[Congressional Record (Bound Edition), Volume 147 (2001), Part 3]
[Senate]
[Pages 3716-3733]
[From the U.S. Government Publishing Office, www.gpo.gov]



                     BANKRUPTCY REFORM ACT OF 2001

  The ACTING PRESIDENT pro tempore. Under the previous order, the 
Senate will now resume consideration of S. 420, which the clerk will 
report.
  The bill clerk read as follows:

       A bill (S. 420) to amend title 11, United States Code, and 
     for other purposes.

  Pending:

       Leahy amendment No. 20, to resolve an ambiguity relating to 
     the definition of current monthly income.
       Wellstone amendment No. 35, to clarify the duties of a 
     debtor who is the plan administrator of an employee benefit 
     plan.
       Kennedy amendment No. 38, to allow for reasonable medical 
     expenses.
       Collins amendment No. 16, to provide family fishermen with 
     the same kind of protections and terms as granted to family 
     farmers under chapter 12 of the bankruptcy laws.

[[Page 3717]]

       Leahy modified amendment No. 41, to protect the identity of 
     minor children in bankruptcy proceedings.
       Reid (for Breaux) amendment No. 94, to provide for the 
     reissuance of a rule relating to ergonomics.
       Reid (for Leahy) amendment No. 19, to correct the treatment 
     of certain spousal income for purposes of means testing.

  The ACTING PRESIDENT pro tempore. Under the previous order, the 
Senator from Minnesota, Mr. Wellstone, is recognized to offer any of 
his germane amendments.
  Mr. WELLSTONE. Mr. President, am I correct that my time starts now at 
20 minutes of?
  The ACTING PRESIDENT pro tempore. The Senator is correct.
  Mr. WELLSTONE. Mr. President, I will probably take about 40 minutes 
of my hour right now and probably later on speak again on the bill.


                Amendments Nos. 70, 71, and 73, En Bloc

  Mr. WELLSTONE. Let me start by calling up some amendments. I send to 
the desk amendments Nos. 70, 71, and 73.
  The ACTING PRESIDENT pro tempore. The clerk will report.
  The bill clerk read as follows:

       The Senator from Minnesota [Mr. Wellstone] proposes 
     amendments Nos. 70, 71, and 73, en bloc.

  Mr. WELLSTONE. I ask unanimous consent the reading of the amendments 
be dispensed with.
  The ACTING PRESIDENT pro tempore. Without objection, it is so 
ordered.
  The amendments are as follows:


                            amendment no. 70

  (Purpose: To change the relevant time period in determining current 
                            monthly income)

       On page 18, line 9, strike ``6'' and insert ``2''.
                                  ____



                            amendment no. 71

 (Purpose: To address the acceptable period of time between the filing 
  of petitions for relief under chapter 13 of title 11, United States 
                                 Code)

       On page 151, strike line 18 and all that follows through 
     page 152, line 3, and insert the following:
       Section 727(a)(8) of title 11, United States Code, is 
     amended by striking ``six'' and inserting ``8''.
                                  ____



                            amendment no. 73

         (Purpose: To create an exemption for certain debtors)

       On page 441, after line 2, add the following:
       (c) Exemptions.--
       (1) Certain unemployed workers.--This Act and the 
     amendments made by this Act do not apply to any debtor that 
     can demonstrate to the satisfaction of the court that the 
     reason for filing is due to the debtor having become 
     unemployed and the debtor is part of a group of workers 
     certified by the Secretary of Labor as being eligible for 
     trade adjustment assistance under title II of the Trade Act 
     of 1974 (19 U.S.C. 2251 et seq.), unless the debtor elects to 
     make a provision of this Act or an amendment made by this Act 
     applicable to that debtor.
       (2) Applicability.--Title 11, United States Code, as in 
     effect on the day before the effective date of this Act and 
     the amendments made by this Act, shall apply to persons 
     referred to in paragraph (1) on and after the date of 
     enactment of this Act, unless the debtor elects otherwise in 
     accordance with paragraph (1).


                            Amendment No. 70

  Mr. WELLSTONE. Mr. President, amendment No. 70 would fix the means 
test so it only looks at present and future income, not an average of 
the past 6 months. This is a really important amendment and I am 
interested in a vote. The means test in the bill determines a debtor's 
ability to pay a certain threshold amount of debt by averaging the 
debtor's last 6 months of income. This may be a very poor snapshot of a 
debtor's circumstances, especially if the debtor's income has gone down 
shortly before the filing due to a job loss or disability. This will 
have the effect of inappropriately forcing some debtors into chapter 13 
repayment plans which they will never be able to complete.
  This means test is unfair. It does not really look at the debtor's 
current income in determining ability to repay debt. It is abusive to 
workers who file shortly after losing well-paying jobs, particularly 
given the current weakness in the manufacturing sector of our economy.
  This amendment changes the means test so it looks at an average of 
the debtor's last 2 months of income instead of the last 6. This is a 
more accurate picture of the debtor's circumstances and will ensure 
that only individuals with actual ability to repay will be captured by 
the means test.
  Think about this for a moment. You better be thinking about it if 
there is a downturn in this economy. I am saying if somebody loses his 
or her job, and you are looking at the average income over the past 6 
months, that doesn't do that person or their family a whole lot of good 
in terms of making an accurate assessment. If you look at it just over 
the last 2 months before they file for bankruptcy, then you are 
providing some protection to the people who have lost their jobs.
  I will give a perfect example from the Iron Range. We now have about 
1,300 taconite workers who have lost their jobs just with the LTV mine 
that is shutting down. For Minnesota, these were well-paying jobs with 
wages and health care. These were $65,000 jobs. For people who lose 
those kinds of jobs because the manufacturing sector is struggling, it 
does not do them a whole lot of good to look at the average income over 
the prior months--not when you have just lost your job or not when you 
have been in an accident and all of a sudden find yourself disabled. So 
I say again, this amendment is an amendment that tries to address the 
harshness of this legislation.
  I cannot understand why Senators would not vote for this amendment 
and therefore this is the first amendment that I bring before the 
Senate today.


                            Amendment No. 71

  Amendment No. 71 strikes the 5-year waiting period for a new chapter 
13 filing. When people file a chapter 13 case, by definition they are 
paying all they can afford. There is no disagreement about that on the 
floor. That is supposed to be the reason this bill puts more people 
into chapter 13. So why does this bill prevent debtors from filing 
another chapter 13 case for 5 years, even if those debtors have 
fulfilled all their obligations in bankruptcy? This change simply adds 
insult to injury. It is particularly harmful, I maintain, to elderly 
individuals who might file a chapter 13 case to save their homes. Under 
this bill, an elderly person might file a chapter 13 case because of 
medical bills or because a spouse dies, successfully complete chapter 
13 and save the home.
  But if they have another illness in the next 5 years or they become 
disabled or lose their income, they will not be able to file for 
chapter 13. That is ridiculous. That is ridiculous. Again, I point to 
the harshness of this legislation. Under this bill, chapter 13 filers 
are not supposed to be abusers. They are supposed to be the good guys. 
Adopting this amendment would restore current law and allow the filing 
of new chapter 13 cases. It is very simple.


                            Amendment No. 73

  Finally, I go to amendment No. 73. This is a safe harbor for folks 
who file because of job losses that are a result of foreign trade. Mr. 
President, 1,400 steelworkers have lost their jobs on the Iron Range of 
Minnesota due to unfair foreign competition.
  By the way--and this will be the broader context I want to give about 
this legislation in a moment--does this Senate, does this Congress, 
does this administration offer proposals that assure a fair trade 
policy so many of our industrial workers, such as steelworkers and auto 
workers, do not get thrown out of work through no fault of their own? 
Do we do anything about the import surge of steel, quite often produced 
well below the cost of production, sometimes because of unfair dumping 
of steel on our market, sometimes because our workers lose their jobs 
in relation to other developing countries, workers who do not have the 
right to organize and bargain collectively, where there is no 
environmental protection, where there is no support for human rights, 
where people get paid 13 cents an hour? Do we do anything about that? 
No.
  But, by golly, if you lose your job, you are not going to be able to 
file for chapter 7. You are going to have a very difficult time making 
it in chapter 13, rebuilding your life, or be in debt for the rest of 
your life. This amendment speaks for the 1,400 steelworkers who lost 
their jobs on the Iron Range due to unfair competition.

[[Page 3718]]

  By the way, these steelworkers are not really interested in even 
getting to the point where they have to declare bankruptcy. They would 
like us to do something about an unfair trade policy. That is really 
what should be part of our agenda. Many more jobs in the timber 
industry are threatened by Canadian imports.
  It is crystal clear that too many of these families are going to need 
to file for bankruptcy. If they do, I do not think a bill aimed at 
scofflaws and deadbeats should hold these workers back from a fresh 
start. This amendment would simply exempt from this entire bill any 
debtor who files because of a trade-related job loss. The people are 
not gaming the system. They have been devastated by the uncertainties 
of the global economy, by forces beyond their control. They have been 
devastated by the failure of the Senate to be on their side and pass 
legislation that will assure fair trade. They should not be subjected 
to this harsh bill.
  Let me try to put the last 3 years in context. I think it has been 
about 2\1/2\ or 3 years that we have been going through this debate. It 
has been 2\1/2\ or 3 years that I have tried to prevent this bill from 
passing. The majority leader says he is very pleased by the vote on 
cloture. I will let history judge us. The majority leader can be very 
pleased by the vote. The majority leader can be very pleased the Senate 
is about to pass this very harsh bankruptcy bill. But later on today, 
the big guys are going to win. The big guys are going to win, and the 
little people are going to get smashed. There is no question about it. 
It is embarrassing--or it should be embarrassing to the Senate--the 
number of articles and now media coverage that have come out over the 
last several weeks about all of the ways in which this financial 
services industry, broadly defined, has hijacked this political 
process.
  It should be embarrassing. There is no one-to-one correlation. I have 
said that many times over.
  I accept the fact that my good friend, Senator Grassley, can have an 
honestly held but different view. I am telling you that when it comes 
to elderly people who are put under because of medical bills and now 
cannot file chapter 13 for another 13 years, or when it comes to 
families, 50 percent of whom file for bankruptcy because of medical 
expenses, who are going to be put through one provision and one hurdle 
and another hurdle and another test, which is going to make it so 
difficult for them to file for chapter 7 or, for that matter, to be 
able to rebuild their economic lives, or when it comes to workers who 
have lost their jobs and don't figure in really well with the 6 months 
of average income and are going to find it so difficult to rebuild 
their lives, or when it comes to women where there has been a divorce 
in the family--and all too often it is the woman who is the one who 
really has to take care of the children--when it comes to a lot of low- 
and moderate-income people, there is an awful lot of harshness in this 
piece of legislation.
  They never were able to mount the same lobbying effort. They were 
never able to get special provisions in the bill. The auto makers or 
the auto dealers get a special provision for them. There was an article 
about that. It is embarrassing.
  Investors in Lloyd's of London get a special provision for 
themselves. It is embarrassing.
  The homestead exemption for millionaires or multimillionaires--it is 
embarrassing.
  I have to say it. I don't see any balance to this legislation.
  Senator Durbin and others tried to go after the predatory lending 
practices. They were not successful.
  Is there any significant focus in this legislation on the ways in 
which the credit card industry pumps these credit cards out to people 
so they are held accountable? No.
  Was the Senate willing to vote for low-income and vulnerable people 
who are picked on by loan sharks or take on these payday loans or take 
on these lenders? No.
  Was the Senate willing to provide an exemption for people who went 
under because of medical bills? No.
  Today I have an amendment that at least says do this for people who 
lost their jobs. There will probably be again another ``no'' vote.
  We have in this legislation the following provisions:
  Prebankruptcy credit counseling requirements at the debtor's expense.
  So you lose your job. You are being put under because of an injury or 
a disability or a medical bill based upon a major illness. How do you 
counsel away a job loss? Why are we asking people who have lost their 
jobs or are filing for bankruptcy because of medical bills to go 
through prebankruptcy credit counseling at their own expense? Can 
someone explain that?
  No limits on prefilings, regardless of personal circumstances;
  Revocation of automatic stay relief for failure to surrender 
collateral;
  You can't file a new 7 case for 8 years or a new chapter 13 case for 
5 years.
  There is no current law under chapter 13. That is in one of my 
amendments.
  My friend--I wish I had known him well--Hubert Humphrey, a Senator 
from Minnesota, later Vice President of the United States of America, 
once said--and we have all heard this quote--that the moral test of a 
society in that matter of government is the way we treat people in the 
dawn of their lives, the children; the way we treat people in the 
twilight of their lives, the elderly; and the way we treat people in 
the shadow of their lives, people who are struggling with a disability; 
and people who are poor.
  This bankruptcy bill fails that moral test.
  The majority leader says he is delighted with the vote. I say to the 
majority leader I believe this piece of legislation fails that moral 
test. I believe the Senate, when it votes for this legislation, will 
fail that moral test. I believe this will be a vote for the heavy 
hitters, the investors, the well connected, and the big players. And 
this will be a vote against ordinary people.
  Bankruptcy has been a safety net for them--not just for low-income 
people but for middle-income people as well. It is being shredded with 
this piece of legislation. I have tried, as my friend from Iowa knows, 
for 2\1/2\ to 3 years to do this.
  This bill is going to pass. When it passes, all I can say is we will 
have to judge it.
  Initially, the case was made that it was all about fraud--that people 
were gaming the system. But the American Bankruptcy Institute took care 
of that argument when it said only 3 percent were gaming the system. 
Other studies got it up to 10 or 13 percent, at the most, of people who 
were gaming the system and who were filing for chapter 7 but really 
could pay back more. That is not widespread fraud or abuse.
  The argument that there was a dramatic increase in filing of 
bankruptcies, although in the last year and a half it has gone down, is 
kind of chasing a problem that doesn't exist. This economy may very 
well turn down. Then there will be more people who live in our States 
who will find themselves in difficult economic circumstances through no 
fault of their own. They will go to try to file for bankruptcy, and 
they will find it impossible to rebuild their economic lives. And they 
will hold us accountable. They will say: Were you on the side of the 
financial services industry with all of these big banks and all of 
these big lenders and this credit card industry? Why weren't you on our 
side?
  I think it is only fitting--I will conclude this way and reserve the 
rest of my time--that the bankruptcy bill is considered right after 
what we did with the ergonomics rule and right before campaign finance 
reform because basically last week when we were dealing with repetitive 
stress injury, we took a rule that was a result of 10 years of work--
repetitive stress injury, blue-collar, white-collar workers, the 
majority of working women, the most serious injury in the workplace, 
providing people with some protection--and in 10 hours the Senate 
overturned it. That was not a good week for working people.
  Then we go to bankruptcy. Now when one of our constituents is injured 
in the workplace--because we have

