[Congressional Record (Bound Edition), Volume 147 (2001), Part 3]
[Senate]
[Pages 3737-3775]
[From the U.S. Government Publishing Office, www.gpo.gov]



                BANKRUPTCY REFORM ACT OF 2001--Continued

  Mr. SESSIONS. Mr. President, we are now proceeding on the bankruptcy 
bill in the regular order.
  I want to say a few general remarks about this process of bankruptcy. 
It is provided for in the U.S. Constitution. It was not written out in 
the early days of our founding precisely how bankruptcy law should 
apply, but it did provide for uniform Federal laws of bankruptcy. So 
our bankruptcy court system is a Federal court system presided over by 
Federal bankruptcy judges, and all the clerks are Federal civil 
servants.
  England developed some procedures to deal with persons who owed 
debts. Basically, they would turn over everything to the Crown, and 
sometimes they would get thrown in jail. But their assets would be 
distributed equally to whoever was claiming money from that person in 
sort of a realistic-priority way.
  Over the years, we have provided tremendous protections for the 
person filing bankruptcy. It does aid them in a lot of different ways. 
How does it actually work?
  Let's say you are in debt and telephone calls start coming from the 
creditors. You promised to pay certain debts and you are not paying 
them. I do not know how we can complain too much about somebody calling 
to ask what your intentions are about paying them. They become 
burdensome on the family after a while, though--very burdensome. Then 
people threaten lawsuits. Then they file lawsuits. And lawsuits get 
carried on to judgment.
  The person is being sued. They are being called. Their lives are 
really being disrupted because they are unable to pay the debts they 
owe. So under this circumstance, a person is allowed to file 
bankruptcy. When bankruptcy is filed, that stops everything. You cannot 
be harassed by phone calls or other claims for debts because all the 
creditors--people who are claiming money--have to be sent a notice; and 
when they get the notice that you filed bankruptcy, all they can do is 
file a claim at the bankruptcy court.
  They cannot keep bugging the individual American citizen. They have 
to leave him or her alone or the bankruptcy judge will slap them with a 
fine if they do that, because bankruptcy does stay those kinds of 
activities. It stops the lawsuits. All lawsuits are stopped under the 
bankruptcy. It is called a stay. A stay is issued, and the legal 
proceedings stop, so a debtor can take a breather.
  Basically, they go into court, if it is an individual. And the 
individual has two choices. He can file, under current law, under 
chapter 7. He can say: I am exempting my homestead. You can't take 
that. And certain of my personal property, you can't take that. This is 
all the money I have otherwise. This is all the assets I have. You take 
that and divide it up among all those people I can't pay. It may be 5 
cents on the dollar, 10 cents on the dollar, 50 cents on the dollar--
usually less than 10 cents on the dollar, or less than 30 cents on the 
dollar, anyway--when they do that.
  Then they wipe out those debts. They are forever gone. They signed a 
contract. They signed agreements. They got sued. And they got judgments 
against them. It is all wiped out; a person does not have to pay.
  That goes on in America regularly. And it is a healthy thing for 
people who are in debt so deep that it is not possible for them to get 
out. And we affirm that.
  So over the years bankruptcy law has been amended and improved. We 
had a Bankruptcy Reform Act in 1978, the last real reform of bankruptcy 
law in the United States. At that time, there were fewer than 300,000--
I think 270,000--bankruptcies a year.
  Since 1978, bankruptcies have increased at a steady pace. Now the 
filings exceed--well, in 1998 or 1999 it was 1.4 million. It dropped a 
little last year, but it is projected to go up again significantly this 
year. So we are talking about nearly 1.5 million filings this year. You 
may say: That is not too many. We have 250, 260 million people in 
America. A lot of them are children, and a lot of them are in jail, and 
so on. You take those numbers down--who is really eligible--and that is 
getting to be a significant number. We do not think about the fact that 
it is happening every year. When you add up 5 years, that is 5, 6, 7 
million people who have filed bankruptcy in a period of 5 years. That 
becomes a significant portion of the American population. If they all 
qualify, then I do not have a problem with it.
  But what has occurred in recent years is the proliferation--and I 
think virtually every city in America has it--of some sort of 
promotional bankruptcy mill. For years, lawyers could not advertise. 
Some people can still remember that day. But now they can. So you turn 
on the TV at 11:30 at night or Saturday afternoon, or pick up the dime 
store, corner market shopping guide, and there are these 
advertisements: Wipe out your debts. Don't pay anybody you owe. Call 
old Joe, your friendly lawyer. He will tell you how to do the deal.
  So people call. They are in debt and having trouble managing their 
money. Some of them are in debt because they could not help it--maybe 
there were serious injuries, maybe medical causes, maybe bad business 
deals, bad judgment. Some of them just cannot manage their money. Some 
of them have drug problems. Some have alcohol problems. Some are just 
unable to manage and just will not stop spending.
  So they go to the lawyer. And this is fundamentally what the lawyer 
tells them. He says: Now, when you get your paycheck, you save that 
money, and you bring it straight to me--all that money--and maybe your 
second check. As soon as I have $1,500 or $1,000, I will file your 
bankruptcy. Don't pay any of your other debts. Don't pay any more 
debts. He will say: Use your credit card. Run up everything you want to 
on your credit card. Live off your credit card. Come down here, and we 
will file bankruptcy as soon as you get your money together to pay me. 
That is what has happened. That is the kind of message. They are told 
this is the right thing to do. These people in debt are in trouble. 
They are hurting. They are tired of people calling them. It is 
embarrassing their children and their families. They want it to end. 
This seems to be the best way out, so they do so. The numbers through 
this promotional activity have been going through the roof.
  A lot of people are troubled by it. People who are regularly involved 
in bankruptcy and see what is happening are rightly concerned that 
quite a number of people are filing who don't qualify, who really don't 
meet our traditional standards of someone who cannot pay all or a part 
of their debts.
  The discussion went on for a number of years about how to deal with 
it. A Federal bankruptcy commission dealt with it, others have dealt 
with it, lawyers groups, experts, and so forth. We have had, in the 
Senate and in the House of Representatives, hearings that have gone on 
for over 4 years now. As a result of those hearings and refinements, 
bankruptcy bills have come forward. One passed this body 2 years ago 
with about 88 votes. The last one passed with 70 votes. It has passed 
the House every year with a veto-proof margin, strong bipartisan 
Republican and Democratic support.
  We are dealing with this incredible surge in bankruptcies and trying 
to do it in a way that allows everybody who previously legitimately 
wanted to file

[[Page 3738]]

bankruptcy, that they could file bankruptcy, by trying to identify 
those who don't qualify and should be contained in their filing. So 
this is a fundamental change in bankruptcy. We adopted what has come to 
be called a means test. It says if you have the means to pay some or 
all of your debt, we ought to set up a plan for you to do so.
  In law today, we have two sections. I mentioned chapter 7, where you 
go in and wipe out all your debts. Basically, the debtor can choose 
that. He can choose in which chapter he wants to go.
  There is a another chapter called chapter 13. In that case, if you 
file in chapter 13, all of the lawsuits stop; all of the phone calls 
stop. The court sits down with the debtor and works out a payment 
arrangement. They prioritize the debts to be paid. Some of them are 
secured; some are not secured. The right priorities are all set. Then 
that person basically takes his paycheck in every month. He or she 
gives it to the court. He or she keeps enough money to live on. They 
give the money to the court, and they pay out to the debtors every 
dime.
  Under chapter 13, many people work through their debts, people with 
low incomes and higher incomes. They pay off all their debts.
  In my State of Alabama, I am proud to say that in the southern 
district of Alabama, where I practiced, 50 percent of the people who 
filed filed under chapter 13. They wanted to pay their debts back. In 
fact, there are some good incentives to filing under chapter 13, a lot 
of good things for a creditor that I won't go into here.
  They are doing it in Birmingham. In the northern district of Alabama, 
I understand 60 percent file there. I also understand there are some 
districts in New York and other places where less than 10 percent, 
maybe even less than 5 percent use chapter 13. Just routinely, the 
debtors come in and wipe out all their debts.
  How should we deal with that? After much thought, it was decided that 
we ought to focus this legislation on a relatively small number of 
people filing for bankruptcy who have income sufficient to pay back 
some or all of their debts. We thought that was a good approach, and it 
has been widely received and voted on by most of the Members of this 
body.
  Basically, we drew a bright line. We said: Based on the size of your 
family and the income of your family, if you make below median income, 
which in America for a family of four is $50,000, you will be able to 
file bankruptcy any way you want, 7 or 13, just like today.
  There is no change for them in that regard. We believe probably 70, 
80, 85 percent of the people who file bankruptcy are below median 
income, but for that 20, that 10, that 15 percent who make above median 
income--some make $70, $80, $90, $200,000, $250,000, some are doctors, 
some are lawyers, some have professional incomes, and so forth--to them 
we say: We are going to look at your income. We are going to look at 
your earning possibilities. If you are able to pay back at least 25 
percent of that debt over 3 to 5 years, we are going to put you in 
chapter 13, as half the people in my State do anyway, and we are going 
to ask you to try to pay those debts over that period of time. You will 
be monitored by the court.
  By the way, this bill says, in a historic step, child support and 
alimony will be moved up to the top, to the first item that will be 
paid. For 5 years, you will be under the supervision financially of a 
Federal bankruptcy judge, and you will pay your alimony. You will pay 
your child support on time. As a matter of fact, the judge will order a 
repayment of past due alimony and child support under court 
supervision.
  I thought that ought to greatly please most people in America. It 
deals only with the abusive cases. It confronts the problem we are 
seeing in bankruptcy. Maybe somewhat fewer people will file if they 
don't think they can get away with ripping off the average taxpayer, 
citizen.
  They say: These credit card companies, these are evil companies. They 
go out and actually lend people money. They are not citizens, they are 
corporations. They are evil. They are always trying to cheat you, and 
we don't need to pay them. They care about this bill. Therefore, the 
bill is no good.
  That is silly. That is not right. The first principle of economics, 
which a lot of people in this body apparently don't know or forgot, is 
there is no such thing as a free lunch. Somebody is going to pay this 
debt if you don't pay it. Somebody is going to eat that loss. If it is 
a bank or a credit card company, they have computers. They figure it 
out. They start seeing greater losses. What do they do? They have to 
raise the interest rate on all of us.
  Experts have studied this; economists have studied it. They have 
concluded that the average debt-paying American citizen who pays his 
bills is annually imposed a bankruptcy cost of $450. That is about $40 
a month they are having to pay every month because other people in this 
country don't pay their debts.
  They say: Well, maybe it was because they had a high medical bill. 
Therefore, we don't want them to pay their hospital bill. Heaven knows, 
they should not pay the doctor and the hospital who treated them and 
helped them get well. This bill is oppressive because it would suggest 
that people ought to pay their hospital bill if they can.
  Basically, that is what the argument is. If you are making below 
median income, lower than median income in America, then you can file, 
just as you always did, and you can wipe out your bills to the 
hospital, to any other people that you owe, including your bookie, I 
guess--wipe that all out. But if you are making above median income, 
and the judge finds you are able, only if he finds you are able to pay 
25 percent of what you owe to the hospital over a period of 3 to 5 
years, he can order a payment plan that requires you to pay that 25 
percent. And he will allow you every month to have sufficient funds to 
live on, in the court's judgment.
  Well, I don't think this is oppressive. This is a reform. This is a 
piece of legislation that deals with a fundamental question. I was 
asked by a young reporter yesterday afternoon, while doing a piece for 
one of the TV shows, ``Do you think this is a moral question?'' I said, 
``I absolutely think it is a moral question.''
  What we do here when we establish law, as our Founding Fathers always 
knew, and I think we are forgetting, is that we are setting public 
policy that guides and shapes American values. What we say you must do 
and what we say you don't have to do shapes opinions and values.
  So I think it is a bad suggestion, an unhealthy value to promote, 
that a person who can pay a substantial portion of his or her debt can 
just walk away from it--not pay the hospital, for example.
  I have visited 20 hospitals in my home State this year. They have a 
bad debt section that they write off regularly. They are not expecting 
any great, huge surge of benefits from this bill. But why should you 
not pay the hospital if you can pay a portion of it? What is bad about 
them? Is that not a good institution that ought to be valued? Who else 
is going to pay for the hospital if the person who is using it doesn't 
pay?
  Well, they say: Maybe you didn't have health care insurance. If you 
make above the median income, you ought to have health care insurance. 
Maybe somebody who is struggling to get by every day, who would be 
below median income, is not able to take out health care insurance. If 
you are making above median income, you need to have some health 
insurance. Why should a person who is not responsible, making above 
median income, who didn't have health insurance--why should they be 
able to stiff the hospital when the ``honest Joe'' and his family, who 
are making below median income, takes out his health insurance every 
month and pays it and makes sure his hospital is paid if he and his 
family go there?
  I think it is a moral question. I think we need to set a public 
policy that says, yes, we validate the great privilege of American 
law--and that has really been increased in recent years--

[[Page 3739]]

that allows a person to wipe out their debts and start over again. We 
validate that. We do not object to that. We have tried to create a bill 
that does just that. But we also say that if you have a higher than 
average income and you can pay some of those debts, we want to set up a 
system where you pay them.
  I believe this is a fair approach, a balanced approach, a generous 
approach. And the legislation has quite a number of factors in it that 
cut down on fraud and abuse. We raise up the protections for women and 
children, as I said. We have tightened up the language on the bill to 
reaffirm a debt from a person who maybe wants to keep his car, or a 
washing machine, and they can come in and negotiate with them. We can 
put extra protections in before they can reaffirm a debt after 
bankruptcy and want to keep something, so that the creditors are 
protected.
  We put in another amendment that people have asked for. I think, in 
general, I will challenge people to tell me what it is about this bill 
that is precisely unfair to anybody. If we want to talk about the means 
test, we will talk about that. That is the real change, the only thing 
that really happens here of significance.
  We have made a number of other improvements to reduce abuses and 
problems with the bill and the processing of cases in bankruptcy, which 
I think everybody would support.
  We have had a lot of amendments. If anybody listens carefully, they 
will find they are not focusing primarily on the improvement of 
bankruptcy law and the administration of assets in a bankruptcy court. 
They are focused on rules for credit cards or bank lending rules, all 
of which are not in the jurisdiction of the Judiciary Committee. They 
are in the jurisdiction of the Banking Committee. Periodically, that 
kind of legislation comes forward. We will have amendments that touch 
on issues outside the bill, but, for the most part, we are right on.
  We had a vote on homestead. The homestead law in this bill eliminated 
quite a number of abuses. The homestead law basically said that States 
could set their own standard for how much you could protect in your 
home. If you file bankruptcy, each State has a homestead limit--some as 
low as $5,000; some are unlimited. So in certain States you can buy a 
home and put $2 million into your home, and when you file bankruptcy, 
you get to keep your home.
  I never thought that was a good idea. I voted to eliminate that. Some 
State laws have unlimited assets, and some Senators wanted to keep 
that. They fought us and fought us and fought us. Frankly, after being 
a cosponsor with Senator Kohl on a limit of $100,000, which we passed, 
we went along with a compromise that we reached that restricted 
homesteads, but not as much as I would like.
  We just voted this morning to go back to the $100,000 limit. The vote 
was here. I voted, as I agreed to last time, for the compromise. But I 
certainly am happy with that public policy. I hope the Senators who 
lost on that vote will see just how strong this body cares about it and 
will realize they are not really benefiting, and the citizens of their 
States are not benefiting by allowing a millionaire to keep a million 
dollars in his home and not pay the gas station or local hospital or 
bank.
  So those are the kinds of things that have occurred. The complaints 
here are either about issues outside of the reform of bankruptcy court 
law or it is a matter in which we have it go.
  I think we have done well. I salute Senator Hatch, the chairman of 
the Judiciary Committee, for his steadfast leadership, and Senator 
Grassley, who formerly chaired the Courts and Administration 
Subcommittee, which I am honored now to chair, when this bill came out 
of his subcommittee. He battled steadfastly to bring this bill up for a 
vote. I believe we will be able to do that today.
  I am quite confident we will have an overwhelming vote for one of the 
most historic reforms that we can imagine. It will improve the 
operation of bankruptcy courts, I am confident. If we made any errors 
in it, I am willing to listen to that and make further amendments, if 
needed.
  I thank the Chair and yield the floor.
  Mr. REID. Mr. President, 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. SESSIONS. 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. SESSIONS. Mr. President, on the Leahy amendment, I will make a 
few comments. It includes the spouse's income in a bankruptcy.
  The PRESIDING OFFICER. The Chair notifies the Senator there is an 
order for a vote to occur at this time.
  Mr. LEAHY. I ask unanimous consent the Senator from Alabama be 
allowed to proceed for 1 minute and then I be allowed to proceed for 1 
minute.
  The PRESIDING OFFICER. Is there objection?
  Mr. REID. I have no objection, but reserving the right to object, it 
is my understanding that, regarding the previous order entered, we are 
going to change the order in which the votes take place; is that right?
  Mr. SESSIONS. I was going to make a change in the order according to 
the agreement that has been reached.
  Mr. REID. I withdraw my objection.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  The Senator from Alabama.
  Mr. SESSIONS. I believe the Senator from Delaware has a request.
  Mr. CARPER. I ask unanimous consent to speak for 1 minute to engage 
in a colloquy with Mr. Leahy and Mr. Sessions.
  Mr. LEAHY. Reserving the right to object, and I will not object, if 
the Senator from Delaware amends that to also add 1 minute for the 
Senator from Vermont.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  The Senator from Alabama.
  Mr. SESSIONS. Mr. President, this would be an amendment on the 
surface that appears to be good. However, I am of the firm opinion that 
it would be unwise and cause a very difficult problem with filing for 
bankruptcy. Under the present law, the median income is determined by 
household size which includes a spouse when married and living 
together. Yet a debtor filing singly will be tested based on his or her 
income only and not based on the income of the spouse as well.
  Under the current bill, for a debtor who is married but has been 
abandoned by her spouse, that will be corrected. She will be tested 
under the means test from her income. If she is abandoned, her expenses 
will exceed her income and she will not be prevented from filing under 
chapter 7.
  However, the ability of couples to maneuver income----
  The PRESIDING OFFICER. The Senator from Alabama has used his 1 
minute.
  Mr. SESSIONS. I thank the Chair.
  Mr. LEAHY. Mr. President, I believe we are dealing with a bill with a 
drafting error and I am trying to correct it. For example, in the bill 
before the Senate, a battered spouse who flees the home with children 
can be denied bankruptcy relief regardless of circumstances because the 
bill would count her husband's income, as well, even though she did not 
receive any money from him.
  Without the Leahy amendment, it is hard to imagine a more antiwoman, 
antichild, or antifamily result. My amendment would not allow separated 
spouses to somehow shield assets when they file for bankruptcy because 
the bill already counts income of the debtor from all sources. That is 
why my amendment is supported by virtually every group in the country 
that has advocated for battered women and battered spouses. They say, 
we support this effort to correct this oversight which ``if left 
unrepaired would create a severe injustice to many women, children, and 
families across the country.''
  The PRESIDING OFFICER. The Senator from Delaware.
  Mr. CARPER. The amendment offered by Senator Leahy is a good 
amendment and he has pointed to a

[[Page 3740]]

problem with the bill, I think unintentional.
  This is the situation we face: We have a husband and a wife and they 
are living separately, maybe at the end of their marriage, and the wife 
wants to file for bankruptcy. The income of her spouse will be imputed, 
regardless of whether or not that spouse is providing any kind of 
support at all.
  As a result, in most cases the wife would not be able to file chapter 
7 and enjoy the benefit of safe harbor. Mr. Leahy would have us fix 
that. That is a good thing.
  Unfortunately, the problem that flows out of the amendment is that in 
some cases that husband really is providing support for that spouse. It 
is important we find that out; that we not create a situation, 
unwittingly, where fraud could prevail and where that husband, in most 
cases, is supporting the wife and supporting the family and does not 
acknowledge as much. There is a simple way to fix it, and I hope in 
conference Senator Leahy and others will find that appropriate fix.
  Mr. LEAHY. Mr. President, I thank my friend from Delaware, but I note 
my amendment does not allow a separated spouse to somehow shield assets 
because the bill already counts income of the debtors from all sources.
  The definition of ``current monthly income'' on page 18, lines 4 to 
21, of the bill includes income from all sources. So if a battered 
spouse or anybody else conceal income on a bankruptcy schedule, that is 
a Federal crime.
  What I do not want is a battered wife who is getting no income from a 
separated spouse to suddenly, if she is out there trying to put her 
financial situation in order, to have to consider the income of a 
spouse from whom she is getting no income.
  I ask unanimous consent a letter from the American Academy of 
Matrimonial Lawyers, and a second letter on behalf of a number of 
organizations, be printed in the Record.
  There being no objection, the letter was ordered to be printed in the 
Record, as follows:

                                               American Academy of


                                          Matrimonial Lawyers,

                                      Chicago, IL, March 15, 2001.
     Hon. Patrick Leahy,
     Ranking Minority Member, Committee on the Judiciary, Russell 
         Senate Office Building, Washington, DC.
       Dear Senator Leahy: I write in strong support of your 
     ``separated spouse'' amendment to the pending means test 
     provisions of the bankruptcy bill not being considered by the 
     Senate.
       I assume the current language in the bill is the result of 
     an unintentional drafting error. If left uncorrected, the 
     existing language will be draconian in its application to all 
     single parents with children who do not have the benefit of 
     any spousal income. It will particularly jeopardize a 
     battered spouse who flees her home with her children. This 
     debtor could be denied bankruptcy relief regardless of her 
     circumstances because the bill would count her husband's 
     income as well, even if she did not receive any money from 
     him.
       The current language would impute to a single parent 
     debtor, for purposes of a means test, the income of a 
     separated spouse irrespective of whether the absentee spouse 
     actually contributes any income to the household.
       There can be no justification that single parents with 
     children should suffer unduly in the bankruptcy process 
     because false and inflated income of an absentee spouse is 
     credited to debtor spouse. I support your laudable effort to 
     correct this oversight, which if left unrepaired, would 
     create a severe injustice to many women, children and 
     families across the country.
           Respectfully yours,
                                             Charles C. Shainberg.

                                                   March 15, 2001.
     Hon. Patrick Leahy,
     Ranking Minority Member, Committee on the Judiciary,
     Russell Senate Office Building, Washington, DC.
       Dear Senator Leahy: We write in strong support of your 
     ``separated spouse'' amendment to the pending means test 
     provisions of the bankruptcy bill now being considered by the 
     Senate.
       We assume the current language in the bill is the result of 
     an unintentional drafting error. If left uncorrected, the 
     existing language will be draconian in its application to all 
     single parents with children who do not have the benefit of 
     any spousal income. It will particularly jeopardize a 
     battered spouse who flees her home. This debtor could be 
     denied bankruptcy relief regardless of her circumstances 
     because the bill would count her husband's income as well, 
     even if she did not receive any money from him.
       The current language would impute to a single parent 
     debtor, for purposes of a means test, the income of a 
     separated spouse irrespective of whether the absentee spouse 
     actually contributes any income to the household. The effect 
     of such language would be to falsely inflate the single 
     parent's income such that it could exceed the means test for 
     purposes of the safe harbor, for access to Chapter 7, or to 
     determine how much an individual can actually repay in 
     bankruptcy.
       There can be no justification that single parents with 
     children should suffer unduly in the bankruptcy process 
     because false and inflated income of an absentee spouse is 
     credited to the debtor spouse. We support your laudable 
     effort to correct this oversight, which if left unrepaired, 
     would create a severe injustice to many women, children and 
     families across the country.
           Sincerely,
     Association for Children for Enforcement of Support (ACES).
     National Center for Youth Law.
     National Partnership for Women & Families.
     National Women's Law Center.
     National Organization for Women.
     NOW Legal Defense and Education Fund.
  Mr. SESSIONS. Mr. President, will the Senator yield for a question?
  Mr. LEAHY. I don't think I have time left.
  The PRESIDING OFFICER. The Senator's minute has expired.
  The Senator from Alabama.
  Mr. SESSIONS. Mr. President, I think we can fix this.
  I ask unanimous consent the votes now commence under the previous 
order, with the vote relative to the Boxer amendment being postponed, 
to occur at the end of the voting sequence, and the Leahy amendment 
being first in the sequence.
  Mr. REID. No objection.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. SESSIONS. I thank the Chair.


                        Vote On Amendment No. 19

  The PRESIDING OFFICER. The question is on agreeing to amendment No. 
19.
  Mr. LEAHY. Have the yeas and nays been ordered, Mr. President?
  The PRESIDING OFFICER. 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 56, nays 43, as follows:

                      [Rollcall Vote No. 32 Leg.]

                                YEAS--56

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

                                NAYS--43

     Allard
     Allen
     Bennett
     Bond
     Brownback
     Bunning
     Burns
     Campbell
     Cochran
     Craig
     Crapo
     DeWine
     Domenici
     Enzi
     Frist
     Gramm
     Grassley
     Gregg
     Hagel
     Hatch
     Helms
     Hutchinson
     Hutchison
     Inhofe
     Kyl
     Lott
     Lugar
     McCain
     McConnell
     Miller
     Murkowski
     Nickles
     Roberts
     Santorum
     Sessions
     Shelby
     Smith (NH)
     Smith (OR)
     Thomas
     Thompson
     Thurmond
     Voinovich
     Warner

                        ANSWERED ``PRESENT''--1

       
     Fitzgerald
       
  The amendment (No. 19) was agreed to.
  Mr. LEAHY. Mr. President, I move to reconsider the vote.
  Mr. CONRAD. I move to lay that motion on the table.
  The motion to lay on the table was agreed to.


