock under the 
unanimous consent agreement.
  We had an opportunity yesterday and today to hear the Senator from 
Minnesota, Mr. Wellstone, and we also heard others complain about the 
parliamentary process of getting this bankruptcy bill to the floor. It 
is an unbelievable thing for him and other Senators to condemn the way 
this bill finally got to conference. The Senate

[[Page 26358]]

passed the bankruptcy bill after weeks of debate and after disposing of 
hundreds of amendments. On the issue of disposing of hundreds of 
amendments, I compliment Senator Harry Reid for his work in helping us 
work through those amendments.
  The Senator from Minnesota still continues to object to the way in 
which this conference was handled saying it was not handled in the 
regular order of doing business in the Senate. The fact is, not only 
Senator Torricelli and the Senator from Iowa worked to get this bill to 
conference, but we also had many meetings between Senator Daschle, the 
Democratic leader, and Senator Lott, the Republican leader, on how to 
get the bill before the Senate.
  In every respect, on the motions it would take to accomplish that 
under the regular order, the Senator from Minnesota was in a position 
to object saying he was going to object and, consequently, then 
conferees could never be appointed in the way they are for most bills.
  So it is misleading, it seems to me, for the Senator from Minnesota 
to pretend that he is not the reason this bill has not moved in the 
conventional way that bills ought to move, and then to blame others for 
finding a way of bringing a conference report.
  It seems to me that if we did not find another way, it would be 
irresponsible on our part not doing our duty to the 83 Senators who 
voted for this bill the first time it passed the Senate. So we found a 
way to conference this bill with an unrelated piece of legislation.
  By the way, very rarely are conference committees three Republicans 
and three Democrats, but this committee was made up that way. So for 
this bill to move to the floor of the Senate, there had to be members 
of Senator Wellstone's political party, the Democrat Party, who agreed 
that this is such an important piece of legislation, with 83 or 84 
Senators voting for it in the first place, that it had to happen and it 
had to come to the floor. So we got this bill out of conference with 
the help of Senators on the other side of the aisle. I thank them for 
their cooperation.
  Also earlier in this debate, Senator Wellstone referred to the fact 
that there seems to be no evidence at all that you can decrease the 
number of bankruptcies filed by the usual stigma against bankrupts that 
has been traditional throughout American society. I have to admit in 
recent years that has not been true. That is one of the very basic 
reasons we have had a dramatic increase in the number of bankruptcies 
since the last bankruptcy reform legislation that was passed in the 
late 1970s.
  In the early 1980s, we had about 300,000 bankruptcies filed. It did 
not go up very dramatically until about the early 1990s, when it shot 
up very dramatically from maybe reaching 700,000 to almost doubling 
that amount, and continuing to rise until it got to a high of 1.4 
million bankruptcies.
  There is some evidence that it has come down just a little bit, but I 
am also going to be speaking shortly about evidence showing that the 
number of bankruptcies is going to shoot up again this year by 15 
percent. But I think there is not the stigma in our society against 
people going into bankruptcy that there used to be. And that is one 
reason. But Senator Wellstone has spoken to the point that there is no 
evidence at all that the decrease in stigma associated with bankruptcy 
is related to this increase in bankruptcy filings. This is simply not 
true.
  I have before me a study from 1998, from the University of Michigan, 
entitled ``The Bankruptcy Decision: Does Stigma Matter?'' by Scott Fay, 
Erik Hurst, and Michelle J. White, economists at the University of 
Michigan. They concluded--and I will read just one sentence from the 
abstract--

       We show that the probability of debtors filing for 
     bankruptcy rises when the level of bankruptcy stigma falls.

  I am not going to spend the taxpayers' money to put this entire 
document in the Record, but the address is the Department of Economics, 
University of Michigan, Ann Arbor, MI, 48109, if people want to refer 
to this and read from it. I advise them to do it because they will see, 
in a very statistical way, in a very in-depth way, that when there is 
stigma associated with bankruptcy--the societal disapproval of people 
filing for bankruptcy--we do not have as high a number of bankruptcy 
filings as we do now.
  Mr. President, with that somewhat pointed reaction to some of the 
statements the Senator from Minnesota legitimately brought to the 
floor--but I think he is wrong in his approach in what he is saying--I 
hopefully have put another side of the coin out there for people to 
consider. That is a strong basis for why this legislation should be 
before us, why it is before us, and why it needed to come here in a 
fairly unconventional way.
  I am glad we are having a chance to debate the merits of the 
bankruptcy reform conference report today, and for a short time 
tomorrow, before we vote tomorrow on sending it to the President.
  When the Senate last considered this bill, we heard a lot about the 
declining number of bankruptcies. Our opponents pointed to a temporary 
downward spike in the number of bankruptcies to say that this bill is 
not needed. They have said the economics have taken care of the 
situation. Not so. Even with a slight downturn, having 1.3 million 
bankruptcies, when we are in our 9th or 10th year of recovery, is an 
unconscionable index for bankruptcies. That is why the very liberal 
bankruptcy legislation that was passed in 1978 has to be changed 
somewhat, so that the legislation does not encourage bankruptcies, so 
that, in fact, it encourages those who have the ability to repay to 
know that they are never going to again get off scot-free.
  I said just a few minutes ago that I was going to point to a study 
that would take away any weight to the arguments that we do not need 
this bill because there has been a downturn in the number of 
bankruptcies in the last year. This new study predicts that 
bankruptcies will rise by 15 percent next year. This was reported in 
the December 1st Wall Street Journal. The research was done by SMR 
Research Corporation, a consumer-debt research firm in Hackettstown, 
NJ. The SMR Research president, Stuart Feldstein, said this as a result 
of their study:

       But now that we've caught our breath, they're [meaning 
     bankruptcies] about to go way up again. We're on the verge of 
     another flood.

  The suggestion is that they will increase by 15 percent.
  That is what we are facing: Another flood of bankruptcies. We have 
our critics, with their heads in the sand, acting as if there is 
nothing for us to worry about. The fact that we have a bankruptcy 
crisis on our hands--and have had for several years--and it looks as if 
things are going to get even worse, is an unconscionable situation when 
we can do something about it.
  That is why we need to pass this bill, and we need to pass it right 
now. The bankruptcy reform bill will do a lot of good for the American 
people. More importantly, it is going to do a lot of good for our 
economy.
  This bill will avert a disaster for our economy. There are signs that 
the economy is slowing down. There are signs that we are in the middle 
or at the beginning of a Clinton era recession. Remember, President 
Clinton is President of the United States. The manufacturing sector is 
already in a recession. Several other indices in the last couple months 
have shown downward trends. If they continue, obviously, we will be in 
a recession. That recession is probably apt to happen when we have a 
President Bush.
  I want to make it clear right now: We are not going to let that be a 
Bush recession, if the downturn started in a Clinton administration. We 
are not going to let the Democrats get away with taking credit for a 
recovery in 1993 that started 8 months before the election of President 
Clinton in 1992. That is when the recession of 1990-1991 turned around. 
It was 1992. Yet from February through the middle of November 1992, 
somehow we were still in a Bush recession, not in a recovery that 
happened in February 1992. But just as soon as Clinton was elected, it 
was all over.
  The media weren't doing their job or it would never have been 
reported that

[[Page 26359]]