[[Page 3719]]

stripped away the protection--and she can't work because of a 
disability, when she goes to file for bankruptcy, she may find it 
impossible, given all of these provisions and all of these hurdles and 
obstacles, to rebuild her life for herself and her children.
  Do we have out here for consideration legislation to raise the 
minimum wage? No.
  Do we have any kind of legislation that talks about a living wage; 
that is to say, an income where people can support their families and 
give their children what they need and deserve? No.
  Do we have legislation that focuses on affordable prescription drug 
costs for elderly people? No.
  Do we have legislation to expand health care coverage for people so 
they don't have to file for bankruptcy? No.
  Do we have legislation which would call for much more by way of 
resources to expand the amount of available low-cost housing for 
people? This has become a huge crisis. No.
  Do we have legislation that calls for a fair trade policy so that 
workers on the Range and other workers in this country don't end up 
losing their jobs through no fault of their own? No.
  The only thing we have is a bill that is a wish list for the credit 
card industry and a nightmare for vulnerable families and vulnerable 
citizens in Minnesota and the country.
  (Mr. ALLEN assumed the chair.)
  Mr. President, I guess this is a bridge to campaign finance reform 
because I am not going to argue that any Senator's vote or support for 
this bill is because of contributions because there are Senators who 
have a different viewpoint. Senator Grassley absolutely believes in 
this, has argued for it, has been effective, and will get this bill 
passed. It is what he believes. I know that.
  But I will say, thinking about it in institutional terms, which is 
the only way I can do it--not in personal terms--anybody can say any 
Senator's vote or position is based on campaign finance. We do that to 
everybody. But if you look at it in broader institutional terms, I am 
sorry, this is a classic example of too few people with too much 
wealth, too much power, too much access, and too many people in the 
country locked out, left behind.
  If the standard of a representative democracy is that each person 
should count as one, and no more than one, I will tell you something: 
This political process fails that standard. And I will tell you 
something else: I think the next debate we have will be the most 
fundamental debate of all when it comes to what representative 
democracy is about because if we fail that test, that each person 
should count as one, and no more than one--and there is not one Senator 
in this Chamber who believes that that is true; we have strayed far 
away from that--then we are undercutting representative democracy.
  If legislation that is passed--and what happens in the Senate; the 
majority leader said he is so pleased about this--is the result of who 
has power in Washington, who can march on Washington every day, who can 
do a full court press for several years, I hand it to the financial 
services industry; you have done that well.
  If that is the test of a representative democracy, the pattern of 
power in the Nation's Capital, we are in really serious trouble because 
a whole lot of ordinary people are left out, and they know it.
  I will tell you what. This debate has me thinking more about this 
campaign finance reform bill. I do not want to make an absolute 
commitment, but I want to say a few things about it. I am absolutely 
convinced that the McCain-Feingold bill is a step in the right 
direction. But most of the money is hard money, not soft money. These 
proposals to raise the limit from $2,000 to 6,000 are just unbelievable 
to me.
  Do you know it is something like four-tenths of 1 percent who 
contribute over $200. So now what we are going to say is, for the four-
tenths of 1 percent who can contribute over $200--who have the big 
bucks, from whom all of us ask for funding when we run for office--we 
are now going to put more importance on these citizens, the highest 
incomes and the wealthiest, who, by the way, quite often contribute 
because they want to support you, they do not do it, hopefully, because 
they are corrupt or because we are corrupt. But now we are going to 
attach more importance to them and leave even more people out, and 
having even more people believe if you pay, you play, and if you don't 
pay, you don't play. I will spend hours opposing that proposal.
  I am absolutely convinced McCain-Feingold is a step in the right 
direction but does not even get at one-tenth of the way in which money 
hijacks politics. We have an example--I need to say this well--of 
corruption--not corruption as in the wrongdoing of individual 
officeholders, the wrongdoing of individual Senators; no, not that. I 
do not think so. I do not think so. I am trying to get everybody to 
like me. I do not think so. I really believe not. But there is a worse 
kind of corruption, systemic corruption, where too few people have all 
the access and the say.
  This bankruptcy bill has been a perfect example of it. The vast 
majority of the people are left out. There is a huge imbalance between 
the big givers and investors--yes, in both parties--and the majority of 
people.
  I will tell you something. I am going to make sure we have a vote on 
a public financing bill. I have written the clean money/clean election 
bill. John Kerry has joined me on it. We should have a vote on it.
  When my good friend Mitch McConnell comes to the floor, first of all, 
he will say it is constitutionally legal. It is constitutional. That is 
what he will say, which I appreciate. Then he will say--and he will say 
it better than I can say it--this is ``food stamps'' for politicians. 
Then we will have the debate.
  But the debate will be: But wait a minute, do the elections belong to 
politicians? Does the Government belong to politicians or does it 
belong to people? And if you could take the clean money/clean election 
efforts--successful in Massachusetts, and started in Maine, and then in 
Arizona--I forget the other State--and Vermont; I am sorry, Vermonters, 
people from Vermont--why not apply that to Federal elections?
  Another amendment would be to just simply change three words in the 
Federal election code, which would allow any State that wanted to--the 
Presiding Officer might like this one--which would just say: leave it 
up to Virginia, leave it up to Iowa, leave it up to Minnesota. And if 
our States want to apply clean money/clean election to Federal 
elections, they should be able to do so.
  There was an Eighth Circuit Court of Appeals decision on this which 
said: Look, Minnesota, if you want to apply some kind of public 
financing to elections, we might be for it, but the way the Federal 
election law reads, you cannot. I would like to enable States to do it 
if they want to; then let the discussion bubble up from the State 
level.
  But I am telling you something. What we have been going through over 
the last couple of weeks, and the last couple of years, on a variety of 
different pieces of legislation--what we have done and what we have not 
done; what has been on the agenda and what has been off the agenda; 
what has been on the table and what has been off the table; who decides 
who benefits and who is asked to sacrifice--those are the questions I 
ask.
  As I look at this within that kind of framework, we need McCain-
Feingold-plus. We need sweeping campaign finance reform, we need clean 
money, and we need clean elections. Ultimately, we have to go down the 
path of the people owning these elections, and therefore they will have 
a much better chance of owning the Government and a much better chance 
of defeating a harsh bankruptcy bill.
  I yield the floor and reserve the remainder of my time.
  How much time do I have, Mr. President?
  The PRESIDING OFFICER. The Senator has 30 minutes remaining.
  Mr. WELLSTONE. I reserve the remainder of my time for later today. I 
thank the Chair.
  Mr. GRASSLEY addressed the Chair.
  The PRESIDING OFFICER. The Senator from Iowa, Mr. Grassley. 

[[Page 3720]]


  Mr. GRASSLEY. I have had an opportunity now for 30 minutes to listen 
to the Senator from Minnesota. Besides responding to his specific 
amendments, I would like to--on, hopefully, the last day of debating 
this bill; and there have been a lot of ``last days'' over the last 
three Congresses to finally get a bill to the President that will be 
signed into law--take an opportunity to express some history.
  First of all, let me suggest to the Senator from Minnesota that there 
are a lot of trade associations that are very interested in getting 
this bill passed. I am not oblivious to that. But I think you ought to 
take into consideration how Senator Grassley got to the point of 
considering legislation such as this.
  I have town meetings around Iowa, just as I am sure you do in 
Minnesota. You go to the small towns of Minnesota to hold town 
meetings; I go to the small towns of Iowa, in each of the 99 counties 
every year, to hold town meetings. Maybe it is not always a town 
meeting. It might be at a coffee break for the workers at a factory; it 
might be at a Rotary Club, and all those things. I have a dialog with 
my constituents. And over the period of the time I have been in the 
Senate--maybe not immediately, but in the late 1980s and early 1990s--
where did I first hear about abuses of bankruptcy laws that we passed 
in 1978, which were not intended to make it easier to get into 
bankruptcy but it ended up that way, 20 years later, so we realized?
  It was from the small business people of Main Street USA that I heard 
about the irritating impact of people declaring bankruptcy. Maybe in 
some of those cases those bankruptcies would have been legitimate. As 
we all agree, some people deserve a fresh start. Even under that 
circumstance, it is irritating to the small businessperson to have 
somebody declare bankruptcy and then, maybe a month later, to see that 
person driving a new car.
  These are the impressions I have of the use of bankruptcy that 
brought me to this point, along with the Senator from Alabama, Mr. 
Heflin, who, until he left the Senate in 1996, was either chairman of 
this subcommittee when Democrats were in the majority, or I was the 
chairman and he was the ranking member. He and I worked together on 
bankruptcy legislation. It was nothing very major through the 1980s and 
early 1990s, just a technical correction here or there. We were 
impressed with the number of small businesspeople who would tell us 
about the abuse of bankruptcy laws, people not paying their bills, and 
then the small businessperson being stuck with it. That is one point.
  The second point is, over the period since the 1978 law passed, we 
have had a lot of changes in the economy of our country and also the 
globalization of the economy. The bankruptcy law has not changed with 
the economics and the changing conditions of the American economy. So 
early in the 1990s--and I think it took us about 4 years to get a 
commission set up--we decided, even though we had been working on 
bankruptcy legislation for a period of time and making some technical 
corrections, things of that nature--nothing real major--we had been 
thinking about how to handle this proposition of some corrections, some 
fine-tuning of the bankruptcy code--we decided to set up the Bankruptcy 
Commission.
  All during that period of time of hearing from our constituents at 
the grassroots of America about abuse of bankruptcy laws or our seeing 
the need for some change in bankruptcy laws because of the changing 
economy, we never heard from these trade associations the Senator is 
referring to that a commission ought to be set up to change the 
bankruptcy laws. We set up a commission not made up of political people 
but experts in bankruptcy laws to bring about some suggested changes. 
Three Congresses ago, Senator Durbin and I introduced the results of 
that commission.
  Obviously, at that point, people started lobbying for and against 
legislation. That is the way the process has worked for a long time. We 
are here today not because of those trade associations that are very 
much involved for and against this bill. Don't forget, when you talk 
about the business interests, there is as much fighting within business 
as to who is going to be on top or who is going to be on the bottom in 
the priorities as there is between business as creditors and the 
debtors the Senator is protecting.
  There is a lot of dispute among these trade associations; there is a 
lot of dispute among various segments of our business community as to 
just exactly how the laws should be changed. I suggest to the Senator 
that there is probably as much effort in lobbying between business as 
there is between all business on one hand and the debtors on the other 
hand.
  I am not saying anything he said is incorrect, nothing whatsoever. I 
am just saying that, please, look at it from the perspective of the 15 
years that I have been involved in bankruptcy legislation and how we 
came from point A to point B today.
  Mr. WELLSTONE. Will the Senator yield?
  Mr. GRASSLEY. I will yield.
  Mr. WELLSTONE. The reason I make this awkward request is that in just 
a minute or two, I have to go back to the office for a conversation 
with journalists about a mental health bill. I apologize for leaving.
  I say to the Senator from Iowa two things: First, here is our 
disagreement. I think there has been abuse. That is what the Senator 
from Iowa has focused on and heard about in his town meetings. I just 
think, to be as honest as I can be, that we have lost our way, and we 
went way beyond dealing with the abuse and ended up with this bill, as 
opposed to the original bill. I was the only vote against it. Frankly, 
if I had known what was going to happen, I wish I would have voted for 
it. I think we lost our way, and we went way beyond dealing with the 
abuse. We have written a bill that makes it easier for the credit card 
companies. That is my honest view. I have been speaking about this day 
after day.
  I thank my colleague for what he said. This may sound too flowery--if 
that is the right word--but I don't think there is anything the Senator 
from Iowa would say on the floor of the Senate that I would not believe 
came out of his personal and political conviction. I know that, period.
  This is a profound and deep, honest disagreement. It is not personal. 
He is a great Senator.
  Mr. GRASSLEY. I thank the Senator from Minnesota for his kind remarks 
and his intellectually honest approach to this issue, even though there 
is great disagreement. One of the tests, I suggest to the Senator from 
Minnesota, that my position might be right is the fact that this bill 
passed three Congresses ago, 97-1. It passed two Congresses ago, one 
time 84-13, another time 70-28. It would be the law of the land now 
because we had the votes to override a veto, except that it was pocket 
vetoed by President Clinton. It was not vetoed by President Clinton in 
the way that we could override it.
  I hope, for the cynical people--maybe everybody is somewhat cynical 
about Congress, but some people are more cynical than others--they are 
a little less cynical on legislation that gets broad bipartisan 
support. In other words, what I am saying is, there are 31 Members of 
Senator Wellstone's party who voted for cloture on this bill yesterday 
to help us get it passed. That is a test that this legislation is well 
compromised--in my judgment, maybe too much compromised; I would rather 
have a stronger bill--and it is a good product to send to the President 
to be the law of the land.
  This legislation should be passed. I hope it will. I am going to 
leave to other Republicans to speak about the merits or demerits of the 
Wellstone legislation because I have to go to a committee meeting. I do 
want to give a historical context of why we are here today.
  I pursued this bankruptcy legislation because I have a real 
conviction that when you are right, you eventually win out. This is the 
third Congress. It would be the law of the land now except for 
President Clinton's pocket veto. President Bush has said he will sign 
it. The bipartisanship shows the rightness of it. We are going to have 
an example this year of right winning out.