                     Amendments Nos. 70, 71, and 73

  The PRESIDING OFFICER. The question is on agreeing to amendment No. 
70 offered by Mr. Wellstone of Minnesota.

[[Page 3741]]

  The Senator from Minnesota.
  Mr. WELLSTONE. Mr. President, I have 1 minute; is that correct?
  The PRESIDING OFFICER. The Senator is correct.
  Mr. WELLSTONE. Would it be helpful, I say to the Senator from Utah 
and the Senator from Vermont, if I did a quick summary of each one of 
the amendments right now, one right after the other?
  Mr. LEAHY. Mr. President, there is so much noise. I know the Senator 
from Minnesota is addressing us. I couldn't hear him.
  Mr. WELLSTONE. I asked my colleagues, if they want me to, I could do 
quick summaries of each one of these amendments. They can respond and 
then we can vote one after another, if that would expedite the process.
  Mr. HATCH. That is fine with me.
  The PRESIDING OFFICER. The Senator may proceed for 3 minutes.
  Mr. WELLSTONE. Amendment No. 70, the first amendment, fixes the means 
test so that it looks at present and future income, not over the past 6 
months. If someone has been laid off work just yesterday and you look 
at their income over the past 6 months, that is not a very accurate way 
of determining whether or not they can file for chapter 7 or how they 
can rebuild their lives. So this means test now in the bill is unfair. 
This is a very important correction.
  Amendment No. 71 strikes the 5-year waiting period for a new chapter 
13 filing. I thought colleagues wanted people to go chapter 13. You 
have an elderly person, a major medical bill puts them under. They file 
for chapter 13 under existing law. If it happens a year from now, they 
can file for chapter 13 again. With this bill, they can't file chapter 
13 for 5 more years. This is especially discriminatory against elderly 
people who are struggling with medical illness.
  Finally, amendment No. 73, a safe harbor for folks who file because 
of job losses as a result of unfair foreign trade. What I am saying is, 
there are many egregious loopholes that will make it hard for people to 
get the relief they need. At the very minimum, if you have people in 
your State who have lost their jobs because of unfair competition, 
because of unfair trade competition, at the very minimum, they ought to 
be exempt from these very harsh provisions. Many of us come from States 
where there are industrial workers. At the very minimum, we ought to be 
there for them.
  The PRESIDING OFFICER. The Senator from Utah.
  Mr. HATCH. How much time do we have?
  The PRESIDING OFFICER. The Senator has 3 minutes.
  Mr. HATCH. How much time remains? Did the Senator from Minnesota use 
all his time?
  Mr. WELLSTONE. Do I have time remaining?
  The PRESIDING OFFICER. One minute 4 seconds.
  Mr. WELLSTONE. Did my colleague from New Mexico need this minute and 
a half?
  Mr. DOMENICI. I would like to use half of it, if the Senator would 
give it to me, and I would ask the permission of the Senate to use the 
time for something else.
  Mr. WELLSTONE. That would be fine.
  Mr. DOMENICI. I so request.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  (The remarks of Mr. Domenici pertaining to the introduction of S. 543 
are printed in today's Record under ``Statements on Introduced Bills 
and Joint Resolutions.'')
  Mr. HATCH. Has the time of the Senator from Minnesota expired?
  The PRESIDING OFFICER. Yes.
  Mr. HATCH. Mr. President, I will be short. I know these amendments 
are well intentioned, but they are terrible amendments.
  The first amendment allows dishonest debtors to shield legitimate 
income from the court. The amendment creates a significant new loophole 
for debtors to exploit. The amendment would create an inaccurate 
picture of even an honest debtor's income by limiting the time period 
over which the income was measured. The legislation already allows the 
court to make adjustments to a debtor's income if necessary and, if 
necessary, to do justice. That amendment should be defeated.
  The second amendment will allow debtors to game the bankruptcy system 
by repeatedly filing in chapter 13. By striking the 5-year waiting 
period, the amendment encourages abusive repeat filings one right after 
the other. I hope our colleagues will vote that down.
  The third amendment would jeopardize bankruptcy reform by completely 
exempting debtors who lose their jobs because of trade imports from the 
provisions of the bill. Under the bill's means test, an unemployed 
worker would still be able to discharge all of his or her debts under 
chapter 7. This amendment, however, would exempt debtors from the 
alimony, child support, and other important protections provided by 
this bill. I worked long and hard for that, and I think almost 
everybody in this body wants it. I can't imagine anybody voting for 
that amendment, but I know it is well intentioned. We will leave it at 
that.
  I yield back the remainder of my time.


                        Vote on Amendment No. 70

  The PRESIDING OFFICER. The question is on agreeing to amendment No. 
70.
  Mr. HATCH. Mr. President, I ask for the yeas and nays.
  The PRESIDING OFFICER. Is there a sufficient second?
  There appears to be. 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 22, nays 77, as follows:

                      [Rollcall Vote No. 33 Leg.]

                                YEAS--22

     Akaka
     Boxer
     Carnahan
     Clinton
     Corzine
     Daschle
     Dayton
     Dodd
     Durbin
     Feingold
     Feinstein
     Inouye
     Kennedy
     Kerry
     Leahy
     Levin
     Murray
     Nelson (FL)
     Reed
     Rockefeller
     Sarbanes
     Wellstone

                                NAYS--77

     Allard
     Allen
     Baucus
     Bayh
     Bennett
     Biden
     Bingaman
     Bond
     Breaux
     Brownback
     Bunning
     Burns
     Byrd
     Campbell
     Cantwell
     Carper
     Chafee
     Cleland
     Cochran
     Collins
     Conrad
     Craig
     Crapo
     DeWine
     Domenici
     Dorgan
     Edwards
     Ensign
     Enzi
     Frist
     Graham
     Gramm
     Grassley
     Gregg
     Hagel
     Harkin
     Hatch
     Helms
     Hollings
     Hutchinson
     Hutchison
     Inhofe
     Jeffords
     Johnson
     Kohl
     Kyl
     Landrieu
     Lieberman
     Lincoln
     Lott
     Lugar
     McCain
     McConnell
     Mikulski
     Miller
     Murkowski
     Nelson (NE)
     Nickles
     Reid
     Roberts
     Santorum
     Schumer
     Sessions
     Shelby
     Smith (NH)
     Smith (OR)
     Snowe
     Specter
     Stabenow
     Stevens
     Thomas
     Thompson
     Thurmond
     Torricelli
     Voinovich
     Warner
     Wyden

                        ANSWERED ``PRESENT''--1

       
       Fitzgerald
       
  The amendment (No. 70) was rejected.
  Mr. COCHRAN. Mr. President, I move to reconsider the vote by which 
the amendment was agreed to.
  Mr. WELLSTONE. I move to lay that motion on the table.
  The motion to lay on the table was agreed to.


                        Vote on Amendment No. 71

  The PRESIDING OFFICER. The question is on agreeing to the amendment 
numbered 71 offered by Mr. Wellstone.
  Mr. WELLSTONE. I ask for the yeas and nays.
  The PRESIDING OFFICER. Is there a sufficient second?
  There is a sufficient second.
  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 36, nays 63, as follows:

                      [Rollcall Vote No. 34 Leg.]

                                YEAS--36

     Akaka
     Bayh
     Boxer
     Cantwell
     Clinton
     Conrad
     Corzine
     Daschle
     Dayton
     Dodd
     Dorgan
     Durbin
     Edwards
     Feingold
     Graham
     Harkin
     Hollings
     Inouye
     Jeffords
     Kennedy
     Kerry
     Kohl
     Landrieu
     Leahy

[[Page 3742]]


     Levin
     Lieberman
     Lincoln
     Mikulski
     Murray
     Reed
     Reid
     Rockefeller
     Sarbanes
     Schumer
     Wellstone
     Wyden

                                NAYS--63

     Allard
     Allen
     Baucus
     Bennett
     Biden
     Bingaman
     Bond
     Breaux
     Brownback
     Bunning
     Burns
     Byrd
     Campbell
     Carnahan
     Carper
     Chafee
     Cleland
     Cochran
     Collins
     Craig
     Crapo
     DeWine
     Domenici
     Ensign
     Enzi
     Feinstein
     Frist
     Gramm
     Grassley
     Gregg
     Hagel
     Hatch
     Helms
     Hutchinson
     Hutchison
     Inhofe
     Johnson
     Kyl
     Lott
     Lugar
     McCain
     McConnell
     Miller
     Murkowski
     Nelson (FL)
     Nelson (NE)
     Nickles
     Roberts
     Santorum
     Sessions
     Shelby
     Smith (NH)
     Smith (OR)
     Snowe
     Specter
     Stabenow
     Stevens
     Thomas
     Thompson
     Thurmond
     Torricelli
     Voinovich
     Warner

                        ANSWERED ``PRESENT''--1

       
     Fitzgerald
       
  The amendment (No. 71) was rejected.
  Mr. LEAHY. Mr. President, I move to reconsider the vote.
  Mr. REID. I move to lay that motion on the table.
  The motion to lay on the table was agreed to.


                      Amendment No. 73, Withdrawn

  Mr. WELLSTONE. Mr. President, I ask unanimous consent that the next 
amendment be withdrawn. I will be back with this amendment, but I want 
to move things along for a little while.
  The PRESIDING OFFICER. Is there objection?
  Without objection, it is so ordered.
  The amendment (No. 73) was withdrawn.
  Mr. REID. 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.
  Mrs. BOXER. Mr. President, I ask unanimous consent that the order for 
the quorum call be rescinded.
  The PRESIDING OFFICER (Mr. Smith of Oregon). Without objection, it is 
so ordered.


                     Amendment No. 42, As Modified

  Mrs. BOXER. Mr. President, I ask unanimous consent to modify my 
amendment No. 42. It has been cleared on all sides. I send the 
modification to the desk at this time.
  The PRESIDING OFFICER. Is there objection to the modification?
  Without objection, it is so ordered.
  Mr. HATCH. Reserving the right to object, do we have a copy of that?
  Mrs. BOXER. We showed it to the Senator's staff.
  Mr. HATCH. I don't think we will object. It is OK. I withdraw my 
reservation.
  The PRESIDING OFFICER. Without objection, the amendment is so 
modified.
  The amendment, as modified, is as follows:

       On page 147, line 3, strike ``$250'' and insert ``$750''.
  Mrs. BOXER. Mr. President, I thank Senator Biden, Senator Hatch, and 
Senator Clinton, who worked so hard with me on this issue. I thank 
Senator Phil Gramm as well. What we do is simply say that the 
definition of a luxury item will be raised from $250 cumulative to 
$750. Frankly, I don't think that is high enough, but it certainly 
moves us in the right direction. I hate to think that people who 
accumulate $250 on a credit card 90 days before bankruptcy will be 
assumed to be a bad person and committing fraud. I think this is a step 
in the right direction. I appreciate it.
  I also thank Senator Hatch and Senator Leahy on the other issue that 
they have agreed to place into the managers' amendment: My amendment to 
ensure that public education expenses are protected in bankruptcy as 
well as private education expenses. I am very pleased that would be in 
the managers' amendment.
  I will not ask for a rollcall vote but a voice vote on my amendment, 
as modified.
  The PRESIDING OFFICER. Does the Senator from Utah yield back time?
  Mr. HATCH. I am happy to accept this amendment and modification. I 
yield back whatever time we have.
  The PRESIDING OFFICER. The question is on agreeing to amendment No. 
42, as modified.
  The amendment (No. 42), as modified, was agreed to.
  Mrs. BOXER. Mr. President, I move to reconsider the vote.
  Mr. LEAHY. I move to lay that motion on the table.
  The motion to lay on the table was agreed to.


                           Amendment No. 105

  The PRESIDING OFFICER. The Senator from Vermont.
  Mr. LEAHY. Mr. President, a number of Senators have been discussing 
the issue of, for want of a better word, the cramdown issue. I ask 
unanimous consent that it be in order, notwithstanding cloture, to send 
to the desk an amendment related to the so-called cramdown issue, and 
that it be considered.
  The PRESIDING OFFICER. Without objection, it is so ordered. The clerk 
will report the amendment.
  The legislative clerk read as follows:

       The Senator from Vermont [Mr. Leahy] proposes an amendment 
     numbered 105.

  Mr. LEAHY. Mr. President, I ask unanimous consent that reading of the 
amendment be dispensed with.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  The amendment is as follows:

 (Purpose: To change the period for no cramdown of debt secured by an 
                  automobile from 5 years to 3 years)

       On page 138, line 19, strike ``5-year'', and insert ``3-
     year''.

  Mr. LEAHY. Mr. President, I urge adoption of the amendment.
  The PRESIDING OFFICER. Is there further debate on the amendment? The 
question is on agreeing to amendment No. 105.
  The amendment (No. 105) was agreed to.
  Mr. LEAHY. Mr. President, I move to reconsider the vote.
  Mr. REID. I move to lay that motion on the table.
  The motion to lay on the table was agreed to.
  Mr. REID. 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. 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. I further ask unanimous consent that the Senator from New 
Jersey be recognized for up to 15 minutes.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. TORRICELLI. Mr. President, I thank the distinguished Senator from 
Nevada for yielding the time.
  For more than 4 years, this body has considered the need for 
comprehensive bankruptcy reform. I have been very proud in each of 
those years to work with Senator Hatch and Senator Grassley in 
accommodating the needs of individual Senators in fashioning what I 
think is a fair and balanced approach.
  I am certainly grateful to each of them, as well as Senator Biden, 
Senator Sessions, and Senator Leahy, for what I think has been an 
extraordinary and a very balanced approach on incredibly complicated 
legislation that has accommodated so many individual Senators.
  We are now approaching the end of this very long and detailed debate. 
I think it is worth noting, as we approach a final vote, that the 
legislation before the Senate has not only been considered for many 
years but has received extraordinarily broad and deep support in the 
Congress. Indeed, very similar legislation passed the House of 
Representatives 2 weeks ago on a bipartisan basis with more than 300 
votes.
  That legislation provided an important change to what is, by any 
reasonable assessment, a very flawed bankruptcy system. Indeed, the 
best evidence of the need for this reform is that in 1998 alone, in the 
midst of one of the greatest economic expansions in American history, 
nearly 1.5 million Americans sought bankruptcy protection. This is a 
staggering 350-percent increase since 1980.
  Indeed, while the filings may have been reduced slightly in 1999, 
they are

[[Page 3743]]

still far too high. It is estimated that 70 percent of filings were 
made in chapter 7, allowing a debtor to obtain relief from almost all 
of their unsecured debts. Conversely, only 30 percent of petitions 
filed were under chapter 13, which requires a repayment plan. This is 
the heart of the problem. People with an ability to repay some debts 
are repaying almost no debts because current bankruptcy law allows them 
to choose, totally escaping responsibility.
  The Department of Justice estimated that 182,000 people last year 
could have repaid some of these debts and didn't. The question has come 
to the floor of the Senate, these 182,000 people, representing some $4 
billion that could have been repaid but escaped repayment, what this 
means in public policy. Members of the Senate appropriately have raised 
questions about the impact on families, on poor people, on middle-
income people, and on small businesses. Each of us has an obligation to 
ensure people meet their responsibilities, that we are not ending the 
opportunities for people who want, need, and deserve a second chance in 
American life.
  To our credit, in our system we have allowed people who often, 
through no fault of their own, face bankruptcy to get another chance. 
We have been particularly sensitive to the poor, that those who have 
been disadvantaged or face tragedy in their lives are given a chance to 
reorganize their lives, to start over, through the protection of 
bankruptcy. It is important that every Member of the Senate know that 
this bankruptcy bill was rewritten to be sensitive to these needs, and 
more.
  It has been argued on the Senate floor that these protections would 
help large American companies--credit card companies, banks, large 
retailers--who sometimes now are left with the price of inappropriate 
bankruptcies. It may help their interests. But how about the small 
retailer or the consumer who ultimately pays for inappropriate 
bankruptcies? How about the small business--the contractor, the 
subcontractor--that is left to absorb the cost of these inappropriate 
bankruptcies? It happens every day. As when one person or business 
inappropriately files for bankruptcy, though they could pay the bills 
and escape their obligation, that cost is passed along, not only to the 
consumer who pays more for everything in every store through every 
product but the subcontractors, the mom-and-pop businesses that are 
sometimes forced out of business by abuse of the bankruptcy law.
  I believe this reform and these changes protect them as well. But 
even so, if we did so while still victimizing the single mother or the 
child or child support, it wouldn't be worth doing. Indeed, I would be 
here opposing the bill rather than fighting for it.
  That is not what we did. This bill protects the American family, the 
vulnerable child, the single mother. Under current bankruptcy law, a 
single parent and the child are seventh in line behind the Government, 
accountants, rent, storage, and tax claims. Under this bill, a mother 
and child seeking money in bankruptcy stand behind no one. They are 
first in line in claiming assets in any bankruptcy.
  Second, the question has been brought to the Senate, How about those 
who are poor and seek protection in bankruptcy? Are they jeopardized if 
they are not single mothers or not children who, through no fault of 
their own, find themselves in bankruptcy?
  This bill provides a waiver so any judge can use discretion to ensure 
any citizen who needs bankruptcy protection because of extraordinary or 
extenuating circumstances, who is otherwise not eligible, can and will 
get it.
  Finally, the question has been raised on the Senate floor: Is it not 
true that all the fault of bankruptcy is not with the individual, it is 
sometimes with unscrupulous, unnecessary, even unconscionable credit 
solicitations? I cannot tell the Senate that in every way this bill 
provides all the consumer protection I think it should have. Rarely in 
the Senate do we get to vote on perfect legislation as envisioned by 
any Member. The question is, as in protection for women and children, 
Is it better than current law? Unquestionably, the answer is yes.
  There are 3.5 billion solicitations for credit cards in America every 
year, 41 mailings for every man, woman, and child in the country. The 
issue before the Senate is, If this bill is passed, is the consumer 
better protected than under current law?
  Under this bill, we will require the prominent disclosure of the 
impact of making only minimum payments every month so every consumer 
knows. Every consumer today does not know.
  It will require the disclosure of late fees, what they will be, and 
when they will be imposed. That is not required under current law.
  It will require disclosure of the date under which introductory or 
teaser rates will expire, as well as what the permanent rate will be 
after that time. That is not required under current law.
  I do not say this will provide perfect consumer protection but it is 
better consumer protection.
  So in all these ways we have taken a difficult situation, recognizing 
the reality of abuse of bankruptcy laws, and provided a more fair bill, 
with access to the courts, protecting the most vulnerable with 
meaningful consumer protection. For all those reasons I ask Members of 
the Senate who on several occasions previously have voted for this bill 
to do so again, recognizing the balance we have tried to reach in one 
of the most extraordinarily complex pieces of legislation in which I 
have ever been involved, and that we follow our 300 colleagues in the 
House, vote for this legislation, get it to the President in the belief 
that he will sign bankruptcy reform and will provide these added 
protections for American businesses, large and small, and for American 
consumers.
  With all the costs being imposed on American businesses in difficult 
and competitive times, one of the costs that should not be imposed is 
unfair and unreasonable petitions for bankruptcy from people and 
businesses that have the ability to repay these debts.
  At long last, after all these years, having spoken on this floor more 
times than I care to remember for bankruptcy reform, this is my last 
speech. The Senate is nearing its last action. It is time to vote for 
the bill and implement bankruptcy reform. I yield the floor.
  Mr. REID. Mr. President, 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 the order for the 
quorum call be rescinded.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. REID. Mr. President, I ask unanimous consent the Senator from 
Delaware be recognized. We are trying to work out a unanimous consent 
agreement here. He will yield to us at such time as that is ready to 
go.
  The PRESIDING OFFICER. The Senator from Delaware.
  Mr. CARPER. Mr. President, I thank Senator Reid. As we come to a 
conclusion on this bill, I just ask a couple of rhetorical questions I 
want us to consider. One of those is, do we believe as a people--not 
just as a Senate but as a people--that those in our country who incur 
substantial debt, in many cases through no fault of their own, should 
be able to gain access to help, to the forgiveness that can be found in 
a bankruptcy court? I think most of us would say, yes, they ought to 
have that right.
  If we ask the second question: If someone filing for bankruptcy has 
the ability to repay a portion of their debts, should we expect that of 
them? I think most of us in this Chamber and across the country would 
agree, if they have the ability to repay a portion of their debts, they 
ought to do that.
  Those are really the easy questions. The harder question in this 
debate is how do you determine who has the ability to repay a portion 
of their debts? In some cases, we give to a bankruptcy judge the 
discretion to make those decisions. In the legislation before us today, 
that we will vote on in a short while for final passage, we go a step 
beyond that. It is a good step.
  What we do is provide, in essence, a safe harbor for those who really 
do not

[[Page 3744]]

have a whole lot of money in the first place, so they can gain access 
to file under chapter 7 and not have to go through an extended process 
of demonstrating a need or lack of means.
  The way it works is pretty simple. I will discuss it again. I want to 
reiterate it.
  Those families whose income is below 100 percent of family median 
income--that is about $46,000 in Delaware for a family of four; in 
Alabama it might be $33,000; in Connecticut it might be $50,000--have a 
safe harbor. They can go right to chapter 7 and file. That is pretty 
much the ball game.
  For those whose income is between 100 percent of median income and 
150 percent of median income, they have the option to get an expedited 
review, and in all likelihood will go ahead and file under chapter 7 as 
well.
  For those people who have extenuating circumstances, and they don't 
meet either the test of safe harbor, the test of 100 percent or 150 
percent of median family income, or they have extra medical expenses, 
those can be taken into account. If they have extra expenses for 
educational needs, those can become extenuating circumstances. For 
people who have seen a marriage end or for people who have lost their 
jobs, those can be extenuating circumstances and be accounted for by a 
bankruptcy judge who is given discretion to decide whether or not a 
person can then go ahead and file under chapter 7.
  There is another very important change in the bill. I would like to 
share a letter I received from the child support enforcement agency in 
my State. As in other States, Delaware has a child support enforcement 
agency to make sure parents meet their obligations to their children 
for whom they do not have custody. In my State, our child support 
enforcement agency endorsed this legislation.
  Frankly, that has been the case in virtually every State across 
America. The reason they do it is simple. This legislation makes it 
more likely that people who have an obligation to the children for whom 
they don't have custody will meet their obligations. Similarly, people 
who have an obligation to their spouse or former spouse for alimony 
will meet that obligation.
  Under current law, once satisfied in bankruptcy, there are secured 
creditors, and there is money left over. When it comes to unsecured 
creditors, children and former spouses are near the end of the line.
  Under this bill, children, alimony payments, and child support 
payments move not to the end of the line under the nonsecured creditors 
but to the front of the line. That is an important change of which we 
need to be mindful.
  I know not everybody agrees with what we have done. There is some 
disagreement as well.
  We had debate on an amendment that said to those people who might try 
to take their assets and go to a State where there is no limit on the 
amount of money they can put into an estate, a home, or residence to 
protect it from bankruptcy--we have attempted to make a real change 
there--to the extent they would have done it, it would have had to have 
been at least 2 years before bankruptcy, and it is capped at $150,000.
  I know that causes heartburn for some people. But it also goes a long 
way in protecting the abuses that occasionally occur when people do 
just that.
  I thank Senator Hatch and Senator Sessions. I express my thanks to 
those on our side--especially to Senator Biden and Senator Torricelli, 
and others--who have worked real hard to get us to a compromise which I 
think is fairer to creditors and certainly fairer to those who incur 
debt than is the current case.
  I think it significantly increases the ability for those who have the 
capability of paying their debts to do so while better ensuring that 
those who do not will not be punished.
  I yield back the floor.
  Mr. REID. Mr. President, 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. LOTT. Mr. President, I ask unanimous consent that the order for 
the quorum call be rescinded.
  The PRESIDING OFFICER (Mr. Ensign). Without objection, it is so 
ordered.
  Mr. LOTT. Mr. President, I believe we are ready to go with a 
unanimous consent agreement which will allow us to complete action on 
this legislation and hopefully go to conference. Let me propound the 
request, see if we can get it locked in so that we can go ahead and get 
a vote here shortly. Let me note before I do that, we may allow, for 
instance, 10 minutes or 15 minutes for debate. I am assuming that maybe 
most of it will be yielded back. Obviously, you don't have to use the 
full time. That is why we do put some amount of time in here so that it 
will be available if there is a need for it.