way or the hysteria Clinton provided the country in 1992 would have 
never taken root. But we are in a situation now where there will be 
some people, if there is a downturn next year, who are going to want to 
blame the new President for that. They won't be able to, if it started 
now.
  I hope these indices will turn around. I think we have an 
opportunity, under a new President with the proper economic policies in 
place and fair tax cuts that the working men and women of America are 
entitled to, to do some things to make sure that such a situation 
doesn't happen. But right now, we have had 9 years of growth, starting 
at the tail end of the last Bush administration. Yet we have the 
highest number of bankruptcies over a long period of time, and it is 
presumably going to get worse. If we have a recession, they are going 
to get a lot worse. That is why we need this legislation.
  We have also seen quite a fall in the stock market recently, and we 
know that Americans are anxious about their economic future. If we hit 
a recession without fixing the bankruptcy system, we could face a 
situation of bankruptcies spiraling out of control. The time to act is 
now before any recession is in full swing.
  As I did earlier this year, when we voted on cloture on this bill, I 
will summarize a few of the things that are in the bill that my 
colleagues may not know are there as a result of the disinformation 
campaign waged by our liberal opponents.
  Right now, farmers in my State and in Minnesota--maybe in every State 
but particularly in the upper Midwest where it is a grain growing 
region and we have a 25-year low in grain prices--have no chapter of 
the bankruptcy code that fits them and their own special needs. They 
did from 1933 to 1949. Then they didn't have it. They have had it as a 
result of my getting it passed in 1986, a chapter 12 for farmers. But 
it has lapsed now because the people on the other side of the aisle, 
who every day talk about helping the American farmer, are voting 
against this bill or stalling it. And chapter 12 has lapsed, so there 
is no chapter 12 to help farmers. Yet we have farmers facing 
foreclosure and forced auctions just because chapter 12 of the 
bankruptcy code, which gives essential protections for the family 
farmers, expired in June of this year. It expired for the reasons I 
gave.
  Shame on those who are blocking us from doing the right thing by 
reinstituting chapter 12 and going beyond how we have normally done it, 
just do it for a few years at a time. In this bill we say that farmers 
are entitled to the same permanency of their chapter in the bankruptcy 
code as the big corporations have in chapter 11, as small business and 
individuals have in chapter 13. We are not going to leave farmers then 
with this last ditch effort.
  We went beyond that because we have also changed the tax laws so that 
farmers will be able to avoid capital gains taxes when they are forced 
to sell something by the referee of bankruptcy. This will free up 
resources then to be invested in a farming operation that would 
otherwise go down the black hole of the IRS.
  We have a fundamental choice. The Senate could vote as the Senator 
from Minnesota wants us to vote, and the Senate would then kill this 
bill and leave farmers without this safety net, or we can stand up for 
the farmers. We can do our duty and make sure that the family farmers 
are not gobbled up by giant corporate farms when they are forced into 
foreclosure. We can give farmers in Iowa and Minnesota a fighting 
chance.
  I hope the Senate will stand with the farmers of Iowa and Minnesota 
and other farmers around the United States on supporting this 
legislation. I hope the Senate doesn't give in to the liberal 
establishment which has decided to fight bankruptcy reform no matter 
who gets hurt or what the cost is to the farming operators.
  There are a lot of other things in this conference report. The bill 
will give badly needed protection for patients in bankrupt hospitals 
and nursing homes. The Senate adopted this as an amendment. I offered 
it. It was accepted unanimously. Again, my colleagues may be unaware of 
the fact that there aren't any provisions in the bankruptcy code to 
protect people in nursing homes, if that nursing home goes into 
bankruptcy. By killing this bill, they are killing some of that 
protection.
  I had hearings on the fate of patients in bankrupt nursing homes in 
my judiciary subcommittee. As my colleagues know, Congress is still 
trying to put more money into nursing homes through the Medicare 
Replenishment Act that is now before the Senate because of nursing 
homes being in bankruptcy. So the potential for real harm to nursing 
home residents is there. I would like to provide an example of that.
  Without the patient protections contained in this conference report, 
we learned, through our hearing process, of a situation in California 
where the bankruptcy trustee just showed up at the nursing home on a 
Friday evening and evicted residents. The bankruptcy trustee didn't 
provide any notice that this was going to happen. There was no chance 
to relocate the residents of the nursing homes. The bankruptcy trustee 
literally put these frail elderly people out onto the street and 
changed the locks on the doors so they couldn't get back into the 
nursing home. But this bankruptcy bill will prevent that from ever 
happening again.
  If we don't stand up and say that residents of nursing homes can't be 
thrown out onto the street, then Congress will fail in its duty to 
these people.
  Again, we have no choice. We can vote this bill down and tell nursing 
home residents and their families that it just doesn't matter to 
anybody in the Senate. That is the end result of the position advanced 
by the Senator from Minnesota. I hope the Senate is much better at 
humanitarian responsibilities than that. I hope the Senate stands for 
nursing home residents and not for the inside Washington liberal 
special interest groups that don't care about some nursing home 
resident being out on the street on a Friday night.
  There is more to this bill. The bankruptcy reform bill contains 
particular bankruptcy provisions advocated by Federal Reserve Chairman 
Alan Greenspan and Treasury Secretary Larry Summers. I think both of 
these people--for the benefit of the Senator from Minnesota--are 
appointees of President Clinton. They have good things to say about the 
need for bankruptcy reform. These particular provisions I am talking 
about will strengthen our financial markets and lessen the possibility 
of domino-style collapses in the financial sector of our economy.
  According to both Chairman Greenspan and Secretary Summers, these 
provisions will address significant threats to our prosperity. As I 
said earlier, we are seeing the early warning signs of a recession. We 
need to put these safeguards into place so that the financial markets, 
which are the key components of our economy, don't face the unnecessary 
risk of what might be the beginning of a Clinton recession.
  Again, we have a very fundamental choice: We can strengthen our 
financial markets by passing this bill or we can side with the liberal 
establishment and fight reform no matter what the cost is to our 
society. So I think the American people do in fact want us to 
strengthen the economy, not turn a deaf ear to pleas for help from the 
Chairman of the Federal Reserve and the Treasury Secretary. I hope the 
Senate decides to vote to safeguard our prosperity and not put it at 
risk.
  At this point, I will talk about the issue of how the bankruptcy bill 
will impact people with high medical expenses. I am going to refer to a 
nearby chart. Earlier this year, I had an opportunity to address this 
very issue. I want to assure my colleagues with any remaining questions 
about the full deductibility of health care costs to a person going 
into bankruptcy, whether or not those are factored into the ability to 
repay, and the answer is, yes, 100 percent. I know the Senator from 
Minnesota has heard my explanation on that. I haven't heard him 
contradict anything I have had to say that the General Accounting 
Office has said to back this up. Yet he will continually

[[Page 26360]]

come to the floor of the Senate and make the same point that it could 
be possible for people with high medical expenses not to be able to go 
into bankruptcy and get those considered as part of the process of 
discharge or not.
  The bankruptcy bill says people who can repay a certain amount of 
their debt can't file for chapter 7, the point being that they are then 
channeled into a repayment plan under chapter 13. At this time, the 
question of medical expenses comes into play when determining whether 
someone has the ability to repay their debt. According to the 
nonpartisan General Accounting Office, the conference report before the 
Senate allows for 100-percent full deductibility for medical expenses 
before examining repayment ability.
  Right here you have it, from the IRS--other necessary expenses that 
are deducted. It says that no standard other than expense must be 
necessary and reasonable. But it says it includes such expenses as 
charitable contributions, child care, dependent care, health care. 
Right now I emphasize the words ``health care'' because that is what we 
are being told by the Senator from Minnesota--that that would not be 
deductible. It says payroll deductions such as union dues and life 
insurance.
  So maybe all of those things together would tell people that there 
are assurances way beyond just the health care expense issue of the 
deductibility. But it also emphasizes in this General Accounting Office 
report that we take care of all of the concerns anybody ought to have 
in that particular area. So, bottom line: If you have huge medical 
bills, you get to deduct them in full before even looking at whether 
you get channeled into a repayment plan. So I don't know what could be 
more fair and how it could be any clearer.
  The Senator from Minnesota has told us he wants to learn more about 
this bankruptcy bill. It is quite obvious that he needs to know more 
about this bankruptcy bill. So I hope he does, and I hope he will let 
me talk to him, because once we look into this bill in its totality, I 
am confident that Members of the Senate will do the responsible thing 
and will vote for final passage tomorrow at 4 o'clock.
  I ask unanimous consent that the article from the Wall Street Journal 
previously referred to be printed in the Record.
  There being no objection, the article was ordered to be printed in 
the Record, as follows:

              [From the Wall Street Journal, Dec. 1, 2000]

            Bankruptcy Pace for Individuals Is Accelerating

                         (By Yochi J. Dreazen)

       When the nation's bankruptcy rate started to drop last 
     year, John Garza felt the impact almost immediately. Business 
     at his suburban Maryland bankruptcy law slowed so much that 
     he was forced to let half of his 15 attorneys go, and several 
     of the survivors quit in frustration over their reduced 
     earnings. Mr. Garza, for his part, had time for other 
     pursuits. ``I played a ton a golf,'' he remembers.
       These days, tee times are down and court time is up. The 
     caseload of Mr. Garza's firm rose more than 15% last month 
     alone, leading him to hire a new attorney. ``We're like 
     vultures perched on the telephone pole, waiting for the 
     disaster so that we can eat,'' he says of his firm, which 
     handles both personal and business bankruptcies. ``Well, the 
     vultures are about to spread their wings.''
       With interest rates up and the economy slowing, many 
     households are discovering that their bills for years of 
     torrid spending are coming due just as they are ill prepared 
     to pay them. As a result, growing numbers of Americans are 
     seeking court protection from their creditors. Personal 
     bankruptcies, as measured by a 12-week moving average of 
     filings, have increased nearly 10% since January. The moving 
     average hit 24,288 for the week ending Nov. 4, up from 22,291 
     in the week ending Jan. 1, according to data from Visa.
       Extended over an entire year, that pace would translate 
     into about 1.26 million personal bankruptcy filings, a notch 
     lower than the 1.28 million filings recorded last year. 
     Indeed, after rising steadily for most of the past decade, 
     personal bankruptcies fell in 1999 amid low interest rates 
     and solid wage gains associated with the nation's ultratight 
     labor market.
       But what concerns many analysts is that the pace of 
     bankruptcies appears to be accelerating. SMR Research Corp., 
     a consumer-debt research firm in Hackettstown, N.J., 
     estimates that bankruptcy filings will rise as much as 15% 
     next year, easily surpassing 1998's record 1.4 million 
     filings.
       ``We've just finished one of the plateau periods for 
     bankruptcies, which hit a peak in 1998 and then fell a bit,'' 
     says SMR President Stuart Feldstein. ``But now that we've 
     caught our breath, they're about to go way up again. We're on 
     the verge of another flood.''
       If the projections hold up, an increase of that size would 
     probably bolster congressional efforts to tighten the 
     nation's Bankruptcy Code. Legislation making it harder for 
     Americans to discharge their debts passed the House this year 
     but got tangled up in partisan wrangling in the Senate. 
     Supporters have promised to try again next year.
       Bankruptcy takes a heavy human toll, and many of those seek 
     protection from their debts see it as a humiliating admission 
     of failure. But the economic costs can also be substantial. 
     Creditor losses from debts erased by bankruptcy run into the 
     tens of billions of dollars each year. The filings, 
     meanwhile, may be the harbinger of a significant slowdown in 
     consumer spending that could make a ``soft landing'' for the 
     U.S. economy nearly impossible.
       Here's why: The consumer-spending binge of the early 1990s 
     was built on a fragile foundation of massive household 
     borrowing, so for spending to keep pace going forward, 
     borrowing would have to continue to increase as well. But the 
     current increase in the number of bankruptcies means that 
     many households are having a hard time repaying existing 
     debts, suggesting they'll be far less eager to amass new 
     ones. And with Americans already spending every dollar they 
     earn, a reluctance to borrow more money means the pace of 
     consumer spending can only slow, serving as a significant 
     drag on the broader economy.
       Yesterday, a new government report on personal income 
     suggested that consumer spending will advance at an annual 
     rate of just 3% this quarter, far slower than the 4.5% pace 
     recorded a quarter earlier. The weaker pace could easily 
     translate into a relatively weak holiday season for the 
     nation's retailers.
       Micole Farley, a 25-year-old single mother from Houston, 
     will be one of those doing a lot less shopping this holiday 
     season. As a teenager in the early 1990s, she was surprised 
     to find herself quickly approved for numerous credit cards, 
     part of the seemingly endless stream of easy credit that 
     continues to wash over many Americans. (With credit 
     plentiful, consumers owed $591 billion in revolving credit 
     debt in 1999, nearly double the $276.8 billion in debt 
     amassed in 1992.)
       Young and in love, Ms. Farley had run up $1,500 in credit-
     card debts by 1994, buying clothing, shoes and housewares for 
     herself and her then-boyfriend. When she got pregnant and had 
     to quit her job a short time later, though, Ms. Farley 
     watched with alarm as finance charges and high interest rates 
     sent her bills spiraling higher. By 1999, she was divorced 
     and the debt had ballooned to nearly $5,000.
       ``I just can't afford to shop like I used to,'' says Ms. 
     Farley, who's trying to avoid bankruptcy. ``I have enough 
     bills as it is.''
       Although many households are struggling to repay their 
     debts, low-income Americans have been among the first to feel 
     the strain. About 10% of households making less than $50,000 
     were more than 60 days late on at least one loan payment, a 
     recent survey showed, compared with less than 4% of the 
     families earning more than that amount. With the labor market 
     easing, moreover, it's becoming harder for low-income 
     Americans to work the extra hours or second jobs needed to 
     earn the money to repay their debts.
       Americans are also feeling the sting of higher interest 
     rates. The Federal Reserve has increased them six times since 
     June 1999 in an effort to cool the economy. Mr. Feldstein 
     argues that the number of bankruptcy filings has actually 
     been increasing steadily since around 1985, with the only 
     exceptions coming immediately after periods in which interest 
     rates fell sharply, reducing the cost of borrowing money. 
     When the Fed cut interest rates in 1998 in the wake of the 
     Asian currency crisis, for example, bankruptcies dutifully 
     fell a year later.
       ``Interest rates quell the bankruptcy rate temporarily, but 
     when rates go back up, bankruptcies resume their climb,'' Mr. 
     Feldstein says.