[[Page 3721]]

  I thank the Senator from Utah for coming to the floor. The 
distinguished chairman of the Judiciary Committee has done so much to 
help move this legislation along, particularly when I have been so busy 
as the new chairman of the Senate Finance Committee. I thank Senator 
Hatch for doing that.
  The PRESIDING OFFICER. The Senator from Utah.
  Mr. HATCH. Mr. President, I am here in opposition to the Wellstone 
amendment to permit a debtor to repeatedly use chapter 13. The effect 
of his amendment is that it strikes the provisions of the reform act 
which require a debtor to wait 5 years between chapter 13 bankruptcies.
  Present law allows the debtor to file repeated chapter 13s, one right 
after another. The amendment is unnecessary. Senator Leahy and myself 
have already worked out an adjustment to be included in the managers' 
amendment, which permits a debtor to refile a chapter 13 within 2 years 
after a previous bankruptcy and provides a hardship exception if the 
debtor absolutely has to have chapter 13 relief more frequently.
  The amendment encourages debtors to repeatedly use chapter 13 
regardless of whether they need it. It undercuts personal 
responsibility. Repeated use of chapter 13 should only be rarely 
necessary. It should never be allowed, unless a judge determines the 
debtor is really experiencing hardship. The amendment encourages 
bankruptcy mills to abuse the system by repeatedly putting their 
clients into chapter 13. This is a documented abuse that has been noted 
by many observers.
  It is difficult for me to see what merit the distinguished Senator 
from Minnesota finds in this particular amendment. I oppose this 
amendment that would undercut personal responsibility and encourage 
abuse of the bankruptcy system.
  I hope our colleagues will vote this amendment down.
  Now, with regard to the other amendments the Senator from Minnesota 
has called up this morning, I oppose the Wellstone amendment to allow 
the debtor to defraud the court and shield income.
  With regard to this legislation, the legislation calculates a 
debtor's ``current monthly income'' for purposes of the means test by 
averaging the debtor's monthly income from all sources over a 6-month 
period.
  The amendment of the distinguished Senator from Minnesota would 
change the time period to a 2-month period instead of 6 months. This 
amendment would allow the debtor to defraud the system more easily. By 
limiting the scope of current monthly income, the amendment allows the 
debtor to hide earnings from the court more easily. For example, it may 
be worthwhile for the debtor to quit a job for 2 months in order to 
have no income for purposes of the means test than to take the income 
into account and risk being converted to chapter 13.
  The point of the legislation is to cut down on loopholes, not create 
them. This amendment of the distinguished Senator from Minnesota 
creates an obvious loophole, which would allow debtors to game the 
system prior to filing.
  A 2-month period does not give an accurate picture of an individual's 
income. Wealthier debtors may receive quarterly or semiannual 
investment distributions which may not be picked up under the Wellstone 
definition if the debtor is lucky, or extremely clever.
  Supporters of the amendment may claim a 6-month period is too long, 
taking into account income or circumstances that are no longer relevant 
at the time of filing; that is, the debtor may have recently lost his 
job. This is the exact reason the legislation includes provisions to 
allow the judge to take such ``special circumstances'' into account. It 
is more appropriate to deter fraud in all cases and allow the judge to 
allow special circumstances in some cases than to presume such 
circumstances in all cases while making fraud easier.
  So I hope our colleagues will oppose that Wellstone amendment as 
well.
  I also oppose the Wellstone amendment excepting those who lose their 
jobs on account of imports from all provisions of the reform 
legislation.
  The effect of his amendment is, if a debtor can demonstrate ``the 
reason for filing is due to the debtor having become unemployed'' on 
account of imports, the debtor is exempt from every provision of S. 420 
except those he or she elects to cover them.
  The amendment unwisely creates two classes of debtors: One class must 
use the bankruptcy bill as 420 would amend it, and another class can 
use bankruptcy law as it exists today, or pick and choose what 
provisions of this new law apply. To allow some group of our citizens, 
no matter how unfortunate, to pick and choose what parts of the law 
will apply to them is absolutely unprecedented.
  The amendment would allow debtors to evade child support, alimony, 
and marital property settlement provisions of this bill that help women 
and children. That is one thing this bill is doing--moving women and 
children, or spouses and children, to the front of the line. The debtor 
who owes child support could evade his basic responsibilities to pay 
child support by fitting under the loophole created by the Wellstone 
amendment.
  This particular amendment would allow debtors to evade the homestead 
exemption caps imposed by this bill.
  The amendment is unworkable. For example, creditors would not know if 
they had to make the truth-in-lending disclosures this bill imposes on 
them until after the debtor files for bankruptcy; yet the disclosures 
must be given in credit card solicitations and on the monthly 
statement.
  The amendment would have the strange effect of apparently exempting 
creditors from complying with consumer protections in this bill, such 
as the reaffirmation reforms, the restrictions on creditors that fail 
to credit plan payments, the privacy protections, and so forth.
  The amendment ignores the basic reality that the bill's primary 
effect is to require debtors who have the means to repay a meaningful 
portion of their debts. In most cases, people who lose their jobs will 
likely not be affected by the means test. For those who still have the 
ability to repay a meaningful portion of their debts--because they are 
independently wealthy, regardless of employment--the fact that the 
person lost a job has nothing to do with whether the debtor can repay a 
meaningful portion of his or her debt.
  We cannot allow this loophole in this legislation. Although I am sure 
the efforts of the distinguished Senator from Minnesota are well 
intentioned and made in good faith, the fact is these amendments would 
do a great deal of harm rather than good and would undermine the 
purposes of this bill and what we are trying to do, which is bring 
honesty and justice to the bankruptcy code.
  I surely hope our colleagues will vote down all three of the 
amendments of the distinguished Senator from Minnesota and that we can 
go forward and, of course, get this bill completed today. I hope we can 
keep all amendments from being on this bill, except perhaps the 
managers' package, which we hope we can work out before final passage.
  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. KOHL. Mr. President, I ask unanimous consent that the order for 
the quorum call be rescinded.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Under the previous order, the hour of 10:30 having arrived, the 
Senator from Wisconsin, Mr. Kohl, is recognized to call up No. 68, on 
which there shall be 90 minutes of debate, equally divided.


                            Amendment No. 68

  Mr. KOHL. Mr. President, I send this amendment to the desk and ask 
for its immediate consideration.
  The PRESIDING OFFICER. The clerk will report.
  The assistant legislative clerk read as follows:

       The Senator from Wisconsin [Mr. Kohl] proposes an amendment 
     numbered 68.

  Mr. KOHL. Mr. President, I ask unanimous consent reading of the 
amendment be dispensed with.

[[Page 3722]]

  The PRESIDING OFFICER. Without objection, it is so ordered.
  (The text of the amendment is printed in today's Record under 
``Amendments Submitted.'')
  Mr. KOHL. Mr. President, I rise today to offer an amendment with 
Senator Feinstein to eliminate the most flagrant abuse of the 
bankruptcy system--the unlimited homestead exemption.
  The homestead exemption allows debtors in five states to purchase 
expensive homes and shield millions of dollars from their creditors. 
All too often, millionaire debtors take advantage of this loophole by 
buying mansions in states with unlimited exemptions like Florida and 
Texas, and declaring bankruptcy--yet continuing to live like kings. Our 
amendment will generously cap the homestead exemption at $125,000--that 
is, it permits a debtor to keep $125,000 of equity in his home after 
declaring bankruptcy.
  The Senate voted on our amendment last session 76-22 after rejecting 
an amendment that would have gutted our amendment by a vote of 69-29. 
That was the right thing to do then, and it is the right thing to do 
now.
  Let me give you a few of the numerous examples of rich debtors taking 
advantage of this loophole:
  Abe Gosman, a health care and real estate magnate, declared 
bankruptcy last week in Florida citing debts of over $233 million. 
Despite these debts incurred from business losses in Massachusetts and 
Rhode Island, he will hold onto his 64,000 square foot mansion in West 
Palm Beach on a street known as ``Billionaire's Row.''
  This January, convicted Wall Street financier Paul Bilzerian filed 
bankruptcy for the second time while owing at least $140 million in 
debts, but still kept his $5 million, 37,000 square foot Florida 
mansion.
  Movie star Burt Reynolds wrote off more than $8 million in debt 
through bankruptcy, but still held onto his $2.5 million estate, named 
Valhalla.
  Sadly, those examples are just the tip of the iceberg. We asked the 
General Accounting Office to study this problem. They estimated that 
400 homeowners in Florida and Texas--all with over $100,000 in home 
equity--profit from this unlimited exemption each year. While they 
continue to live in luxury, they write off an estimated $120 million 
owed to honest creditors. A Brown University study estimated that 3 
percent of all people who move to Texas and Florida are motivated by 
bankruptcy concerns.
  Opponents of this amendment will say that while their hearts are with 
us on this issue, there is a compromise in this bill that is 
satisfactory. That is, they simply require someone be a resident of a 
state for 2 years. Unfortunately, that so-called compromise is so 
watered down that it doesn't accomplish anything. Instead, it bends 
over backwards for millionaire debtors who are trying to evade their 
creditors.
  There are several ways that the current provision fails. First, it is 
easily evaded. It lets anyone who has had their home for more than two 
years to take advantage of the homestead loophole. Bankruptcy 
professors throughout the nation have written us to say that any decent 
bankruptcy planner will be able to stall for two years while their 
client squirrels money away in a mansion and away from creditors. If 
you can afford a multi-million dollar house, you can afford an attorney 
good enough to get around this provision.
  Second, the provision would do absolutely nothing to catch the 
wealthy debtor who already lives in Florida, Texas, or three other 
states. Former Governor John Connally, who hid millions from his 
creditors in Texas, and Burt Reynolds, who shielded $2.5 million in 
Florida, do not deserve their mansions any more than people who just 
moved to Florida from Wisconsin or California.
  For these reasons, Mr. President, the provision in the bill is just 
not good enough. It is a blueprint for rich debtors. It shows them how 
to dodge their creditors. Avoiding personal responsibility and using 
the bankruptcy laws as a method of financial planning is contrary to 
the stated purpose of this bill. A hard cap is not only the best 
policy; it also sends the best message: bankruptcy is a tool of last 
resort, not financial planning. And it gives credibility to reform by 
targeting the worst abusers, no matter how wealthy.
  This is a simple idea that makes sense. There is no greater 
bankruptcy abuse than this. Last Congress, an overwhelming number of 
our colleagues agreed with us and voted to cap the homestead exemption 
by a vote of 76-22. The vote this year is exactly the same as the one 
last Congress. If you were against rich debtors avoiding their 
creditors last time, then you should be against rich debtors avoiding 
their creditors this time.
  Mr. President. I reserve the remainder of my time.
  The PRESIDING OFFICER. Who yields time? The Senator from Utah, Mr. 
Hatch.
  Mr. HATCH. Mr. President, one of the most difficult aspects of this 
bankruptcy bill we have had is trying to resolve the problems with 
regard to home ownership and homestead exemption. It has been a very 
difficult problem and we have worked on both sides of Capitol Hill to 
try to come up with a solution that will work. Frankly, the solution we 
have come up with is in this bill, basically recognizing the States 
have the right to set the homestead cap rather than the Federal 
Government.
  My distinguished friend, Senator Kohl, is trying to change that with 
this amendment. This amendment jeopardizes bankruptcy reform by 
stripping out the bipartisan compromise homestead provision that we 
have worked out over a long period of time, over many years. This 
bipartisan compromise homestead exemption is in the bill, and the 
distinguished Senator from Wisconsin would require home equity, 
wherever acquired, that exceeds $125,000, will be subject to collection 
under the bankruptcy code. The bipartisan compromise homestead 
provision now in the bill substantially improves current law by 
requiring home equity acquired within 2 years before bankruptcy, not to 
exceed $100,000, to be subject to crediting in a bankruptcy estate.
  What the code does is prohibits individuals from shielding more than 
$100,000 in new equity in their home--paying down the mortgage, 
building an addition--if that new equity was obtained within 2 years of 
filing.
  Finally, the compromise would disallow any acquisition of homestead 
property within 7 years of filing if done to ``delay, hinder, or 
defraud'' a creditor.
  The amendments proposed by Senators Kohl and Feinstein would add no 
additional antifraud protection and would, instead, threaten final 
passage of the bankruptcy bill. The Bush administration supports the 
existing homestead language contained in the underlying bill, the 
compromise that we have all worked out, and the Kohl-Feinstein 
amendment is opposed by the National Governors' Association and the 
National Conference of State Legislators. I think we would be very 
wrong to go against allowing the States to set their own standards in 
this area.
  Some States will have different standards than others, but it is up 
to the States. If they set the standards too high or too low, they are 
going to suffer as a result of it. They will gradually get it right. 
But for us to arbitrarily set a homestead exemption standard here in 
the Senate, in this bankruptcy bill, is the wrong thing to do. I prefer 
to leave it up to the States.
  I hope our colleagues will vote against this homestead exemption 
language of the distinguished Senator from Wisconsin.
  With that, I yield the floor.
  The PRESIDING OFFICER. The Senator from Wisconsin, Mr. Kohl. 
  Mr. KOHL. Just briefly, to respond to Senator Hatch, bankruptcy is a 
Federal proceeding that occurs in Federal courts, so there is every 
logical reason to have Federal standards. Right now, there are only 
five States with an unlimited exemption--Florida, Texas, South Dakota, 
Nebraska, and Iowa--and only two States have one over $125,000, and 
that is $200,000. Those two States are Minnesota and Massachusetts. 
Every other State has an exemption of $125,000, which is ours, or less.