  I ask unanimous consent that Senator Sessions be recognized to offer 
his amendment No. 59, that it be considered in order, and there be up 
to 10 minutes for debate, and following that debate, the amendment be 
agreed to and the motion to reconsider be laid upon the table. I 
further ask unanimous consent that Senator Feingold then be recognized 
to call up his amendment No. 51 and there be up to 15 minutes for 
debate and, following the debate, a vote occur.
  I further ask unanimous consent that all of the pending amendments be 
withdrawn, and I ask unanimous consent that following that, the Senate 
proceed to a managers' amendment, to be followed by third reading of 
the Senate bill, and the Senate proceed to the House companion bill, 
H.R. 333, and that the text of S. 420 be inserted, the bill be advanced 
to third reading, and passage occur on H.R. 333, as amended, and the 
Senate bill be placed on the calendar.
  Mr. WELLSTONE. Mr. President, I object.
  The PRESIDING OFFICER. Objection is heard.
  Mr. REID. Will the Senator allow me to make a statement?
  Mr. LOTT. I yield to Senator Reid for a comment at this point.
  Mr. REID. I ask that we vote on the Senate bill. That is what we had 
agreed to do.
  Mr. LOTT. Mr. President, on that, since the Chair asked for consent 
and it was objected to, Senator Reid is suggesting that a change be 
made. For the information of all Senators, this is standard and routine 
language necessary to send a bill to conference. This action is made 
and agreed to 40, 50 times on average in a year of a Senate session. 
However, this objection indicates to me that, once again, the goal here 
is to try to make it difficult for us to get to conference. The Senator 
from Minnesota knows what the rules are and what his rights are. You 
recall last year we had a hard time getting the bankruptcy bill into 
conference. It was for a different set of reasons, but that is what we 
have here, too.
  Again, I may have to go through some hoops to get this bill to 
conference. That could take some time, and I am prepared to do that, 
since there was objection heard. I think that with the kind of support 
this bill has, with Senators speaking for it on both sides of the 
aisle, and with 80 Senators voting to invoke cloture, surely a bill 
with that kind of support--and I assume there are going to be about 80 
votes for it on final passage--we should find a way to get it to 
conference.
  Since objection was heard, then I renew my request but amend it to 
withdraw the reference to the House companion bill so that passage 
would occur on the Senate bill.
  The PRESIDING OFFICER. Is there objection?
  Mr. REID. Reserving the right to object, Mr. President, I say to my 
friend from Alabama principally, because of a Senator wanting to vote 
on the underlying Feingold amendment and time being so precious, would 
the Senator from Alabama agree to roll those, have his after Senator 
Feingold debates his?
  Mr. SESSIONS. We are not going to vote on my amendment.
  Mr. REID. That is correct.
  Mr. SESSIONS. I would like to have it accepted before, and I would 
not need but 1 minute to comment on it.

[[Page 3745]]


  Mr. REID. Senator Feingold is here on the floor. The other question 
is, he has another amendment; it was my understanding that that was not 
going to be offered.
  Mr. FEINGOLD. I would just need a couple minutes to offer that as 
well.
  Mr. LOTT. Mr. President, I thought we clearly had an understanding on 
that. That additional Feingold amendment was not included in the UC. I 
urge the Senators to let us proceed with this UC because we are under 
severe time constraints now. Could we proceed with the UC as requested?
  The PRESIDING OFFICER. The Senator from Wisconsin.
  Mr. FEINGOLD. Mr. President, reserving the right to object, I want to 
be clear on the amendment No. 51, that was No. 51, as modified. The 
leader originally said amendment No. 51.
  Mr. REID. As modified.
  Mr. FEINGOLD. As modified.
  Mr. LOTT. We will make that change in the request: Amendment No. 51, 
as modified.
  Mr. FEINGOLD. Although I had intended to offer the other amendment, 
given the situation here, even though it is a very worthy amendment and 
really should be brought up on the floor, I am going to withdraw it at 
this time.
  Mr. LOTT. I would like to express our appreciation to Senator 
Feingold for his willingness to do that in an effort to accommodate 
Senators on both sides of the aisle.
  Mr. REID. Mr. Leader, I will just briefly say it is my fault. I 
explained that to Senator Hatch, and that was the agreement we had. I 
apologize to my friend from Wisconsin.
  Prior to passage, Senator Daschle wishes 5 minutes and Senator John 
Kerry 10 minutes.
  Mr. LOTT. Mr. President, I would modify the request but also would 
need to reserve an equal amount of time for Senator Hatch or his 
designee of 15 minutes in addition to that 15 minutes.
  Mr. SESSIONS. Reserving the right to object, I want to be sure that 
the modified language Senator Feingold cared about and that he wanted 
in there--we have agreed on that language?
  Mr. FEINGOLD. Mr. President, it is my understanding that we have 
agreed on the modification.
  Mr. SESSIONS. I believe we have, and I will not object.
  Mr. REID. The Chair has not accepted the unanimous consent agreement 
yet; is that true?
  I have been informed that the manager on this side wants 5 minutes, 
and the manager on the other side wants 5 minutes before final passage.
  Mr. LOTT. I believe Senator Hatch would be in control, or his 
designee, of a total of 20 minutes and 20 minutes on the other side 
divided among Senators Daschle, Leahy, Kerry and I hope none of them 
will take the full time.
  The PRESIDING OFFICER. Is there objection to the leader's request, as 
amended?
  Without objection, it is so ordered.
  Mr. LOTT. I yield the floor.
  The PRESIDING OFFICER. The Senator from Alabama.


                     Amendment No. 59, As Modified

  Mr. SESSIONS. Mr. President, I offer my amendment No. 59, as 
modified.
  The PRESIDING OFFICER. The clerk will report.
  The legislative clerk read as follows:

       The Senator from Alabama [Mr. Sessions] proposes an 
     amendment numbered 59, as modified.

  The amendment is as follows:

       On page 148, strike line 4 and all that follows through 
     page 151, line 15, and insert the following:
       (a) In General.--Section 362(b) of title 11, United States 
     Code, is amended--
       (1) by inserting after paragraph (21), as added by this 
     Act, the following:
       ``(23) under subsection (a)(3), of the commencement or 
     continuation of any eviction, unlawful detainer action, or 
     similar proceeding by a lessor against a debtor seeking 
     possession of residential property--
       ``(A) on which the debtor resides as a tenant; and
       ``(B) with respect to which--
       ``(i) the debtor fails to make a rental payment that first 
     becomes due under the unexpired specific term of a rental 
     agreement or lease or under a tenancy under applicable State, 
     or local rent control law, after the date of filing of the 
     petition or during the 10-day period preceding the date of 
     filing of the petition, if the lessor files with the court a 
     certification that the debtor has not made a payment for rent 
     and serves a copy of the certification upon the debtor; or
       ``(ii) the debtor has a month to month tenancy (or one of 
     shorter term) other than under applicable State or local rent 
     control law where timely payments are made pursuant to clause 
     (i), if the lessor files with a court a certification that 
     the requirements of this clause have been met and serves a 
     copy of the certification upon the debtor.
       ``(24) under subsection (a)(3), of the commencement or 
     continuation of any eviction, unlawful detainer action, or 
     similar proceeding by a lessor against a debtor seeking 
     possession of residential property, if during the 2-year 
     period preceding the date of filing of the petition, the 
     debtor or another occupant of the leased premises--
       ``(A) commenced another case under this title; and
       ``(B) failed to make any rental payment that first became 
     due under applicable nonbankruptcy law after the date of 
     filing of the petition for that other case;
       ``(25) under subsection (a)(3), of an eviction action, to 
     the extent that it seeks possession based on endangerment of 
     property or the illegal use of controlled substances on the 
     property, if the lessor files with the court a certification 
     that such an eviction has been filed or the debtor has 
     endangered property or illegally used or allowed to be used a 
     controlled substance on the property during the 30-day period 
     preceding the date of filing of the certification, and serves 
     a copy of the certification upon the debtor;''; and
       (2) by adding at the end of the flush material at the end 
     of the subsection the following: ``With respect to the 
     applicability of paragraph (23) or (25) to a debtor with 
     respect to the commencement or continuation of a proceeding 
     described in any such paragraph, the exception to the 
     automatic stay shall become effective on the 15th day after 
     the lessor meets the filing and notification requirements 
     under any such paragraph, unless--
       ``(A) the debtor files a certification with the court and 
     serves a copy of that certification upon the lessor on or 
     before that 15th day, that--
       ``(i) contests the truth or legal sufficiency of the 
     lessor's certification; or
       ``(ii) states that the tenant has taken such action as may 
     be necessary to remedy the subject of the certification under 
     paragraph (23)(B)(i), except that no tenant may take 
     advantage of such remedy more than once under this title; or
       ``(B) the court orders that the exception to the automatic 
     stay shall not become effective, or provides for a later date 
     of applicability.''.
       (3) by adding at the end of the flush material added by 
     paragraph (2), the following:

     Where a debtor makes a certification under subparagraph (A), 
     the clerk of the court shall set a hearing on a date no later 
     than 10 days after the date of the filing of the 
     certification of the debtor and provide written notice 
     thereof. If the debtor can demonstrate to the satisfaction of 
     the court that the sent payment due post-petition or 10 days 
     prior to the petition was made prior to the filing of the 
     debtor's certification under subparagraph (A), or that the 
     situation giving rise to the exception in paragraph (25) does 
     not exist or has been remedied to the court's satisfaction, 
     then a stay under subsection (a) shall be in effect until the 
     termination of the stay under this section. If the debtor 
     cannot make this demonstration to the satisfaction of the 
     court, the court shall order the stay under subsection (a) 
     lifted forthwith. Where a debtor does not file a 
     certification under subparagraph (A), the stay under 
     subsection (a) shall be lifted by operation of laws and the 
     clerk of the court shall certify a copy of the bankruptcy 
     docket as sufficient evidence that the automatic stay of 
     subsection (a) is lifted.

  Mr. SESSIONS. Mr. President, Senator Feingold and I have worked on 
this for some time. He cares very deeply about this. I did, too, as a 
matter of legal principle and what I thought was correct. I think we 
have language with which both of us can live. The perfect being the 
enemy of the good, we might as well just take the good and bring this 
matter to a conclusion.
  I yield the floor.
  The PRESIDING OFFICER. The Senator from Wisconsin.
  Mr. FEINGOLD. Mr. President, as the Senator from Alabama suggested, I 
don't think either one of us is entirely happy with the outcome of 
this. I hope we have something that takes a more reasonable approach to 
the landlord-tenant situation.
  Mr. SESSIONS. Mr. President, I yield back my time on the amendment 
and suggest the absence of a quorum.
  The PRESIDING OFFICER. The clerk will call the roll.
  The legislative clerk proceeded to call the roll.
  Mr. REID. Mr. President, I ask unanimous consent that the order for 
the quorum call be rescinded.

[[Page 3746]]

  The PRESIDING OFFICER. Without objection, it is so ordered.
  The PRESIDING OFFICER. Under the previous order, the amendment No. 
59, as modified, is agreed to.
  The amendment (No. 59), as modified, was agreed to.
  The PRESIDING OFFICER. The Senator from Wisconsin is recognized.


                     Amendment No. 51, As Modified

  Mr. FEINGOLD. Mr. President, I send amendment No. 51, as modified, to 
the desk.
  The PRESIDING OFFICER. The clerk will report.
  The legislative clerk read as follows.

       The Senator from Wisconsin [Mr. Feingold], for himself, Mr. 
     Thompson and Mr. Wellstone, proposes an amendment numbered 
     51, as modified.

  The amendment is as follows:

 (Purpose: To strike section 1310, relating to barring certain foreign 
                               judgments)

       On page 439, strike line 19 and all that follows through 
     page 440, line 12.

  Mr. FEINGOLD. Mr. President, I am happy to be joined in offering this 
bipartisan amendment by the Senator from Tennessee, Mr. Thompson, and 
the Senator from Minnesota, Mr. Wellstone. I ask unanimous consent they 
be listed as original cosponsors.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. FEINGOLD. Mr. President, this amendment would delete section 1310 
from the bill. Section 1310 is the epitome of a special interest fix--
its language purports to be general, it identifies no particular 
person, but it is targeted to affect only a tiny number of people who 
were involved in cases arising out of transactions with Lloyd's of 
London, a large multinational insurance company.
  Those people who invested with Lloyd's are called ``names.'' This 
provision, which bars the enforcement of certain foreign judgments 
against some of the ``names'' has nothing whatsoever to do with 
bankruptcy law. Very few people have heard of it but it has some 
history: It has been quietly promoted for at least a couple of years 
now, but it has never been the subject of a full hearing in the 
Judiciary committee. It found its way into the conference report that 
served as a vehicle for bankruptcy legislation last year, although it 
had never been debated or discussed in committee or on the floor. Let 
me emphasize that point: this special provision was nowhere to be found 
in the Senate bankruptcy bill in the last Congress. Nor was it in the 
House bankruptcy bill last year. Yet somehow, late last year, it was 
quietly slipped into the conference vehicle that was negotiated in 
secret. That vehicle was the empty shell of a bill unrelated to 
bankruptcy, into which was inserted the version of the bankruptcy bill 
favored by the majority leadership, along with the special-interest 
provision that my amendment seeks to strike. Somebody in Congress 
arranged that, but nobody in Congress ever voted on it. In the end, 
last year's conference report was vetoed.
  As a result Section 1310 has been treated as part of the bill we 
started with this year, and it has reappeared in the version of the 
bill before us: the same provision, designed to assist only about 250 
investors in Lloyds of London, the Names, who lost money on asbestos-
related claims in the 1980s. These individuals had judgments entered 
against them in British courts, and American courts repeatedly have 
declined to throw out those judgments. In fact, eight circuit courts 
have ruled that these investors' disputes with Lloyds should be settled 
in British courts. Now, to be fair, the Names have attorneys who argue 
that the British courts won't treat their clients fairly and that their 
clients have suffered as a result. So they have been seeking special 
treatment from the Congress, and if the final conference vehicle had 
not been vetoed last year they would have succeeded.
  Mr. President, this provision has been opposed by the State 
Department, under President Bill Clinton and George W. Bush. The State 
Department is worried about the impact of a law that gives the back of 
the hand to respected foreign courts, courts that we will rightly 
expect to respect and enforce the judgments of American courts. Here is 
what a State Department spokesman had to say about this issue in a 
Reuters article, dated March 13:

       We have reservations about section 1301. There are 
     commercial disputes involving U.S. and British companies 
     every day. It is inevitable that, in some of those disputes, 
     U.S. parties will lose.
       But this cannot be the basis for the U.S. Congress to 
     overturn decisions of both British and U.S. courts. Such 
     action would be directly at odds with our own international 
     economic policy, which promotes a rules-based system premised 
     on the rule of law to protect U.S. investors abroad.

  Just this morning Mr. President, I received a letter in support of 
our amendment, signed by Secretary of State Colin Powell and Secretary 
of the Treasury Paul O'Neill.
  I ask unanimous consent that the text of the letter be printed in the 
Record.
  There being no objection, the letter was ordered to be printed in the 
Record, as follows:

                                       The Secretary of State,

                                       Washington, March 15, 2001.
     Hon. Russell D. Feingold,
     U.S. Senate.
       Dear Senator Feingold: We write in support of the amendment 
     that you and Senator Thompson have introduced to S. 420 (The 
     Bankruptcy Reform Act). The Administration supports the 
     overall bankruptcy reforms contained in S. 420. However, the 
     Administration opposes Section 1310, which would bar 
     enforcement in the United States of any foreign judgment 
     between 1975 and 1993 if a U.S. court finds that the judgment 
     was derived from fraud.
       Section 1310 is intended to provide relief for some 
     American investors who have a private commercial dispute with 
     the Lloyd's of London (UK) insurance market that, according 
     to the contracts they signed with Lloyd's, must be heard in 
     British courts. U.S. courts have dismissed all attempts by 
     these investors to sue here, requiring that they resolve 
     their dispute in the United Kingdom as provided by their 
     contractors. U.S. courts have upheld the enforcement of the 
     U.K. court judgments. The investors now want legislation to 
     overturn these decisions.
       By directing the outcome in these court cases, Section 1310 
     has the potential to undercut the rule of law as it applies 
     across international borders today, with serious consequences 
     for U.S. commercial and other interests. Commercial disputes 
     involving American and British companies arise every day, and 
     it is inevitable that American parties sometimes lose. 
     However, that cannot be the basis for federal legislation to 
     overturn the decisions of both British and U.S. courts. Such 
     action would be directly at odds with our goals of promoting 
     a rules-based system to protect U.S. investors abroad.
       The American investors have had the opportunity to argue 
     the merits of their position before U.S. courts, as well as 
     in the United Kingdom, but have not prevailed. For example, 
     under U.S. law, our courts can refuse to enforce foreign 
     court judgments if they find that the foreign court failed to 
     follow fundamental standards of fairness and due process, or 
     if the judgments violated our public policy. State and 
     federal courts hearing these cases have not found this 
     threshold to be met.
       In these circumstances, intervening in these private 
     commercial matters through legislation could open the door to 
     reciprocal treatment in other countries. The result would be 
     to undercut the orderliness and predictability that are 
     essential to international business transactions and crucial 
     to our Nation's economic well-being. It could also weaken our 
     ability to negotiate new international rules on enforcement 
     of civil judgments and to promote the enforcement of child 
     custody cases.
       We respectfully urge that the Senate adopt the amendment to 
     remove Section 1310 from the Bankruptcy Reform Act.
           Sincerely,
     Paul H. O'Neill,
                                        Secretary of the Treasury.
     Colin L. Powell,
                                               Secretary of State.

  Mr. FEINGOLD. The Organization for International Investment, the 
National Association of Insurance Commissioners, and the Council of 
Insurance Agents and Brokers oppose the provision because of their 
concern over its potential impact on the international insurance 
market.
  Now I realize there are arguments on the other side. The Names argue 
that they were defrauded by Lloyds, misled into investing when Lloyds 
knew that there were going to be many claims based on asbestos 
litigation. And despite their consistent losses in courts on both sides 
of the Atlantic, they might be right, and maybe the courts have been 
wrong not to let them make their claims of fraud in the way that they 
desired.
  They may believe they were right to try to avoid the judgments 
against

[[Page 3747]]

them. But Mr. President, I don't think we in the Senate are in a better 
position than the courts to assess those arguments at this point. I am 
not yet convinced that this is a matter that should be addressed by 
legislation, certainly not by bankruptcy legislation, and very 
certainly not without a hearing. At the very least, we need to have a 
full hearing and air these issues in a public forum, that will lend 
itself to a thoughtful and deliberate consideration of the issues. The 
kind of insiders' deal that led to this provision being added for a 
small group of people should be unacceptable to anyone who cares about 
maintaining the people's confidence in the integrity of the legislative 
process.
  I hope my colleagues will join me in this bipartisan effort to strike 
this provision for a few simple reasons: It is a special deal for a 
very small group of people--they represent about one one-millionth of 
our population, but they somehow had the clout to get it inserted into 
the bill; it will undermine the ability of American courts to see their 
judgments enforced abroad; and it has not been fully considered by the 
Judiciary Committee or the full Senate--there have been no hearings, no 
debate and until the last few days, no knowledge by most members that 
this provision was even a part of the bill.
  We should strike Section 1310 and then we should ensure that it does 
not sneak back into the bill at a later date. If we adopt this 
amendment, I will keep an open mind on the issue of the remaining 
Lloyds names if it comes before the committee in the future, and I 
won't oppose a request to the chairman of the Judiciary Committee to 
schedule a hearing to examine the issues in full if the Names wish to 
pursue a legislative remedy through the normal channels. But until 
then, this special interest provision has no place in the bankruptcy 
bill or any other bill.
  Mrs. LANDRIEU. Mr. President, I have received a number of letters on 
this subject. I ask unanimous consent that they be printed in the 
Record.
  There being no objection, the letters were ordered to be printed in 
the Record, as follows:

                                                     New York, NY.
     Re 8-420 Bankruptcy Abuse Prevention and Consumer Protection 
         Act of 2001, Sec. 1310. Enforcement of Certain Foreign 
         Judgments Barred.

       Dear Senator Landrieu: I write to enlist your support in 
     protecting hundreds of innocent victims from what many 
     consider to be the biggest, most sophisticated, deliberate 
     securities fraud in financial history that has been 
     perpetrated by Lloyd's of London.
       In the mid-seventies, when Lloyd's realized the extent of 
     their exposure from underwriting insurance policies exposed 
     to huge losses from asbestosis and pollution they set out to 
     recruit Americans and other foreign investors to fund their 
     losses. They did this with what we now know were fallacious 
     financial statements for unregistered securities. More than 
     three thousand Americans, who are called Names, were 
     recruited. They were induced on the basis of Lloyd's three 
     hundred year history to undertake what was purported to be a 
     safe, conservative investment. My involvement with Lloyd's 
     has resulted, so far, in the loss of my family home, over 
     three hundred thousand dollars and my good health. Stress 
     from Lloyd's produced heart attack. Am 77.
       Over the years, many Names have become old and the draining 
     of their resources has brought much hardship to those 
     employed and to those no longer employed, especially those 
     who were counting on some income from their Lloyd's 
     investment to help sustain them in retirement. The constant 
     stress, effort and anxiety endured in battling for our 
     constitutional right to a fair trail, which Lloyd's has 
     fought with over eighty million dollars paid to lawyers, 
     lobbyists and campaign contributions to legislators and 
     insurance commissioners, has taken a toll on all of us. Names 
     have already sacrificed millions of dollars, stock and real 
     estate to satisfy Lloyd's claims, but they are not through 
     with having us cover their losses and that is why we need 
     your help in passing Sec. 1310. I implore you to resist 
     efforts by those conspiring to deny Names of their right to 
     due process. The deceit and arrogance of Lloyd's can no 
     longer be tolerated.
       For the full, sordid story of fraud at Lloyd's I refer you 
     to www.truthaboutlloyds, the special twenty-four page report 
     in the February 21, 2000 European Edition of Time magazine 
     and current articles in the Los Angeles Times on the former 
     California Insurance Commissioner's acceptance of gifts and 
     four hundred thousand dollars from Lloyd's and their lawyers, 
     LeBoeuf, Lamb, Greene & MacRae, for among other things 
     promoting opposition in the insurance and legal communities 
     to the just claims and interests of the Names.
       Thank you for your kind attention and, I hope, your vote in 
     favor of S. 420, Sec. 1310.
           Yours truly,
     Edith Anthoine.
                                  ____



                                              San Antonio, TX,

                                                   March 13, 2001.
     Hon. Mary Landrieu,
     Hart Office Building,
     Washington, DC.
       Dear Senator Landrieu: I am an 80-year-old grandmother who 
     has worked and saved all my life and who attempts to live 
     honorably, only to be cheated and lied to by fancy pants, 
     smooth talking Englishmen representing Lloyd's of London. For 
     the past decade I have been traumatized by their threats. 
     Much of my life savings have been depleted by their 
     fraudulent representations. They have used every legal trick 
     known, plus many they invented, to keep out of U.S. courts 
     because they, along with those who have aided and abetted 
     them, know that their lawlessness and misdeeds would be 
     exposed.
       As I understand the Bankruptcy Bill, Section 1310 prohibits 
     the granting of a foreign judgment without giving the 
     defrauded defendant an opportunity to present the merits of 
     his/her case in a U.S. court. It seems to me that any fair-
     minded person would savor the justice implicit in this 
     Amendment. Foreign interlopers who commit fraud in this 
     country should not use the technicalities of foreign 
     judgments to harvest their fraudulent gains. This will 
     provide Constitutional due process to me and other Lloyd's 
     victims. It will also provide American due process to future 
     victims of fraud by foreigners.
       I urge, and count on you to enthusiastically support this 
     Amendment. Thank you for your help on this vital matter.
           Sincerely yours,
     Joan B. Wilson.
                                  ____

                                                   March 13, 2001.
       Dear Senator Landrieu, I am a senior citizen and am among 
     those who have been hurt by Lloyds.
       Right now, of course, I need what funds I do have to live 
     on as I cannot work anymore. We (my now deceased husband & 
     myself) had to sell an income producing apartment house in 
     downtown Reno in order to pay what they requested of our 
     letter of credit. In addition they wanted even more than 
     that. We could not pay it. So, we were not ``wealthy 
     Americans'' who could afford a big loss, or who refused to 
     pay--we just didn't have it.
       With the constant threat of Lloyds grabbing everything--
     life as you may understand--was not easy. However, compared 
     to those who went bankrupt or homeless--as dreadful as our 
     situation was, we were better off than those who went 
     bankrupt or lost their homes. Lloyds is without a conscience.
           Sincerely,
     Beverly Hudson.
                                  ____



                                              New Orleans, LA,

                                                   March 13, 2001.
     Re Section 1310 of the Bankruptcy Bill (S-420).