  Mr. GRASSLEY. Mr. President, since I don't see any colleagues here on 
the floor wanting to speak, 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. FEINGOLD. Mr. President, I ask unanimous consent that the order 
for the quorum call be rescinded.
  The PRESIDING OFFICER (Mr. Thomas). Without objection, it is so 
ordered.
  Mr. FEINGOLD. Mr. President, I would like the opportunity to address 
the bankruptcy issue, and I am here to say that I am very disappointed 
that the majority leader chose to bring this bankruptcy bill back to 
the floor.
  Let me remind my colleagues that the House passed this conference 
report

[[Page 26361]]

on October 12, and the majority leader first moved to proceed to the 
conference report on October 19--well before the election. He could 
have sought and invoked cloture on the bill and had this final debate 
any time in the month before the election. Instead, he waited until 
right before the election, and then was unable to get cloture because 
many Senators, of course, were back home in their States campaigning.
  In this lame duck session when we ought to be doing only the business 
that is essential to keep the Government running and leave substantive 
legislation to the representatives of the people who were duly elected 
on November 7, only now has cloture been invoked and we are headed for 
a vote on final passage. We are here in a lame-duck session, taking 
final action on an extraordinarily important and controversial and far-
reaching substantive legislation.
  The American people didn't vote for this Senate on November 7. With 
all due respect, they voted for a new Senate, with a decidedly 
different makeup. Why did the majority leader bring up this bill again? 
Why is he trying to put this bill through in this lame-duck session? 
The Senate is going to have a very different makeup in a month, and 
this legislation might turn out very differently in the next Congress. 
I suppose because we are all eager to finally bring this Congress to a 
close he thought there would be pressure on those Members who oppose 
the bill to relinquish the debate time the Senate rules provide for and 
let the bill go to final passage without a fight.
  The supporters of this bill want to get this over with, pass the 
bill, and send it to the President where it will certainly meet a veto 
pen or perhaps a veto pocket, depending on when the other business of 
the Senate is completed.
  Before we recessed for the election, I spoke at some length about the 
very regrettable procedure that was used to bring this bankruptcy bill 
back to the floor. I continue to believe that allowing four Senators 
meeting in secret in a conference committee to write the final version 
of the bill that we are now considering is a terrible affront to the 
tradition of reasoned deliberation in this body. As I said before, this 
procedure diminishes the Senate floor in favor of the backroom 
conference committee chosen to address these issues by none but 
themselves, accountable to none but themselves and open to observations 
by none but themselves. This procedure sets a terrible precedent for 
our work, and I sincerely hope it will never be used again.
  I would be remiss in my responsibilities as a Senator if I did not 
also speak about the terrible damage that this bill will do to the 
bankruptcy system in our country and, even more importantly, to so many 
hard-working American families who will bear the brunt of the unfair 
so-called reforms that are included in this bill. It is a good thing 
that this bill will not become law.
  The President's veto, whether by pocket or by pen, will protect our 
country's most vulnerable citizens from a harsh and unfair measure 
pushed through this Congress by the most powerful and wealthy lobbying 
forces in this country. President Clinton will do a service to those 
citizens by standing up to powerful special interests and vetoing this 
bill in the waning days of his administration.
  First, let me talk about what is not in this bill, which is directly 
related to the fact that powerful special interests have had the chance 
to shape it. As I have discussed on this floor before a number of 
times, this bill is not a balanced piece of legislation. The interests 
that are the strongest supporters of this bill--the credit card 
companies and the big banks--succeeded in limiting the provisions that 
will have any effect on the way they do business. These interests gave 
us and our political parties millions of dollars of campaign 
contributions and they like the results they achieved in this bill.
  Billions of credit card solicitations go out each year to consumers--
not millions but billions. Most experts agree that part of the rise in 
bankruptcy filings over the past decade, although the number is 
actually now on the way down, is due to credit card companies and the 
banks irresponsibly extending credit to people who have already shown 
they cannot handle additional debt.
  I have next to me a pile of credit card solicitations. This pile of 
solicitations was collected by just one of my staff members over the 
past year and a half since this bill was marked up in the Senate 
Judiciary Committee. These were sent to his home. This pile of 
solicitations, 85 in all, came in the mail to one person--one person--
in the last 19 months. I am sure that the member of my staff is a very 
creditworthy individual, but 85 offers for a new credit card--and these 
direct mail offers don't include the constant invitations for credit 
cards that people see every day on the Internet and on the TV.
  This industry's sales techniques are out of control. The credit card 
companies are making bad decisions every day, and now they are here 
before this Congress asking for our help. Boy, did we give it to them. 
This bill is a bailout for the credit card industry. It is going to 
make it easier for credit card companies to collect more on the bad 
decisions they have made, the credit they have extended to people who 
already have maxed out on 2, 5, even 10 credit cards. Make no mistake, 
giving the credit card companies more power will work to the detriment 
of women and children trying to collect alimony and child support.
  If we are going to pass a credit card industry bailout bill, the 
least we should do is help save the industry from itself by taking some 
steps to make sure consumers are made more aware of the consequences of 
taking on ever-increasing amounts of debt. We had the chance in this 
bill to require credit card companies to be more open with consumers 
about the consequences of running a balance on a card, but we didn't do 
it. We need more prevalent and more detailed disclosures on credit card 
statements and solicitations. There are limited disclosure requirements 
in the bill, but they don't go far enough, in my opinion. I think it is 
clear that the main reason they don't is the power of the credit card 
companies.
  A few days ago the Wisconsin State Journal, a newspaper in my home 
area which is generally perceived as a conservative, quite probusiness 
newspaper, summarized well my concern about the extent to which this 
bill gives the credit card industry what it wants. I ask unanimous 
consent the Wisconsin State Journal editorial from December 4 be 
printed in the Record.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

            [From the Wisconsin State Journal, Dec. 4, 2000]

   Bankruptcy Reform Bill Is a Bust; Let Credit Card Issuers Protect 
Themselves With Sound Lending Practices, Not by Rigging Bankruptcy Law 
                             in Their Favor

       When the credit card industry came to Congress to ask for 
     help in collecting debts from deadbeats, Congress should have 
     said:
       It's not government's job to bail you out. Why don't you 
     tighten up your own lending practices?
       Instead, Congress let the industry turn a bankruptcy reform 
     bill into a debt collection assistance plan.
       That's why, when the Senate goes back to work this week, it 
     should vote down the bankruptcy reform bill and spare 
     President Clinton from following through with his threat to 
     veto it.
       The bill, already passed by the House, is touted as an 
     answer to the questions created by a rapid rise in the number 
     of petitions for bankruptcy filed annually. The surge in 
     annual bankruptcy filings from about 300,000 in the early 
     1980s to 1.4 million in 1998 occurred during relatively good 
     economic times, prompting complaints that abuse of bankruptcy 
     law had become too common.
       Indeed, there was evidence that some people were using the 
     law to escape debts while living it up on wealth protected 
     from creditors' reach.
       In response, Congress began to work on bankruptcy reform 
     legislation. For guidance, the House and Senate had before 
     them 172 recommendations from the National Bankruptcy Reform 
     Commission, which was led by Madison attorney Brady 
     Williamson. The commission had stressed that bankruptcy law 
     must remain balanced: It must work for creditors and debtors.
       But the congressmen also had before them lobbyists for the 
     credit card industry and similar lenders. Quickly, bankruptcy 
     reform legislation became a campaign fund-raising bonanza for 
     the politicians, with the lending

[[Page 26362]]

     industry ``investing'' $20 million in contributions. Just as 
     quickly, bankruptcy reform turned into the credit card 
     industry's bill.
       The industry's goal was to tilt bankruptcy law in its 
     favor. The banks and retailers that issue credit cards make 
     money when their card holders run up large balances and pay 
     the card's high interest rates. That's why the card issuers 
     try to put the cards in the hands of as many people as 
     possible, even people who are poor credit risks.
       But there's a consequence: Sometimes people file for 
     bankruptcy, and their debts are reduced or discharged.
       The industry wanted to use bankruptcy reform to escape that 
     consequence of their risk taking--they wanted to rig the law 
     to keep people out of bankruptcy court so the debts could be 
     collected. Moreover, they wanted to escape the expense of 
     being careful about whom they issued cards to.
       So, the House and Senate included in their reform bills 
     provisions to make it harder for people to file under Chapter 
     7 of bankruptcy law, which basically allows a filer to wipe 
     away debts, or harder to file for bankruptcy at all.
       The bill is atop the Senate's agenda for its lame-duck 
     session this month. Wisconsin Sens. Herb Kohl and Russ 
     Feingold are prepared to oppose the bill, but the Republican 
     leadership believes it has the votes to pass it.
       Bankruptcy law does need some reform. But this bill is not 
     it. Furthermore, there's no rush. Bankruptcy filings have 
     declined more than 10 percent since 1998, suggesting that the 
     sense of urgency. Congress had when it took on the reform may 
     be out of date.
       The proposal should be killed, and Congress should start 
     anew next year.