[[Page 3723]]

The argument that every State should be allowed to set an unlimited 
exemption if they so wish is not logical because it is not a States 
rights issue. Bankruptcy is a Federal issue.
  I think that argument doesn't hold water. Again, I point out the 
exemption that has been worked out simply says that a person would have 
to have 2 years residency in any one of these five States, and then 
they could shield an unlimited amount in a home in a bankruptcy 
proceeding. As I said in my earlier statement, it is very easy to work 
a 2-year residency while you are planning to have a bankruptcy 
proceeding. Furthermore, it does nothing to address the issue of people 
who currently live in those five States--maybe for 5 years, 10 years, 
15 years, or 20 years. They would have the opportunity to shield an 
unlimited amount in a home.
  This is a very simple amendment. We debated it 2 years ago, and by a 
76-22 margin, the Senate accepted that amendment 2 years ago. We are 
simply requesting that same expression of the Senate's intent be stated 
again today.
  I reserve the remainder of my time.
  Mr. HATCH. Mr. President, 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. BROWNBACK. Mr. President, I ask unanimous consent the order for 
the quorum call be dispensed with.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  The Senator from Kansas. Who yields time to the Senator?
  Mr. BROWNBACK. Mr. President, I rise to speak against the amendment.
  Mr. HATCH. I will be happy to yield 10 minutes to the Senator.
  The PRESIDING OFFICER. The Senator from Kansas.
  Mr. BROWNBACK. I thank the chairman of the committee for yielding the 
10-minute time for me to speak on this topic.
  Mr. President, we have an issue that has been worked on extensively. 
I appreciate my colleague from Wisconsin bringing this back to the 
floor this year. We had spirited debate and discussion on it last year. 
We had an aggressive effort to work this out in conference. We did--I 
don't think to everybody's satisfaction--but there are a number of 
people on that side of the aisle and our side of the aisle who thought 
this was an area that should be addressed.
  I personally think this is an area that should be left in the State's 
constitution and away from bankruptcy law the way it has been for 132 
years, and I continue to believe that now. But what has come forward 
has been a compromise that has been worked out by a number of people 
who worked on the bankruptcy issue, people of good faith from different 
perspectives, and that compromise is in the bill.
  The chairman of the committee spoke about what that compromise was. 
To deviate from that will cause a number of us to then say that is 
something with which we will not be able to live. I personally will be 
voting against the bill if that is in it, and I will fight this bill 
coming back in any form from conference if it has this new language in 
it.
  I respect the thoughts on the part of my colleague from Wisconsin. I 
know his heart is good and clear on this.
  But there is another matter here for me; that is, Kansas, along with 
a number of other States, has put in the State constitution a homestead 
provision that says you are entitled to be able to keep your home and 
160 contiguous acres. This dates back to the period of homesteading, 
which Kansas, the State of Nebraska, and the United States granted to 
people. It said, if for 5 years you can go out there and tame 160 acres 
and build a home, you get to keep it. It is yours. That is your 
homestead. We settled much of the Midwest in that way--not all of it. 
It was settled that way.
  Over succeeding years, a number of farmers would borrow against the 
land. They would say, I need to buy fertilizer, or seed, or some stock 
and cattle to put on it. They would borrow against the land. Then a bad 
market would hit, or bad weather would hit, and they would lose the 
land. So a number of States built not just in their laws but their 
constitution a law to say you can protect your home and 160 contiguous 
acres so you can farm again.
  This was very much thought through, and it has been used a lot--even 
as recently as the eighties in Kansas. This provision was used 
extensively by farmers who lost most of their land, most of their 
machinery, and most of their livestock. But they could keep the home 
and 160 acres to be able to start farming again.
  At that time, I did a number of foreclosures for farmers, defending 
farmers, and bankruptcy work for farmers. A number of them lost 
everything but the home and 160 acres. Today they are still out there 
farming--some because they were able to protect it. They were able to 
continue and start farming again.
  A compromise has been carefully worked out in this legislation that 
says we are not going to let people defraud others, or try to protect 
more than they are entitled to, and we are going to continue to allow 
States 2 years out--people who have lived there for more than 2 years--
to protect what the State law would allow you to protect.
  In my State, 160 acres is your homestead; or, in town, a home and 
one-half acre. That is in our law and the constitution of the State of 
Kansas. I think that is fully appropriate. It is fair. I think it is 
right, and it is what a number of States have done.
  I point out some of the States that have worked on this either in 
their constitution or in their laws--Florida, Iowa, Kansas, South 
Dakota, Texas, Oklahoma, Minnesota, and Massachusetts. And there are 
other States that have different provisions as well.
  We have had a Federal bankruptcy law for 133 years that has not 
addressed this issue and has said this should be left to what an 
individual State would decide. If California or Wisconsin or Kansas 
want to do this differently within their State, we will let the State 
determine what they want to do. I think it is important we allow that 
provision to continue. The effect of this would be that the Federal 
Government identifies this law and would say for the first time in 133 
years that we are going to take up this issue.
  There have been a few high profile instances of abuse of the 
homestead exemption. Debtors have moved to other States to take 
advantage of a higher exemption in that State or have transferred 
assets of the homestead to shield them. Those are, by far, the 
exception rather than the rule.
  I can tell you that during the 1980s during the bankruptcy crisis in 
Kansas they weren't moving. Some were trying to shield assets but most 
were trying to hold onto enough so they could start farming again. That 
is, by far, the typical situation, while there have been some high 
profile cases where it has been different. In fact, a recent survey of 
bankruptcies by the Executive Office for the United States Trustees 
said they ``did not find a single debtor who came close to the popular 
stereotype of homestead abuse. Our conclusion is that this is a 
relatively rare phenomenon in bankruptcy.''
  For every Burt Reynolds-type example out there, there are hundreds of 
honest, middle-class people who find themselves in financial trouble 
who would be forced to move out of their homes or off their farms under 
this particular well-meaning amendment. As well meaning as it may be, 
it is going to hit them, and it is going to harm them.
  What is in the bill now to end homestead abuse?
  The bill now contains compromise language on the homestead issue that 
was adopted during the debate on the bill last year. That was approved 
by the Senate as part of the overall bill by a 70-vote margin. We 
worked a long time to get this language worked out. There were a lot of 
parties involved. We were able to get it through by a 70-vote majority. 
Taken together, the protections against homestead abuse contained in 
the bill virtually guarantee that the few instances of true abuse will 
never occur again.
  They include a cap of $100,000, indexed to inflation, on any new 
equity

[[Page 3724]]

obtained in the homestead within 2 years of filing for bankruptcy. 
Thus, a debtor would not be able to shield a $200,000 addition to a 
house built within 2 years of filing. This would, however, leave the 
large majority of homeowners unaffected since very few homeowners can 
expect to acquire more than $100,000 in equity within a 2-year period.
  The bill requires that, before a debtor can use the homestead 
exemption in a particular State, he or she must have resided in that 
State for no less than 2 years. This will prevent the problem of 
``forum shopping'' by bankruptcy filers.
  If you are trying to plan bankruptcy and looking more than 2 years 
out, that is a pretty aggressive effort. And, like I said, from the 
Bankruptcy Trustees' perspective in their study, they don't find any 
cases of this abuse, and there is a relatively very rare phenomenon of 
that.
  The bill contains a heightened scrutiny of any transfer of assets to 
the homestead made within 7 years of filing for bankruptcy done to 
``delay, hinder, or defraud'' creditors--for example, getting cash from 
a credit card to fraudulently pay-down a mortgage before filing for 
bankruptcy.
  The bill now makes it very hard for anyone who makes or who can make 
above the national median income to even file chapter 7, where the 
homestead exemption is at issue. This effectively guarantees that high-
income debtors will not be able to shield their assets in their home 
and discharge their debts.
  Finally, these and other general provisions of the bill and of 
existing law grant any bankruptcy judge in the country the power to 
disallow the use of the homestead or any other exemption, if it is 
being used improperly to shield assets. The bankruptcy judge can step 
in as well and say: No. I am not going to allow this to take place.
  With all of these protections against abuse or fraud, one can only 
conclude that this amendment will have the effect of forcing middle-
class Americans to sell their homes if they encounter financial 
difficulty.
  As I stated, if this gets in the bill, I will be voting against the 
overall bankruptcy bill, and I will be fighting against it coming out 
of conference. I will be fighting against it in conference and on the 
floor by every means possible. It is in the Kansas Constitution. Their 
right of a homestead is in it. It is in the constitution of several 
States. It is something that has been used by farmers for generations 
and will continue to be used.
  For those reasons, I will adamantly oppose the Kohl amendment, with 
as much respect as I have for the Senator from Wisconsin and his heart 
and his desire to see that people do not fraudulently keep too many of 
their assets. But it is going to have a detrimental impact on my State. 
I cannot support that.
  I reserve the remainder of our time.
  The PRESIDING OFFICER. The Senator from Wisconsin.
  Mr. KOHL. Mr. President, I will briefly respond to the Senator from 
Kansas.
  He argues against changing what is in the current bill and is against 
accepting my amendment and believes that farmers would undergo an 
extreme correction.
  This bill and its amendment can be crafted for acceptance on the 
floor today to protect a farmer's exemption. There is a recognition 
that the intention of this amendment is not to impoverish any farmers 
or homesteaders, as Senator Brownback has referred. And if that 
language is not clear enough, we would be more than happy to work out 
the farmer exemption, which is currently in our amendment. The intent 
of our amendment is not to do anything to get at family farmers who 
have owned their land for many years and who would be impoverished 
beyond reasonableness in a bankruptcy proceeding.
  I don't think it is an argument that should be used against this 
amendment because the amendment includes the recognition that farmers 
need an exemption.
  I thank the Chair.
  The PRESIDING OFFICER (Mr. Allard). Who yields time?
  Mr. HATCH. 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. REID. 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. REID. Mr. President, there is an attempt to start some votes in 
about half an hour, at about 11:35. We have a long list of people who 
have germane amendments. If any of those individuals wish to offer 
their amendments, this would be an ideal time to do that. As the day 
wears on, there is going to be less and less time to do that. There may 
come a time when all time has expired and they will not be able to call 
up their amendments.
  So if those people who have germane amendments wish to come and offer 
them, they should do so because otherwise--I have spoken to Senator 
Hatch and Senator Leahy, and we could be finished early this afternoon 
on everything.
  So I think the Senator from Utah would agree, Senators should get 
over here and get moving on these amendments; otherwise, there will 
come a time this afternoon when there will not be any time and we will 
wrap up consideration of the bill.
  The PRESIDING OFFICER. The Senator from Utah.
  Mr. HATCH. I agree with the distinguished Senator. I think we should 
move ahead. I understand there is one other person, the distinguished 
Senator from Texas, who would like to speak on the Kohl amendment. 
After she gets here and gives her remarks, we intend to proceed to a 
vote on the Kohl amendment. Then we will try to stack votes on the two 
Leahy amendments, I think with a minute on each side to explain them, 
if I have that right. So we are hopeful we can move this.
  Mr. REID. If my friend will yield, the mere fact that you have a 
germane amendment does not mean it automatically is protected. There 
are certain procedures that have to be initiated before there can be a 
vote.
  The point is, we have had some down time already this morning. We 
will have some during the noon hour. These amendments could be called 
up.
  So I hope people who have these amendments--they are listed; it would 
be easy to ascertain who they are and what the amendments are--will 
call them up as soon as possible.
  There are some people who have already started calling the Cloakroom. 
They have other things they want to do this evening and tomorrow and 
are asking us when we are going to be able to complete this bill.
  I suggest the absence of a quorum.
  The PRESIDING OFFICER. The clerk will call the roll.
  The legislative clerk proceeded to call the roll.
  Mrs. HUTCHISON. Mr. President, I ask unanimous consent that the order 
for the quorum call be rescinded.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mrs. HUTCHISON. Mr. President, I rise today in opposition to the 
Kohl-Feinstein amendment now before the Senate. I do so because it is 
unwarranted and unwise--it is an intrusion upon well-established State 
constitutions and laws--and because it throws out the window a 
carefully crafted compromise reached last year on this issue that 
virtually guarantees the elimination of any fraud or abuse of State 
homestead exemptions.
  I am pleased to be joined in my opposition to this amendment by my 
colleagues from Kansas and Florida, as well as the managers of the 
bill, Senators Hatch, Grassley, and Sessions, as well as our leader and 
assistant leader, Senators Lott and Nickles.
  Also on our side is the President of the United States who has 
singled out this issue in the bankruptcy debate and who supports the 
existing language in the bill.
  Finally, my colleagues should know that the National Governors' 
Association, the National Conference of State Legislatures, and the 
National Association of Home Builders strongly oppose this amendment.