     Hon. Mary Landrieu,
     Hart Senate Office Building,
     Washington, DC.
       Dear Senator Landrieu: I am a 72-year-old widow whose 
     husband was an investor in Lloyd's of London along with my 
     son and daughter. When my husband learned of Lloyd's fraud 
     and the devastating affect it could have upon our two 
     children he spent tireless hours attempting to right this 
     very very wrong. It seemed at every turn, Lloyd's was far too 
     powerful and far too well heeled, for my husband to fight 
     this massive institution. As the stress continued to mount 
     against him, in November of 1993 he died of a heart attack.
       What Lloyd's of London did to my husband and my family, I 
     will never forgive. It is my understanding that you are 
     making the effort to stand up for the rights of Lloyd's 
     investors by urging the passage of Section 1310 in the 
     Bankruptcy Bill. It is my understanding that Section 1310 is 
     designed to provide a level playing field, something that 
     neither my husband nor children have had in connection with 
     their investment at Lloyd's. You are absolutely doing the 
     right thing.
       I would ask that you let other colleagues in the Senate 
     know that if Section 1310 is not passed it will likely wipe 
     out all that my husband and two children have worked for. I 
     ask for my children, that you ask your colleagues to pass 
     Section 1310 and give all of Lloyd's investors a fighting 
     chance to put Lloyd's fraud behind them forever.
       I would also like to thank you very much on behalf of my 
     family for taking the time to correct this wrong and not 
     having asked for anything in return.
           Thank you very much,
     Ruth G. Tufts.
                                  ____



                                              San Antonio, TX,

                                                   March 13, 2001.
     Senator Mary Landrieu of Louisiana,
     U.S. Senate.
       I am writing to you about S. 420 Bankruptcy Bill, Sec. 
     1310. I am desperately in need of your support of this 
     legislation. It will allow me to raise a defense of fraud 
     prior

[[Page 3748]]

     to any enforcement of Lloyd's of London judgment against me 
     issued by a thoroughly biased English Court. Why is Lloyd's 
     so fearful of facing the U.S. Justice system if they are not 
     guilty?
       Lloyd's of London purposely withheld and actively concealed 
     information from U.S. citizens regarding existing asbestos 
     claims. I foolishly believed their prior reputation and 
     invested the inheritance that my father worked so hard for--
     only to lose it all--and much more. I was repeatedly falsely 
     reassured in written communications that ``things would 
     certainly improve next year''. As you no doubt know, the U.S. 
     Justice Department and Postal Service is currently 
     investigating Lloyd's. How can they have any credibility at 
     all? I resigned in 1993 and have been fighting them at great 
     financial and emotional expense ever since.
       I am not a wealthy person. I am the same Shirley Cook, 
     third grade teacher, mentioned in the Time Magazine article 
     of February 28, 2000. I am now retired, age 65 and receive 
     slightly over $20,000.00 per year in retirement. I live in a 
     quite average house with a leaky roof and currently drive a 
     seven-year-old automobile.
       Lloyd's has offered me a ``settlement'' of its fraudulent 
     claims against me, but offer no legitimate proof of the 
     validity of their demands. Even worse, there is no finality. 
     If they want more money anytime in the future, all they have 
     to do is bill me. If I move, I must notify them of my 
     whereabouts! In fact, by payment of the settlement offer, I 
     absolve them of any past, present or future claim of fraud 
     and give up all rights to recourse of any kind. This is 
     certainly not the American way. It is a travesty, and to me, 
     personally, a tragedy.
       I implore you to vigorously support and vote for justice 
     for the Americans, your constituents, who were ill treated by 
     a foreign court favoring a dishonest foreign company.
           Most respectfully,
     Shirley M. Cook.
                                  ____



                                              San Antonio, TX,

                                                   March 13, 2001.
     Hon. Mary Landrieu,
     Hart Senate Office Building,
     Washington, DC.
       Dear Senator Landrieu: As an 80 year old grandmother, who 
     has been thoroughly skinned by Lloyd's of London, I am again 
     dismayed by their arrogance and audacity in coming to 
     Washington to oppose legislation aimed at assuring Americans 
     Constitutional due process in United States courts.
       It is obvious to me that they are afraid that a trial on 
     the merits would expose their fraud and deviousness. The 
     United States Department of Justice, the Postal Service and 
     the California Attorney General all seem to smell a rat in 
     their behavior. Please don't let them pull the wool over the 
     eyes of the Senate. I plead with you to support Section 1310 
     of the Bankruptcy Bill.
       Trusting your wisdom and support, I remain
           Respectfully and sincerely yours,
     Joan B. Wilson.
                                  ____



                                                 New York, NY,

                                                   March 13, 2001.
     Senator Mary Landrieu,
     U.S. Senate,
     Washington, DC.
       Dear Senator Landrieu: I write to you in explanation of why 
     it seems so terribly important that you vote for the bill 
     which includes section 1301: it's a request for your 
     understanding of the difficulty of being 79 years old and 
     under acute stress because I wait to see what terrible move 
     Lloyd's will make next. I'm not the suicide type and I intend 
     to fight to the last ditch, but they have made light of the 
     many years I have worked and lived carefully, of the fact 
     that I trusted them on their assurance that Names would be 
     first in their consideration, that they would certainly honor 
     my request for modest and safe participation in their 
     investments.
       I had a sum of money because I lost my husband in an 
     airplane accident from which I miraculously was rescued. The 
     court awarded me some money. That together with my earnings 
     which were at the time $39,000 annually, gave me $400,000, 
     which was enough for them to accept me. Obviously it had to 
     be a modest participation. I told them my goals were to make 
     a bit of supplementary money annually. They appeared to 
     understand. But what they did was something else again. They 
     put me on syndicates which they knew to be already 
     treacherous--with upcoming liabilities of billions of 
     dollars. What kind of a character does that? Do they deserve 
     the immunity that their courts have granted them? The inside 
     traders all took themselves off the syndicates. The man who 
     handled my affairs retired (in his 50s) and I should have 
     suspected.
       I'm still working. I really dare not stop. If we can get 
     1301 through, we will not be ducking our debts. We will 
     simply be getting the time and opportunity to bring our fraud 
     charges to the American court system where we as citizens 
     should be able to plead our case and have it aired once and 
     for all. Please help to give us that chance.
       Thank you for your attention to my letter.
           Sincerely yours,
     Barbara Lyons.
                                  ____



                                              New Orleans, LA,

                                                   March 13, 2001.
     Re Section 1310 of the Bankruptcy Bill (S-420).

     Hon. Mary Landrieu,
     Hart Senate Office Building,
     Washington, DC.
       Dear Senator Landrieu: I respectfully urge your continued 
     support of Section 1310 and that you inform your Senate 
     colleagues of the importance of this provision, which will do 
     no more than give me and hundreds of other defrauded U.S. 
     citizens the ability to defend ourselves against the fraud 
     perpetrated by Lloyd's of London.
       Already as a result of Lloyd's fraud, I have had several 
     hundred thousand dollars confiscated by them; my wife and I 
     have partitioned our community to protect what is left of our 
     estate, and I have spent countless hours and spent thousands 
     of dollars in attorneys fees preparing for bankruptcy and 
     otherwise fighting the terrible Lloyd's nemace.
       If Section 1310 is not adopted, it is highly likely that 
     Lloyd's will successfully (and wrongly) reap the rewards of 
     their fraud against those hundreds of U.S. citizens and, 
     personally, require me to file for bankruptcy.
       As always, your help in protecting me, the citizens of 
     Louisiana, and in this case hundreds of U.S. citizens across 
     the country, is most appreciated.
           Sincerely,
                                                   Thomas O. Lind.
  Mr. THOMPSON. Mr. President, I agree with my colleague's assessment. 
This is simply an effort to abrogate a series of contracts. This was a 
contract dispute involving thousands of people; 97 percent of those 
people settled those lawsuits. There were some who didn't settle them. 
They went to court in England and raised a fraud claim and lost. They 
went to court in this country and raised the fraud claim and lost.
  In fact, there were two sets of lawsuits in England and two sets in 
America, and in every case the ultimate disposition at the appellate 
court level--five appellate courts in the U.S. ruled on the venue 
question, for example. In each and every case, they had their day in 
court and they lost. Some of them were on the fraud issue and some on 
other issues.
  The bottom line is that it is not our job in Congress to determine 
factual issues in a lawsuit. So after having lost two sets of lawsuits 
in each country, they have here a provision in the bankruptcy bill that 
would in effect open the lawsuit again. It says, ``notwithstanding any 
other provision of law or contract . . ..'' So it is a clear abrogation 
of contracts and opens the situation again for courts in this country.
  In addition to that, I am afraid it is clearly unconstitutional. 
Specifically, it violates article III in that it represents a 
congressional attempt to dictate a result with respect to the parties 
in a final determination by an article III court. As Judge Posner, of 
the Sixth Circuit, said, this thing has been litigated in England. The 
English system comports to our system. It is not exactly as if there 
was a due process of law situation. Most of us understand from where 
our court system comes. It was litigated. By this law, we are 
attempting to open up and overturn a final determination by an American 
court. If we get in the business in the Congress of overturning 
lawsuits with results we don't like, we will have clearly gone down a 
slippery slope and will be going contrary to the rule of law.
  Secretary Powell and Secretary O'Neill have sent us a letter, and it 
contains this provision:

       By directing the outcome in these court cases, Section 1310 
     has the potential to undercut the rule of law as it applies 
     across international borders today, with serious consequences 
     for U.S. commercial and other interests.

  I think they are right. Our sympathy is with the 300 or so Americans 
who had the opportunity to litigate this and lost, just as our sympathy 
is with the several thousand people who lost money and settled the 
lawsuits.
  But the rule of law must prevail, and we must be concerned about our 
own commercial interests if, in fact, we do this when we have a British 
citizen over here in our court that makes a similar determination.
  Mr. FEINGOLD. Mr. President, how much time do I have?
  The PRESIDING OFFICER. Two minutes.
  Mr. FEINGOLD. I ask the Senator from Tennessee if he will yield so I 
can

[[Page 3749]]

offer a minute to the Senator from Texas and a minute to the Senator 
from Delaware.
  Mr. THOMPSON. Yes.
  Mr. FEINGOLD. I thank the Senator from Tennessee.
  I yield a minute to the Senator from Texas.
  Mr. GRAMM. Mr. President, all over the world tonight, legislative 
bodies are meeting to try to protect their citizens from living up to 
obligations that they have with American economic interests. All over 
the world tonight, legislative bodies that don't live up to the 
standards we have set for this, the greatest deliberative body in 
history, are trying to change domestic laws to make it possible for 
people to violate international standards of business.
  There is no one in this body I care more about than the distinguished 
Senator from Alabama, and I have no doubt that there may very well have 
been wrongs committed in terms of selling people part of this 
liability. But I urge my colleagues tonight to look at the big issue of 
the viability of world commerce, and the enforceability of contracts, 
and to live up to the standards of the greatest deliberative body in 
history by adopting this amendment.
  Mr. FEINGOLD. I thank the Senator.
  I yield the remainder of my time to Senator Biden.
  Mr. BIDEN. Mr. President, I associate myself with the remarks of the 
Senator from Tennessee, as well as the Senator from Texas. 
International relations, this would be a very serious mistake for us to 
make. Beyond commerce, this will do damage, in my view, to our 
relations also with Great Britain. This will make it difficult for us 
to make the case that when we want foreign courts to make concessions 
based upon our needs, for them to be willing to do so, I think it is a 
mistake.
  I understand and admire the Senator from Alabama for his desire to 
protect the interests of a citizen or citizens of his State, or others, 
but I think this is a mistake.
  I yield the floor.
  The PRESIDING OFFICER. The Senator from Alabama has 7\1/2\ minutes.
  Mr. SESSIONS. Mr. President, I will refer to a letter from 
Congressman Henry Hyde, chairman of the House of Representatives 
Committee on International Relations and former chairman of the House 
Judiciary Committee, a man of great knowledge and experience. He says:

       This provision does not impact State regulation of 
     insurance and it does not violate any treaty obligations of 
     this country. Consistent with the Hague Convention, 
     recognition of a foreign award may be refused if the court in 
     the country where enforcement is sought finds that 
     ``recognition or enforcement of the award would be contrary 
     to the public policy of that country.'' It certainly is 
     contrary to the public policy of this country [Chairman Hyde 
     continues] for an individual to be defrauded and then denied 
     the right to assert fraud as a defense.

  I ask unanimous consent to have printed in the Record letters from 
the former Chief Justice of the Supreme Court of Alabama, and a former 
Democratic Senator from this body, Howell Heflin, who said:

       As a former judge, I am appalled at this entire situation.

  I also ask unanimous consent to have a letter from Senator Robert 
Kerrey of Nebraska and Mary Landrieu of Louisiana in reference to this 
matter, as well as a letter from Laura Unger, acting chairman of the 
Securities and Exchange Commission, printed in the Record.
  There being no objection, the letters were ordered to be printed in 
the Record, as follows:

                                      U.S. Securities and Exchange


                                                   Commission,

                                    Washington, DC, March 1, 2001.
     Hon. Michael G. Oxley,
     Chairman, Committee on Financial Services, House of 
         Representatives, Rayburn House Office Building, 
         Washington, DC.
       Dear Chairman Oxley: Thank you for your letter dated 
     February 28, 2001 regarding Lloyd's of London. As you stated 
     in your letter, the SEC has filed a number of briefs amicus 
     curiae with United States Courts of Appeals stating that 
     forum selection provisions entered into between Lloyd's and 
     plaintiffs in the cases violated the anti-waiver provisions 
     of the United States federal securities laws. The SEC stated 
     that these provisions acted to prohibit courts from giving 
     effect to contractual provisions precluding purchasers from 
     obtaining relief under the federal securities laws.
       As we stated in our briefs, Congress has made a legislative 
     determination of the rights and obligations necessary to 
     protect investors in the United States and directed that 
     those provisions cannot be waived. As a result, we continue 
     to believe that the antiwaiver provisions of the federal 
     securities laws render void any agreement to waive compliance 
     with those laws. The SEC, however, submitted its briefs 
     solely to address the legal issue of the applicability of the 
     anti-waiver provisions and took no position on any other 
     issue.
       I hope this information is helpful. If you have any further 
     questions, please do not hesitate to contact me.
           Sincerely,
                                                   Laura S. Unger,
     Acting Chairman.
                                  ____



                                                  U.S. Senate,

                                     Washington, DC, May 16, 2000.
     Hon. Orrin Hatch,
     Chairman, Committee on the Judiciary,
     Washington, DC.
       Dear Mr. Chairman: We are writing you regarding an issue of 
     concern to a number of us on both sides of the aisle. As we 
     understand it, you are aware that English courts have entered 
     summary judgments against hundreds of Americans who contend 
     that they were defrauded in the United States by Lloyd's of 
     London. These Americans were deprived of the right in these 
     actions of raising a fraud defense to Lloyd's claims. As a 
     result, they have asked Congress to give them the right to 
     raise their fraud claims in any collection action brought by 
     Lloyd's in the United States. They are merely asking to have 
     their day in court.
       Enclosed is a copy of the proposed language which would 
     provide these Americans with the right to their day in court. 
     As you will see, it is limited in scope and the burden of 
     proof will be upon those seeking to raise a fraud defense to 
     prove such fraud. The amendment would in no way mandate how a 
     court might ultimately decide whether fraud occurred. It 
     simply gives these Americans their day in court.
       We hope that it could be included in the pending bankruptcy 
     legislation when it emerges from conference. We would 
     appreciate your consideration in this regard.
           Sincerely,
                                                 Mary L. Landrieu,
     U.S. Senator.
                                  ____

                                                    Howell Heflin,


                                       U.S. Senator (Retired),

                                     Tuscumbia, AL, March 2, 2001.
     Hon. Russell D. Feingold,
     U.S. Senator, Hart Senate Office Building, Washington, DC.
       Dear Russ: I am writing you about a matter which will be on 
     the Senate floor next week. I would prefer to visit directly 
     with you, but unfortunately I am unable to make the trip at 
     this time.
       Our State Democratic Party chairman here in Alabama, Jack 
     Miller, and his law firm are old friends and supporters who 
     have been involved with me from the time I first ran for 
     Chief Justice of the Alabama Supreme Court and throughout my 
     political career. They tell me that over the last three 
     years, they have been working with a group of Americans who 
     invested in Lloyd's of London and they have been trying to 
     help them secure ``their day in court.'' This group invested 
     in the 1980s before it was generally known that Lloyd's was 
     facing horrendous asbestos losses. When they invested, they 
     were not told of these losses. Obviously, had they been aware 
     of the losses, they would not have made the investments.
       Despite the strong support of the SEC, including the SEC's 
     filing of amicus briefs with various courts, these Americans 
     have not been allowed to assert their claims of fraud by 
     Lloyd's. Lloyd's has used an agreement executed by agents 
     appointed by Lloyd's to preclude these Americans from raising 
     fraud as a defense. Lloyd's did this by passing a by-law 
     which authorized Lloyd's to appoint an agent for the 
     investors. The agent then signed away the investors' right to 
     assert fraud as a defense or to question how Lloyd's had 
     calculated what they allegedly owed. As a result of the 
     agent's actions, the investors were just given a sheet of 
     paper with the amounts owed and no backup information and 
     they were not permitted to question how the numbers were 
     calculated. Some of the investors instructed their agent not 
     to sign away their rights and those agents which followed the 
     investors' instructions were replaced by Lloyd's with an 
     agent which would do as Lloyd's instructed in direct 
     contravention of the instructions from the principal.
       As a former judge, I am appalled at this entire situation. 
     As I understand it, the provision in the pending bankruptcy 
     bill, Section 1310, simply will give these Americans the 
     right to have their case heard. The burden will be on them to 
     prove by clear and convicing evidence, the highest civil 
     standard, that they were defrauded.
       There are no treaty implications. The Hague Convention only 
     applies to arbitral awards, not judgements. Further, Article 
     V of the Convention permits host countries to refuse 
     enforcement of judgements which contravene the public policy 
     of the host country. It would be difficult to find a 
     situation

[[Page 3750]]

     which is more clearly against our country's public policy.
       I hear that you have been concerned over the increasing use 
     of arbitration provisions in the United States. Likewise, I 
     am seriously concerned. What Lloyd's is attempting to do 
     takes such provisions to a new level. The consumer is not 
     only expected to sign away his constitutional rights and 
     securities law protections, it can be done for him by another 
     who is appointed his agent by the other party.
       Finally, I gather that you have some questions regarding 
     how this provision became part of the bankruptcy bill. As I 
     understand it, my friends here in Alabama have been working 
     for years to find a legislative vehicle to help these 
     Americans secure a day in court. They have had bipartisan 
     support, including former Senator Bob Kerrey and Senator Mary 
     Landrieu. During their efforts over the last several years, 
     the firm contacted Senator Jeff Sessions since the firm and 
     Senator Sessions are both from Mobile. As a former U.S. 
     Attorney, Senator Sessions agreed that these people had not 
     been accorded their rights and he agreed to support their 
     efforts.
       I know that my friends here in Alabama would like the 
     opportunity to meet with you and to respond to any questions 
     you might have concenring this matter. If your scheduled 
     permits this to occur, please let me know.
       Thank you for considering what I have to say. I hope that 
     it won't be too long before we can visit in person again.
           Sincerely yours,
     Howell Heflin.
                                  ____

         House of Representatives, Committee on International 
           Relations,
                                    Washington, DC, March 5, 2001.
     Hon. Jesse Helms,
     Chairman, Senate Committee on Foreign Relations, Washington, 
         DC.
       Dear Chairman Helms: I am strongly supportive of Section 
     1310 of S. 420, the Bankruptcy Reform Act of 2001, and I seek 
     your support of this provision as well. It is important that 
     this provision remain in the Senate bill and not be stricken.
       This provision is necessary to allow American investors who 
     believe they may have been defrauded by Lloyd's of London an 
     opportunity to be heard in American courts. Section 1310 is 
     narrowly drafted to address the unique circumstances facing 
     those Americans who were recruited in the United States to 
     invest in Lloyd's before 1994 without full disclosure that 
     they would be saddled with asbestos liabilities. The English 
     court which rendered summary judgments in favor of Lloyd's 
     and against the American investors denied those investors the 
     right to assert fraud as an affirmative defense. Section 1310 
     provides a measured remedy in these cases, where, by clear 
     and convincing evidence, the burden of proof is on the 
     American investor to assert and prove fraud. As you are 
     probably aware, a number of Members and Senators on both 
     sides of the aisle, as well as the Securities and Exchange 
     Commission have endeavored to give the Americans who believe 
     they have been defrauded by Lloyd's legal forum in American 
     courts with respect to the representations that were made to 
     them in this country by Lloyd's and its agents. (See attached 
     copy of the Commission's letter to Chairman Oxley)
       The provision does not impact state regulation of insurance 
     and it does not violate any treaty obligations of this 
     country. Consistent with the Hague Convention, recognition of 
     a foreign award may be refused if the court in the country 
     where enforcement is sought finds that ``recognition or 
     enforcement of the award would be contrary to the public of 
     that country.'' It is certainly contrary to the public policy 
     of this country for an individual to be defrauded and then 
     denied the right to assert fraud as a defense.
       If you have any questions concerning this provision or my 
     support of it, I would be happy to discuss this matter with 
     you.
           Sincerely,
                                                       Henry Hyde.

  Mr. SESSIONS. This is a front page copy of Time magazine:

                       Lloyd's of London, 1688--?

       Its watchword is utmost good faith. So why does Lloyd's 
     stand accused of the greatest swindle ever?

  I was a Federal prosecutor for 12 years in Alabama. I was also in 
litigation. I am personally aware that there is fraud in big insurance 
companies. I had the opportunity and the responsibility to prosecute 
perhaps the largest insurance fraud case in the history of the United 
States that had even been investigated by committees here in the 
Senate. In that case, people were defrauded out of over $50 million-
plus. The guy who did that, Alan Teal, was convicted. It just so 
happened he had previously, years before, been a member of Lloyd's. 
That has nothing to do with this, but I relay it here to let you know 
that I understand insurance fraud and I have been involved in 
prosecuted the big cases.
  In addition, I was involved in asbestos litigation in the late 1970s. 
I know in the late 1970s there were thousands of asbestos cases being 
filed, tens of thousands were being filed, and more were on the way. 
Everyone knew it. Plaintiffs were beginning to win tremendous verdicts. 
Everybody who knew anything about the litigation wondered if there 
would ever be enough money to pay those verdicts.
  During this same period of time, the companies that had the 
guaranteeing of the insurance, the reinsurance, was Lloyd's of London. 
What did they do? They were sending representatives to the United 
States, asking those people to invest hundreds of thousands of dollars 
of their own money into these accounts, and they told them: People have 
done well investing in Lloyd's. We think you will do well. But you are 
liable for everything that can come up. It is in the fine print. But 
they invested, thinking Lloyd's had a good reputation. The company 
began in 1688 with Members of Parliament, with lords and earls as 
investors in this.
  So they invested, little knowing that the bullet was already in the 
heart, that this company faced absolute financial ruin as a result of 
the most unprecedented series of lawsuits in American history, asbestos 
lawsuits.
  Now, when this case went to trial, they said they had a trial over 
there. They passed a securities law in England similar to our 
securities law, except they exempted one named entity--Lloyd's of 
London. Many Members of Parliament who passed that law were investors 
in Lloyd's. I don't know if they recused themselves or not.
  These are some of the facts at which we are looking. The heart of the 
claim is this, that these American investors were not allowed to put on 
evidence in the British court that omission could lead to liability. In 
other words, they were not allowed to show under the law under which 
they were forced to operate, that Lloyd's had any duty to tell them 
when they were investing in these syndicates, that they were doomed to 
lose, and there would be money they would have to pay--really, tens of 
billions of dollars in asbestos claims, enough to ruin all of Lloyd's.
  They sold these investments to American citizens, who did not fully 
know what they were facing. As one said, these were massive, 
unquantifiable losses that were heading Lloyd's way like a tidal wave, 
visible only to the few professional insiders who were tracking 
asbestos claims.
  That was a fraud, I think, under any definition of the word.
  The British judge, who excluded all evidence except the written 
documents that were submitted to the investors as the only evidence 
that went in on the question of fraud, those documents were submitted 
and they said you could be liable for any claims that may come against 
Lloyd's, but they did not say this tidal wave of claims was coming.
  Up to 7 or more people all over the world, possibly up to 12, have 
committed suicide as a result of this. It has ruined the lives of many, 
many citizens.
  The judge who tried the case and who was bound by the law so he 
didn't let this evidence in, said, ``The catalog of failings and 
incompetence in the 1980s by underwriters, managing agents, members and 
agents and others is staggering and has brought disgrace on one of the 
city's great markets.'' He goes on to skewer Lloyd's for their 
behavior, yet we can't get a remedy.
  This says you don't get money as a result, you only go to court and 
show in a court of law you may have been defrauded.
  Mr. President, let me take just a moment to more fully explain the 
issues involved in this section of S. 420 that we are debating here 
today.
  The Lloyd's of London provision would allow American investors in 
Lloyd's to defend against debt collection actions by Lloyd's in 
American courts by attempting to show that Lloyd's defrauded them when 
it recruited them as investors in the United States. The investors 
claim that Lloyd's of London recruited them as investors with unlimited 
liability and

[[Page 3751]]

without disclosing to them massive impending liabilities for asbestos 
and pollution losses.
  This provision was added in the quasi-conference on the Bankruptcy 
Bill last year. Republicans and Democrats alike agreed to it.
  The provision was in the Bankruptcy bill as introduced and passed by 
the Judiciary Committee of the House and by the whole House this year. 
It was in the Bankruptcy Bill as introduced and passed by the Senate 
Judiciary Committee this year where Senator Feingold mentioned his 
objections to it.
  There are legitimate arguments on both sides of this issue. I have 
listened to investors, and I have listened to Lloyd's of London. 
Further, my colleague from Wisconsin has spoken against this provision, 
and I respect his view.
  Lloyd's asserts that an English court has found that Lloyd's, as a 
corporate entity, was not liable for fraud to several American 
investors that participated in that trial; that international law and 
comity among nations demands that we respect the judgment of the 
English courts;
  That the agreements signed by the investors had forum-selection and 
choice-of-law clauses which provided that any dispute would be 
litigated in English courts under English law; and
  That American courts have upheld the forum-selection and choice-of-
law clauses.
  On the other hand, the investors contend that Parliament precluded 
suits against Lloyd's for negligence and breach of contract in 1982 and 
for securities fraud in 1986; that after the investment contract was 
signed, Lloyd's changed its by-laws to require investors to pay their 
losses before asserting fraud as a defense even though many investors 
can't afford to pay their losses in full!;
  That the English court failed to address allegations of fraud that 
took place in America;
  That in 1995 a Colorado court, at the behest of state attorneys 
working under Gale Norton, issued a preliminary injunction against 
Lloyd's stating its statements to American investors were ``materially 
misleading and false because, as a result of underwriting and 
reinsurance of asbestos-related liabilities in various syndicates, 
which liabilities had not been disclosed to [investors], those 
[investors] . . . are exposed to indefinite liability both in terms of 
amount and duration . . . .'';
  That in 1996, Lloyd's settled the fraud claims of numerous State 
securities regulators by agreeing to reduce its claims against settling 
investors by $62 million; and
  That in the February 26th edition of the Wall Street Journal it was 
reported that Lloyd's is currently under criminal investigation 
relating to defrauding its American investors.
  In my view, this comes down to a very simple question:
  Is this situation egregious enough to warrant an exception to the 
general rule of comity on judgments?
  I believe that it is because of my personal experience as both 
Attorney General of my State and a federal of prosecutor.
  I prosecuted criminals who defrauded policy-holders and investors.
  In 1979, I became aware that insurance companies knew of large 
asbestos losses discovered in litigation in Pascagoula, Mississippi, 
and that these losses would be catastrophic to the insurance companies.
  I know what it means to a family to be defrauded by an insurance 
company. It is wrong.
  I believe in the sanctity of contract, but there is no contract if 
the investors were fraudulently induced to enter the investment 
agreement.
  I believe in comity with the British government, but there is no 
comity if Parliament protects Lloyd's, but Congress does not protect 
American investors.
  I believe that helping wealthy investors should not be at the top of 
our priority list, but many of these investors are not wealthy and as 
Time magazine reported some have even lost their homes to Lloyd's.
  I also believe that defrauding investors is intolerable, but that it 
is possible Lloyd's did not commit fraud.
  However, under the current post-contract term that requires the 
investors to pay before they assert fraud as a defense, investors who 
cannot afford to pay their loss in full cannot prevent debt collection 
actions by Lloyd's even if Lloyd's did defraud them.
  This amendment says that international comity is a two-way street. 
The British Parliament cannot protect wealthy British investors from 
negligence and securities law claims and expect the American Congress 
not to at least give American investors a chance to assert fraud as a 
defense to debt-collection actions--a right that the investors had when 
they signed their investment contracts but that was unilaterally 
stripped away from them by Lloyd's after the fact.
  Accordingly, I support this narrow provision in the bill to allow 
pre-1994 American investors to assert fraud as a defense prior to 
payment. If they cannot prove fraud by clear and convincing evidence, 
they will lose. If they can prove it, they will win. That is only fair.
  Mr. FEINGOLD. I ask for the yeas and nays on the amendment.
  The PRESIDING OFFICER. Is there a sufficient second?
  There is a sufficient second.
  The question is on agreeing to the Feingold amendment, No. 51, as 
modified.
  The PRESIDING OFFICER. The clerk will call the roll.
  The legislative clerk called the roll.
  Mr. FITZGERALD (when his name was called). Present.
  Mr. STEVENS (when his name was called). Present.
  Mr. REID. I announce that the Senator from California (Mrs. Boxer) is 
necessarily absent.
  The result was announced--yeas 79, nays 18, as follows:

                      (Rollcall Vote No. 35 Leg.)