  Mr. FEINGOLD. Mr. President, I will quote from the editorial:

       When the credit card industry came to Congress to ask for 
     help in collecting debts from deadbeats, Congress should have 
     said: It's not government's job to bail you out. Why don't 
     you tighten up your own lending practices? Instead, Congress 
     let the industry turn a bankruptcy reform bill into a debt 
     collection assistance plan.

  The editorial continues:

       The House and Senate had before them 172 recommendations 
     from the National Bankruptcy Reform Commission, which was led 
     by Madison attorney Brady Williamson. The commission had 
     stressed that bankruptcy law must remain balanced: It must 
     work for creditors and debtors.
       But the Congressmen also had before them lobbyists for the 
     credit card industry and similar lenders. Quickly, bankruptcy 
     reform legislation became a campaign fund-raising bonanza for 
     the politicians, with the lending industry ``investing'' $20 
     million in contributions. Just as quickly, bankruptcy reform 
     turned into the credit card industry's bill.

  My colleagues are well aware of my concern about the influence of 
money on politics and policy. As I have said a number of times on this 
floor over this past year, this bankruptcy bill is really a poster 
child for the need for campaign finance reform. You only have to look 
at what the credit card industries get in this bill and, just as 
importantly, the disclosure that consumers don't get to understand 
that.
  There is another thing missing in this bill. Remember, this bill is 
supposedly designed to end the abuses of the bankruptcy system by 
people who really can't afford to pay off more of their debts. But the 
biggest abuses, and all the experts agree on this, come when wealthy 
people in certain States file for bankruptcy by taking advantage of 
very large or unlimited homestead exemptions that are available in 
their States. Some people with large debts even move to a State such as 
Florida or Texas where there is an unlimited homestead exemption 
specifically for the purpose of filing for bankruptcy.
  The National Bankruptcy Review Commission and virtually all leading 
academics believe that homestead exemptions are being abused and that a 
national standard is, indeed, needed. And, by a vote of 76-22, the 
Senate adopted a very good amendment from my colleague, the senior 
Senator from Wisconsin, which would have closed the loophole. That 
amendment would have put a $100,000 cap on the amount of money that a 
debtor shield from creditors through the homestead exemption.
  But almost unbelievably, after that overwhelming bipartisan vote in 
the Senate, that amendment was stripped out of the bill by a group of 
Senators--again working in secret--and it was replaced by a weak 
substitute. The bill that has been stuffed into this conference report 
limits the homestead exemption to $100,000 but only for property 
purchased within 2 years of filing for bankruptcy. That means that 
wealthy debtors can plan for bankruptcy by moving to an unlimited 
homestead exemption State, buying a palatial estate and putting off 
their creditors for 2 years before filing bankruptcy. If they do that, 
they can continue to shield millions of dollars in assets and throw off 
their debts with the bankruptcy discharge.
  The bill will have no effect on this abuse of the bankruptcy system. 
This bill will not close the homestead exemption loophole of people 
like Burt Reynolds and Bowie Kuhn have used in the past. Supporters of 
this bill have chosen to ignore reforms that would give this bill real 
balance. Somehow the interests of wealthy debtors who use the homestead 
exemption to abuse the bankruptcy system are more important than the 
interests of hard-working Americans who, through no fault of their own, 
whether from a medical catastrophe or the loss of a job or a divorce, 
are forced to seek the financial fresh start that bankruptcy has made 
possible since the beginning of our Republic.
  It is interesting, and very revealing, to contrast the treatment by 
this bill of wealthy homeowners who abuse the bankruptcy system with 
how it treats poor tenants who need the protection of the bankruptcy 
system to keep from being thrown out on the street while they try to 
get their affairs in order. As I mentioned, the provision dealing with 
the homestead exemption is virtually meaningless. At the same time, the 
bill includes a draconian provision that denies the bankruptcy stay to 
tenants trying to hold off eviction proceedings, even if they are able 
to pay their rent while the bankruptcy is pending. I think this 
provision--I hesitate to use this language--has become something that 
is purely punitive. It will have no impact at all on getting debtors to 
pay past due rent. It will result in people being evicted who are not 
abusing the bankruptcy system, but who are trying to use it for exactly 
the purpose for which it was intended--to get a fresh start and become 
once again productive members of our society.
  When the bankruptcy bill was before the Senate at the beginning of 
this year, I tried very hard to pass an amendment that would have made 
the bill less harsh on tenants while at the same time denying the 
protection of the automatic stay to repeat filers who are abusing the 
system, and who, as I understand it, were the whole reason why they 
want to change the provision. I listened to the arguments of the 
Senator from Alabama who had concerns about my original amendment. What 
I did then was to modify the amendment to take account of some 
reasonable hypothetical situations that the Senator from Alabama came 
up with in our debates in committee and then here on the floor. But the 
realtors strongly opposed my amendment and the Senate rejected it by a 
nearly party line vote. That was unfortunate. It confirmed my view that 
this bill is not balanced. It is not rational. It is about punishing 
people, not just stopping the abuses that we all agree should be 
stopped.
  Shortly before the election, the Senator from Alabama was on the 
floor once again arguing that this bill is necessary to crack down on 
tenants abusing the bankruptcy system to live rent free. My amendment 
would have cracked down on those abusers too, but without harming good 
faith debtors who need the automatic stay of an eviction to avoid 
homelessness and be able to pay some of their debts. The failure of the 
majority to recognize the harshness of the bill on this point and 
accept a reasonable amendment that deals with the abuse just as 
effectively was a great disappointment to me. It reinforced by judgment 
that this bill is not balanced, it is not fair.
  Let me turn to what proponents view as the central feature of this 
bill, the means test. After much work, I believe this feature of the 
bill is still flawed and unfair. The means test is the mechanism that 
the bill's proponents believe will force people who can really some 
portion of their debts into Chapter 13 repayment plans instead of 
Chapter 7 discharges. The means test requires every debtor to file 
detailed information on their expenses and income which is then 
analyzed according

[[Page 26363]]

to a formula. Those who pass the means test can file a Chapter 7 case; 
those who fail would have to file under Chapter 13.
  The bill that is now before us includes an important ``safe harbor'' 
for debtors who are below the median income. The means test does not 
apply to them. That is a good thing, since studies show that only 2 or 
3 percent of debtors would be required to move from Chapter 7 to 
Chapter 13 under the means test. But even with that ``safe harbor,'' 
the bill has significant problems. First, the bill specifies that for 
purposes of determining the safe harbor, the median income for each 
individual state should be used, rather than the higher of the state or 
national median income. This will unfairly disadvantage people who live 
in high cost areas of low median income states. In the Senate bill, we 
included a safe harbor from creditor motions that applied to people 
with income less than either the national or the median income. The 
people who drafted this final bill ignored that standard. I doubt they 
really believe it will mean that more abusers of the system will be 
caught by the means test. But they did it anyway, giving further 
evidence of the arbitrary nature of this bill.
  In addition, the means test still employs standards of reasonable 
living expenses developed by the Internal Revenue code for a wholly 
different purposes. These standards are too inflexible to be fair in 
determining what families can live on as they go through a bankruptcy. 
They are arbitrary. And they are also ambiguous with respect to things 
like car payments because they were not designed to be used in this 
context. We have pointed this out repeatedly over the past few years, 
but the sponsors of the legislation have insisted on using these 
inflexible IRS standards.
  The safe harbor from the means test also inexplicably counts a 
separated spouse's income as income available to a mother with children 
who has filed for bankruptcy, even if the spouse is not paying any 
child support. This can't be fair. Let me repeat that. Mothers filing 
for bankruptcy because their spouses have left them are treated for 
purposes of the safe harbor as if the spouse's income is still 
available to them. That is what the bill we are about to vote on does. 
It makes no sense. It is arbitrary and punitive.
  But perhaps the thing that is most curious about the means test is 
that while we now have a safe harbor for lower income people, they 
still have to fill out all the same paperwork, doing all of means test 
calculations using the IRS expense standards. Why is that? If the 
intent is to exempt lower income debtors from the means test, why have 
them go through the means test anyway? The burden of the means test for 
these people is not the result--a tiny percentage would ever be sent to 
Chapter 13 because of it. No, it is the burdensome paperwork that is 
the problem. This bill makes it more difficult to file for bankruptcy. 
By leaving the paperwork requirements in place, the means test remains 
a barrier for low income debtors, even with the safe harbor.
  Let me give you one example. This bill would deny the protection of 
bankruptcy to a single mother with income well below the State median 
income if she does not present copies of income tax returns for the 
last 3 years, even if those returns are in the possession of her ex-
husband. I can see no justification for this result whatsoever.
  So for those supporters of the bill who trumpet the safe harbor, I 
ask you: Why doesn't the bill apply the same safe harbor to creditor 
motions as the Senate bill did, and why doesn't it exempt people who 
fall within the safe harbor from the paperwork requirements? I have yet 
to hear reasonable answers to those questions, which leads me to 
believe that there are no reasonable answers. This bill is arbitrary, 
and it is punitive.
  This bill also includes a number of ``presumptions of 
nondischargeability'' provisions, which basically say, ``these debts 
can't be discharged in bankruptcy because we think they look like 
people are running up bills in contemplation of bankruptcy.'' In other 
words, they are abusing the system. They are accumulating debt with no 
intention of paying it off.
  The problem is that these presumptions are unfair. So instead of 
being a deterrent to abuse of the system, they are simply a gift to the 
credit industry, and a harsh punishment to hard working people trying 
to do the best they can to meet their obligations to their families. 
One such provision creates a presumption of nondischargeability if a 
debtor takes $750 of cash advances within 70 days of bankruptcy. Seven 
hundred fifty dollars in a little more than two months. That is not 
much. I think all of us can imagine a single mother with children who 
loses her job or has unexpected medical bills for her kids and has to 
use cash advances to buy food and for her family or pay her rent. But 
if that woman files for bankruptcy, the debt to the credit card company 
is presumed to be fraudulent. That means that the debt from those cash 
advances will not be discharged by bankruptcy. It will still hang over 
her head as she tries to get back on her feet and support her family 
after the bankruptcy proceeding is over. That is not balanced. Once 
again, this bill gives special treatment to credit card companies at 
the expense of the most vulnerable members of our society. It is 
arbitrary and punitive.
  This example shows how empty the proponent's arguments are when they 
claim that the bill gives first priority to alimony and child support. 
The chairman of the Judiciary Committee had a big chart listing all the 
ways that the bill supposedly helps women and children. But, as has 
already been mentioned by other Senators on the floor, 116 law 
professors have written to us to contest that claim.
  Let me quote from their letter because I think it is very important 
to hear these arguments in some detail. The letter says:

       Granting ``first priority'' to alimony and support claims 
     is not the magic solution the consumer credit industry claims 
     because ``priority'' is relevant only for distributions made 
     to creditors in the bankruptcy case itself. Such 
     distributions are made in only a negligible percentage of 
     cases. More than 95 percent of bankruptcy cases make no 
     distributions to any creditors because there are no assets to 
     distribute. Granting women and children a first priority for 
     bankruptcy distributions permits them to stand first in line 
     to collect nothing.
       Women's hard-fought battle is over reaching the ex-
     husband's income after bankruptcy. Under current law, child 
     support and alimony share a protected post-bankruptcy 
     position with only two other recurrent collectors of debt--
     taxes and student loans. The credit industry asks that credit 
     card debt and other consumer credit share that position, 
     thereby elbowing aside the women trying to collect on their 
     own behalf. . . . As a matter of public policy, this country 
     should not elevate credit card debt to the preferred position 
     of taxes and child support.