[[Page 3725]]

  As my colleagues know, this amendment would impose a one-size-fits-
all nationwide cap of $125,000 on all State homestead exemptions in 
bankruptcy. I must confess that I don't think you could, by any stretch 
of the imagination, say that property values in Wisconsin are the same 
as those in Florida or New York the same as those in California or 
Texas the same as those in Kansas. The arbitrary limit runs roughshod 
over the constitution and laws of at least nine States that have 
homestead protection above that amount.
  In my home State of Texas, we don't even mention amount. We go by 
acreage. It is in the State constitution. It has been there for over 
100 years. Other States that have different caps are Kansas, Iowa, 
South Dakota, Oklahoma, Minnesota, and Massachusetts.
  It would also immediately threaten the homestead exemptions of two 
other States, Nevada and California, which are right at the $125,000 
figure that is in their amendment. It would threaten two States, and it 
would, frankly, threaten all States because there is no allowance in 
the amendment for the rate of real estate inflation which we all know 
has been on the rise in recent years.
  This is a States rights issue. We have, for over 130 years, allowed 
the States to set homestead exemptions because, clearly, property 
values are different in different States. Bankruptcy is a Federal 
issue. Homestead exemptions have been allowed to be set by the States 
because we differ in our approach to homesteads and to bankruptcy 
itself. It is important that we address this issue in a way that allows 
States to have the ability to keep their constitutions intact. There is 
no overriding interest for us to run over a State constitution.
  It is very important that we curb fraud and abuse. That is why this 
bill contains the airtight antifraud and antiabuse provisions that it 
does. Under this bill, you must live in a State for at least 2 years 
before you can even avail yourself of that State's homestead exemption. 
Moreover, even if you have lived in a State for more than 2 years, you 
can only protect up to $100,000 in any new equity you obtain in that 
home within 2 years of filing for bankruptcy. This eliminates the 
scenario of someone running to a State, buying a home, putting a lot of 
equity into it, and then filing for bankruptcy.
  It is important that we look at this issue in the bigger picture of 
bankruptcy reform. When we took this amendment up last year, it passed 
overwhelmingly in the Senate. The House was diametrically opposed. The 
House had a State opt-out. That would have been my position, to keep 
States rights in the homestead exemption as it has been for 130 years. 
I would like to have had the House position. I lost on the Senate 
floor.
  When this bill went to conference, this amendment was hammered out in 
a very hard-fought conference negotiation. What was hammered out 
between the two Houses and agreed to by the House and Senate is what we 
have in the bill today.
  Senator Sessions and Senator Grassley were two of those who fought 
hard for the Kohl amendment last year. This year they are saying: Stay 
with the bill so we can keep the compromise that was forged last year 
and so we will have a chance to get in place the other bankruptcy 
reforms that this bill provides.
  They are doing something that I think has great integrity because 
they are saying, we have hammered it out now let's stick to the 
agreement we made. In fact, I urged my colleagues on the House side not 
to go back to their original position because I thought the Senate 
would stick with the bill. I think this goes against what we hammered 
out last year, and the bill was vetoed by President Clinton, so we are 
back this year. But President Bush, who has the ability to veto the 
bill again, has specifically said he hopes the provision that is in the 
bill that would be altered by the Kohl amendment stays in the bill.
  If we vote for the Kohl amendment, we are now putting the bill in 
jeopardy once again, and if we don't prevail in conference with what is 
in the bill today, we could face another delay or, possibly, a veto of 
the bankruptcy reform bill.
  So if you are a Senator who favors bankruptcy reform, you should not 
vote for the Kohl-Feinstein amendment. Instead, you should stick with 
the bill, stick with the compromise that was forged in a bipartisan way 
in Congress last year between the House and the Senate, and let's allow 
States to have the ability to set their own homestead exemptions, 
except in the case of fraud and abuse and in the case of someone who 
moves and in 2 years declares bankruptcy.
  I think the bill provides closure of every loophole that would allow 
someone to come in, buy a big house, declare bankruptcy, and still have 
the big house in which to live. The statistics show that the 
declarations of bankruptcy in the last couple of years have actually 
gone down. So the purpose of the bankruptcy bill has been alleviated by 
the fact that people are not declaring as many bankruptcies.
  What we want to do is provide a fair bill that deals with creditors 
in a fair way but also requires that people pay their debts, if they 
possibly can. That is the purpose of the bankruptcy reform bill. 
Running roughshod over States rights is not a good addition to this 
bill. And, of course, if we do run roughshod over States rights, I 
could not possibly support a bill that would violate my State's 
constitution. It would be unthinkable.
  So I am urging my colleagues to set this to rest once and for all 
with the compromise that was hard fought, but forged, last year between 
the two Houses of Congress, if you believe in real bankruptcy reform. 
If you do, we should not let this amendment derail the whole bill. If 
it passes and if it prevails, it will do so. I hope that does not 
happen.
  Thank you, Mr. President. I yield the floor.
  The PRESIDING OFFICER. The Senator from Wisconsin is recognized.
  Mr. KOHL. Mr. President, I will just respond to the Senator from 
Texas. I think one of the major arguments, if not the major argument, 
she makes is that this amendment is about States rights, in her 
opinion, and that we should preserve States rights.
  I want to make the point that, in my judgment, nothing could be 
further from the truth because anybody who files for bankruptcy is 
choosing to invoke Federal law in a Federal court to get a fresh start, 
which is uniquely a Federal benefit. So in these circumstances it is 
only fair to impose Federal kinds of limits.
  In fact, this bill is full of provisions that do rewrite State law. 
For example, one of the provisions in this bill establishes a Federal 
provision that allows creditors to come into a debtor's home, if 
necessary, to take their stereo and then sell it. So there is no reason 
Federal law should determine if you can keep a stereo but not the 
amount of equity in your house. I believe this argument about States 
rights with respect to a Federal bankruptcy bill just doesn't equate.
  The other point she makes is that we worked out a generous compromise 
and that is the one we should keep. That is the compromise that 
requires 2 years of residency before you can keep the equity in your 
house to the full extent. Bankruptcy professors and practitioners 
across our Nation have told us, and will tell you, that the 2-year 
residency requirement is something that any planner can deal with in 
providing for the bankruptcy of their client. So that is not an 
adequate kind of a resolution, and that is why we are here today to 
make our arguments in favor of this amendment.
  I thank the Chair.
  Mrs. HUTCHISON. Mr. President, I say to the distinguished Senator 
from Wisconsin that I think the fact that we have a 7-year antifraud 
lookback certainly assures that someone who is planning a bankruptcy 
and comes in and makes the 2-year move is still going to be very 
vulnerable. In fact, that was part of the hard-fought compromise.
  That 7-year antifraud lookback means it doesn't matter what else is 
in

[[Page 3726]]

your favor if you have fraudulently tried to come in and, within 5 
years or 6 years--which it would be very hard to plan for--declare a 
bankruptcy; then you can go back 7 years to make sure you catch someone 
who would defraud the court or the debtors and lenders of another 
State.
  Secondly, I think that to take away what has been a State right for 
130 years is against the rest of the States rights that are allowed in 
the exemptions the Federal courts take into account. We don't put a 
limit on the value of personal property. Someone could have a fabulous 
art collection and defraud creditors, perhaps, in one State. We haven't 
taken on that. They could have a great car collection that would not 
have a cap.
  The point is, if someone does this in a fraudulent way, we have steps 
in the bill that can be taken to keep someone from defrauding their 
lender. We take care of that in the bill. But we have different 
property values in different States. We have different valuations in 
personal property, different valuations of cars, and we in this country 
have acknowledged that, very wisely, for the last 130 years.
  It is certainly not unusual but, in fact, oftentimes the Federal 
courts look to the State laws to be the guiding principle. So that is 
not an argument not to allow States rights to prevail as they have for 
130 years in this country.
  So I hope we will look at the bigger picture and keep States rights 
intact. We have amply provided for antifraud provisions in the 
compromise that was forged between the two Houses last year. I hope the 
Senate will stick with that compromise and keep the integrity of the 
bill.
  The PRESIDING OFFICER. The Senator from Wisconsin is recognized.
  Mr. KOHL. Mr. President, I want to respond briefly. There is in the 
bankruptcy code today a limit on cars. I think it is $5,000. There is a 
limit on art, along with other provisions, which I think is at $8,000. 
The claim that you can shield an unlimited amount of art, or a fabulous 
car collection, in a bankruptcy proceeding today is simply not true.
  Mrs. HUTCHISON. Mr. President, I will respond by saying the States 
set their own limit on personal property.
  The PRESIDING OFFICER. The Senator from Utah is recognized.
  Mr. HATCH. Mr. President, I understand the distinguished Senator from 
Florida would like to speak prior to the vote. How much time does the 
Senator desire?
  Mr. GRAHAM. Ten minutes.
  Mr. HATCH. And the distinguished Senator from Wisconsin would like 
some time to respond?
  Mr. KOHL. I am prepared to yield my time if we want to vote.
  Mr. HATCH. I ask unanimous consent after the 10 minutes of the 
distinguished Senator from Florida, all time be yielded back in 
relation to the pending Kohl amendment; that further, the Senate 
proceed to a vote in relation to the amendment at that time, which 
would be approximately 11:41, to be immediately followed by a vote in 
relation to the Leahy amendment numbered 41.
  Finally, I ask consent that the second vote in the series, that is, 
the Leahy amendment, be limited to 10 minutes.
  Mr. REID. Reserving the right to object.
  The PRESIDING OFFICER. The Senator from Nevada.
  Mr. REID. I will not object other than to inform Senators that it 
appears, following the two votes, Senator Boxer will be over to offer 
her amendment. Then we really don't have many amendments remaining. 
Senator Feingold has two amendments and he has tentatively agreed to 
time agreements. We have Wellstone amendments of which we have to 
dispose. I don't know if he will offer more, but we have at least three 
votes there. Senator Leahy has a number of issues to be resolved and, 
of course, Senator Sessions. We need to work on matters he wants to 
bring up. We are getting down to the end of this bill. With a little 
bit of luck, we could be completed late this afternoon.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. NELSON of Florida. Mr. President, the Florida Constitution grants 
the citizens of my State unlimited protection of the equity in their 
homes. I think we can all agree that this provision was not created so 
that wealthy, non-resident debtors could escape their obligations. The 
provision was created because the people of my State understood the 
importance of preserving a debtor's most essential asset, their home.
  I do not think that a previously wealthy person should have the right 
to purchase a very expensive home in order to shield his remaining 
assets from creditors, and I do agree that we must address homestead 
abuse. But, we should not take away the homes of innocent debtors who 
have worked hard to build equity in their homestead. The median income 
of debtors in bankruptcy is $22,000 per year. Working people in that 
income range do not have the ability to shelter a significant amount of 
money in a home.
  My State has many retirees from around the country. Many have worked 
their entire lives to own their own home and under the Kohl amendment 
they may lose their residence even though they fell into hard times 
through no fault of their own. Forcing a bankrupt retiree out of her 
home simply because she has more than $125,000 in equity does not meet 
any standard of fair play.
  The $125,000 cap proposed by this amendment does not adequately 
represent the value of homes in Florida today and certainly will not 
reflect the value of homes five years from now. The Kohl amendment's 
catch-all, national cap ignores the differences in property value that 
vary not only from State to State, but also from city to city. 
Furthermore, the amendment unfairly lumps long-time residents and 
retirees into the same category as abusers who move to the State one 
day and file for bankruptcy the next.
  The current language of S. 420 avoids these problems by protecting 
homeowners who have fallen on hard times, but who have worked and 
played by the rules in a State for more than 2 years. The current 
language is clear, if you move to a State simply to avoid paying your 
creditors you will not be protected and you should not be protected. 
However, people who play by the rules will have a real chance to start 
over without losing the equity in their homes.
  I ask my colleagues today to protect the home equity of those debtors 
who legitimately need a fresh start by opposing this amendment.
  Mrs. FEINSTEIN. Mr. President, I rise in support of the Kohl-
Feinstein amendment to cap the homestead exemption at $125,000 for all 
States, and to eliminate from our bankruptcy laws a loophole so large 
that you could fit a $50 million mansion right through it.
  This amendment will correct a longstanding discrepancy between the 
States, a discrepancy that on the one hand forces most debtors to 
struggle to pay back every dime they owe, but on the other hand allows 
many of the most ``wealthy'' debtors declaring bankruptcy to shield 
their assets in multi-million dollar homes.
  The discrepancy I speak of occurs because in five States, Florida, 
Texas, South Dakota, Iowa and Kansas, where debtors are allowed to keep 
their homes no matter what they owe, or to whom they owe it, and no 
matter how much the home is worth.
  The ``homestead'' laws in these five States differ radically from the 
other 45:
  Many States have virtually no homestead exemption at all. In 
Michigan, for instance, the cap is $3,500; in Pennsylvania, just $300.
  Other States, recognizing a benefit in allowing debtors some ability 
to remain in their homes as they dig out of bankruptcy, place slightly 
higher caps on their homestead exemptions and allow debtors to keep 
$15,000, $30,000, $60,000, or even $75,000 equity in their homes.
  My own State of California has a sliding scale cap, ranging from 
$75,000 for most debtors to $125,000 for seniors.
  Massachusetts and Minnesota have relatively high caps of $200,000, 
and Minnesota's cap even goes to $500,000