                                YEAS--79

     Akaka
     Allard
     Allen
     Bayh
     Biden
     Bond
     Brownback
     Burns
     Byrd
     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
     Hagel
     Harkin
     Hollings
     Hutchison
     Inhofe
     Inouye
     Jeffords
     Johnson
     Kennedy
     Kerry
     Kohl
     Leahy
     Levin
     Lieberman
     Lincoln
     Lugar
     McCain
     McConnell
     Mikulski
     Miller
     Murkowski
     Murray
     Nelson (NE)
     Nickles
     Reed
     Reid
     Roberts
     Rockefeller
     Santorum
     Sarbanes
     Schumer
     Shelby
     Smith (OR)
     Snowe
     Specter
     Stabenow
     Thomas
     Thompson
     Torricelli
     Voinovich
     Warner
     Wellstone
     Wyden

                                NAYS--18

     Baucus
     Bennett
     Bingaman
     Breaux
     Bunning
     Campbell
     Grassley
     Gregg
     Hatch
     Helms
     Hutchinson
     Kyl
     Landrieu
     Lott
     Nelson (FL)
     Sessions
     Smith (NH)
     Thurmond

                        ANSWERED ``PRESENT''--2

     Fitzgerald
     Stevens
       

                             NOT VOTING--1

       
     Boxer
       
  The amendment (No. 51), as modified, was agreed to.
  Mr. HATCH. Mr. President, I move to reconsider the vote.
  Mr. LEAHY. I move to lay that motion on the table.
  The motion to lay on the table was agreed to.
  The PRESIDING OFFICER. Under the previous order, the pending 
amendments are withdrawn.
  The Senator from Utah.


Amendments Nos. 15 as modified, 16, 20 as modified, 24, 30 as modified, 
35, 38 as modified, 43, 45 as modified, 49, 50, 54 as modified, 58, 60 
  as modified, 66 as modified, 81 as modified, 106, 107, 108, and 109

  Mr. HATCH. Mr. President, I have sent a package of amendments to the 
desk that have been cleared by both sides. Pursuant to the prior 
agreement, I ask unanimous consent that the package be agreed to at 
this time, and I also ask unanimous consent the pending Breaux 
amendment No. 94 be withdrawn, pursuant to previous agreement.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  The amendment (No. 94) was withdrawn.

[[Page 3752]]

  The amendments (Nos. 15 as modified, 16, 20 as modified, 24, 30 as 
modified, 35, 38 as modified, 43, 45 as modified, 49, 50, 54 as 
modified, 58, 60 as modified, 66 as modified, 81 as modified, 106, 107, 
108, and 109) were agreed to, as follows:


                     amendment no. 15, as modified

     (Purpose: To clarify provisions relating to involuntary cases)

       On page 413, after line 25, insert the following:

     SEC. 1237. INVOLUNTARY CASES.

       Section 303 of title 11, United States Code, is amended--
       (1) in subsection (b)(1), by--
       (A) inserting ``as to liability or amount'' after ``bona 
     fide dispute''; and
       (B) striking ``if such claims'' and inserting ``if such 
     undisputed claims''; and
       (2) in subsection (h)(1), by inserting before the semicolon 
     the following: ``as to liability or amount''.
                                  ____



                            amendment no. 16

               (Purpose: To provide for family fishermen)

       At the appropriate place insert the following:

     SEC. __. FAMILY FISHERMEN.

       (a) Definitions.--Section 101 of title 11, United States 
     Code, is amended--
       (1) by inserting after paragraph (7) the following:
       ``(7A) `commercial fishing operation' includes--
       ``(A) the catching or harvesting of fish, shrimp, lobsters, 
     urchins, seaweed, shellfish, or other aquatic species or 
     products;
       ``(B) for purposes of section 109 and chapter 12, 
     aquaculture activities consisting of raising for market any 
     species or product described in subparagraph (A); and
       ``(C) the transporting by vessel of a passenger for hire 
     (as defined in section 2101 of title 46) who is engaged in 
     recreational fishing;
       ``(7B) `commercial fishing vessel' means a vessel used by a 
     fisherman to carry out a commercial fishing operation;'';
       (2) by inserting after paragraph (19) the following:
       ``(19A) `family fisherman' means--
       ``(A) an individual or individual and spouse engaged in a 
     commercial fishing operation (including aquaculture for 
     purposes of chapter 12)--
       ``(i) whose aggregate debts do not exceed $1,500,000 and 
     not less than 80 percent of whose aggregate noncontingent, 
     liquidated debts (excluding a debt for the principal 
     residence of such individual or such individual and spouse, 
     unless such debt arises out of a commercial fishing 
     operation), on the date the case is filed, arise out of a 
     commercial fishing operation owned or operated by such 
     individual or such individual and spouse; and
       ``(ii) who receive from such commercial fishing operation 
     more than 50 percent of such individual's or such 
     individual's and spouse's gross income for the taxable year 
     preceding the taxable year in which the case concerning such 
     individual or such individual and spouse was filed; or
       ``(B) a corporation or partnership--
       ``(i) in which more than 50 percent of the outstanding 
     stock or equity is held by--

       ``(I) 1 family that conducts the commercial fishing 
     operation; or
       ``(II) 1 family and the relatives of the members of such 
     family, and such family or such relatives conduct the 
     commercial fishing operation; and

       ``(ii)(I) more than 80 percent of the value of its assets 
     consists of assets related to the commercial fishing 
     operation;
       ``(II) its aggregate debts do not exceed $1,500,000 and not 
     less than 80 percent of its aggregate noncontingent, 
     liquidated debts (excluding a debt for 1 dwelling which is 
     owned by such corporation or partnership and which a 
     shareholder or partner maintains as a principal residence, 
     unless such debt arises out of a commercial fishing 
     operation), on the date the case is filed, arise out of a 
     commercial fishing operation owned or operated by such 
     corporation or such partnership; and
       ``(III) if such corporation issues stock, such stock is not 
     publicly traded;''; and
       (3) by inserting after paragraph (19A) the following:
       ``(19B) `family fisherman with regular annual income' means 
     a family fisherman whose annual income is sufficiently stable 
     and regular to enable such family fisherman to make payments 
     under a plan under chapter 12 of this title;''.
       (b) Who May Be a Debtor.--Section 109(f) of title 11, 
     United States Code, is amended by inserting ``or family 
     fisherman'' after ``family farmer''.
       (c)  Chapter 12.--Chapter 12 of title 11, United States 
     Code, is amended--
       (1) in the chapter heading, by inserting ``OR FISHERMAN'' 
     after ``FAMILY FARMER'';
       (2) in section 1201, by adding at the end the following:
       ``(e)(1) Notwithstanding any other provision of law, for 
     purposes of this subsection, a guarantor of a claim of a 
     creditor under this section shall be treated in the same 
     manner as a creditor with respect to the operation of a stay 
     under this section.
       ``(2) For purposes of a claim that arises from the 
     ownership or operation of a commercial fishing operation, a 
     co-maker of a loan made by a creditor under this section 
     shall be treated in the same manner as a creditor with 
     respect to the operation of a stay under this section.'';
       (3) in section 1203, by inserting ``or commercial fishing 
     operation'' after ``farm'';
       (4) in section 1206, by striking ``if the property is 
     farmland or farm equipment'' and inserting ``if the property 
     is farmland, farm equipment, or property of a commercial 
     fishing operation (including a commercial fishing vessel)''; 
     and
       (5) by adding at the end the following:

     ``Sec. 1232. Additional provisions relating to family 
       fishermen

       ``(a)(1) Notwithstanding any other provision of law, except 
     as provided in subsection (c), with respect to any commercial 
     fishing vessel of a family fisherman, the debts of that 
     family fisherman shall be treated in the manner prescribed in 
     paragraph (2).
       ``(2)(A) For purposes of this chapter, a claim for a lien 
     described in subsection (b) for a commercial fishing vessel 
     of a family fisherman that could, but for this subsection, be 
     subject to a lien under otherwise applicable maritime law, 
     shall be treated as an unsecured claim.
       ``(B) Subparagraph (A) applies to a claim for a lien 
     resulting from a debt of a family fisherman incurred on or 
     after the date of enactment of this chapter.
       ``(b) A lien described in this subsection is--
       ``(1) a maritime lien under subchapter III of chapter 313 
     of title 46 without regard to whether that lien is recorded 
     under section 31343 of title 46; or
       ``(2) a lien under applicable State law (or the law of a 
     political subdivision thereof).
       ``(c) Subsection (a) shall not apply to--
       ``(1) a claim made by a member of a crew or a seaman 
     including a claim made for--
       ``(A) wages, maintenance, or cure; or
       ``(B) personal injury; or
       ``(2) a preferred ship mortgage that has been perfected 
     under subchapter II of chapter 313 of title 46.
       ``(d) For purposes of this chapter, a mortgage described in 
     subsection (c)(2) shall be treated as a secured claim.''.
       (d) Clerical Amendments.--
       (1) Table of chapters.--In the table of chapters for title 
     11, United States Code, the item relating to chapter 12, is 
     amended to read as follows:

``12. Adjustments of Debts of a Family Farmer or Family Fisherman with 
    Regular Annual Income...................................1201''.....

       (2) Table of sections.--The table of sections for chapter 
     12 of title 11, United States Code, is amended by adding at 
     the end the following new item:

``1232. Additional provisions relating to family fishermen.''.
       (e) Applicability.--
       Nothing in this section shall change, affect, or amend the 
     Fishery Conservation and Management Act of 1976 (16 U.S.C. 
     1801, et seq.).
       Amend the table of contents accordingly.
                                  ____



                     amendment no. 20, as modified

(Purpose: To resolve an ambiguity relating to the definition of current 
                            monthly income)

       On page 18, beginning on line 10, after ``preceding the 
     date of determination'' insert ``, which shall be the date 
     which is the last day of the calendar month immediately 
     preceding the date of the bankruptcy filing. If the debtor is 
     providing the debtor's current monthly income at the time of 
     the filing, and otherwise the date of determination shall be 
     such date on which the debtor's current monthly income is 
     determined by the court for the purposes of this Act.''.
                                  ____



                            amendment no. 24

  (Purpose: To amend the definition of a bankruptcy petition preparer)

       On page 85, beginning on line 12, strike ``a person, other 
     than''.
                                  ____



                     amendment no. 30, as modified

    (Purpose: To provide a clarification of postpetition wages and 
                               benefits)

       At the end of title III, add the following:

     SEC. 330. CLARIFICATION OF POSTPETITION WAGES AND BENEFITS.

       Section 503(b)(1)(A) of title 11, United States Code, is 
     amended to read as follows:
       ``(A) the actual, necessary costs and expenses of 
     preserving the estate, including wages, salaries, or 
     commissions for services rendered after the commencement of 
     the case, and wages and benefits awarded pursuant to an 
     action brought in a court of law or the National Labor 
     Relations Board as back pay attributable to any period of 
     time after commencement of the case as a result of the 
     debtor's violation of Federal or State law, without regard to 
     when the original unlawful act occurred or to whether any 
     services were rendered if the court determines that the award 
     will not substantially increase the probability of layoff or 
     termination of current employees or of nonpayment of domestic 
     support obligations during the case;''

[[Page 3753]]

     
                                  ____
                            amendment no. 35

      (Purpose: To clarify the duties of a debtor who is the plan 
               administrator of an employee benefit plan)

       At the appropriate place, insert the following:

     SEC. __. DUTIES WITH RESPECT TO A DEBTOR WHO IS A PLAN 
                   ADMINISTRATOR OF AN EMPLOYEE BENEFIT PLAN.

       (a) In General.--Section 521(a) of title 11, United States 
     Code, as so designated by section 106(d) of this Act, is 
     amended--
       (1) in paragraph (4), by striking ``and'' at the end;
       (2) in paragraph (5), by striking the period at the end and 
     inserting ``; and''; and
       (3) by adding at the end the following:
       ``(6) unless a trustee is serving in the case, if at the 
     time of filing, the debtor, served as the administrator (as 
     defined in section 3 of the Employee Retirement Income 
     Security Act of 1974 (29 U.S.C. 1002)) of an employee benefit 
     plan, continue to perform the obligations required of the 
     administrator.''.
       (b) Duties of Trustees.--Section 704(a) of title 11, United 
     States Code, as so designated and otherwise amended by this 
     Act, is amended--
       (1) in paragraph (10), by striking ``and'' at the end;
       (2) in paragraph (11), by striking the period at the end 
     and inserting ``; and''; and
       (3) by adding at the end the following:
       ``(12) where, at the time of the time of the commencement 
     of the case, the debtor served as the administrator (as 
     defined in section 3 of the Employee Retirement Income 
     Security Act of 1974 (29 U.S.C. 1002)) of an employee benefit 
     plan, continue to perform the obligations required of the 
     administrator;''.
       (c) Conforming Amendment.--Section 1106(a) of title 11, 
     United States Code, is amended by striking paragraph (1) and 
     inserting the following:
       ``(1) perform the duties of the trustee, as specified in 
     paragraphs (2), (5), (7), (8), (9), (10), (11), and (12) of 
     section 704;''.
       Amend the table of contents accordingly.
                                  ____



                     amendment no. 38, as modified

       (Purpose: To allow a debtor to purchase health insurance)

       Page 25, line 7, insert the following new subsection and 
     redesignate the subsequent subsections accordingly:
       ``(i) Special Allowance for Health Insurance.--Section 
     1329(a) of title 11, United States Code, is amended by 
     inserting the following new paragraph--
       `` `(4) reduce amounts to be paid under the plan by the 
     actual amount expended by the debtor to purchase health 
     insurance for the debtor and any dependent of the debtor (if 
     those dependents do not otherwise have health insurance 
     coverage) if the debtor documents the cost of such insurance 
     and demonstrates that--
       `` `(A) such expenses are reasonable and necessary;
       `` `(B)(i) if the debtor previously paid for health 
     insurance, the amount is not materially larger than the cost 
     the debtor previously paid or the cost necessary to maintain 
     the lapsed policy, or;
       `` `(ii) if the debtor did not have health insurance, the 
     amount is not materially larger than the reasonable cost that 
     would be incurred by a debtor who purchases health insurance 
     and who has similar income, expenses, age, health status, and 
     lives in the same geographic location with the same number of 
     dependents that do not otherwise have health insurance 
     coverage; and
       `` `(C) the amount is not otherwise allowed for purposes of 
     determining disposable income under section 1325(b) of this 
     title.

     Upon request of any party in interest the debtor shall file 
     proof that a health insurance policy was purchased.' ''
                                  ____



                            amendment no. 43

             (Purpose: To address exceptions to discharge)

       On page 173, line 11, strike ``discharge a debtor'' and 
     insert ``discharge an individual debtor''.
       On page 244, line 8, strike ``described in section 
     523(a)(2)'' and insert ``described in subparagraph (A) or (B) 
     of section 523(a)(2) that is owed to a domestic governmental 
     unit or owed to a person as the result of an action filed 
     under subchapter III of chapter 37 of title 31, United States 
     Code, or any similar State statute,''.
                                  ____



                     amendment no. 45, as modified

(Purpose: To make amendments with respect to filings by small business 
                   concerns, and for other purposes)

       On page 212, strike line 8 and all that follows through 
     page 212, line 14, and insert the following:

     SEC. 438. PLAN CONFIRMATION DEADLINE.

       Section 1129 of title 11, United States Code, is amended by 
     adding at the end the following:
       ``(e)(1) In a small business case, the plan shall be 
     confirmed not later than 45 days after the date that a plan 
     is filed with the court as provided in section 1121(e).
       ``(2) The 45 day period referred to in paragraph (1) may be 
     extended only if--
       ``(A) the debtor, after notice and hearing, demonstrates 
     that it is more likely than not that the court will confirm a 
     plan within a reasonable period of time;
       ``(B) a new deadline is imposed at the time at which the 
     extension is granted; and
       ``(C) the order extending time is signed before the 
     existing deadline has expired.''.
       On page 217, line 16, strike ``establishes'' and all that 
     follows through ``time'' on line 20 and insert the following: 
     ``establishes that--
       ``(A) there is a reasonable likelihood that a plan will be 
     confirmed within the timeframes established in sections 
     1121(e) and 1129(e) of this title, as amended, or in cases in 
     which these sections do not apply, within a reasonable period 
     of time''.
                                  ____



                            Amendment No. 49

(Purpose: To provide that Federal election law fines and penalties are 
                        nondischargeable debts)

       At the appropriate place, insert the following:

     SEC.   . FEDERAL ELECTION LAW FINES AND PENALTIES AS 
                   NONDISCHARGEABLE DEBT.

       Section 523(a) of title 11, United States Code, is amended 
     by inserting after paragraph (14A) (as added by this Act) the 
     following:
       ``(14B) incurred to pay fines or penalties imposed under 
     Federal election law;''.
       Amend the table of contents accordingly.
                                  ____



                            Amendment No. 50

    (Purpose: to provide that political committees may not file for 
                              bankruptcy)

       At the appropriate place, insert the following:

     SEC.   . NO BANKRUPTCY FOR INSOLVENT POLITICAL COMMITTEES.

       Section 105 of title 11, United States Code, is amended by 
     adding at the end the following:
       ``(e) A political committee subject to the jurisdiction of 
     the Federal Election Commission under Federal election laws 
     may not file for bankruptcy under this title.''.
       Amend the table of contents accordingly.
                                  ____



                     Amendment No. 54, as modified

  (Purpose: To encourage debtors to file in chapter 13 to repay their 
                                 debts)

       On page 151, strike line 23 and all that follows through 
     page 152, line 3, and insert the following:
       ``(f) Notwithstanding subsections (a) and (b), the court 
     shall not grant a discharge of all debts provided for by the 
     plan or disallowed under section 502, if the debtor has 
     received a discharge: (1) in a case filed under chapter 7, 11 
     or 12 of this title during the three-year period preceding 
     the date of the order for relief under this chapter, or (2) 
     in a case filed under chapter 13 of this title during the 
     two-year period preceding the date of such order, except that 
     if the debtor demonstrates extreme hardship requiring that a 
     chapter 13 case be filed, the court may shorten the two-year 
     period.''.
                                  ____



                            AMENDMENT NO. 58

  (Purpose: To make an amendment to preserve the existing bankruptcy 
  appellate structure while providing a mechanism for obtaining early 
      review by the court of appeals in appropriate circumstances)

       Strike section 1235 and insert the following:

     SEC. 1235. EXPEDITED APPEALS OF BANKRUPTCY CASES TO COURTS OF 
                   APPEALS.

       (a) Appeals.--Section 158 of title 28, United States Code, 
     is amended--
       (1) in subsection (c)(1), by striking ``Subject to 
     subsection (b),'' and inserting ``Subject to subsections (b) 
     and (d)(2),''; and
       (2) in subsection (d)--
       (A) by inserting ``(1)'' after ``(d)''; and
       (B) by adding at the end the following:
       ``(2)(A) A court of appeals that would have jurisdiction of 
     a subsequent appeal under paragraph (1) or other law may 
     authorize an immediate appeal of an order or decree, not 
     otherwise appealable, that is entered in a case or proceeding 
     pending under section 157 or is entered by the district court 
     or bankruptcy appellate panel exercising jurisdiction under 
     subsection (a) or (b), if the bankruptcy court, district 
     court, bankruptcy appellate panel, or the parties acting 
     jointly certify that--
       ``(i) the order or decree involves--
       ``(I) a substantial question of law;
       ``(II) a question of law requiring resolution of 
     conflicting decisions; or
       ``(III) a matter of public importance; and
       ``(ii) an immediate appeal from the order or decree may 
     materially advance the progress of the case or proceeding.
       ``(B) An appeal under this paragraph does not stay 
     proceedings in the court from which the order or decree 
     originated, unless the originating court or the court of 
     appeals orders such a stay.''.
       (b) Procedural Rules.--
       (1) Temporary application.--A provision of this subsection 
     shall apply to appeals under section 158(d)(2) of title 28, 
     United States Code, as added by subsection (a) of this 
     section, until a rule of practice and procedure relating to 
     such provision and appeal is promulgated or amended under 
     chapter 131 of such title.
       (2) Certification.--A district court, bankruptcy court, or 
     bankruptcy appellate panel may enter a certification as 
     described in section 158(d)(2) of title 28, United States 
     Code,

[[Page 3754]]

     during proceedings pending before that court or panel.
       (3) Procedure.--Subject to the other provisions of this 
     subsection, an appeal by permission under section 158(d)(2) 
     of title 28, United States Code, shall be taken in the manner 
     prescribed in rule 5 of the Federal Rules of Appellate 
     Procedure.
       (4) Filing petition.--When permission to appeal is 
     requested on the basis of a certification of the parties, a 
     district court, bankruptcy court, or bankruptcy appellate 
     panel, the petition shall be filed within 10 days after the 
     certification is entered or filed.
       (5) Attachment.--When permission to appeal is requested on 
     the basis of a certification of a district court, bankruptcy 
     court, or bankruptcy appellate panel, a copy of the 
     certification shall be attached to the petition.
       (6) Panel and clerk.--In a case pending before a bankruptcy 
     appellate panel in which permission to appeal is requested, 
     the terms ``district court'' and ``district clerk'', as used 
     in rule 5 of the Federal Rules of Appellate Procedure, mean 
     ``bankruptcy appellate panel'' and ``clerk of the bankruptcy 
     appellate panel'', respectively.
       (7) Application of rules.--In a case pending before a 
     district court, bankruptcy court, or bankruptcy appellate 
     panel in which a court of appeals grants permission to 
     appeal, the Federal Rules of Appellate Procedure apply to the 
     proceedings in the court of appeals, to the extent relevant, 
     as if the appeal were taken from a final judgment, order, or 
     decree of a district court, bankruptcy court, or bankruptcy 
     appellate panel exercising appellate jurisdiction under 
     subsection (a) or (b) of section 158 of title 28, United 
     States Code.
                                  ____



                     AMENDMENT NO. 60, AS MODIFIED

(Purpose: To make technical corrections to Title IX--Financial Contract 
                              Provisions)