  Mr. President, what the law professors point out so convincingly is 
that the key issue is not how the limited assets of a debtor are 
distributed in bankruptcy, but what debts survive bankruptcy and will 
compete for the debtor's income when the bankruptcy is over. In a 
variety of ways, this bill will encourage reaffirmation agreements and 
increase nondischargeability claims which will lead to more debtors 
having more debt that continues after bankruptcy.
  That is what hurts women and children, not the priority of child 
support claims in the bankruptcy itself. The priority of claims in the 
bankruptcy itself is almost meaningless since in the vast majority of 
bankruptcy cases there are no assets to distribute. People are broke, 
and they do not have anything to sell to satisfy their creditors. That 
is why they file for bankruptcy. You can't squeeze blood from a stone.
  One of the most interesting things about this bill, as I have seen in 
other legislation as well in recent years, is the almost Orwellian 
names of some of its provisions. There are a number of them. For 
example, there is a title of this bill with the name ``Enhanced 
Consumer Protection,'' but many of the provisions in this title 
actually offer little, if any, protection at all. The weak credit card 
disclosure provisions are an example. Yes, those may be enhanced 
consumer protections, enhanced from nothing, but they are not

[[Page 26364]]

considered sufficient by any organization, not one organization, whose 
primary concern is consumer protection.
  There is another section with the so-called ``Enhanced Consumer 
Protection'' title called ``Protection of Retirement Savings in 
Bankruptcy.'' That sounds pretty good. What the provision actually does 
is put a cap on the amount of retirement savings that is put out of 
reach of creditors in a bankruptcy proceeding. Before this bill, there 
was no limit at all on the amount of retirement savings that can be 
protected. So this bill is not an enhanced consumer protection at all. 
It is a step backward for consumers and hard-working Americans who 
tried to put aside some money for their golden years.
  Incidentally, this provision is nowhere to be found in either the 
bankruptcy bill that passed the Senate or the bill that passed the 
House. This is one of those provisions that appeared out of nowhere. In 
fact, before a firestorm of criticism forced him to reconsider, the 
Senator who proposed this provision wanted to let consumers waive the 
existing protection of retirement savings in boilerplate consumer 
credit agreements. So the $1 million cap is an improvement over what 
the sponsors of this bill tried to do, but it is hardly a protection.
  Here is another sort of Orwellian title. Section 306 is called 
``Giving Secured Creditors Fair Treatment Under Chapter 13.'' It ought 
to be called ``Giving Certain Secured Creditors Preferred Treatment 
Under Chapter 13'' because it favors those who make car loans over 
other secured creditors and over unsecured creditors.
  Here is how it works. There is, of course, a concept in bankruptcy 
law currently called cramdown or stripdown. It recognizes the fact that 
the collateral for some kinds of loans can lose value over time so it 
may be worth significantly less than the debt owed. Remember that in a 
bankruptcy proceeding, secured creditors get paid first, but the 
cramdown concept says to those creditors that they only get paid first 
up to the amount of the value of the collateral for the loan. After 
that, if they are still owed money, they have to get in line with the 
other unsecured creditors.
  To give a more tangible example, if someone owes $10,000 on a car 
loan, but the car which is collateral for that loan is worth only 
$7,000 now, then only $7,000 of that loan is considered secured in a 
bankruptcy. That makes perfect sense since the maker of that loan has 
the right to repossess the car, but if it does that, it can only get 
$7,000 when it sells the car.
  What the bill does is eliminate the cramdown for any car that is 
purchased within 5 years of bankruptcy. That means that even though the 
vehicle that secures the loan has lost much of its value, the entire 
amount of the debt must be repaid in a chapter 13 plan. This gives 
special treatment to the lender and, more importantly, it will make it 
much more difficult for a chapter 13 plan to work, and that will hurt 
people who want to pay off their debts in an organized fashion under 
chapter 13.
  Most people file chapter 13 cases because they want to keep their 
cars. The cramdown allows them to reduce their car payments to a 
reasonable amount, leaving enough money to pay off other secured 
creditors and make a repayment plan work.
  According to the chapter 13 trustees who know what they are talking 
about since they deal with these cases day in and day out, this single 
provision of the bill will increase the number of unsuccessful chapter 
13 plans by 20 percent.
  Making it more difficult to get chapter 13 plans confirmed will lead 
to more repossessions of cars and ultimately to more chapter 7 filings. 
Even where a chapter 13 plan can be confirmed and is successful, the 
anticramdown provision will reduce the amount a creditor can pay to 
unsecured creditors or to child support or alimony. In essence, 
payments on a car worth far less than the debt are given priority over 
child support, another example of how this bill is arbitrary and 
punitive and how the claims of the bill's proponents that the bill will 
help women and children are empty indeed.
  The anticramdown provision undermines the efficacy of chapter 13. All 
the experts tell us that. I have to point out the irony here. The 
avowed purpose of proponents of this bill is to move people from 
chapter 7 discharges to chapter 13 repayment plans. Yet the bill 
actually has the effect of undermining chapter 13.
  There is even another provision in this bill that undercuts chapter 
13. A small group of Senators who shaped this bill in a shadow 
conference accepted a provision from the House bill that says for those 
debtors with income above their State's median income, chapter 13 plans 
must extend over 5 years rather than 3. That is a 66-percent increase 
in payments required to complete the plan. In view of the fact that the 
majority of 3-year plans fail, the requirement that the debtor go 2 
more years without an income interruption or unexpected expenses will 
inevitably lead to an even higher rate of chapter 13 plan failures and 
discourage even more debtors from filing voluntarily under chapter 13.
  As I have said before, this bill is really, in a way, at war with 
itself. Bankruptcy experts from around the country tell us clearly that 
it will not work. This bill will destroy chapter 13 as an option for 
many debtors. If we pass it, I am convinced we will be back here trying 
to fix it once it starts to take its toll on the American people. In 
the meantime, how many lives will be made harder? How much more 
heartache are we going to inflict on hard-working Americans?
  I have spoken for quite awhile here about the problems with this 
bill. In fact, I am sorry to say, I have probably only just scratched 
the surface. This is an immensely complicated bill about a very 
technical area of the law. There are provisions in this bill that I 
would venture to guess that no one in this body really understands. 
Indeed, some of the statements by proponents of the bill indicate that 
they don't understand bankruptcy law or this bill.
  This is the kind of bill where we need to rely on the experts to give 
us some real guidance. And we just have not done that here. Once again, 
we have a letter from 116 law professors. They are from all across the 
country. They are not debtors' lawyers, they are not all Democrats, 
they do not have an ideological agenda. They just understand the law 
and care about how it operates. And they are pleading with us. Let me 
quote from their letter:

       Please don't pass a bill that will hurt vulnerable 
     Americans, including women and children.

  That is what the 116 law professors say.
  This is extraordinary. The experts beg us to listen to them. They do 
not have a financial interest here. They do not represent debtors. None 
of them is in danger of declaring bankruptcy. They just hate to see 
this Congress make such a big mistake in writing the laws. They do not 
want us to ruin the bankruptcy system, which dates back to the earliest 
days of our country, by passing a bill that is so unbalanced, so 
arbitrary, and so punitive.
  We have one last chance to listen to these experts, one last chance 
to step back from the brink of passing a very bad law, a law that I 
believe we will come to regret. It is a matter of simple fairness and 
simple justice.
  I want to assure my colleagues that I am not opposed to reform of the 
bankruptcy laws. I know there are abuses that need to be stopped. I 
voted for a bill here in 1998 that passed the Senate with only a 
handful of votes in opposition. There are things we can do--and should 
do--to improve the bankruptcy system. There are loopholes we can close 
and abuses we can address. We can do it in a bipartisan way. We can 
write a balanced bill that the Senate and the country can be proud of. 
We can rely on the advice of experts, as we have always done in this 
complicated area in the past. But we did not do that here. We relied on 
the credit card industry, which has showered Senators and the political 
parties with campaign contributions, and it shows.
  I urge my colleagues to vote against this unfair bill. This Senate 
can do better, and we will do better next year if this bill is 
defeated.