[[Page 3727]]

for farms, the highest cap of all the States that have at least some 
restriction on how much equity can be protected.
  A vast majority of the 50 States have homestead caps of under 
$125,000, and this bill would do nothing to affect those States.
  The glaring exceptions are those five cases where a State has chosen 
to allow debtors to hide assets in luxury homesteads and essentially 
avoid their obligations under Federal bankruptcy law.
  What does this mean? This means that wealthy debtors facing 
bankruptcy can take their remaining assets, buy a home in one of those 
five States, and tell their creditors to get lost. Their assets are 
protected permanently.
  Let me give an example of homestead abuse that has been highlighted 
in the press and even on ``Sixty Minutes.''
  When this Wall Street financier and convicted felon finally declared 
bankruptcy, he listed more than $140 million in debts and only $15,805 
in assets.
  But one particular asset was not itemized, and the financier was not 
obligated to itemize it. That asset was his 37,000 square foot Florida 
mansion, worth an estimated five to $6 million.
  This ``house'' has ten bedrooms, two libraries, a business center, a 
double gourmet kitchen, an indoor squash and racquetball court, an 
indoor basketball court complete with electronic scoreboard, a private 
movie theater, full weight and exercise rooms, a swimming pool, a spa, 
an outdoor entertainment area, game rooms, a nine-car garage, a 
lakefront gazebo, an elevator, 21 bathrooms, and a 6,000 square foot 
quest house.
  The quest house alone has been described as a mansion in and of 
itself.
  But in Florida, the entire home, 21 bathrooms and all, as well as the 
property on which it sits, is completely exempt from the bankruptcy 
laws. The ``bankrupt'' financier owes millions, but through careful 
planning he can continue to live like a king.
  Meanwhile, his creditors can only stand outside the gates of the home 
and look with awe upon the home they paid for--$140 million in debts, 
and nothing his creditors can do.
  And this case is not all that unique. Actors, Wall Street financiers, 
participants in felonious savings and loan scandals, and others, all 
have taken advantage of the homestead exemption loophole.
  Essentially, these five States act as heavens for the most determined 
avoiders of debt, an escape of last resort for wealthy individuals who 
play fast and loose with their money.
  A General Accounting Office study of bankrupt debtors who take 
advantage of the homestead loophole in Florida and Texas alone found 
that each year more than 400 wealthy debtors are able to protect more 
than $100,000 in equity in their home, at a cost to creditors of $120 
million.
  The bankruptcy reform bill as a whole attempts to increase personal 
responsibility by forcing more people to repay more of their debts. 
This goal is a good one, but the bill as drafted sends mixed signals.
  To poor debtors struggling to climb out of bankruptcy and to simply 
put a roof over the heads of their family, the bill takes a stern view, 
debts must be paid back, assets must be sold, and you'll face some hard 
years ahead.
  To more sophisticated debtors, many of whom had every advantage 
before making the bad, or even criminal, decisions that led to 
bankruptcy, the bill says that with a little planning, you can get away 
scot free.
  This is just plain wrong.
  This bankruptcy bill forces lower- and middle-class families to give 
up the family computer in many instances.
  The bill takes your second television set and even family heirlooms.
  The bill requires most debtors to enter strict payment plans to pay 
back even extraordinary medical or other debts incurred due to 
circumstances beyond their control.
  Yet the homestead exemption allows sophisticated debtors to avoid 
repayment entirely.
  This must be changed.
  That is why Senator Kohl and I are proposing a cap of $125,000. For 
States that already have a cap of or below that $125,000 level, and 
this is almost every State in the Union, this amendment will do nothing 
to change current bankruptcy proceedings.
  For those few States that have chosen to provide a safe haven for 
debtors fleeing from their creditors, this amendment will create a new, 
national cap that must be followed.
  The last time the Senate considered a homestead cap, an even lower 
$100,000, we approved of the cap by an overwhelming margin.
  The provision was watered down during a shadow conference so that in 
the end, the conference report and now this bill do virtually nothing 
to prevent debtors from shielding millions of dollars in luxurious 
mansions.
  Some will argue that the current bill does provide a ``compromise'' 
homestead exemption cap.
  As drafted, that cap only applies if a debtor purchases a home within 
two years of bankruptcy. Any good bankruptcy attorney will tell you 
that this provision can be easily avoided. In fact, dozens of 
professors and attorneys have told us just that. I ask unanimous 
consent that their letter be printed in the Record after my remarks.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  (See Exhibit 1.)
  Mrs. FEINSTEIN. Under this so-called ``compromise'' language, as long 
as a debtor plans a couple of years in advance, or already lives in one 
of those five States, there is no cap. This is a very soft cap, indeed.
  So the current language in the bill does not represent a real 
compromise, it does little to stop wealthy debtors from protecting 
their assets through bankruptcy and living the rest of their lives in 
luxury, while leaving their creditors with nothing.
  Bankruptcy is a federal matter. In fact, our Constitution explicitly 
gives Congress the right to establish ``uniform laws on the subject of 
bankruptcies throughout the United States.''
  So this Congress is constitutionally authorized, even obligated, to 
see that bankruptcy laws are fair and uniform throughout our Nation.
  We must ensure that bankruptcy is a refuge of last resort for those 
truly in need of a fresh start, not just another financial planning 
tool to help felons and deadbeats protect their assets from creditors.
  This bill rightly encourages responsibility for those who enter 
bankruptcy, so that those who can pay their debts, do pay their debts.
  But we must encourage responsibility across the board, not just for 
those who cannot afford a god accountant or don't happen to live in 
Texas, Florida, Iowa, South Dakota or Kansas.
  I urge my colleagues to support his amendment. I thank my 
distinguished colleague, Senator Kohl, for working so diligently on 
this amendment.

                               Exhibit 1

                                                 October 30, 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 91 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.

[[Page 3728]]

     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 September 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 ``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. 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 91 law professors.]

  Mr. HATCH. I ask for the yeas and nays on the Kohl amendment.
  The PRESIDING OFFICER. Is there a sufficient second?
  There is a sufficient second.
  The yeas and nays were ordered.
  The Senator from Florida is recognized for 10 minutes.
  Mr. GRAHAM. Mr. President, for 133 years, since Congress established 
a Federal personal bankruptcy law, there has been a recognition that 
the law is a balance of the interests of the National Government in 
uniformity and the interests of the States in terms of local values and 
circumstances. Federal law presently allows States, for instance, to 
establish how much of their residents' property can be protected or 
exempt from seizure during bankruptcy.
  This delicate relationship tests our fundamental commitment to the 
concept of federalism. Everybody is for federalism. Everyone favors 
more local control, placing decisions closest to those who are 
involved, until it begins to affect a specific interest of their own. 
Then they become what I refer to as ``situational federalists.'' If the 
situation does not result in a conclusion that is to your liking, you 
decide that federalism becomes a lesser value.
  We are being tested today on, do we believe, as this Congress has for 
133 years, that personal bankruptcy should be a balance of the 
interests of uniformity at the national level, but recognize the 
legitimate interests of the States and their citizens in protecting 
certain important values.
  Since most of the creditor-debtor relationships tend to be within a 
single State, this is an issue in which States have had to make the 
same kinds of hard choices that we have been dealing with in 
consideration of this bill: How to set the proper balance between the 
person who has indebted himself and who is now unable to meet their 
responsibilities against the person who has extended that credit.
  Many States, including my own, have placed such an importance on 
protecting the value of the residence in which an individual lives that 
they have enshrined that in their State constitution.
  I have the following commentaries on the amendment before us as it 
relates to that Federal-State balance. The amendment makes no allowance 
for the wide variance in property values from State to State. There are 
places in America where if you live in a home valued at $125,000, it is 
a veritable mansion. There are other places in America where a home 
valued at $125,000 meets minimum adequacy standards. This bill provides 
only one standard to cover the wide range of circumstances.
  The standard itself, even by national standards, is inadequate. The 
national average value of existing single family homes in the United 
States of America is $176,000, $51,000 higher than the proposed cap on 
the amount that can be exempt from foreclosure in bankruptcy. This 
amendment would threaten home ownership for millions of American 
families.
  States also have given special recognition to individual classes of 
persons as it relates to the exemption. For

[[Page 3729]]

instance, some States have recognized a different standard for seniors 
or disabled citizens and providing additional homestead protection when 
they experience a serious illness or other financial crisis. We know, 
for instance, that seniors tend to have a higher proportion of their 
net worth in the equity of their home, typically because they have been 
living in the home for an extended period of time and have paid down 
the mortgage. The circumstance of older Americans will become more 
pronounced in the immediate future because within two decades 54 
million Americans will be 65 years of age or older. An estimated two-
thirds of these seniors will own their own homes free and clear.
  This amendment makes no allowance for real estate inflation. In the 
last few years, parts of America have been experiencing a real estate 
inflation on residential housing above 10 percent per year. Fewer and 
fewer States will be able to protect home and farm ownership in the 
same way they do now as real estate purchasing power of the $125,000 
limit contained in this amendment is eroded by inflation.
  As the Senator from Texas has already stated, this bill does not 
ignore, is not unmindful of this balance between the National 
Government's interest in uniformity and the State's interest in the 
particular circumstances of its citizens. This bill contains 
compromised language on the homestead issue which was adopted during 
debate on the bill last year and has already been approved once by the 
Senate.
  As an example, in this bill before the Senate, without the amendment 
that has been proposed, the homestead exemption would be capped at 
$100,000, with an inflation adjustment provision for any property 
purchased within 2 years of filing for bankruptcy. So the case that is 
frequently cited as the reason to require this amendment, the person 
who rushes into a State such as mine which has an exemption of the 
residential property from bankruptcy in the last moments before they 
declare, will not be the case. If you have not owned that home for 2 
years before declaring bankruptcy, your exemption is limited to 
$100,000 adjusted for inflation.
  There is a further requirement before a debtor can use the homestead 
exemption in a particular State that he or she must have been a 
resident of that State for more than 2 years--again, an appropriate 
recognition of the national desire for uniformity.
  Additionally, these and other provisions of the bill and of existing 
law grant any bankruptcy judge in the country the power to disallow the 
use of the homestead or any other exemption if it is being used 
improperly to shield assets.
  So this legislation contains effective barriers to inappropriate use 
of the homestead exemption while recognizing the 130-year theory of 
Federal relationship within the personal bankruptcy law between 
national uniformity and State values.
  This amendment tests our commitment to the fundamental principle of 
federalism. The States and the Federal Government share in the 
responsibility for developing and applying our bankruptcy code. In my 
judgment, this amendment distorts that relationship. The provisions 
that are already in the bill honor federalism.
  The PRESIDING OFFICER. The Senator from Kansas.
  Mr. BROWNBACK. Mr. President, I move to table the Kohl amendment.
  The PRESIDING OFFICER. There is still time remaining. That motion is 
not in order at the present time.
  Mr. KOHL. Mr. President, I request just 1 minute.
  Mr. HATCH. I request the Senator have 1 minute.
  Mr. KOHL. I will respond to some of the comments made by the 
distinguished Senator from Florida.
  We need to recognize there is no question in this legislation that we 
have every right and have, in fact, asserted a Federal right in 
bankruptcy legislation. We have done it in many cases in this 
legislation. To suggest we do not have the right or it is improper to 
assert in bankruptcy a Federal right in establishing a minimum amount 
to shield a home just is not consistent with the rest of this 
legislation.
  I also want to point out that the $125,000 limit we imposed is 
negotiable in conference to $150,000 to $200,000. There are only five 
States with unlimited exemptions. There are only two States with 
exemptions in excess of $125,000--Minnesota and Massachusetts, which 
have $200,000. So it is not difficult to correct any of these problems 
in conference.
  Again, by a vote of 76-22 2 years ago, we accepted this amendment. I 
am requesting and hoping the Senate will again vote to accept this 
amendment today.
  I yield the floor.
  The PRESIDING OFFICER. Does the Senator yield back his time?
  Mr. KOHL. I yield back my time.
  The PRESIDING OFFICER. The Senator from Kansas.
  Mr. BROWNBACK. Mr. President, I move to table the Kohl amendment and 
I ask for the yeas and nays.
  The PRESIDING OFFICER. Is there a sufficient second?
  There appears to be a sufficient second.
  The question is on agreeing to the motion to table amendment No. 68.
  The clerk will call the roll.
  The legislative clerk called the roll.
  Mr. FITZGERALD (when his name was called). Present.
  The result was announced--yeas 39, nays 60, as follows:

                      [Rollcall Vote No. 30 Leg.]