       On page 294, line 10, delete the comma after ``mortgage'';
       On page 295, line 15, insert ``mortgage'' before ``loan'';
       On page 296, line 25, strike ``or'' and insert 
     ``including'';
       On page 299, line 17, strike ``or'' and insert 
     ``including'';
       On page 301, line 18, strike ``or any'' and insert 
     ``including any'';
       On page 302, line 23, insert ``mortgage'' before ``loans'';
       On page 303, line 3, insert ``mortgage'' before ``loans'';
       On page 304, line 16, strike ``or'' after ``(V)'' and 
     insert ``including'';
       On page 306, line 10, insert ``is of a type'' after 
     ``clause and'';
       On page 308, line 5, strike ``or any'' and insert 
     ``including any'';
       On page 308, line 23, strike ``the Gramm-Leach-Bliley 
     Act,'' and insert ``the Gramm-Leach-Bliley Act, and'';
       On page 308, line 25, strike all after ``2000'' and insert 
     a period following ``2000'';
       On page 309, strike line 1 through 3;
       On page 320, line 10, strike ``and'';
       On page 321, line 4, strike the period at the end of the 
     line and insert ``; and''
       On page 321, insert after line 4 the following:
       ``(3) by including at the end of section 11(e) the 
     following new paragraph:
       `(__) Savings Clause.--The meaning of terms used in this 
     subsection (e) are applicable for purposes of this subsection 
     (e) only, and shall not be construed or applied so as to 
     challenge or after the characterization, definition, or 
     treatment of any similar terms under any other statute, 
     regulation, or rule, including the Gramm-Leach-Bliley Act, 
     the Legal Certainty for Bank Products Act of 2000, the 
     securities law (as that term is defined in section 3(a)(47) 
     of the Securities Exchange Act of 1934), and the Commodity 
     Exchange Act.''
       On page 327, line 7, strike ``408'' and insert ``407A'';
       On page 327, line 20, strike ``or'' the second time it 
     appears;
       On page 328, line 3, strike all following ``receiver'' 
     through ``agency'' on line 4;
       On page 328, line 7, strike all following ``receiver'' 
     through ``bank'' on line 9;
       On page 328, line 12, strike the comma after ``Act'';
       On page 328, line 18, strike all following ``conservator'' 
     through ``agency'' on line 20;
       On page 338, line 23, strike all following ``conservator'' 
     through ``bank'' on line 25;
       On page 329, line 25, insert ``in the case of an uninsured 
     national bank or uninsured Federal branch or agency'' after 
     ``Currency'';
       On page 330, line 1, insert ``in the case of a corporation 
     chartered under section 25A of the Federal Reserve Act, or an 
     uninsured State member bank that operates, or operates as a 
     multilateral clearing organization pursuant to section 409 of 
     the Act,'';
       On page 330, line 3, insert ``solely'' before ``to 
     implement''.
       On page 330, line 5, strike ``to implement this section,'' 
     and insert ``, limited solely to implementing paragraphs (8), 
     (9), (10) and (11) of section 11(e) of the Federal Deposit 
     Insurance Act,'';
       On page 330, line 7, insert ``each'' before ``shall 
     ensure'';
       On page 330, line 8, strike ``that the'' and insert ``that 
     their'';
       On page 332, line 4, strike ``(D), or'' and insert ``(D) 
     including'';
       On page 333, line 14, insert ``mortgage'' before ``loans'';
       On page 333, line 18, insert ``mortgage'' before ``loans'';
       On page 334, line 21, strike ``(iv), or'' and insert ``(vi) 
     including'';
       On page 336, line 5, strike ``or an'' and insert ``or'';
       On page 336, line 8, strike ``or a'' and insert ``or'';
       On page 336, line 10, strike ``credit spread, total return, 
     or a'' and insert ``total return, credit spread or'';
       On page 336, line 22, insert after ``(I)'' the following: 
     ``is of a type that'';
       On page 338, line 13, strike ``(v), or'' and insert ``(v); 
     including'';
       On page 338, line 18, strike ``do'';
       On page 339, line 9, insert ``and'' after ``Act,'';
       On page 339, line 10, strike all after ``2000'' through 
     ``Commission'' on line 13 and insert a period after ``2000'';
       On page 340, line 20, insert ``mortgage'' before ``loan'';
       On page 342, line 2, strike ``or any'' and insert 
     ``Including any'';
       On page 343, line 21, strike ``or any'' and insert 
     ``including any'';
       On page 346, line 7, strike ``or'' the first time it 
     appears;
       On page 346, line 25, Insert ``, including any guarantee or 
     reimbursement obligation related to 1 or more of the 
     foregoing'' following ``foregoing'';
       On page 352, line 24, insert ``a securities clearing 
     agency,'' after ``association,'';
       On page 353, line 25, insert ``a securities clearing 
     agency,'' before ``a contract market'';
       On page 355, line 5, insert ``a securities clearing 
     agency,'' after ``association,'';
       On page 355, line 6, strike the end parenthesis after 
     ``Act'';
       On page 358, line 13, strike ``5(c)'' and insert ``5c(c)'';
       On page 358, line 24, strike ``a national securities 
     exchange'';
       On page 359 line 4, insert ``a securities clearing 
     agency,'' after ``association'';
       On page 363, line 13, insert ``a securities clearing 
     agency,'' after ``association,'';
       On page 365, strike lines 18 through 22, and on page 366, 
     strike lines 1 through 2, and insert in lieu thereof the 
     following:
       ``(H) Recordkeeping Requirements.--The Corporation, in 
     consultation with the appropriate Federal banking agencies, 
     may by regulation require more detailed recordkeeping by any 
     insured depository institution with respect to qualified 
     financial contracts (including market valuations) only if 
     such insured depository institution is in a troubled 
     condition (as such term is defined by the Corporation 
     pursuant to 12 USC 1831i).'';
       On page 372, line 18, insert ``governmental unit, limited 
     liability company (including a single member limited 
     liability company),'' after ``partnership,'';
       On page 373, line 22, insert ``on or'' after ``State law'';
       On page 374, line 10, insert ``and'' before ``the 
     Commodity'' and strike all after ``Act'' through line 12 and 
     insert a period after ``Act''.
                                  ____



                      AMENDMENT NO. 66 AS MODIFIED

    (Purpose: To save taxpayers $4,000,000 over 5 years, the costs 
 associated with the storage of the tax returns of debtors in certain 
    bankruptcy cases, according to the Congressional Budget Office)

       Strike line 21, page 160 to line 12, page 161 and insert 
     thereof:
       ``(f) An individual debtor in a case under chapter 7, 11, 
     or 13 shall file with the court at the request of the Judge, 
     U.S. Trustee, any party in interest--
       ``(1) at the time filed with the taxing authority, the 
     Federal tax returns or transcript thereof required under 
     applicable law, with respect to the period from the 
     commencement of the case until such time as the case is 
     closed;
       ``(2) at the time filed with the taxing authority, the 
     Federal tax returns or transcript thereof required under 
     applicable law, that were not filed with the taxing authority 
     when the schedules under subsection (a)(1) were filed with 
     respect to the period that is 3 years before the order of 
     relief;
       ``(3) any amendments to any of the Federal tax returns or 
     transcripts thereof described in paragraph (1) or (2); and''.
                                  ____



                     AMENDMENT NO. 81, AS modified

 (Purpose: To require the General Accounting Office to conduct a study 
         of the reaffirmation process, and for other purposes)

       At the end of subtitle A of title II, add the following:

     SEC. 204. GAO STUDY ON REAFFIRMATION PROCESS.

       (a) Study.--The General Accounting Office (in this section 
     referred to as the ``GAO'') shall conduct a study of the 
     reaffirmation process under title 11, United States Code, to 
     determine the overall treatment of consumers within the 
     context of that process, including consideration of--
       (1) the policies and activities of creditors with respect 
     to reaffirmation; and
       (2) whether consumers are fully, fairly and consistently 
     informed of their rights pursuant to this title.

[[Page 3755]]

       (b) Report to Congress.--Not later than 1\1/2\ years after 
     the date of enactment of this Act, the GAO shall submit a 
     report to the Congress on the results of the study conducted 
     under subsection (a), together with any recommendations for 
     legislation to address any abusive or coercive tactics found 
     within the reaffirmation process.
                                  ____



                           AMENDMENT NO. 106

                     (Purpose: To improve the bill)

       On page 187, line 20, strike ``(25)'' and insert ``(24)''.
       On page 187, line 21, strike ``(26)'' and insert ``(25)''.
       On page 191, strike line 25 and insert the following:
       (2) in subsection (i), as so redesignated, by inserting 
     ``and subject to the prior rights of holders of security 
     interests in such goods or the proceeds thereof,'' after 
     ``consent of a creditor,''; and
       On page 192, line 1, strike ``(2)'' and insert ``(3)''.
       On page 199, line 4, strike ``through (5)'' and insert 
     ``and (4)''.
       On page 255, line 8, strike ``(26)'' and insert ``(25)''.
       On page 255, line 10, strike ``(27)'' and insert ``(26)''.
       On page 278, line 9, strike ``(28)'' and insert ``(27)''.
       On page 281, line 23, strike ``(28)'' and insert ``(27)''.
       On page 347, line 21, strike ``to, under'' and insert ``to 
     and under''.
       On page 347, line 24, strike ``to, under'' and insert ``to 
     and under''.
       On page 348, line 13, strike ``to, under'' and insert ``to 
     and under''.
       On page 348, line 17, strike ``(27)'' and insert ``(26)''.
       On page 348, line 19, strike ``(28)'' and insert ``(27)''.
       On page 349, line 8, strike ``to, under'' and insert ``to 
     and under''.
       On page 349, line 21, strike ``(28)'' and insert ``(27)''.
       On page 361, line 23, strike ``(28)'' and insert ``(27)''.
       On page 362, lines 4 and 8, strike ``(28)'' each place it 
     appears and insert ``(27)''.
       On page 385, line 10, strike ``, including'' and insert ``. 
     If the health care business is a long-term care facility, the 
     trustee may appoint''.
       On page 385, line 13, add at the end the following: ``In 
     the event that the trustee does not appoint the State Long-
     Term Care Ombudsman to monitor the quality of patient care in 
     a long-term care facility, the court shall notify the 
     individual who serves as the State Long-Term Care Ombudsman 
     of the name and address of the individual who is 
     appointed.''.
       On page 386, line 12, insert after the first period the 
     following: ``If the individual appointed as ombudsman is a 
     person who is also serving as a State Long-Term Care 
     Ombudsman appointed under title III or title VII of the Older 
     Americans Act of 1965 (42 U.S.C. 3021 et seq., 3058 et seq.), 
     that person shall have access to patient records, consistent 
     with authority spelled out in the Older Americans Act and 
     State laws governing the State Long-Term Care Ombudsman 
     program.''.
       On page 388, line 4, strike ``(28)'' and insert ``(27)''.
       On page 388, line 6, strike ``(29)'' and insert ``(28)''.
       On page 394, strike lines 9 through 13.
       Redesignate sections 1220 through 1223 as sections 1219 
     through 1222, respectively.
       On page 397, strike line 16 and all that follows through 
     page 398, line 12.
       On page 405, line 13, strike ``after'' and insert ``prior 
     to''.
       On page 406, line 5, strike ``after'' and insert ``prior 
     to''.
       Redesignate sections 1225 through 1236 as sections 1223 
     through 1234, respectively.
       Amend the table of contents accordingly.
                                  ____



                           AMENDMENT NO. 107

  (Purpose: To provide for an additional bankruptcy judgeship for the 
                          district of Nevada)

       On page 400, insert between lines 10 and 11 the following:
       (T) One additional bankruptcy judgeship for the district of 
     Nevada, and one for the district of Delaware.
                                  ____



                           AMENDMENT NO. 108

   (Purpose: To correct the treatment of certain spousal income for 
                       purposes of means testing)

       On page 10, line 14, after ``private'' insert ``or public'' 
     and
       On page 10, line 17, after ``necessary'' insert ``, and 
     that such expenses are not already accounted for in the 
     Internal Revenue Service Standards referred to in 707(b)(a) 
     of this title.''
                                  ____



                           amendment no. 109

       At the end of the bill, add the following:

                   TITLE XV--MISCELLANEOUS PROVISIONS

     SEC. 1501. REIMBURSEMENT OF RESEARCH, DEVELOPMENT, AND 
                   MAINTENANCE COSTS.

       (a) In General.--Not later August 1, 2001, the Federal Crop 
     Insurance Corporation shall promulgate final regulations to 
     carry out section 522(b) of the Federal Crop Insurance Act (7 
     U.S.C. 522(b)), without regard to--
       (1) the notice and comment provisions of section 553 of 
     title 5, United States Code;
       (2) the Statement of Policy of the Secretary of Agriculture 
     effective July 24, 1971 (36 Fed. Reg. 13804), relating to 
     notices of proposed rulemaking and public participation in 
     rulemaking; and
       (3) chapter 35 of title 44, United States Code (commonly 
     known as the ``Paperwork Reduction Act'').
       (b) Congressional Review of Agency Rulemaking.--In carrying 
     out this section, the Corporation shall use the authority 
     provided under section 808 of title 5, United States Code.
       (c) Effective Date.--The final regulations promulgated 
     under subsection (a) shall take effect on the date of 
     publication of the final regulations.
       Amend the table of contents accordingly.

  The PRESIDING OFFICER. The Senator from Vermont.
  Mr. LEAHY. Mr. President, just so Senators know, that included the 
Baucus, Feingold, Feinstein, Leahy, Schumer, Wellstone, Leahy, Ensign/
Reid, Leahy, Kohl/Kennedy, Levin/Grassley, Biden/Specter/Sessions/
Leahy, Collins/Kerry, Gramm of Texas, Reed of Rhode Island, Kennedy, 
Leahy, Bond/Kerry, Boxer, and Grassley amendments.


                     amendment no. 30, as modified

  Mr. KENNEDY. Mr. President, this bipartisan amendment protects 
workers who face bankruptcy because they are owed money by employers 
for back pay. This amendment was passed by voice vote last year, but 
was dropped in conference. This should be a noncontroversial change, a 
change that would ensure that workers receive all the wages that are 
due them, workers who were denied minimum wage or overtime pay, workers 
who were victims of discrimination, workers who were wrongfully fired, 
and veterans who were denied jobs when they returned from active 
military duty.
  Amending the bankruptcy bill to protect the back pay of workers is 
especially appropriate, because back pay awards help many of the people 
that this legislation places at risk, low income families, minorities, 
and women. My amendment helps workers take care of their families. 
Collecting a back pay award would give them more of the resources they 
need to afford food, clothing, and health care without turning to 
credit cards.
  Our bankruptcy laws already protect wages so that businesses can 
continue to pay their workers during a reorganization. And some courts 
have taken the important step of requiring employers facing bankruptcy 
to live up to their obligations to provide back pay awards. This change 
would ensure that all workers are treated the same, no matter what 
bankruptcy court their employer has filed in.
  The Department of Labor and the National Labor Relations Board obtain 
back pay awards on behalf of workers. For fiscal year 1998, the NLRB 
got back pay awards on behalf of about 24,000 workers, with an average 
award of $3,750 per worker. During the past 5 years, the NLRB also 
recovered about $1 million on behalf of approximately 300 American 
veterans who were wrongfully denied jobs after they returned to work 
from active military duty.
  Similarly, for fiscal year 1999 the Department of Labor got back pay 
awards on behalf of about 2,000 workers, with an average award of about 
$900 per worker.
  If these back pay awards do not receive protection in bankruptcy, 
most workers will never receive them. They will have earned the back 
pay, but will never see a dime. Without this amendment, workers lose 
twice--first when they are wrongfully denied wages, and then again when 
they are unable to collect the wages because their employers have 
declared bankruptcy.
  Mr. KOHL. Mr. President, I am pleased that the Senate agreed to 
accept this amendment as part of the bankruptcy bill. Last session, my 
amendment was accepted by the Senate only to be stripped out of the 
conference report. The compromise reached on the amendment this year 
should ensure that it remains in the bill this year. In addition, I 
would like to thank Senator Kennedy for joining me this year in 
offering this amendment.
  The amendment corrects an inconsistency in current law regarding the

[[Page 3756]]

treatment of backpay awards issued for violations of state or federal 
laws such as whistle blower protection laws, the Fair Labor Standards 
Act, or civil rights laws. For example, an employee who works ten hours 
of overtime during a pay period, but is only paid for nine, or an 
employee who is wrongfully fired for being a whistle blower does not 
currently receive the same treatment as the employee who continues to 
work for the bankrupt company postpetition. Some courts have held that 
where an award of backpay covers a time both before and after the 
employer's bankruptcy petition, the entire award is considered a 
general unsecured claim.
  This amendment would clarify the treatment of backpay awards for the 
postpetition period. For example, the postpetition backpay due an 
employee who has been reinstated after a successful suit under 
whistleblower protection laws would clearly be an administrative 
expense under 11 U.S.C. Sec.  503(b)(1)(A). So too would backpay due to 
workers whose overtime compensation was illegally denied or reduced.
  Under the terms of the compromise agreed to in this amendment, before 
the postpetition award is treated as an administrative expense, the 
bankruptcy court must first determine that ``the award will not 
substantially increase the probability of layoff or termination of 
current employees or nonpayment of domestic support obligations during 
the case.'' The court should evaluate the possible impact of the award 
in the context of all other administrative expenses being awarded. The 
term ``substantial'' will ensure that the bankruptcy court only refuses 
to treat postpetition backpay awards as an administrative expense in 
the rarest of circumstances.
  In general, these backpay awards range on average from only a few 
hundred dollars up to a couple of thousand dollars. Given that these 
awards are so small, there is virtually no chance that the award will 
substantially affect any part of an ongoing business concern. Should 
the award of the postpetition amount be significantly more than a 
couple of thousand dollars, it is still highly unlikely that it will 
substantially change the probability of layoff or termination of other 
employees.
  This amendment is an important clarification to the code. I am 
pleased that the Senate recognized the consequence of these 
postpetition backpay awards.


                     amendment no. 107, as modified

  Mr. ENSIGN. Mr. President, today I introduce, along with the senior 
Senator from Nevada, an amendment to the Bankruptcy Reform Act of 2001 
to create an additional bankruptcy judgeship position for the District 
of Nevada.
  This amendment follows the recommendation of the Judicial Conference 
Committee on the Administration of the Bankruptcy Committee to the 
Judicial Conference of the United States that legislation be 
transmitted to Congress to create an additional judgeship for the 
District of Nevada.
  The combination of a rapidly growing population in Nevada and a high 
number of bankruptcy filings makes it imperative for Nevada to have 
another judgeship. Nevada continues to be the fastest growing state in 
the nation, and the Las Vegas metropolitan area remains one of the most 
rapidly growing cities. Between 1990 and 1999, the population of the 
state of Nevada grew by more than 66 percent. Its population growth is 
projected to increase by 10 percent from 2000 to 2005. At this current 
rate of growth, the Las Vegas area alone will nearly double to 2.5 
million people in the next ten years.
  Unfortunately, the growth in bankruptcy case filings in Nevada has 
been even more dramatic. Between 1990 and 1999 case filings grew by 
more than 226 percent. In 2000, the District of Nevada was ranked fifth 
highest in U.S. total filings per capita and first in the U.S. in 
filings of Chapter 7 per capita. By every measure, weighted filings per 
judgeship, case filings per judgeship, Chapter 11 filings--the District 
of Nevada measured well above the national average.
  The population growth in my state and the increased number of case 
filings clearly justifies the need for an additional bankruptcy 
judgeship position for the District of Nevada. We offer this amendment 
today in the hopes that we can accomplish this critical task for our 
home state of Nevada.
  Mr. LEAHY. Mr. President, I am pleased that we finally adopted the 
amendments in the managers' package to improve this bill. I thank the 
efforts of Senators Hatch, Daschle, Grassley, and Reid.
  For the information of my colleagues, we adopted the following 
amendments to improve this bill.
  We adopted an amendment by Senator Baucus to resolve an ambiguity 
regarding involuntary bankruptcies.
  We adopted an amendment by Senator Boxer to provide that public 
education expenses are treated equally with private education expenses 
in the bill's means-test.
  We adopted an amendment by Senator Feinstein regarding bankruptcy 
petition preparers.
  We adopted an amendment by Senator Jack Reed calling for a General 
Accounting Office review of the bill's reaffirmation provisions.
  We adopted an amendment by Senator Feingold to make Federal Election 
Commission fines and judges non-dischargeable in a bankruptcy 
proceeding.
  We adopted another amendment by Senator Feingold to clarify that the 
Federal Election Commission has jurisdiction over insolvent Political 
Action Committees.
  We adopted an amendment that I offered to clarify the definition of 
current monthly income in the bill's means-test to prevent unnecessary 
litigation.
  We adopted another Leahy amendment to allow a person who has 
successfully completed a chapter 13 plan and paid off all her creditors 
to file another chapter 13 plan if some unforeseen economic disaster--
such as a job loss or high medical expenses--hits that person within 
two years of the first chapter 13 completion.
  We adopted a third Leahy amendment to modify the requirements for 
debtors to file tax returns to only Federal returns or transcripts to 
streamline the process and reduce unnecessary court storage costs.
  We adopted an amendment by Senator Schumer and Senator Grassley on 
corporate business reorganizations to prevent a single creditor from 
alleging fraud to delay the reorganization and to clarify that debts 
from violations of the False Claims Act are non-dischargeable in 
bankruptcy.
  We adopted an amendment by Senator Wellstone to clarify that the 
companies in bankruptcy must fulfil their legal obligations as sponsors 
and administrators of health care and other benefit plans.
  We adopted an amendment by Senators Reid and Ensign to authorize a 
bankruptcy judgeship for Nevada the fastest growing state in the 
nation.
  We also adopted, at the request of Senators Biden and Carper, an 
authorization for an additional bankruptcy judgeship for the District 
of Delaware, which has the heaviest caseload of bankruptcy cases in the 
country.
  We accepted a colloquy between Senator Levin and Senator Grassley to 
ensure that spikes in gasoline prices will be taken into account in the 
bill's means-test.
  We adopted an amendment by Senators Kohl and Kennedy to require that 
back pay awards are given the same priority as regular wages in 
bankruptcy proceedings.
  We adopted an amendment by Senator Gramm, which Senator Sarbanes has 
cleared as the ranking member of the Senate Banking Committee, making 
corrections to the bill's financial contract provisions.
  We adopted an amendment by Senators Bond and Kerry to improve the 
bill's small business provisions.
  We adopted an amendment by Senator Kennedy to include health 
insurance costs in the bill's means-test.
  We adopted an amendment by Senator Collins and Senator Kerry on 
family fisherman protection in bankruptcy.
  We adopted an amendment by Senators Sessions, Leahy, Specter, and 
Biden regarding appeals of bankruptcy cases.

[[Page 3757]]

  I am glad we made these important bipartisan changes to improve this 
bill and add more balance and fairness to it.


                 Amendment No. 59, As Further Modified

  Mr. SESSIONS. Mr. President, I ask unanimous consent that amendment 
No. 59 be further modified so that it strikes section 311 of the Kohl 
amendment No. 68.
  The PRESIDING OFFICER. Without objection, it is so ordered. The 
amendment (No. 59), as further modified, is as follows:
       Strike section 311 of Kohl amendment No. 68, and insert the 
     following:
       (a) In General.--Section 362(b) of title 11, United States 
     Code, is amended--
       (1) by inserting after paragraph (21), as added by this 
     Act, the following:
       ``(23) under subsection (a)(3), of the commencement or 
     continuation of any eviction, unlawful detainer action, or 
     similar proceeding by a lessor against a debtor seeking 
     possession of residential property--
       ``(A) on which the debtor resides as a tenant; and
       ``(B) with respect to which--
       ``(i) the debtor fails to make a rental payment that first 
     becomes due under the unexpired specific term of a rental 
     agreement or lease or under a tenancy under applicable State, 
     or local rent control law, after the date of filing of the 
     petition or during the 10-day period preceding the date of 
     filing of the petition, if the lessor files with the court a 
     certification that the debtor has not made a payment for rent 
     and serves a copy of the certification upon the debtor; or
       ``(ii) the debtor has a month to month tenancy (or one of 
     shorter term) other than under applicable State or local rent 
     control law where timely payments are made pursuant to clause 
     (i), if the lessor files with a court a certification that 
     the requirements of this clause have been met and serves a 
     copy of the certification upon the debtor.
       ``(24) under subsection (a)(3), of the commencement or 
     continuation of any eviction, unlawful detainer action, or 
     similar proceeding by a lessor against a debtor seeking 
     possession of residential property, if during the 2-year 
     period preceding the date of filing of the petition, the 
     debtor or another occupant of the leased premises--
       ``(A) commenced another case under this title; and
       ``(B) failed to make any rental payment that first became 
     due under applicable nonbankruptcy law after the date of 
     filing of the petition for that other case;
       ``(25) under subsection (a)(3), of an eviction action, to 
     the extent that it seeks possession based on endangerment of 
     property or the illegal use of controlled substances on the 
     property, if the lessor files with the court a certification 
     that such an eviction has been filed or the debtor has 
     endangered property or illegally used or allowed to be used a 
     controlled substance on the property during the 30-day period 
     preceding the date of filing of the certification, and serves 
     a copy of the certification upon the debtor;''; and
       (2) by adding at the end of the flush material at the end 
     of the subsection the following; ``With respect to the 
     applicability of paragraph (23) or (25) to a debtor with 
     respect to the commencement or continuation of a proceeding 
     described in any such paragraph, the exception to the 
     automatic stay shall become effective on the 15th day after 
     the lessor meets the filing and notification requirements 
     under any such paragraph, unless--
       ``(A) the debtor files a certification with the court and 
     serves a copy of that certification upon the lessor on or 
     before that 15th day, that--
       ``(i) contests the truth or legal sufficiency of the 
     lessor's certification; or
       ``(ii) states that the tenant has taken such action as may 
     be necessary to remedy the subject of the certification under 
     paragraph (23)(B)(i), except that no tenant may take 
     advantage of such remedy more than once under this title; or
       ``(B) the court orders that the exception to the automatic 
     stay shall not become effective, or provides for a later date 
     of applicability.''.
       (3) by adding at the end of the flush material added by 
     paragraph (2), the following:

     ``Where a debtor makes a certification under subparagraph 
     (A), the clerk of the court shall set a hearing on a date no 
     later than 10 days after the date of the filing of the 
     certification of the debtor and provide written notice 
     thereof. If the debtor can demonstrate to the satisfaction of 
     the court that the sent payment due post-petition or 10 days 
     prior to the petition was made prior to the filing of the 
     debtor's certification under subparagraph (A), or that the 
     situation giving rise to the exception in paragraph (25) does 
     not exist or has been remedied to the court's satisfaction, 
     then a stay under subsection (a) shall be in effect until the 
     termination of the stay under this section. If the debtor 
     cannot make this demonstration to the satisfaction of the 
     court, the court shall order the stay under subsection (a) 
     lifted forthwith. Where a debtor does not file a 
     certification under subparagraph (A), the stay under 
     subsection (a) shall be lifted by operation of law and the 
     clerk of the court shall certify a copy of the bankruptcy 
     docket as sufficient evidence that the automatic stay of 
     subsection (a) is lifted.''