[[Page 26365]]

  Mr. President, I yield the floor and suggest the absence of a quorum.
  The PRESIDING OFFICER (Mr. Gregg). The clerk will call the roll.
  The assistant legislative clerk proceeded to call the roll.
  Mr. GRASSLEY. 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. GRASSLEY. Mr. President, I want to take this time during the 
debate on the bankruptcy bill to give a little bit of history on 
bankruptcy reform. I want to say a few words about how we thought about 
the proper role of bankruptcy over the course of our Nation's history.
  Congress' authority to create bankruptcy legislation derives from the 
body of the Constitution, article I, section 8, clause 4, authorizing 
Congress to establish ``uniform laws on the subject of bankruptcies 
throughout the United States.''
  Until 1898, we did not have permanent bankruptcy laws in our country. 
The previous bankruptcy laws that were on the books throughout that 
early 100 years were temporary reactions to particular economic 
problems, and with each successive bankruptcy act and each major reform 
of our bankruptcy laws, we refined our conception of how bankruptcies 
should promote the important social goal of giving honest but very 
unfortunate Americans a fresh economic start, while at the same time 
after giving that fresh start guarding against the moral hazard of 
making bankruptcy too lax, easy, and in fact encouraging bankruptcy.
  Right now, I think we have a situation where too many Americans see 
bankruptcy as an easy way out. A huge majority of Americans recently 
told pollsters that bankruptcy is too easy and more socially acceptable 
than a few years ago.
  I refer to the chart from Penn and Schoen Associates. The question 
they ask: ``Is bankruptcy more socially acceptable than a few years 
ago?'' You get an overwhelming 84 percent who say, gee, it is more 
socially acceptable. As few as 10 percent say that it is not more 
socially acceptable, and 6 percent said they did not have an opinion.
  A very dramatically high proportion of the American people know that 
the present policies of bankruptcy in this country are not right, and 
they tend to encourage people to file for bankruptcy.
  The bill we are considering today and tomorrow and will hopefully 
pass at 4 o'clock tomorrow under the unanimous consent agreement 
proposes fundamental reforms which are a logical outgrowth and an 
extension of our prior bankruptcy reform efforts.
  From 1898 until 1938--a 40-year period of time--consumers had only 
one way to declare bankruptcy. It was called in the terms of the 
profession ``straight bankruptcy.'' Today we refer to it as ``chapter 
7'' bankruptcy. Under chapter 7, which is still in existence, bankrupts 
surrendered some of their assets to the bankruptcy court. The court 
then sold those assets--today, for that matter--and used the proceeds 
to pay creditors. Any deficiency then is automatically wiped out.
  In 1932, the President recommended changes to the bankruptcy laws 
which would push wage earners into repayment plans. In the 1930s--in 
fact, specifically in 1938--Congress then created a chapter 13 in 
addition to a chapter 7. Chapter 13 permits but does not require a 
debtor to repay a portion of his or her debts in exchange for limited 
debt cancellation and protection for debt collectors' efforts.
  Chapter 13 is still on the books to this day, although it has been 
modified several times. Most notably, modification to it came in the 
year 1978.
  Under current law, the choice between chapter 7 and chapter 13 is 
entirely voluntary.
  In the late 1960s, Senator Albert Gore, Sr.--the father of the Vice 
President of the United States--introduced legislation to push people 
into the repayment plans. This proposal was reported to the Senate as a 
part of a bankruptcy tax bill passed by the Finance Committee. But it 
ultimately died in the Senate.
  Later, in the mid-1980s, Senator Dole on the part of the Senate and 
Congressman Mike Synar on the part of the House tried to steer higher 
income bankrupts--those who could pay some of their debt--into chapter 
13. The efforts of Senator Dole and Congressman Synar ultimately 
resulted in the creation of section 707(b) of the bankruptcy code. This 
section gives bankruptcy judges the power to dismiss the bankruptcy 
case of someone who has filed for chapter 7 bankruptcy if that case is, 
in the words of the law, ``substantial abuse'' of the bankruptcy code.
  While this idea sounds good and well intended, it has not worked well 
in the real world of people who do not pay their bills--and the people 
who enforce the bankruptcy laws and the lawyers who work with them.
  First, the problem is that no one knows what the term ``substantial 
abuse'' actually means. We have conflicting court decisions around the 
country, and people just aren't sure what the rules are.
  Second, creditors and private trustees are actually forbidden from 
bringing evidence of abuse to the attention of a bankruptcy judge.
  Look at that situation.
  No. 2, if somebody knows about abuse, and it is very obvious--and 
even if it isn't so obvious--they can bring it to the attention of the 
bankruptcy judge and something can be done about it. The law doesn't 
allow that to be done.
  As well intentioned as what Senator Dole and Congressman Mike Synar 
ended up doing--their original intentions were right but they had to 
compromise to get it done in 707--it just hasn't accomplished what that 
compromise was supposed to have accomplished.
  The bill before the Senate now corrects these shortcomings. Under the 
bill, 707(b) now permits creditors and private trustees to file motions 
and bring evidence of chapter 7 abuses to the attention of the 
bankruptcy judge.
  People who oppose this bill find fault with that. If somebody is 
using the courts of the United States to help them along, and if they 
don't deserve that help and there is abuse of power of government to 
the detriment of creditors and particularly to the consumers, and as a 
result of 1.4 million bankruptcies in America a family of four pays 
$400 more for goods and services than they would otherwise pay--and 
that is wrong--what is wrong with that information being presented 
through the transparency process to the judge? We do that here. It 
should be done. I don't know why anybody would find fault where there 
is outright abuse being presented.
  The change is very important, since creditors have the most to lose 
from bankruptcy abuse, and private trustees are often in the very best 
position to know which cases are abusive in nature. In certain types of 
cases where the probability of abuse is very high, the Department of 
Justice is required to bring evidence of abuse to the attention of 
bankruptcy judges. And they should be required to bring this abuse to 
their attention.
  Additionally, the bill requires judges to dismiss or convert chapter 
7 cases where the debtor has a clear ability to repay his or her debts.
  Taken together, these changes will bring the bankruptcy system back 
into balance, particularly in relationship to the evolution of the 
bankruptcy code from an ad hoc sort of passage by Congress for the 
first 100 years--the last 100 years being more permanent, and in the 
last 20 years it has been very liberalized--to make it a little more 
balanced. It is a perfectly legitimate thing to do.
  Importantly, these changes preserve the element of flexibility so 
that each and every debtor can have his or her special circumstances 
considered. This means that each bankrupt will have his or her own 
unique circumstances taken into account at the time of judgment.
  As we consider this bill, I hope my colleagues will keep in mind the 
remainder of the bill, and the fair nature of this legislation as well 
as its historical roots.
  I see that the Senator from Alabama has come to the floor. I think he 
is

[[Page 26366]]

waiting to speak. Soon I will yield the floor.
  But I also take this opportunity to praise, as I have had the 
opportunity in times past, the efforts of the Senator from Alabama to 
help us bring this bill this far, and for his willingness to be 
flexible in some things where he would like to go further in making 
sure that debts are repaid that maybe otherwise would not be repaired 
but understanding the extremes on both sides helping us to get to a 
middle so that a moderate bill such as this can become law. I thank, 
publicly, Senator Sessions of Alabama.
  I yield the floor.
  The PRESIDING OFFICER (Mr. Crapo). The Senator from Alabama.
  Mr. SESSIONS. Mr. President, I express my appreciation and admiration 
to Senator Grassley for his extraordinary patience, steadfast 
leadership, and efforts in moving this bill forward over a period of 
years.
  Some say this has slipped through. We have had hearings for years. We 
have had debates on this floor for the last 2 to 3 years. It has passed 
every time overwhelmingly. But a small group is trying to identify 
certain little things when they put a spin on it to make it sound as if 
doing something about a bankruptcy system that is out of control is bad 
and is not a fair thing.
  What we are saying fundamentally is, if you make above median 
income--for a family of four, I believe the median income is $45,000--
and a judge finds you can pay some of your debts back, you ought to be 
able to pay that.
  We have examples all over this country. If you talk to any of your 
bankers and hospitals in your community, you find people with high 
incomes are just walking away, wiping out all their debts and not 
paying them. They think it is cool and clever. But it is wrong.
  When a person receives a value, receives a loan, he or she ought to 
pay it back if they can. America is very generous. If you cannot pay it 
back and you are in debt, you can file bankruptcy, wipe out all those 
debts, and start over free and clear.
  What this legislation says is, most historically, the small number--
and it is far less than 50 percent--who make higher incomes, if they 
can pay more, ought to. That is only fair and just.
  Bankruptcy is a Federal court legal system. Bankruptcy judges are 
Federal judges. The whole bankruptcy code with which many lawyers have 
worked--and I have a bit over the years but never mastered; and as U.S. 
attorney, I had a couple of lawyers on my staff who worked bankruptcy 
regularly and we dealt with bankruptcy issues--this complex code states 
who gets what in bankruptcy and how much should be paid.
  We found we have had a doubling in filings in bankruptcy in the last 
10 years, during a time when the economy is doing exceedingly well. We 
have also found that lawyers--and I don't really blame lawyers; I am a 
lawyer; I practiced law; if the bankruptcy code gives me a clause 
somewhere that I can use to the advantage of my client to make them not 
pay a debt that the client probably should pay--I am going to take 
advantage of it. It is malpractice not to take advantage of that.
  Whose responsibility is it if we create a bankruptcy code that has 
loopholes in it? It is our responsibility. If after over 20 years of 
this current bankruptcy bill, after over 20 plus years of experience, 
we see where the problem areas are, where the abuses are, it is our 
obligation, I think, to do something about it and fix it so that it 
operates fairly and so that people are treated as they should be 
treated.
  What we are saying and what bankruptcy does is say that a person who 
incurred a debt, a person who received a benefit, doesn't have to pay 
for it. If you received a loan, they give you $10,000 and you go 
bankrupt, you don't pay your loan back. Sure, it hurts your brother-in-
law who loaned it to you, your banker who loaned it to you, and it has 
financial repercussions. The bank has to charge higher interest rates 
when they have more defaults. Consumers pay for that, too.
  It hurts that family who sits down on a weekly basis adding up their 
income around the kitchen table, figuring how to pay their debts. Some 
people don't; they go off gambling or they do other things. Or they 
have, in fact, a serious financial problem they can't deal with--a huge 
medical bill. Some families try to figure out a way to work through 
that; they should. Some can't, and they file bankruptcy.
  All we are saying is, that that small percentage who is making above 
median income, who a judge believes can pay some of it, ought to pay 
it. Maybe it is 25 percent of the debts they owe, but they ought to pay 
that if they can.
  It also does a number of things that Senator Hatch and Senator 
Grassley have mentioned to raise the level of protection and benefits 
for children and divorced women through alimony. Alimony and child 
support become No. 1 protected items in this bill.
  There have been some letters that Senator Kennedy and others read 
that nobody supports this bill. He stated on the floor not one single 
organization that advocates for children supports this bill. These are 
his words: Not one single organization that advocates for women 
supports this legislation, there is not one single organization that 
represents working men and women that supports the bill, and that there 
is not one single organization that represents the interests of 
consumers that supports the bill.
  Well, that is not exactly correct. Interestingly, just yesterday I 
received four letters from organizations that represent the interests 
of all the groups referred to by Senator Kennedy who do support this 
bill. Those four organizations writing letters in support of this bill 
include the National Child Support Enforcement Association.
  I was attorney general for 2 years in Alabama, and we worked all 
kinds of ways to utilize the power of the State's attorneys to help 
increase child support collections. That is one of the main groups in 
America that does this--the National Child Support Association, the 
Western Interstate Child Support Enforcement Council, the California 
Family Support Council, and Attorney General Betty Montgomery of Ohio.
  I will now tell you a little bit about the contents of the letters. 
The National Child Support Enforcement Association is committed to 
ensuring parents fulfill their responsibility to provide emotional and 
financial support for their children, including honoring legally-owed 
child support obligations. According to the organization, this bill 
will ``significantly advance their goal.''
  I do not see how any person can stand on the floor of this Senate and 
not say this bill will enhance the ability of children to receive child 
support payments. In fact, it enhances it in a multiplicity of ways. It 
even puts the payments of child support above payments to the lawyers 
in the case, which may be one of the reasons we are having some 
objection to this bill.
  The Western Interstate Child Support Enforcement Council's primary 
purpose is to ensure that child support workers have effective 
enforcement tools to carry out their mandated responsibility to 
establish and collect child support, feels that passage of this bill 
will ``greatly enhance [their] efforts in this regard by establishing 
an equitable system of debt repayment and discharge in bankruptcy 
proceedings.''
  This is a strong and clear statement from this organization that 
cares about children, is dedicated to them, and is working on a regular 
basis.
  According to Howard Baldwin, the president of WICSEC, the provisions 
of this bill:

       will re-prioritize the elements in bankruptcy plans by 
     establishing child support as the debtor's primary 
     obligation, with all other debts assuming a secondary role.
       As a result, our Nation's child support agencies will be 
     able to pursue collection efforts without encountering the 
     restrictions caused by existing bankruptcy proceedings.

  This is another strong statement that they will be able to pursue 
collection efforts without encountering restrictions under the current 
bankruptcy laws.
  The California Family Support Council also supports this bill.
  At its Annual Training Conference held in February, 2000, the 
organization noted that:

       based on [its] experience .  .  . bankruptcy remains an 
     impediment to [their] ability to

[[Page 26367]]

     collect support and [that is serves as] a haven for those who 
     want to avoid their familial obligations.

  As a result, the California Family Support Council's membership:

       feels strongly that this legislation will strenghten 
     substantially the child support enforcement program and 
     improve the collection of child support.

  So if we don't pass this bill we are going to be continuing under a 
rule of bankruptcy law far less favorable to children than the ones in 
existence today.
  Ohio Attorney General Betty D. Montgomery has strongly endorsed this 
bill. In her letter to Senators DeWine and Voinovich, and Congressman 
Steve Chabot, General Montgomery recounted the improvements this bill 
makes over current law.
  General Montgomery rightly notes that:

       current law places domestic support obligations 7th on this 
     list of priorities. By providing that repayment of domestic 
     support obligations move to the head of the list of 
     priorities for debtors to pay in Section 212 of this bill, 
     Congress will ensure that the spouse and the children will 
     continue to collect support payments that are owed during the 
     bankruptcy case. Under the bill, debtors who owe child 
     support would have to keep paying after they file for 
     bankruptcy and creditors could not seize previous payments, 
     which is commendable.

  What that means is this. Under current bankruptcy law, let's say 
there is a deadbeat dad who files bankruptcy and he still owes a lot of 
child support money. It is not dischargeable. He wipes out all his 
debts but his child support is not wiped out, he still owes that. If he 
moves off to another State, maybe halfway across the country, and they 
can't find him, it's hard to make him pay. Under this legislation, if 
he were certified as somebody with an income sufficient to be put into 
Chapter 13 and not just wipe out all his debts but had to pay some of 
those debts back, the first debts he must pay under bankruptcy court 
specific supervision would be this child support. If it is up to a 
period of 5 years, which it normally would be, he would be under court 
order. The mother/wife wouldn't need to hire a lawyer to chase the 
deadbeat dad all around the country, the bankruptcy judge would be 
there making sure he paid it. The first moneys that came in would have 
to go to that child support.
  This is a historic step for children and families, and I believe we 
ought to recognize that. I am glad Attorney General Montgomery, the 
able Attorney General of Ohio who I was honored to know when I was 
Attorney General of Alabama, recognizes that and has stated it so 
clearly.
  Finally, Phillip L. Strauss, assistant district attorney for the city 
and county of San Francisco, in a September 14, 1999, letter to members 
of the Judiciary Committee made known his unqualified support for this 
bill.
  His 27 years in the DA's Office, Family Support Bureau, and his 10 
years' experience as a bankruptcy law professor, convince him that this 
bill is a real improvement over the current bankruptcy law.
  In his letter, responding to a July 14, 1999 letter from the National 
Women's Law Center, Strauss makes the point that none of the 
organizations opposing this bill in the NWLC letter have actually ever 
been engaged in the collection of support; Conversely, the largest 
professional organizations which do perform this function have endorsed 
the child support provisions of the Bankruptcy Reform Act as 
``crucially needed modifications of the Bankruptcy Code which will 
significantly improve the collection of support during bankruptcy.''
  Notes Professor Strauss:

        Most of the concerns raised by the groups opposing [this] 
     bill do not, in fact, center on the language of the domestic 
     support provisions themselves. Instead they are based on 
     vague generalized statements that the bill hurts debtors, or 
     the women and children living with debtors, or the ex-wives 
     and children who depend on the debtor for support. It is 
     difficult to respond point by point to such claims when they 
     provide no specifics.

  The crux of the main argument against this bill is:

       by not discharging certain debts owned to credit and 
     finance companies, the institutions would be in competition 
     with women and children for scarce resources of the debtor 
     and that the bill fails ``to insure that support payments 
     will come first.''

  According to Strauss, ``nothing could be further from the truth.''
  Indeed, under this bill, there are many protections for women and 
children over powerful credit and finance companies that exist outside 
of bankruptcy. Moreover, support claims are given the highest priority 
under this bill, while commercial debts do not have any statutory 
priority. Thus when there is competition between commercial and support 
creditors, support creditors will be paid first. And, unlike commercial 
creditors, support creditors must be paid in full when the debtor files 
a case under chapter 12 or 13.
  In addition, support creditors will benefit--again, unlike commercial 
creditors--from Chapter 12 and 13 plans which must provide for full 
payment of on-going support and unassigned support arrears. Further 
benefits to support creditors which are not available to commercial 
creditors is the security in knowing that Chapter 12 and 13 debtors 
will not be able to discharge other debts unless all post-petition 
support and pre-petition unassigned arrears have been paid in full.
  In other words, you cannot get discharged from your bankruptcy until 
you have paid your child support.
  In conclusion, this bill is a much-welcomed improvement over current 
law--as noted by these five letters, written on behalf of organizations 
that deal with these issues every day, in support of it.
  The opponents should not oppose this bill just to oppose it--that is 
disingenuous. Mere opposition to any change in the present law, and 
vague claims that any and all attempts to address such existing abuses 
as serial filings are oppressive and will harm women and children, and 
does nothing to advance the proper understanding of the problems we are 
faced with, in my view.
  I would just say, those things make it clear from professionals in 
the field that the legislation is not harsh toward children but, in 
fact, provides greater protections than they have ever had before, a 
fact which I assert is indisputable. Somehow, though, there is a 
feeling here that you just ought to have an untrammeled right, an 
unlimited right to not pay anybody you don't want to pay; that somehow 
there is no cost to society when people don't pay their debts.
  There is a cost to society. There is a cost to you, to me, to 
everyone in this Chamber, and to everyone in this country because when 
more people do not pay their debts, the interest rate you pay for your 
loan has to go up because a part of the reason for an interest rate is 
the uncollectibility rate, and if a bank makes 100 loans and they 
collect 99 out of 100, they only have to factor in that percentage of 
that amount to pay for that one bad loan they write.
  If only 95 out of 100 are being paid, or 90 out of 100, we will feel 
it in the interest rates. Who will be paying the higher interest rates? 
The ones who will be paying the higher interest rates are the people 
who manage their money, do the right thing, serve their country, train 
their children, and pay their debts, and we do not want them to feel 
like they are chumps, that they somehow are not smart. And a really 
smart person is the one who knows how to run up a bunch of debt and 
declare bankruptcy.
  There is a problem into which this country is sliding. The real 
reason for the increase in bankruptcy filings in America is television 
advertisement. Turn on your TV. Do you have debt problems? Call old Joe 
the lawyer. It is 11 or 12 o'clock at night, people cannot sleep, they 
are worried about their debt. There it is. That is the answer. They go 
down, and the lawyer says: Give me $1,000.
  Well, I don't have $1,000.
  How much do you make?
  My check is $500.
  Save up two of those checks and bring them to me. Don't pay any other 
debt. Don't pay a dime on your credit card. Bring all that money to me. 
As soon as you bring it to me, I will file bankruptcy. I will wipe out 
all these debts. You can forget this.
  That is what is happening. Do not think I am exaggerating. That is 
what is happening in America today. If their debts are high, they 
cannot pay their