                                YEAS--39

     Allard
     Allen
     Bennett
     Bond
     Brownback
     Bunning
     Burns
     Campbell
     Cochran
     Craig
     Crapo
     Ensign
     Enzi
     Frist
     Graham
     Gramm
     Grassley
     Gregg
     Hagel
     Hatch
     Hutchinson
     Hutchison
     Inhofe
     Kyl
     Lott
     Lugar
     Miller
     Murkowski
     Nelson (FL)
     Nickles
     Roberts
     Sessions
     Shelby
     Smith (NH)
     Stevens
     Thomas
     Thompson
     Thurmond
     Voinovich

                                NAYS--60

     Akaka
     Baucus
     Bayh
     Biden
     Bingaman
     Boxer
     Breaux
     Byrd
     Cantwell
     Carnahan
     Carper
     Chafee
     Cleland
     Clinton
     Collins
     Conrad
     Corzine
     Daschle
     Dayton
     DeWine
     Dodd
     Domenici
     Dorgan
     Durbin
     Edwards
     Feingold
     Feinstein
     Harkin
     Helms
     Hollings
     Inouye
     Jeffords
     Johnson
     Kennedy
     Kerry
     Kohl
     Landrieu
     Leahy
     Levin
     Lieberman
     Lincoln
     McCain
     McConnell
     Mikulski
     Murray
     Nelson (NE)
     Reed
     Reid
     Rockefeller
     Santorum
     Sarbanes
     Schumer
     Smith (OR)
     Snowe
     Specter
     Stabenow
     Torricelli
     Warner
     Wellstone
     Wyden

                        ANSWERED ``PRESENT''--1

       
     Fitzgerald
       
  The motion was rejected.
  Mr. HATCH. Mr. President, I move to vitiate the yeas and nays.
  The PRESIDING OFFICER (Mr. Bunning). Without objection, it is so 
ordered.
  The question is on agreeing to amendment No. 68.
  The amendment (No. 68) was agreed to.
  Mr. LEAHY. Mr. President, I move to reconsider the vote.
  Mr. HATCH. I move to lay that motion on the table.
  The motion to reconsider was laid on the table.


                 Vote on Amendment No. 41, As Modified

  The PRESIDING OFFICER. The question now is on agreeing to the Leahy 
amendment No. 41, as modified. The yeas and nays have been ordered. The 
clerk will call the roll.
  Mr. LEAHY. Mr. President, parliamentary inquiry: Was there not time 
reserved of 1 minute before the vote?
  The PRESIDING OFFICER. The 2 minutes were vitiated by the last 
unanimous consent agreement.
  Mr. LEAHY. Mr. President, I ask unanimous consent that I have 1 
minute and the Senator from Utah have 1 minute.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  The Senator from Vermont.
  Mr. LEAHY. I thank my friend from Kentucky.
  Mr. President, our amendment protects the identity of minor children 
in bankruptcy court records. It permits a debtor to withhold the name 
of a minor child in the public record, especially as

[[Page 3730]]

these records go on the Internet where anybody who wants the names and 
addresses of children can find them. To prevent fraud, it permits the 
judge, or trustee, or an auditor to review a child's name in a 
nonpublic record.
  The amendment is modest, but it is a first step in protecting 
personal privacy and protecting criminal activity through the 
unnecessary disclosure of personal information. We know, unfortunately, 
that there are people who prey on children who are out there. What my 
friend from Utah and I are trying to do is to prevent their access to 
these names.
  The PRESIDING OFFICER. The Senator from Utah.
  Mr. HATCH. Mr. President, this is a good amendment. It protects the 
privacy of minors. It is just one of the steps the distinguished 
Senator from Vermont and I are taking to try to protect privacy rights. 
I recommend everybody vote for this amendment.
  I yield back the remainder of my time.
  The PRESIDING OFFICER. All time is yielded back. The question is 
agreeing to the Leahy amendment No. 41, as modified. The yeas and nays 
have been ordered. The clerk will call the roll.
  The assistant legislative clerk called the roll.
  Mr. FITZGERALD (when his name was called). Present.
  The result was announced--yeas 99, nays 0, as follows:

                      [Rollcall Vote No. 31 Leg.]

                                YEAS--99

     Akaka
     Allard
     Allen
     Baucus
     Bayh
     Bennett
     Biden
     Bingaman
     Bond
     Boxer
     Breaux
     Brownback
     Bunning
     Burns
     Byrd
     Campbell
     Cantwell
     Carnahan
     Carper
     Chafee
     Cleland
     Clinton
     Cochran
     Collins
     Conrad
     Corzine
     Craig
     Crapo
     Daschle
     Dayton
     DeWine
     Dodd
     Domenici
     Dorgan
     Durbin
     Edwards
     Ensign
     Enzi
     Feingold
     Feinstein
     Frist
     Graham
     Gramm
     Grassley
     Gregg
     Hagel
     Harkin
     Hatch
     Helms
     Hollings
     Hutchinson
     Hutchison
     Inhofe
     Inouye
     Jeffords
     Johnson
     Kennedy
     Kerry
     Kohl
     Kyl
     Landrieu
     Leahy
     Levin
     Lieberman
     Lincoln
     Lott
     Lugar
     McCain
     McConnell
     Mikulski
     Miller
     Murkowski
     Murray
     Nelson (FL)
     Nelson (NE)
     Nickles
     Reed
     Reid
     Roberts
     Rockefeller
     Santorum
     Sarbanes
     Schumer
     Sessions
     Shelby
     Smith (NH)
     Smith (OR)
     Snowe
     Specter
     Stabenow
     Stevens
     Thomas
     Thompson
     Thurmond
     Torricelli
     Voinovich
     Warner
     Wellstone
     Wyden

                        ANSWERED ``PRESENT''--1

       
     Fitzgerald
       
  The amendment (No. 41), as modified, was agreed to.
  Mr. LEAHY. Mr. President, I move to reconsider the vote.
  Mr. HATCH. I move to lay that motion on the table.
  The motion to lay on the table was agreed to.
  The PRESIDING OFFICER. The Senator from Utah.
  Mr. HATCH. Mr. President, I ask unanimous consent Senator Boxer be 
recognized in order to call up amendment No. 42, and further, following 
the debate, the amendment be temporarily set aside. Further, I ask that 
at 2:30 today the Senate proceed to a vote in relation to the Boxer 
amendment No. 42 and, following that vote, the Senate proceed to votes 
in relation to the Wellstone amendments No. 70, No. 71, No. 73, and 
Leahy No. 19.
  Further, I ask consent there be 2 minutes equally divided in the 
usual form between each vote and there be no second-degree amendments 
in order to the amendments prior to the votes.
  Finally, I ask that following the first vote, the remaining votes in 
the series be limited to 10 minutes in length.
  The PRESIDING OFFICER. Is there objection?
  The Senator from Nevada.
  Mr. REID. Mr. President, I ask my friend from Utah to change the 
unanimous consent agreement as follows: That immediately the senior 
Senator from West Virginia would be recognized and use whatever period 
of time up to an hour that he wishes. I have been told by the Senator 
he would yield to Senator Boxer so she could offer her amendment.
  Mr. HATCH. That is appropriate and fine with me.
  The PRESIDING OFFICER. Is there objection?
  Mrs. BOXER. Mr. President, if I might, I so appreciate the 
opportunity to offer the amendment. I know Senator Byrd is going to 
yield to me to do that and then he will get the floor. I just want to 
make sure we can vote on that in the next block, which we are hoping 
will be around the 2:30 area.
  Mr. REID. It is in the unanimous consent agreement.
  The PRESIDING OFFICER. The Senator from West Virginia is recognized.
  Mr. REID. Will the Senator yield?
  Mr. BYRD. Mr. President, I thank the Chair. I ask unanimous consent 
that I may yield to the distinguished minority whip without losing my 
right to the floor.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. REID. I ask that Senator Feingold's amendments No. 76 and No. 51 
be called up and then set aside.
  Mr. HATCH. Reserving the right to object.
  The PRESIDING OFFICER. The Senator from Utah is reserving the right 
to object?
  Mr. HATCH. It is my understanding that on the Sessions amendment we 
have asked for a modification.
  Mr. REID. We are doing our best to work that out.
  Mr. HATCH. I know you are trying to work that out. We have tried to 
work on modifications for your side as well. I hope that can be worked 
out.
  Mr. REID. We are doing our best.
  Mr. HATCH. May we withhold until we get that resolved?
  Mr. REID. Yes.
  Mr. HATCH. I appreciate that.
  The PRESIDING OFFICER. Objection is heard.
  The Senator from West Virginia.
  Mr. BYRD. Mr. President, I thank the Chair.
  Mr. President, I ask unanimous consent that I may speak out of order.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. BYRD. Mr. President, I ask unanimous consent that I may yield to 
the distinguished Senator from California, Mrs. Boxer, for not to 
exceed 15 minutes without losing my right to the floor.
  The PRESIDING OFFICER. Without objection, it is so ordered. The 
Senator from California is recognized.
  Mr. BYRD. Mr. President, I also ask unanimous consent that the time 
utilized by the distinguished Senator not come out of my hour under the 
cloture rule.
  The PRESIDING OFFICER. Without objection, it is so ordered.


                            Amendment No. 42

  Mrs. BOXER. Mr. President, I thank my good friend, my dear friend, 
for yielding me this time. This is an amendment about which I care an 
awful lot. Senator Clinton cares a lot about this. We just want to take 
a brief time, and speak as concisely as we can, to explain why we 
believe this amendment is so important.
  I think I must call up amendment No. 42 because I have this amendment 
pending at the desk, and I ask the clerk to report it.
  The PRESIDING OFFICER. The clerk will report.
  The assistant legislative clerk read as follows:

       The Senator from California [Mrs. Boxer] proposes an 
     amendment numbered 42.
       Strike Section 310.

  Mrs. BOXER. Mr. President, I am very sad to say that there is great 
controversy surrounding this amendment because there is a 
misunderstanding about it. I guess what I want to say is I am putting 
my faith in a number of groups that have written to me about the 
current status of this bill. I would like to put the names of those 
groups up on the easel right now. These are groups that have very 
astute attorneys who have studied this bill. They have enlisted our 
support. We are about to tell you who they are:
  The American Association of University Women, Children NOW, 
Children's Defense Fund, Center for Law and Social Policy, Feminist 
Majority, National Association of Commissions For Women, National 
Center for Youth Law, National Organization for Women, National 
Partnership for

[[Page 3731]]

Women and Families, National Youth Law Center, National Women's 
Conference, National Women's Law Center, NOW Legal Defense and 
Education Fund, the Older Women's League, the Women Activist Fund, 
Wider Opportunities for Women, Women Employed, Women Work, Women's Law 
Center of Maryland, and the YWCA.
  I put my faith in these groups. Their purpose is to protect women and 
children. I believe they are correct when they say this bill will hurt 
women and children. Let me explain their position, and mine.
  Under the current bankruptcy laws--I want you to remember this 
number, $1,075--it is presumed that 60 days before you declare 
bankruptcy, if you have accumulated charges of $1,075 or more, then 
those charges are presumed fraudulent and the credit card companies can 
go after those charges. I think it is fair. This number did not come 
out of the air. It has been adjusted for inflation. It makes sense. I 
think the credit card companies have the right to say, if you are going 
to declare bankruptcy and you have charged that much, that you should 
not be able to discharge it.
  Let me tell you what happens in S. 420. That number, rather than 
being increased for inflation, is brought down to $250 over 90 days. So 
if someone charges, in that 90-day period, more than $250, all charges 
on that card in a 90-day period are presumed to be fraudulent and the 
credit card companies can go after you.
  Can you prove these were not luxuries? Sure. You could take time off 
from work, time away from your children. Can you hire a lawyer? You can 
fight the credit card companies. But it just makes me ill to think we 
are presuming that a single woman who may be plagued with all kinds of 
problems who used her credit card to purchase food at the supermarket 
would in fact be told that she is a fraud, that she meant to defraud 
the poor credit card companies.
  I have to tell you a story.
  The member of my family who has part-time work and is going through a 
difficult time right now just received today an application for a 
credit card where they say: Take a trip to exotic lands and put it on 
your credit card. It happens to be Diners Club. And, don't worry about 
paying it back for months. The poor credit card company. You would 
think they would investigate to whom they were sending these cards. 
But, no, they want us to protect them from some poor woman with a 
single child, perhaps, or two, who is struggling with a divorce, and 
let us say is charging $250 on her credit card over 90 days. These 
charges are fraudulent.
  Let me read for you a letter that was sent to me by a women's group, 
and then I am going to yield 5 minutes to Senator Clinton.
  Mr. President, how much time do I have remaining?
  The PRESIDING OFFICER. The Senator has used 5 minutes 45 seconds.
  Mrs. BOXER. If the Chair would inform me when I have used another 5 
minutes, I would greatly appreciate it. Thank you.
  This is the letter:

       The undersigned women's and children's organizations write 
     to urge you to support Senator Boxer's amendment to S. 420, 
     the ``Bankruptcy Reform Act of 2001.'' This amendment is 
     necessary to protect parents and children owed child support 
     from facing increased competition from credit card companies 
     after bankruptcy.
       Senator Boxer's amendment to the ``luxury goods'' provision 
     of S. 420 would prevent credit card debt from being routinely 
     elevated to the same protected status as child support and 
     alimony obligations after bankruptcy. Under current law, 
     child support and alimony are among the few debts that are 
     not dischargeable in bankruptcy. The bankruptcy process 
     allows debtors to get back on their feet and focus their 
     resources on paying their most important debt: their 
     obligation to support their families. Credit card debts 
     generally are discharged in bankruptcy, unless there has been 
     an abuse of the bankruptcy process; for example, by 
     purchasing ``luxury goods'' on the eve of filing for 
     bankruptcy.
       S. 420 would apply the label ``luxury goods'' to very 
     modest levels of expenditures, allowing much more credit care 
     debt to survive bankruptcy and compete with support 
     obligations. Under S. 420, purchases on a credit card that 
     total $250 over the 90-day period prior to filing bankruptcy 
     would be presumed to be nondischargeable ``luxury goods.'' 
     For example, a debtor who charged just $25 a week at the 
     supermarket would have to prove that the purchases--because 
     they would exceed $250 over the 90-day period--were 
     necessities, not luxuries. Cash advances of any more than $75 
     per week in the 70 days before filing for bankruptcy would be 
     presumed to be nondischargeable.
       Senator Boxer's amendment would retain the current ``luxury 
     goods'' exception, preventing abuse of the bankruptcy process 
     by debtors without allowing its abuse by the credit card 
     industry. We urge you to support this important amendment to 
     prevent the credit card industry from making it even more 
     difficult for women and children to collect child support 
     after bankruptcy.