                         fluctuating gas prices

  Mr. LEVIN. Mr. President, as the Senator knows, gas prices have 
fluctuated significantly in the last year. In my own state of Michigan, 
gas prices went from .80 cents a gallon in October 1999 to a high of 
$1.46 a gallon by June 2000. The Internal Revenue Service, IRS, Local 
Standards for Operating Costs and Public Transportation Costs, which 
includes costs for gasoline, are revised in October of each year but 
are often based on statistics from as long as 2 or 3 years before that. 
The IRS standards for gasoline costs can be out of date in a fast 
changing economy.
  In the event a debtor has experienced significant increases in the 
costs of buying gasoline for their car, how would the means test adjust 
for this?
  Mr. GRASSLEY. Mr. President, under the special circumstances 
provision, the debtor could explain in the debtor's petition why an 
additional allowance in excess of the amounts allowed under the 
Internal Revenue Standards was reasonable and necessary. As a practical 
matter, if the costs for gas have increased significantly over the 
costs for gas used by the Internal Revenue Service, the excess costs of 
gasoline over the IRS standard should and would be allowed under the 
special circumstances provision.
  Mr. NELSON of Florida. Mr. President, I am opposed to the Bankruptcy 
Reform Act of 2001. I do not take my decision to vote against this 
legislation lightly. The growing personal debt of the American people 
and the dramatic rise in bankruptcy filings over the last 10 years 
should give us all reason for concern.
  However, this legislation simply fails as a matter of sound public 
policy. Rather than addressing this complex issue with a solution that 
focuses on consumer and private sector responsibility, this bill almost 
exclusively places the burden of change on the people that bankruptcy 
law is supposed to help. It almost completely ignores the aggressive 
marketing practices of lenders who in some cases, seem to have lost the 
ability to judge a bad credit risk.
  It is difficult to have sympathy for an industry that mails three 
billion solicitations a year, and expends very little effort to ensure 
that they are marketing to people who have the financial means or are 
even old enough to hold a credit card. It's clear that young and low-
income individuals, who often have the least ability to repay, are 
prime targets of the credit industry's overly aggressive marketing 
tactics.
  It appears that these companies have made a calculation that it is 
more profitable to have liberal lending policies and higher interest 
rates, than it is to deny credit or at least putting a reasonable 
credit limit in place.
  I have heard many of my colleagues talk a lot over the past week 
about how consumers need to be more financially responsible. Fair 
enough. But I'm here to say that we should also demand more 
responsibility from big lenders who fail to do their homework.
  Especially in a time of economic slow-down, I do not believe we 
should make it more difficult for people to get a fresh start unless we 
also make further demands of an industry that could solve many of its 
problems by simply making credit available responsibly.
  I realize that this legislation also would benefit many small 
businesses that extend credit to their customers, and that are 
sometimes forced to foot the bill for individuals who choose to abuse 
the system. My concern about reckless lending practices is not aimed at 
the small businessman, and, I strongly want to stamp out abuse in the 
bankruptcy system.
  However, a better bankruptcy bill would encourage responsible 
marketing of credit services and would include stronger provisions to 
curb predatory lending. This bill falls short of the mark in these 
areas and as result will not get my vote.
  Mr. KERRY. Mr. President, the Bankruptcy Reform bill we are voting on 
today has a valid, uncontroversial and necessary purpose. It is 
intended to curb bankruptcy abuse and ensure that

[[Page 3758]]

those who can afford to pay their debts, do pay their debts. And I 
would say to you, Mr. President, if this were--all about those goals--
if this were a debate about personal responsibility--there would be a 
very different dialogue in the United States Senate and it would have 
given us a very different bill than the one we're voting on today. But 
Mr. President the bill we are voting on is seriously flawed and will 
harm innocent debtors who are genuinely in need of the protections and 
``fresh start'' that bankruptcy procedures are intended to provide. It 
is for that reason that I must vote against this bill.
  During the 106th Congress, I voted in favor of the Senate bankruptcy 
bill, because I believe that we need to reform the system and curb 
abuse. I had some serious reservations about that bill and had hoped 
that many of the concerns I had at that time would be addressed in 
conference. Unfortunately the conference bill, like the bill we are 
voting on today, did not target only those who abuse the bankruptcy 
system. What we needed during the 106th Congress, and what we need now, 
is bankruptcy reform that does not lump together those who need the 
protections of bankruptcy with those who abuse the system.
  We must absolutely prevent the abuse of the bankruptcy system by the 
millionaires whom we know have received the protections of the 
bankruptcy system despite their ability to repay their debts. But even 
beyond the flagrant, high profile abuse of the bankruptcy system that 
we have read about in the papers, we must also be sure that every 
consumer acts responsibly and does not charge meals, vacations and 
clothes that he can't afford, only to turn to the bankruptcy system to 
bail him out of his debt.
  At the same time, we must not forget that a fresh start in bankruptcy 
serves a valuable purpose for many individuals who truly need its 
protections. When an individual gets into financial trouble because, 
for example, she has catastrophic, unforeseen medical expenses, it is 
better for her, for her creditors and even for society as a whole if 
she is given the opportunity to have her debts discharged and is given 
a fresh start. The alternative is that the innocent but unlucky debtor 
may have as much as 25 percent of her wages garnished by her creditors. 
Most people live paycheck to paycheck and would be put in serious 
financial trouble if their paychecks were reduced by that much. In 
those circumstances, consumers have no choice but to cut back on other, 
important expenses. They stop paying for their auto insurance and 
health insurance. They deplete any savings they might have and stop 
contributing to their retirement accounts. This is a perverse result 
that doesn't benefit anyone and certainly should not be the outcome of 
our efforts to reform the bankruptcy system.
  As you know, this bill implements a means-testing system that would 
create a presumption that a Chapter 7 bankruptcy, or fresh start 
bankruptcy, should be dismissed or converted to a Chapter 13 
reorganization if a certain financial formula is satisfied. The means 
test applies an IRS standard to determine whether a case should be 
dismissed or converted. The IRS standard is inflexible, and it provides 
no room for a bankruptcy judge to determine whether the circumstances 
that led to the debtor's financial situation warrant treatment under 
Chapter 7. A father with a sick child is treated the same way as a 
reckless spender who ran up his credit cards on luxury items. Judges 
should have some discretion to distinguish those situations and exempt 
from means-testing debtors who, due to circumstances beyond their 
control, have come to the court to ask for the protection bankruptcy is 
intended to provide.
  The purpose of the means test is to ensure that more individuals file 
in Chapter 13 and therefore pay off more of their debts. That sounds 
like a laudable goal. But it is likely to fail. Simply because more 
people are forced into Chapter 13 plans does not mean that they will be 
able to successfully complete those plans. Even under the current 
system, only a third of those who file for Chapter 13 successfully 
complete their plans. Simply funneling more individuals into Chapter 13 
does not in any way guarantee that more debts will be paid off.
  Finally, the means test imposes financial disclosure requirements 
that put significant burdens on all debtors, not just the ten percent 
or fewer whom experts say abuse the system. Under the means test, 
everyone who files for bankruptcy must engage in more preparation, more 
paperwork and more attorney and other expenses prior to filing for 
bankruptcy, leaving fewer assets to distribute to creditors.
  A narrowly targeted reform bill designed to reduce abuse of the 
system would have provided bankruptcy judges with the discretion to 
dismiss or convert a case to Chapter 7, but would not have mandated it. 
It would have provided creditors the opportunity to ask for a dismissal 
or conversion, but would not have put the burden on every filer to 
prove that he or she deserves the protections of Chapter 7. This bill 
simply fails to take that reasonable, targeted approach toward curbing 
abuse.
  In its attempt to thwart abuse of the system, the bill we are voting 
will also result in some innocent debtors losing their rented homes and 
apartments. Current bankruptcy law allows individuals in bankruptcy to 
remain in their apartments as long as they keep paying their rent while 
the bankruptcy is pending, and as long as they repay any unpaid rent. A 
landlord must go to the bankruptcy court for permission to evict 
tenants who have filed for bankruptcy. There is no question that some 
tenants will abuse this provision, and withhold rent while gambling on 
the fact that the time and expense of going to bankruptcy court will 
prevent the landlord from getting permission to evict the tenant. This 
bill, which allows landlords to evict debtors without going to 
bankruptcy court, punishes the innocent tenant who is paying his rent 
while it attempts to get at those who abuse the system. And once again, 
the answer lies in more narrowly targeting reform. We simply need to 
make it easier and less expensive for a landlord to evict a tenant when 
that tenant has failed to pay his rent. It is not necessary, nor is it 
good public policy, to allow a landlord to evict a tenant who is paying 
rent and who will pay back any debts owed.
  Perhaps one of the most disturbing parts of the bill is its impact on 
children. The bill's supporters claim that by moving child support 
claims from seventh to first priority in Chapter 7 cases, the bill 
``puts child support first.'' What they don't say is that this 
provision is virtually meaningless and will help very few children. The 
reason is because few debtors in Chapter 7 have any assets to 
distribute to priority unsecured creditors, such as credit card 
companies, after secured creditors receive the value of their 
collateral. Therefore, this change would affect only the smallest 
number of cases.
  In addition, by forcing more debtors to file Chapter 13, more debt, 
including credit card debt, will have to be repaid. The result is that 
banks and credit card companies will be in direct competition with 
single parents trying to collect child support after bankruptcy. Once 
again, Mr. President, a bill that claims to reform the system may 
actually make it worse for those most in need.
  While this bill puts more burdens on the innocent debtor, it does not 
place more responsibility on the creditors who provide the consumers 
with the opportunity to take on increasing amounts of debt. A simple 
provision requiring credit card bills to state the length of time it 
would take and the interest that would be paid on the current debt if 
only the monthly minimum was paid would have provided real reform. Such 
a provision would have provided valuable information to consumers, and 
given them the tools they need to decide whether they can afford to 
take on any new debt. This bill, however, fails to include such a 
balanced reform provision. Instead, it includes an inadequate 
disclosure provision that would free 80% of all banks from any 
disclosure responsibility and place the burden of disclosure on the 
Federal Reserve for two years. After

[[Page 3759]]

that time, it is unclear whether and how the consumer disclosure 
requirements would be maintained.
  This bill is not only detrimental to consumers, but it also hurts our 
small businesses. This effort to reform our bankruptcy laws will make 
it more difficult for entrepreneurs to start a small business and 
impose additional regulations and reporting requirements on small 
businesses who file for bankruptcy. I believe we must do everything 
possible to ensure the viability of small businesses and to assist in 
fostering entrepreneurship in our economy. It has been the Congress's 
long-held belief that regulatory and procedural burdens should be 
lowered for small business wherever possible. However, the Bankruptcy 
Reform Act fails to meet this challenge. Instead, this legislation 
promotes additional red tape and a government bureaucracy that we have 
worked to reduce for small business. Specifically, the provisions 
included in the Bankruptcy Reform Act impose new technical and 
burdensome reporting requirements for small businesses who file for 
bankruptcy that are more stringent on small businesses than they are on 
big business. Further, the bill will provide creditors with greatly 
enhanced powers to force small businesses to liquidate their assets.
  Any big business would have difficulty complying with these new 
burdensome reporting requirements. But think of the difficulties an 
entrepreneur or a mom and pop grocery store will have in complying with 
this dizzying array of new and complex reporting and other 
requirements. These small businesses are the most likely to need, but 
least likely to be able to afford, the assistance of a lawyer or an 
accountant to comply with these new taxing requirements. That is why 
during the consideration of this bill I offered an amendment to strike 
the small business provisions which will make it easier for creditors 
to force liquidations of small business during the bankruptcy process. 
Unfortunately, that amendment was not adopted.
  A limited number of provisions do help small businesses and family 
fishing businesses. The amendments that I offered last year to extend 
the reorganization plan filing and confirmation deadlines for small 
business are included in this bill along with a provision to include 
small businesses in the creditors committee. Those amendments help 
small businesses, but they cannot compensate for the greater burdens 
this bill imposes.
  Additionally, I am pleased that an amendment sponsored by Senator 
Collins and I which will extend Chapter 12 bankruptcy protections to 
our family fishermen has been included in the bill. Mr. President, 
small, family-owned fishing businesses are in serious trouble. Severe 
environmental factors such as coastal pollution, warmer oceans and 
changing currents have resulted in severely depleted fish stocks around 
the country. We are making progress in rebuilding stocks, however, the 
cost of this progress has been a steep decline in the amount of fishing 
allowed in Georges Bank and the Gulf of Maine. This in turn has made it 
much more difficult for fishermen in Massachusetts and Maine to 
maintain profitable businesses.
  This amendment Senator Collins and I sponsored will ensure that 
fishermen have the flexibility under Chapter 12 of the bankruptcy code 
to wait out the rebuilding of our commercial fish stocks without back-
tracking on our conservation gains to date. It will help preserve the 
rich New England fishing heritage in Massachusetts without wiping out 
the fiercely independent small-boat fishermen.
  Despite those provisions, which I do believe improve the system, 
overall this bill does not provide for real bankruptcy reform. Mr. 
President, sponsors of this bill say it is necessary because we are in 
the midst of a ``bankruptcy crisis.'' There has been widespread and 
justifiable concern over the increase in consumer bankruptcies during 
the 1990s. There were more than 1.4 million bankruptcy filings in 1998. 
However, personal bankruptcy filings have fallen steadily since then, 
down to 1.3 million in 1999 and to 1.2 million last year. That is fewer 
bankruptcies per capita than there were at the time the bankruptcy bill 
was first introduced. I cannot help but think that had we enacted 
bankruptcy reform in 1998, the sponsors of the bill would have been 
taking credit for this downturn in bankruptcies.
  But without congressional intervention, bankruptcies have been on the 
decline. The reason, Mr. President, is simple. Lenders are profit-
maximizing institutions which select their own credit criteria. If 
there is an increase in personal bankruptcies, credit card companies 
simply won't offer their cards to consumers who don't have the means to 
pay. The free-market thus corrects any upswing in bankruptcy.
  Although the free market will correct the over-extension of credit to 
those who can least afford it, the market will not address the small 
percentage of bankruptcy filers who abuse the system. We need 
legislation for that. But that legislation should be targeted; it 
should be narrowly crafted; and it should avoid punishing those who 
truly need and deserve bankruptcy protection. This bill does not do 
that, and I must vote against it.
  Mr. HATCH. Mr. President, I am pleased that S. 420, the bankruptcy 
legislation, cures some abuses in the Bankruptcy Code regarding 
executory and unexpired leases.
  One provision, Section 404 of the bill, amends Section 365(d)(4) of 
the Bankruptcy Code. Presently, Section 365(d)(4) provides a retail 
debtor 60 days to decide whether to assume or reject its lease. A 
bankruptcy judge may extend this deadline for cause, and therein is the 
problem. Too many bankruptcy judges have allowed this exception 
essentially to eliminate any notion of a reasonable and firm deadline 
on a retail debtor's decision to assume or reject a lease. Bankruptcy 
judges have been extending this deadline for months and years, often to 
the date of confirmation of a plan.
  This situation is unfair. A shopping center operator is a compelled 
creditor. It has no choice but to continue to provide space and 
services to the debtor in bankruptcy. Yet, the current Code permits a 
retail debtor as much as years to decide what it will do with its 
lease. Coupled with the increased use of bankruptcy by retail chains, 
the Bankruptcy Code is tipped unfairly against the shopping center 
operator.
  Some stores curtail their operations or go dark, and still the lessor 
cannot regain control of its space.
  This legislation, like the conference report in the last two 
Congresses, ends this abuse. It imposes a firm, bright line deadline on 
a retail debtor's decision to assume or reject a lease, absent the 
lessor's consent. It permits a bankruptcy trustee to assume or reject a 
lease on a date which is the earlier of the date of confirmation of a 
plan or the date which is 120 days after the date of the order for 
relief. A further extension of time may be granted, within the 120-day 
period, for an additional 90 days, for cause, upon motion of the 
trustee or lessor. Any subsequent extension can only be granted by the 
judge upon the prior written consent of the lessor: either by the 
lessor's motion for an extension, or by a motion of the trustee, 
provided that the trustee has the written approval of the lessor. This 
is important. We are taking away the bankruptcy judges' discretion to 
grant extensions of the time for the retail debtor to decide whether to 
assume or reject a lease after a maximum possible period of 210 days 
from the time of entry of the order of relief. Beyond that maximum 
period, there is no authority in the judge to grant further time unless 
the lessor has agreed in writing to the extension.
  Retail debtors filing for bankruptcy will factor into their plans 
this new deadline. Most retail chains undertake a careful review of 
their financial condition and business outlook before they file for 
bankruptcy. They will already have an understanding of which leases are 
ones they wish to assume and which ones they wish to dispose of. The 
legislation gives them an additional 120 days to decide on what to do 
with their leases, once they file for bankruptcy. Within that 120 day 
time period, an additional 90 days can be granted for cause. A further 
extension may be negotiated by the retail debtor and the

[[Page 3760]]

lessor if circumstances warrant, and any such extension can be granted 
by a judge only with prior written consent of the lessor. Further, a 
lessor's prior written approval of one such extension does not 
constitute approval for any further extensions, each such extension 
beyond the 210 day period requires the lessor's prior written approval. 
The current imbalance between the retail debtor and the lessor will be 
redressed by the legislation.
  The bill in Section 404 also amends Section 365(f)(1) of the 
Bankruptcy Code to make sure that all of the provisions of Section 
365(b) are adhered to and that Section 365(f) does not override Section 
365(b).
  This addresses another growing abuse under the Bankruptcy Code. The 
bill makes clear that an owner must be able to retain control over the 
mix of retail uses in a shopping center. When an owner enters into a 
use clause with a retail tenant forbidding assignments of the lease for 
a use different than that specified in the lease, that clause should be 
honored. Congress has so intended already, but bankruptcy judges have 
sometimes ignored the law.
  Congress made clear, in Section 365(f)(2)(B), that the trustee may 
assign an executory contract or unexpired lease of the debtor, only if 
the trustee makes adequate assurance of future performance under the 
contract or lease.
  In Section 365(b)(3), Congress provided that for purposes of the 
Bankruptcy Code:

       ``Adequate assurance of future performance of a lease of 
     real property in a shopping center includes adequate 
     assurance--
       ``(A) of the source of rent and other consideration due 
     under such lease, and in the case of an assignment, that the 
     financial condition and operating performance of the proposed 
     assignee and its guarantors, if any, shall be similar to the 
     financial condition and operating performance of the debtor 
     and its guarantors, if any, as of the time the debtor became 
     the lessee under the lease;
       (B) that any percentage rent due under such lease will not 
     decline substantially;
       (C) that assumption or assignment of such lease is subject 
     to all provisions thereof, including (but not limited to) 
     provisions such as a radius, location, use, or exclusivity 
     provision, and will not breach any such provision contained 
     in any other lease, financing agreement, or master agreement 
     relating to such shopping center; and
       (D) that assumption or assignment of such lease will not 
     disrupt any tenant mix or balance in such shopping center.

  Congress added these provisions to the Code in recognition that a 
shopping center must be allowed to protect its own integrity as an on 
going business enterprise, notwithstanding the bankruptcy of some of 
its retail tenants. A shopping center operator, for example, must be 
able to determine the mix of retain tenants it leases to. Congress 
decided that use or similar restrictions in a retail lease, which the 
retailer cannot evade under nonbankruptcy law, should not be evaded in 
bankruptcy.
  Regrettably, bankruptcy judges have not followed this Congressional 
mandate. Under another provision of the Code, Section 365(f), a number 
of bankruptcy judges have misconstrued the Code and allowed the 
assignment of a lease even though terms of the lease are not being 
followed. This ignores Section 365(b)(3) and is wrong.
  For example, if a shopping center's lease with an educational 
retailer requires that the premises shall be used solely for the 
purpose of conducting the retail sale of educational items, as the 
lease in the In re Simon Property Group, L.P. v. Learningsmith, Inc. 
case provided, then the lessor has a right to insist on adherence to 
this use clause, even if the retailer files for bankruptcy. The clause 
is fully enforceable if the retailer is not in a bankruptcy proceeding, 
and the retailer should not be able to evade it in bankruptcy. 
Otherwise, the shopping centers operator loses control over the nature 
of his or her business.
  Unfortuantley, in the Learningsmith case, the judge allowed the 
assignment of the lease to a candle retailer because it offered more 
money than an educational store to buy the lease, in contravention of 
Section 365(b)(3) of the Code. As a result, the lessor lost control 
over the nature of its very business, operating a particular mix of 
retail stores. If other retailers file for bankruptcy in that shopping 
center, the same result can occur.
  The bill remedies this problem by amending Section 365(f)(1) to make 
clear it operates subject to all provisions of Section 365(b).
  The legal holding in the Learningsmith case, and other cases like it 
which do not enforce Section 365(b), particularly 365(b)(3), are 
overturned by this legislation.
  Mr. GRAMM. Mr. President, Title IX of S. 420, the Bankruptcy Reform 
Act of 2001, involves financial contract provisions. The provisions of 
Title IX have been carefully crafted with the assistance of the 
President's Working Group on Financial Markets following a review of 
current statutory provisions governing the treatment of qualified 
financial contracts and similar financial contracts upon the insolvency 
of a counterparty.
  Title IX amends the Bankruptcy Code, the Federal Deposit Insurance 
Act, FDIA, as amended by the Financial Institutions Reform, Recovery, 
and Enforcement Act of 1989, FIRREA, the payment system risk reduction 
and netting provisions of the Federal Deposit Insurance Corporation 
Improvement Act of 1991, FDICIA, and the Securities Investor Protection 
Act of 1970, SIPA. These amendments address the treatment of certain 
financial transactions following the insolvency of a party to such 
transactions. The amendments are designed to clarify and improve the 
consistency between the applicable statutes and to minimize the risk of 
a disruption within or between financial markets upon the insolvency of 
a market participant.
  Since its adoption in 1978, the Bankruptcy Code has been amended 
several times to afford different treatment for certain financial 
transactions upon the bankruptcy of a debtor, as compared with the 
treatment of other commercial contracts and transactions. These 
amendments were designed to further the policy goal of minimizing the 
systemic risks potentially arising from certain interrelated financial 
activities and markets. Similar amendments have been made to the FDIA 
and the FDICIA, both the Federal Deposit Insurance Corporation, (FDIC), 
and the Securities Investor Protection Corporation (SIPC), have issued 
policy statements and letters clarifying general issues in this regard.
  Systemic risk has been defined as the risk that a disruption at a 
firm, in a market segment, to a settlement system, etc., can cause 
widespread difficulties at other firms, in other market segments or in 
the financial system as a whole. If participants in certain financial 
activities are unable to enforce their rights to terminate financial 
contracts with an insolvent entity in a timely manner, to offset or net 
payment and other transfer obligations and entitlements arising under 
such contracts, and to foreclose on collateral securing such contracts, 
the resulting uncertainty and potential lack of liquidly could increase 
the risk of an inter-market disruption.
  Congress has in the past taken steps to ensure that the risk of such 
systemic events is minimized. For example, both the Bankruptcy Code and 
the FDIA contain provisions that protect the rights of financial 
participants to terminate swap agreements, forward contracts, 
securities contracts, commodity contracts and repurchase agreements 
following the bankruptcy or insolvency of a counterparty to such 
contracts or agreements. Furthermore, other provisions prevent 
transfers made under such circumstances from being avoided as 
preferences or fraudulent conveyances, except when made with actual 
intent to defraud and taken in bad faith. Protections also are afforded 
to ensure that the acceleration, termination, liquidation, netting, 
setoff and collateral foreclosure provisions of such transactions and 
master agreements for such transactions are enforceable.
  In addition, FDICIA was enacted in 1991 to protect the enforceability 
of close-out netting provisions in ``netting contracts'' between 
``financial institutions.'' FDICIA states that the goal of enforcing 
netting arrangements is to reduce systemic risk within the banking 
system and financial markets.
  The orderly resolution of insolvencies involving counterparties to 
such