[[Page 26368]]

way out of it, it is hopeless for them and they have a low income, they 
ought to be able to start over again. Anybody who loans money to people 
who have low incomes and excessive debt--they have to be careful about 
loaning money. They know they are going to lose sometimes. Understand 
that.
  I am not saying we will change that. In fact, I suspect that as high 
as 90 percent of the people who filed bankruptcy under straight 
bankruptcy, chapter 7, before this new bill was passed, would be able 
to do it afterwards. This bill will catch a lot of people who are 
abusing the system, and it will be a signal that Congress does care and 
does believe that if you can pay some of your debts, you should pay 
them.
  We are going to insist you do, and we are not going to have a court 
system that allows wealthy people to just walk away from debts they 
honorably signed up to pay and dishonorably declined to make good on. 
We can do better.
  There are a number of things I will say about this bill perhaps 
tomorrow. I do believe Senator Grassley has done a superb job. It has 
been a matter of great debate. It came out of the Judiciary Committee 
by a vote of 16-2 on one occasion, maybe with only three dissenting 
votes on another occasion. It has passed this Senate with 80 or 90 
votes more than once. Somehow always it comes up at the end of a 
session. It is dragged out. A small group fights it, and at the end 
they say: We are really for bankruptcy reform, but we are just not for 
this bill. We know there are abuses, but this bill is not fair. Or, the 
bill I voted on last time was changed in conference, so it is now bad; 
I am not voting for it now.
  I do not think that is legitimate. If they study what is in here, 
they will see this is a fair bill, that it does close somewhat the 
homestead loophole about which some Senators have complained. Senator 
Kohl and I led the fight to eliminate the homestead loophole entirely. 
I thought it was an abuse, but we just did not have the votes to do 
entirely eliminate it, so resolved to make significant progress toward 
tightening it--and we have.
  Not passing this bill is going to leave us with a total lack of 
control over the homestead issue. Passing this bill will eliminate 
fraud totally in the most extreme cases and tighten up the process. It 
will be a significant step forward, in my view, to controlling that 
abuse. That is what compromise is about.
  Chairman Grassley has done a great job working this bill to this 
point. I believe it is a piece of legislation that should pass, and I 
remain hopeful the President will sign it. If not, I am hopeful this 
Senate will be able to override that veto. Yesterday, we had a vote 
well into the sixties to invoke cloture.
  Mr. President, I ask unanimous consent the letter dated October 19 
from the NCSEA, the letter dated October 18 from Howard Baldwin, Jr., 
and the letter dated October 17 from the California Family Support 
Council be printed in the Record.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

                                            National Child Support


                                      Enforcement Association,

                                 Washington, DC, October 19, 2000.
     President William J. Clinton,
     The White House,
     Washington, DC.
       Dear President Clinton: As President of the National Child 
     Support Enforcement Association (NCSEA), representing over 
     60,000 child support professionals across America, I'm 
     writing to urge you to support the Bankruptcy Reform Act of 
     2000 (Conference Report 106-970 accompanying HR 2415). This 
     legislation includes NCSEA's recommendations to restrict the 
     dischargeability of child support obligations. NCSEA is 
     committed to ensuring that both parents fulfill their 
     responsibilities to provide emotional and financial support 
     to their children--including honoring legally-owed child 
     support obligations. The pending legislation will forward 
     this goal significantly.
       Specifically, NCSEA supports the child support bankruptcy 
     provisions that: (1) exempt mandated child support 
     enforcement tools from the effect of an automatic stay; (2) 
     eliminate the dischargeability of all child support debt and 
     treat all support debt in a similar manner; (3) give child 
     support debt a high priority in bankruptcy payment plans; and 
     (4) prevent confirmation of a bankruptcy plan or prevent 
     discharge if a debtor's support payments are not current 
     after a bankruptcy petition is filed.
       Under current law, children are disadvantaged when the 
     parent who owes child support seeks protection in the 
     bankruptcy court. These families find themselves competing 
     with other creditors for the debtor-parent's limited assets. 
     Being on the losing end of this competition can have dire 
     economic consequences. The family may be forced to seek 
     public assistance. Families who have left welfare and are 
     struggling to make ends meet are especially vulnerable, as 
     illustrated by recent findings that for poor families not on 
     welfare, child support represents fully 35% of household 
     income, a critical supplement to the 48% earned from work.
       The proposed bankruptcy reforms would also complement 
     current efforts, which your Administration strongly supports, 
     to distribute more child support to families rather than 
     retaining such collections as reimbursement for government 
     welfare benefits received. If bankruptcy reform is not 
     passed, these collections will continue to be distributed to 
     creditors ahead of the vulnerable families struggling to 
     responsibly support their children by working instead of 
     collecting welfare.
       Back in the previous Congress, the same child support 
     provisions as in the present bankruptcy legislation failed to 
     be enacted when the overall bill (HR 3150) stalled due to 
     disagreements over other bankruptcy provisions. Attached is 
     the policy resolution NCSEA passed in 1998 supporting 
     bankruptcy reform that will strengthen the collection of 
     child support debt. The bill now under consideration 
     accomplishes the goals of our resolution. We urge you to 
     support the bill for that reason.
       Thank you for your consideration. If you have questions, 
     please contact NCSEA's Government Relations Director, Ken 
     Laureys, at 202-624-5878 ([email protected]).
           Respectfully,
                                                    Laura Kadwell,
     President.
                                  ____

                                          Western Interstate Child


                                  Support Enforcement Council,

                                     Austin, TX, October 18, 2000.
     Re Bankruptcy reform conference report for H.R. 2415.

     Hon. William J. Clinton,
     President of the United States,
     The White House, Washington, DC.
       Dear Mr. President: As President of the Western Interstate 
     Child Support Enforcement Council (WICSEC), an organization 
     comprised of child support professionals from the private and 
     public sectors west of the Mississippi River, I would like to 
     express our membership's unqualified support of H.R. 2415. 
     The primary purpose of WICSEC is to ensure that child support 
     workers have effective enforcement tools to carry out our 
     mandated responsibility to establish and collect child 
     support. The passage of H.R. 2415 will greatly enhance our 
     efforts in this regard by establishing an equitable system of 
     debt repayment and discharge in bankruptcy proceedings.
       The current structure of the bankruptcy process allows 
     child support obligors who file for protection under the 
     Bankruptcy Code to repay debts to customary collectors, but 
     does not hold them accountable for the ongoing financial 
     support of their children. The provisions of H.R. 2415 will 
     reprioritize the elements in bankruptcy plans by establishing 
     child support as the debtor's primary obligation, with all 
     other debts assuming a secondary role. As a result, our 
     nation's child support agencies will be able to pursue 
     collection efforts without encountering the restrictions 
     caused by existing bankruptcy proceedings.
       We greatly appreciate your demonstrated support of 
     legislation which benefits families and children. At this 
     time, we respectfully ask you to continue that commitment by 
     signing H.R. 2415.
           Sincerely.
                                           Howard G. Baldwin, Jr.,
     President.
                                  ____



                            California Family Support Council,

                                 Sacramento, CA, October 17, 2000.
     Re Bankruptcy reform conference report for H.R. 2415.

       Dear Mr. President: I am writing you on behalf of the 
     California Family Support Council, an organization of 
     professionals who are responsible for carrying out the 
     federal child support program in California pursuant to Title 
     IV-D of the Social Security Act. Our membership consists of 
     approximately 2,500 persons employed by county and state 
     agencies which administer the program.
       Support of the bankruptcy reform legislation by the Council 
     is reflected in the attached resolution, approved by the 
     general membership at our Annual Training Conference in 
     February of this year. It is based on our experience that 
     bankruptcy remains an impediment to our ability to collect 
     support and a haven for those who want to avoid their 
     familial obligations. Our membership feels strongly that this 
     legislation will strengthen substantially the child support 
     enforcement program and improve the collection of child 
     support.
       Bankruptcy should no longer interfere with the payment of 
     collection of support. This legislation is the first major 
     revision of the treatment of support during bankruptcy

[[Page 26369]]

     since the Banruptcy Code was enacted in 1978. We strongly 
     urge you to sign this legislation.
           Respectfully,
                                                      Kris Reiman,
                                                        President.

         California Family Support Council 2000--Resolution II

       Whereas the California Family Support Council is composed 
     of state and local professionals who have the responsibility 
     of operating the federal child support enforcement program in 
     the State of California; and
       Whereas the filing of a bankruptcy petition by debtors 
     owing child support substantially impairs the ability of 
     government and private child support creditors to enforce 
     support obligations; and
       Whereas the Bankruptcy Code conflicts in many significant 
     ways with federally mandated child support program 
     requirements; and
       Whereas the 1996 Personal Responsibility and Work 
     Opportunity Act of 1996 provided child support obligees with 
     a new and considerable right to child support arrearages 
     which were previously assigned to the government, and under 
     current law these arrears are treated unfavorably in 
     bankruptcy; and
       Whereas in 1999 both houses of Congress passed bankruptcy 
     reform bills, each of which contained child support 
     provisions which would accomplish the following:
       a. Give support debts a very high priority in payment from 
     the bankruptcy estate;
       b. Eliminate the distinction between support owed to a 
     spouse or parent and support assigned to the government;
       c. Insure that support in any form would not be 
     dischargeable in bankruptcy;
       d. Allow federally mandated support enforcement procedures 
     such as wage withholding orders, license revocations 
     processes, credit reporting, and medical support enforcement, 
     to be unaffected by automatic bankruptcy stays;
       e. Eliminate the conflicts between provisions of the 
     Bankruptcy Code and the Social Security Act which affect the 
     treatment of a support arrearage debt; and
       Whereas the California Family Support Council is on record 
     in support of both the House and Senate 1998 bankruptcy 
     reform bills; and
       Whereas the support provisions were improved and 
     strengthened in the 1999 House and Senate Bankruptcy Reform 
     bills; and
       Whereas the support provisions in the 1999 House and Senate 
     bills contain all improvements for collecting support during 
     bankruptcy as approved by the California Family Support 
     Council; now therefore be it
       Resolved that the California Family Support Council:
       1. Supports both the House and Senate Bankruptcy Reform 
     Bills as passed by their respective bodies; and
       2. Urges the House and Senate to preserve the current child 
     support provisions in conference; and
       3. Urges the President to sign the bankruptcy reform 
     legislation if the final conference report maintains the 
     current child support provisions; and
       4. Directs the President of the California Family Support 
     Council to convey to the California Congressional Delegation 
     and to the President its enthusiastic endorsement of the 
     Bankruptcy Reform Bills.

  Mr. SESSIONS. I thank the Chair and yield the floor. I suggest the 
absence of a quorum.
  The PRESIDING OFFICER. The clerk will call the roll.
  The assistant legislative clerk proceeded to call the roll.
  Mr. GRASSLEY. Mr. President, I ask unanimous consent that the order 
for the quorum call be rescinded.
  The PRESIDING OFFICER. Without objection, it is so ordered.

                          ____________________