  I already talked about how credit card companies solicit and coax 
people into spending more than they earn.
  I do not feel sorry for the companies. I have seen the interest 
rates. I have seen the profits. Mr. President, $250 is not an amount 
that says it is a luxury over a 90-day period.
  Where is the committee coming from? I don't understand it.
  Let's take an example. A woman who grocery shops with a credit card 
for her family of four at the local Safeway or Albertson's would be 
able to spend no more than $25 per week in the 12 weeks before 
declaring bankruptcy. It is true. My colleagues on the other side of 
the aisle say: No problem. They just have to prove that in a court of 
law as they go through the filing.
  This is a mother who is going through probably a hellish time in her 
life and she now has to dig out the receipts, or get a lawyer, by the 
way, or take off from work. Why are we presuming that a person is bad 
if they charge $250 over 90 days before they file bankruptcy? Can't we 
give people a break? Don't we respect the American people? People do 
not want to do this. Keep the current law.
  There are many other examples I could show you, all of which they 
would have to prove in a court of law. The burden is on them. Why not 
give this exemption? Why not keep the current law?
  That is the purpose of this amendment. It just says trust folks a 
little bit more. That is why I believe very strongly.
  I ask Senator Clinton if she would now wish to use 5 minutes on this 
amendment at this time.
  The PRESIDING OFFICER. The Senator has 5 minutes remaining on her 
time.
  Mrs. BOXER. I ask the Senator to take 4 minutes and I will wrap it 
up.
  Mrs. CLINTON. Mr. President, I thank the Senator.


                           Amendment No. 104

  First, I ask unanimous consent that it be in order, considered 
germane for the purpose of S. 420, and the following agreed to: In the 
amendment on behalf of myself and Mr. Hatch, on page 80, line 25, after 
the word ``resides)'' add the following: ``, and the holder of the 
claim,''.
  I ask that this be adopted because this remedies the problem that was 
also brought to our attention with respect to this particular 
legislation.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  The amendment (No. 104) was agreed to, as follows:

       At page 80, on line 25, after ``resides)'' insert the 
     following: ``, and the holder of the claim,''.


                            Amendment No. 42

  Mrs. CLINTON. Mr. President, I rise to support my very good friend, 
the Senator from California, who is one of the strongest advocates on 
behalf of women and children in our entire country. I do so because I 
find myself in agreement that there is some confusion about the meaning 
and application of this provision. That certainly should be clarified 
before we move to a vote on the underlying legislation.
  As the Senator has so eloquently stated, we are making a dramatic 
change in both cutting the amount and the period of time for which a 
debtor would be held accountable with respect to any luxury goods or 
services.
  I respect my very good friend, the Senator from Delaware, in his 
pointing out that the legislation makes clear that this is not goods 
for services and is reasonably necessary for the support or maintenance 
of the debtor or a dependent of the debtor.
  We have several issues with this. One which the Senator from 
California

[[Page 3732]]

pointed out is the size and the timing. The other is to make clear that 
this presumption is absolutely sustainable with respect to the meaning 
of support and maintenance.
  I urge that we adopt the amendment of the Senator from California 
because I believe it is reasonable for existing law to have the amount 
and the time period.
  I don't believe it is a great disservice to the credit card companies 
and other creditors to keep the status quo in this provision since we 
are so dramatically changing the law in so many other respects.
  I yield the remainder of my time to the Senator from California.
  Mrs. BOXER. How much time is remaining, Mr. President?
  The PRESIDING OFFICER. The Senator has 2 minutes 20 seconds.
  Mrs. BOXER. I thank Senator Clinton for her support. I know Senator 
Biden would like to have some time. I am glad he got that by unanimous 
consent.
  I reserve the remainder of my time.
  The PRESIDING OFFICER. The Senator from Delaware.
  Mr. BIDEN. Mr. President, I ask the distinguished Senator from West 
Virginia, since he has the floor, whether I can use up to 5 minutes of 
the hour I have under cloture.
  Mr. BYRD. Mr. President, I have no objection to such a request.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. BIDEN. I will be necessarily brief.
  First of all, with regard to the credit card companies, this isn't a 
problem for credit card companies. If you go to the grocery store and 
use a credit card, it lists the grocery store. You have an automatic 
receipt. There is a presumption that you went to the grocery store and 
you bought groceries. They are not luxury goods. That is automatic. You 
could go in and charge $1,000 of groceries on that credit card and 
there would be no problem.
  Second, if you take a look at what we are talking about, in addition 
to the credit card companies, you can draw up to $750 in cash. You if 
go above $750, you have to explain. If you go up to $749 in cash, you 
don't have to explain anything to anybody.
  We are talking about the mother who is in real trouble and can't pay 
her bills. I am as sympathetic to that as anyone. But that is not with 
this is about. We are misreading.
  First of all, it applies to only luxury goods. On page 147, line 2, a 
consumer's debt owed to a single creditor--if you have five different 
credit cards and go out and charge $250 on five different credit cards, 
it doesn't matter. This is a bunch of malarkey, with all due respect.
  I understand the intention, and I think this is just a misreading of 
the legislation.
  Let me speak to the issue of my good friend. I happen to be on the 
opposite side of Senator Boxer. She is literally my closest friend in 
the Senate. I don't like doing this. But here is the deal.
  Her staff--my former staff--is telling her how this works, as well as 
these groups are telling her how this works. This is how it works. When 
you file for bankruptcy, you go before a bankruptcy judge or you go 
before a master. You have to show up. You have to pay for the cab or 
the bus to get there. You have to be there.
  When you get there, it is a one-stop shopping deal. You have a list, 
and you have to submit what you spent. You have to submit everything as 
to why you deserve to go into chapter 13. It is required under the law. 
For anybody now--no matter when--it is required.
  So you have the list and the credit card. You list the credit card. 
You have all these groceries you bought on the credit card. They are 
listed. The problem is the non-credit-card guys. You go into Boscov's--
and you have credit with Boscov's--and you decide to buy a couch. It is 
arguable whether that is a luxury good or not. Boscov's might want to 
fight you about that. They then have to come into court and say: Hey, 
judge, that was a couch she bought. That was not a luxury good, she 
says. No, no. It was a crib for my baby. Well, then, file the receipt. 
Was it a crib for a baby and/or was it a brand new leather couch? What 
is the deal?
  Look, I will do anything I can to change this to accommodate what the 
concern is of my friends. But I do not understand the concern. It says 
``Per creditor.'' You could have five credit cards, No. 1. No. 2, you 
can take up to $750 in cash out per credit card that you have. You can 
take it out. No. 3, you can go in and spend $249 on a zircon ring for 
your daughter because it has been a bad day at Boscov's. That is a 
luxury good, but you can do that. And, No. 4, you can take all your 
credit cards and/or your checking account and/or anything and buy 
$10,000 worth of jeans for your kids--shirts for your baby, formula--
whatever dire example I am going to be given here.
  Look, with all due respect, this is much ado about nothing. It is the 
same way in which you would have to go in under $10,750 under the law 
now. How do you do it now?
  Mrs. BOXER. It is $1,075.
  Mr. BIDEN. Excuse me, $1,075. You walk in now and say: Judge, here is 
my form. You get a date to show up or you are going to be discharged 
from bankruptcy, whether you are going to be in chapter 7 or chapter 
13. You walk in--with or without a lawyer--and say: Your Honor, here is 
the deal. And you list your debt. You list your obligations and you 
list your assets. You have to do that no matter what.
  If you list $1,075 now, and it turns out you bought $1,075 worth of 
good wine, the creditor can come in and say: Whoa, they bought wine 
with that--in grocery stores like when I used to stack Schaefer beer in 
New York State when I was in law school working for the Schaefer beer 
company. They do not sell alcohol in those stores in my State, but in 
New York State I think they still do. If you say you bought $1,075 
worth of beer, then it is not dischargeable. That would not be 
dischargeable, any more than $250 or $750 would be.
  Look, it is easy to make it sound complicated. When you take out your 
credit card, it lists what you bought. You have a receipt. You walk in 
and file and say: Judge, I used five credit cards, and I spent $5,000 
in the last 90 days on food and clothing. Here is the deal. That is 
dischargeable. But if you walk in with those credit cards, and you 
spend it on, say, Versace----
  The PRESIDING OFFICER. The Senator's 5 minutes have expired.
  Mr. BIDEN. I thank the Chair.
  Mrs. BOXER. Mr. President, this is painful, to have a debate with 
your brother. But the question of who is full of malarkey is debatable. 
I have some pretty good folks on my side. May we show them again? I 
have never known my friend to say the American Association of 
University Women is full of malarkey, or the Children's Defense Fund, 
or on and on. I really haven't. That is a debate we will have 
privately.
  But this is the point. To me, it is a question of faith and trust in 
Americans--in particular, in this case, women, who most of all find 
themselves caught in this problem. I would like to know where you get a 
leather couch for $250.
  Mr. BIDEN. You don't.
  Mrs. BOXER. If you can find one, let me know, because I need one. The 
fact is, you can't.
  The other fact is, if we could put this chart back up, under current 
law this is the cash card advance. You play with that, too, I say to my 
friend, it used to be $1,075 over 60 days. Now he rolls it back to $750 
and says it is a great deal.
  This reminds me of the debates on a woman's right to choose. The 
presumption is, we can't trust women to make this decision. People 
supported a 24-hour waiting period, as if a woman never thought about 
it. They want Government to be involved and make the rules. In a way, 
it is very similar. It is treating people with distrust.
  We have a good law here, the current law. At $1,075, it is presumed 
you needed these things. It is fine. The other point about: Oh, you 
have the receipts; it is not a problem, I would ask every American 
today to put their hands on their receipt that they got when they made 
their last purchase. Now maybe I am just not good at it. My husband is 
good. He is probably the one guy I know who keeps every receipt.
  Mr. BIDEN. Will the Senator yield for 2 seconds?

[[Page 3733]]


  Mrs. BOXER. Yes.
  Mr. BIDEN. The credit card company, as you point out, will send you 
the bill. That is your receipt.
  The PRESIDING OFFICER. The Senator's time has expired.
  Mrs. BOXER. I ask for 3 seconds.
  The PRESIDING OFFICER. The Senator from West Virginia controls the 
time.
  Mrs. BOXER. May I have 30 seconds?
  Mr. BYRD. Mr. President, I have never seen 3 seconds yielded in this 
Chamber. Does the Senator want 1 minute or 2 minutes or 3 minutes?
  Mrs. BOXER. I would be delighted to have 1 minute.
  Mr. BYRD. I yield 1 minute to the Senator.
  Mrs. BOXER. The only reason I asked for 3 seconds is my friend asked 
for 2 seconds. I am trying to be fair.
  The bottom line here is, as I look at this, this is the little person 
against the huge credit card companies. The CEOs, who are getting paid 
millions of dollars, look at the little people and say if they charge 
$250 cumulatively over 90 days before they declare bankruptcy, they are 
presumed to be bad people. I have more faith in people than that. I 
really hope that Senators will support this amendment.
  Let's go back to current law. It is fair. And let's reject this 
portion of S. 420. It is unfair.
  I thank my friend from West Virginia very much for his generosity.
  The PRESIDING OFFICER. The Senator from West Virginia is now 
recognized.
  Mr. BYRD. Mr. President, the distinguished Senator from California is 
very gracious, and she was welcome to whatever time I have been able to 
yield to her.

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