[[Page 3761]]

contracts also is an important element in the reduction of systemic 
risk. The FDIA allows the receiver for an insolvency insured depository 
institution the opportunity to review the status of certain contracts 
to determine whether to terminate or transfer the contracts to new 
counterparties. These provisions provide the receiver with flexibility 
in determining the most appropriate resolution for the failed 
institution and facilitate the reduction of systemic risk by permitting 
the transfer, rather than termination, of such contracts.
  In general, Title IX is designed to clarify the treatment of certain 
financial contracts upon the insolvency of a counterparty and to 
promote the reduction of systemic risk. It furthers the goals of prior 
amendments to the Bankruptcy Code and the FDIA regarding the treatment 
of those financial contracts and of the payment system risk reduction 
provisions in FDICIA. It has four principal purposes:
  1. To strengthen the provisions of the Bankruptcy Code and the FDIA 
that protect the enforceability of acceleration, termination, 
liquidation, close-out netting, collateral foreclosure and related 
provisions of certain financial agreements and transactions.
  2. To harmonize the treatment of these financial agreements and 
transactions under the Bankruptcy Code and the FDIA.
  3. To amend the FDIA and FDICIA to clarify that certain rights of the 
FDIC acting as conservator or receiver for a failed insured depository 
institution (and in some situations, rights of SIPC and receivers of 
certain uninsured institutions) cannot be defeated by operation of the 
terms of FDICIA.
  4. To make other substantive and technical amendments to clarify the 
enforceability of financial agreements and transactions in bankruptcy 
or insolvency.
  All these changes are designed to further minimize systemic risk to 
the banking system and the financial markets.
  In section 901, subsections (a) through (f) amend the FDIA 
definitions of ``qualified financial contract,'' ``securities 
contract,'' ``commodity contract,'' ``forward contract,'' ``repurchase 
agreement'' and ``swap agreement'' to make them consistent with the 
definitions in the Bankruptcy Code and to reflect the enactment of the 
Commodity Futures Modernization Act of 2000 (CFMA). It is intended that 
the legislative history and case law surrounding those terms, to the 
date of this amendment, be incorporated into the legislative history of 
the FDIA.
  Subsection (b) amends the definition of ``securities contract'' 
expressly to encompass margin loans, to clarify the coverage of 
securities options and to clarify the coverage of repurchase and 
reverse repurchase transactions. The inclusion of ``margin loans'' in 
the definition is intended to encompass only those loans commonly known 
in the securities industry as ``margin loans,'' such as arrangements 
where a securities broker or dealer extends credit to a customer in 
connection with the purchase, sale or trading of securities, and does 
not include loans that are not commonly referred to as ``margin 
loans,'' however documented. The reference in subsection (b) to a 
``guarantee by or to any securities clearing agency'' is intended to 
cover other arrangements, such as novation, that have an effect similar 
to a guarantee. The reference to a ``loan'' of a security in the 
definition is intended to apply to loans of securities, whether or not 
for a ``permitted purpose'' under margin regulations. The reference to 
``repurchase and reverse repurchase transactions'' is intended to 
eliminate any inquiry under the qualified financial contract provisions 
of the FDIA as to whether a repurchase or reverse repurchase 
transaction is a purchase and sale transaction or a secured financing. 
Repurchase and reverse repurchase transactions meeting certain criteria 
are already covered under the definition of ``repurchase agreement'' in 
the FDIA (and a regulation of the FDIC). Repurchase and reverse 
repurchase transactions on all securities (including, for example, 
equity securities, asset-backed securities, corporate bonds and 
commercial paper) are included under the definition of ``securities 
contract''.
  Subsection (b) also specifies that purchase, sale and repurchase 
obligations under a participation in a commercial mortgage loan do not 
constitute ``securities contracts.'' While a contract for the purchase, 
sale or repurchase of a participation may constitute a ``securities 
contract,'' the purchase, sale or repurchase obligation embedded in a 
participation agreement does not make that agreement a ``securities 
contract.''
  A number of terms used in the qualified financial contract 
provisions, but not defined therein, are intended to have the meanings 
set forth in the analogous provisions of the Bankruptcy Code or FDICIA 
(for example, ``securities clearing agency''). The term ``person,'' 
however, is not intended to be so interpreted. Instead, ``person'' is 
intended to have the meaning set forth in 1 U.S.C. Sec. 1.
  Subsection (e) amends the definition of ``repurchase agreement'' to 
codify the substance of the FDIC's 1995 regulation defining repurchase 
agreement to include those on qualified foreign government securities. 
See 12 CFR Sec. 360.5. The term ``qualified foreign government 
securities'' is defined to include those that are direct obligations 
of, or fully guaranteed by, central governments of members of the 
Organization for Economic Cooperation and Development, OECD. Subsection 
(e) reflects developments in the repurchase agreement markets, which 
increasingly use foreign government securities as the underlying asset. 
The securities are limited to those issued by or guaranteed by full 
members of the OECD, as well as countries that have concluded special 
lending arrangements with the International Monetary fund associated 
with the Fund's General Arrangements to Borrow.
  Subsection (e) also amends the definition of ``repurchase agreement'' 
to include those on mortgage-related securities, mortgage loans and 
interests therein, and expressly to include principal and interest-only 
U.S. government and agency securities as securities that can be the 
subject of a ``repurchase agreement.'' The reference in the definition 
to United States government- and agency-issued or fully guaranteed 
securities is intended to include obligations issued or guaranteed by 
Fannie Mae and the Federal Home Loan Mortgage Corporation (Freddie Mac) 
as well as all obligations eligible for purchase by Federal Reserve 
banks under the similar language of section 14(b) of the Federal 
Reserve Act.
  This amendment is not intended to affect the status of repos 
involving securities or commodities as securities contracts, commodity 
contracts, or forward contracts, and their consequent eligibility for 
similar treatment under the qualified financial contract provisions. In 
particular, an agreement for the sale and repurchase of a security 
would continue to be a securities contract as defined in the FDIA, even 
if not a ``repurchase agreement'' as defined in the FDIA. Similarly, an 
agreement for the sale and repurchase of a commodity, even though not a 
``repurchase agreement'' as defined in the FDIA, would continue to be a 
forward contract for purposes of the FDIA.
  Subsection (e), like subsection (b) for ``securities contracts,'' 
specifies that repurchase obligations under a participation in a 
commercial mortgage loan do not make the participation agreement a 
``repurchase agreement.'' Such repurchase obligations embedded in 
participations in commercial loans (such as recourse obligations) do 
not constitute a ``repurchase agreement.'' However, a repurchase 
agreement involving the transfer of participations in commercial 
mortgage loans with a simultaneous agreement to repurchase the 
participation on demand or at a date certain one year or less after 
such transfer would constitute a ``repurchase agreement'', as well as a 
``securities contract''.
  Subsection (f) amends the definition of ``swap agreement'' to include 
an ``interest rate swap, option, future, or forward agreement, 
including a rate floor, rate cap, rate collar, cross-currency rate 
swap, and basis swap; a spot, same

[[Page 3762]]

day-tomorrow, tomorrow-next, forward, or other foreign exchange or 
precious metals agreement; a currency swap, option, future, or forward 
agreement; an equity index or equity swap, option, future, or forward 
agreement; a debt index or debt swap, option, future, or forward 
agreement; a total return, credit spread or credit swap, option, 
future, or forward agreement; a commodity index or commodity swap, 
option, future, or forward agreement; or a weather swap, weather 
derivative, or weather option.'' As amended, the definition of ``swap 
agreement'' will update the statutory definition and achieve 
contractual netting across economically similar transactions.
  The definition of ``swap agreement'' originally was intended to 
provide sufficient flexibility to avoid the need to amend the 
definition as the nature and uses of swap transactions matured. To that 
end, the phrase ``or any other similar agreement'' was included in the 
definition. (The phrase ``or any similar agreement'' has been added to 
the definition of ``forward contract,'' ``commodity contract,'' 
``repurchase agreement'' and ``securities contract'' for the same 
reason.) To clarify this, subsection (f) expands the definition of 
``swap agreement'' to include ``any agreement or transaction that is 
similar to any other agreement or transaction referred to in Section 
11(e)(8)(D)(vi) of the FDIA and that is of a type that has been, is 
presently, or in the future becomes, the subject of recurrent dealings 
in the swap markets and that is a forward, swap, future, or option on 
one or more rates, currencies, commodities, equity securities or other 
equity instruments, debt securities or other debt instruments, 
quantitative measures associated with an occurrence, extent of an 
occurrence, or contingency associated with a financial, commercial, or 
economic consequence, or economic or financial indices or measures of 
economic or financial risk or value.''
  The definition of ``swap agreement,'' however, should not be 
interpreted to permit parties to document non-swaps as swap 
transactions. Traditional commercial arrangements, such as supply 
agreements, or other non-financial market transactions, such as 
commercial, residential or consumer loans, cannot be treated as 
``swaps'' under either the FDIA or the Bankruptcy Code simply because 
the parties purport to document or label the transactions as ``swap 
agreements.'' In addition, these definitions apply only for purposes of 
the FDIA and the Bankruptcy Code. These definitions, and the 
characterization of a certain transaction as a ``swap agreement,'' are 
not intended to affect the characterization, definition, or treatment 
of any instruments under any other statute, regulation, or rule 
including, but not limited to, the statutes, regulations or rules 
enumerated in subsection (f). Similarly, Section 914 and a new 
paragraph of Section 11(e) of the FDIA provide that the definitions of 
``securities contract,'' ``repurchase agreement,'' ``forward 
contract,'' and ``commodity contract,'' and the characterization of 
certain transactions as such a contract or agreement, are not intended 
to affect the characterization, definition, or treatment of any 
instruments under any other statute, regulation, or rule including, but 
not limited to, the statutes, regulations or rules enumerated in 
subsection (f).
  The definition also includes any security agreement or arrangement, 
or other credit enhancement, related to a swap agreement, including any 
guarantee or reimbursement obligation related to a swap agreement. This 
ensures that any such agreement, arrangement or enhancement is itself 
deemed to be a swap agreement, and therefore eligible for treatment as 
such for purposes of termination, liquidation, acceleration, offset and 
netting under the FDIA and the Bankruptcy Code. Similar changes are 
made in the definitions of ``forward contract,'' ``commodity 
contract,'' ``repurchase agreement'' and ``securities contract.''
  The use of the term ``forward'' in the definition of ``swap 
agreement'' is not intended to refer only to transactions that fall 
within the definition of ``forward contract.'' Instead, a ``forward'' 
transaction could be a ``swap agreement'' even if not a ``forward 
contract.''
  Subsection (g) amends the FDIA by adding a definition for 
``transfer,'' which is a key term used in the FDIA, to ensure that it 
is broadly construed to encompass dispositions of property or interests 
in property. The definition tracks that in section 101 of the 
Bankruptcy Code.
  Subsection (h) makes clarifying technical changes to conform the 
receivership and conservatorship provisions of the FDIA. This 
subsection (h) also clarifies that the FDIA expressly protects rights 
under security agreements, arrangements or other credit enhancements 
related to one or more qualified financial contracts, (QFCs). An 
example of a security arrangement is a right of setoff, and examples of 
other credit enhancements are letters of credit, guarantees, 
reimbursement obligations and other similar agreements.
  Subsection (i) clarifies that no provision of Federal or state law 
relating to the avoidance of preferential or fraudulent transfers, 
(including the anti-preference provision of the National Bank Act) can 
be invoked to avoid a transfer made in connection with any QFC of an 
insured depository institution in conservatorship or receivership, 
absent actual fraudulent intent on the part of the transferee.
  Section 902 provides that no provision of law, including FDICIA, 
shall be construed to limit the power of the FDIC to transfer or to 
repudiate any QFC in accordance with its powers under the FDIA. As 
discussed below, there has been some uncertainty regarding whether or 
not FDICIA limits the authority of the FDIC to transfer or to repudiate 
QFCs of an insolvent financial institution. Section 902, as well as 
other provisions in the Act--clarify that FDICIA does not limit the 
transfer powers of the FDIC with respect to QFCs.
  Section 902 denies enforcement to ``walkaway'' clauses in QFCs. A 
walkaway clause is defined as a provision that, after calculation of a 
value of a party's position or an amount due to or from one of the 
parties upon termination, liquidation or acceleration of the QFC, 
either does not create a payment obligation of a party or extinguishes 
a payment obligation of a party in whole or in part solely because of 
such party's status as a non-defaulting party.
  In Section 903, subsection (a) amends the FDIA to expand the transfer 
authority of the FDIC to permit transfers of QFCs to ``financial 
institutions'' as defined in FDICIA or in regulations. This provision 
will allow the FDIC to transfer QFCs to a non-depository financial 
institution, provided the institution is not subject to bankruptcy or 
insolvency proceedings.
  The new FDIA provision specifies that when the FDIC transfers QFCs 
that are cleared on or subject to the rules of a particular clearing 
organization, the transfer will not require the clearing organization 
to accept the transferee as a member of the organization. This 
provision gives the FCIC flexibility in resolving QFCs cleared on or 
subject to the rules of a clearing organization, while preserving the 
ability of such organizations to enforce appropriate risk reducing 
membership requirements. The amendment does not require the clearing 
organization to accept for clearing any QFCs from the transferee, 
except on the terms and conditions applicable to other parties 
permitted to clear through that clearing organization. ``Clearing 
organization'' is defined to mean a ``clearing organization'' within 
the meaning of FDICIA (as amended both by the CFMA and by Section 906 
of the Act).
  The new FDIA provision also permits transfers to an eligible 
financial institution that is a non-U.S. person, or the branch or 
agency of a non-U.S. person or a U.S. financial institution that is not 
an FDIC-insured institution if, following the transfer, the contractual 
rights of the parties would be enforceable substantially to the same 
extent as under the FDIA. It is expected that the FDIC would not 
transfer QFCs to such a financial institution if there were an 
impending change of law that would impair the enforceability of the 
parties' contractual rights.
  Subsection (b) amends the notification requirements following a 
transfer

[[Page 3763]]

of the QFCs of a failed depository institution to require the FDIC to 
notify any party to a transferred QFC of such transfer by 5:00 p.m. 
(Eastern Time) on the business day following the date of the 
appointment of the FDIC acting as receiver or following the date of 
such transfer by the FDIC acting as a conservator. This amendment is 
consistent with the policy statement on QFCs issued by the FDIC on 
December 12, 1989.
  Subsection (c) amends the FDIA to clarify the relationship between 
the FDIA and FDICIA. There has been some uncertainty whether FDICIA 
permits counterparties to terminate or liquidate a QFC before the 
expiration of the time period provided by the FDIA during which the 
FDIC may repudiate or transfer a QFC in a conservatorship or 
receivership. Subsection (c) provides that a party may not terminate a 
QFC based solely on the appointment of the FDIC as receiver until 5:00 
p.m. (Eastern Time) on the business day following the appointment of 
the receiver or after the person has received notice of a transfer 
under FDIA section 11(d)(9), or based solely on the appointment of the 
FDIC as conservator, notwithstanding the provisions of FDICIA. This 
provides the FDIC with an opportunity to undertake an orderly 
resolution of the insured depository institution.
  The amendment also prohibits the enforcement of rights of termination 
or liquidation that arise solely because of the insolvency of the 
institution or are based on the ``financial condition'' of the 
depository institution in receivership or conservatorship. For example, 
termination based on a cross-default provision in a QFC that is 
triggered upon a default under another contract could be rendered 
ineffective if such other default was caused by an acceleration of 
amounts due under that other contract, and such acceleration was based 
solely on the appointment of a conservator or receiver for that 
depository institution. Similarly, a provision in a QFC permitting 
termination of the QFC based solely on a downgraded credit rating of a 
party will not be enforceable in an FDIC receivership or 
conservatorship because the provision is based solely on the financial 
condition of the depository institution in default. However, any 
payment, delivery or other performance-based default, or breach of a 
representation or covenant putting in question the enforceability of 
the agreement, will not be deemed to be based solely on financial 
condition for purposes of this provision. The amendment is not intended 
to prevent counterparties from taking all actions permitted and 
recovering all damages authorized upon repudiation of any QFC by a 
conservator or receiver, or from taking actions based upon a 
receivership or other financial condition-triggered default in the 
absence of a transfer (as contemplated in Section 11 (e)(10) of the 
FDIA).
  The amendment allows the FDIC to meet its obligation to provide 
notice to parties to transferred QFCs by taking steps reasonably 
calculated to provide notice to such parties by the required time. This 
is consistent with the existing policy statement on QFCs issued by the 
FDIC on December 12, 1989.
  Finally, the amendment permits the FDIC to transfer QFCs of a failed 
depository institution to a bridge bank or a depository institution 
organized by the FDIC for which a conservator is appointed either (i) 
immediately upon the organization of such institution or (ii) at the 
time of a purchase and assumption transaction between the FDIC and the 
institution. This provision clarifies that such institutions are not to 
be considered financial institutions that are ineligible to receive 
such transfers under FDIA section 11(e)(9). This is consistent with the 
existing policy statement on QFCs issued by the FDIC on December 12, 
1989.
  Section 904 limits the disaffirmance and repudiation authority of the 
FDIC with respect to QFCs so that such authority is consistent with the 
FDIC's transfer authority under FDIA section 11(e)(9). This ensures 
that no disaffirmance, repudiation or transfer authority of the FDIC 
may be exercised to ``cherry-pick'' or otherwise treat independently 
all the QFCs between a depository institution in default and a person 
or any affiliate of such person. The FDIC has announced that its policy 
is not to repudiate or disaffirm QFCs selectively. This unified 
treatment is fundamental to the reduction of systemic risk.
  Section 905 states that a master agreement for one or more securities 
contracts, commodity contracts, forward contracts, repurchase 
agreements or swap agreements will be treated as a single QFC under the 
FDIA (but only to the extent the underlying agreements are themselves 
QFCs). This provision ensures that cross-product netting pursuant to a 
master agreement, or pursuant to an umbrella agreement for separate 
master agreements between the same parties, each of which is used to 
document one or more qualified financial contracts, will be enforceable 
under the FDIA. Cross-product netting permits a wide variety of 
financial transactions between two parties to be netted, thereby 
maximizing the present and potential future risk-reducing benefits of 
the netting arrangement between the parties. Express recognition of the 
enforceability of such cross-product master agreements furthers the 
policy of increasing legal certainty and reducing systemic risks in the 
case of an insolvency of a large financial participant.
  In section 906, subsection (a)(1) amends the definition of ``clearing 
organization'' to include clearinghouses that are subject to exemptions 
pursuant to orders of the Securities and Exchange Commission or the 
Commodity Futures Trading Commission and to include multilateral 
clearing organizations, (the definition of which was added to FDICIA by 
the CFMA).
  Subsection (a)(2). FDICIA provides that a netting arrangement will be 
enforced pursuant to its terms, notwithstanding the failure of a party 
to the agreement. However, the current netting provisions of FDICIA 
limit this protection to ``financial institutions,'' which include 
depository institutions. This subsection amends the FDICIA definition 
of covered institutions to include (i) uninsured national and State 
member banks, irrespective of their eligibility for deposit insurance 
and (ii) foreign banks, (including the foreign bank and its branches or 
agencies as a combined group, or only the foreign bank parent of a 
branch or agency).\1\ The latter change will extend the protections of 
FDICIA to ensure that U.S. financial organizations participating in 
netting agreements with foreign banks are covered by the Act, thereby 
enhancing the safety and soundness of these arrangements. It is 
intended that a non-defaulting foreign bank and its branches and 
agencies be considered to be a single financial institution for 
purposes of the bilateral netting provisions of FDICIA (except to the 
extent that the non-defaulting foreign bank and its branches and 
agencies on the one hand, and the defaulting financial institution, on 
the other, have entered into agreements that clearly evidence an 
intention that the non-defaulting foreign bank and its branches and 
agencies be treated as separate financial institutions for purposes of 
the bilateral netting provisions of FDICIA).
---------------------------------------------------------------------------
     \1\ The Federal Reserve Board has by regulation included 
     certain institutions, including certain foreign banks, swaps 
     dealers and insurance companies, in the definition of a 
     ``financial institution'' for purposes of FDICIA. See 12 
     C.F.R. Part 231.
---------------------------------------------------------------------------
  Subsection (a)(3) amends FDICIA to provide that, for purposes of 
FDICIA, two or more clearing organizations that enter into a netting 
contract are considered ``members'' of each other. This assures the 
enforceability of netting arrangements involving two or more clearing 
organizations and a member common to all such organizations, thus 
reducing systemic risk in the event of the failure of such a member. 
Under the current FDICIA provisions, the enforceability of such 
arrangements depends on a case-by-case determination that clearing 
organizations could be regarded as members of each other for purposes 
of FDICIA.
  Subsection (a)(4) amends the FDICIA definition of netting contract 
and the general rules applicable to netting contracts. The current 
FDICIA provisions require that the netting agreement must be governed 
by the law of the United States or a State to receive the

[[Page 3764]]

protections of FDICIA. However, many of these agreements, particularly 
netting arrangements covering positions taken in foreign exchange 
dealings, are governed by the laws of a foreign country. This 
subsection broadens the definition of ``netting contract'' to include 
those agreements governed by foreign law, and preserves the FDICIA 
requirement that a netting contract not be invalid under, or precluded 
by, Federal law.
  Subsections (b) and (c) establish two exceptions to FDICIA's 
protection of the enforceability of the provisions of netting contracts 
between financial institutions and among clearing organization members.
  First, the termination provisions of netting contracts will not be 
enforceable based solely on (i) the appointment of a conservator for an 
insolvent depository institution under the FDIA or (ii) the appointment 
of a receiver for such institution under the FDIA, if such receiver 
transfers or repudiates QFCs in accordance with the FDIA and gives 
notice of a transfer by 5:00 p.m. on the business day following the 
appointment of a receiver. This change is made to confirm the FDIC's 
flexibility to transfer or repudiate the QFCs of an insolvent 
depository institution in accordance with the terms of the FDIA. This 
modification also provides important legal certainly regarding the 
treatment of QFCs under the FDIA, because the current relationship 
between the FDIA and FDICIA is unclear.
  The second exception provides that FDICIA does not override a stay 
order under SIPA with respect to foreclosure on securities, (but not 
cash), collateral of a debtor (section 911 makes a conforming change to 
SIPA). There is also an exception relating to insolvent commodity 
brokers.
  Subsections (b) and (c) also clarify that a security agreement or 
other credit enhancement related to a netting contract is enforceable 
to the same extent as the underlying netting contract.
  Subsection (d) adds a new section 407 to FDICIA. This new section 
provides that, notwithstanding any other law, QFCs with uninsured 
national banks, uninsured Federal branches or agencies, or Edge Act 
corporations, or uninsured State member banks that operate, or operate 
as, a multilateral cleaning organization and that are placed in 
receivership or conservatorship will be treated in the same manner as 
if the contract were with an insured national bank or insured Federal 
branch for which a receiver or conservator was appointed. This 
provision will ensure that parties to QFCs with these institutions will 
have the same rights and obligations as parties entering into the same 
agreements with insured depository institutions. The new section also 
specifically limits the powers of a receiver or conservator for such an 
institution to those contained in 12 U.S.C. Sec. Sec. 1821(e)(8), (9), 
(10), and (11), which address QFCs.
  While the amendment would apply the same rules to such institutions 
that apply to insured institutions, the provision would not change the 
rules that apply to insured institutions. Nothing in this section would 
amend the International Banking Act, the Federal Deposit Insurance Act, 
the national Bank Act, or other statutory provisions with respect to 
receiverships of insured national banks or Federal branches.
  In section 907, subsection (a)(1) amends the Bankruptcy Code 
definitions of `'repurchase agreement'' and ``swap agreement'' to 
conform with the amendments to the FDIA contained in sections 901(e) 
and 901(f) of the Act.
  In connection with the definition of ``repurchase agreement,'' the 
term ``qualified foreign government securities'' is defined to include 
securities that are direct obligations of, or fully guaranteed by, 
central governments of members of the Organization for Economic 
Cooperation and Development OECD. This language reflects developments 
in the repurchase agreement markets, which increasingly use foreign 
government securities as the underlying asset. The securities are 
limited to those issued by or guaranteed by full members of the OECD, 
as well as countries that have concluded special lending arrangements 
with the International Monetary Fund associated with the Fund's General 
Arrangements to Borrow.
  Subsection (a)(1) also amends the definition of ``repurchase 
agreement'' to include those on mortgage-related securities, mortgage 
loans and interests therein, and expressly to include principal and 
interest-only U.S. government and agency securities as securities that 
can be the subject of a ``repurchase agreement.'' The reference in the 
definition to United States government- and agency-issued or fully 
guaranteed securities is intended to include obligations issued or 
guaranteed by Fannie Mae and the Federal Home Loan Mortgage Corporation 
(Feddie Mac) as well as all obligations eligible for purchase by 
Federal Reserve banks under the similar language of section 14(b) of 
the Federal Reserve Act.
  This amendment is not intended to affect the status of repos 
involving securities or commodities as securities contracts, commodity 
contracts, or forward contracts, and their consequent eligibility for 
similar treatment under other provisions of the Bankruptcy Code. In 
particular, an agreement for the sale and repurchase of a security 
would continue to be a securities contract as defined in the Bankruptcy 
Code and thus also would be subject to the Bankruptcy Code provisions 
pertaining to securities contracts, even if not a ``repurchase 
agreement'' as defined in the Bankruptcy Code. Similarly, an agreement 
for the sale and repurchase of a commodity, even though not a 
``repurchase agreement'' as defined in the Bankruptcy Code, would 
continue to be a forward contract for purposes of the Bankruptcy Code 
and would be subject to the Bankruptcy Code provisions pertaining to 
forward contracts.
  Subsection (a)(1) specifies that repurchase obligations under a 
participation in a commercial mortgage loan do not make the 
participation agreement a ``repurchase agreement.'' Such repurchase 
obligations embedded in participations in commercial loans, such as 
recourse obligations, do not constitute a ``repurchase agreement.'' 
However, a repurchase agreement involving the transfer of 
participations in commercial mortgage loans with a simultaneous 
agreement to repurchase the participation on demand or at a date 
certain one year or less after such transfer would constitute a 
``repurchase agreement'' (as well as a ``securities contract'').
  The definition of ``swap agreement'' is amended to include an 
``interest rate swap, option, future, or forward agreement, including a 
rate floor, rate cap, rate collar, cross-currency rate swap, and basis 
swap; a spot, same day-tomorrow, tomorrow-next, forward, or other 
foreign exchange or precious metals agreement; a currency swap, option, 
future, or forward agreement; an equity index or equity swap, option, 
future, or forward agreement; a debt index or debt swap, option, 
future, or forward agreement; a total return, credit spread or credit 
swap, option, future, or forward agreement; a commodity index or 
commodity swap, option, future, or forward agreement; or a weather 
swap, weather derivative, or weather option.'' As amended, the 
definition of ``swap agreement'' will update the statutory definition 
and achieve contractual netting across economically similar 
transactions.
  The definition of ``swap agreement'' originally was intended to 
provide sufficient flexibility to avoid the need to amend the 
definition as the nature and uses of swap transactions matured. To that 
end, the phrase ``or any other similar agreement'' was included in the 
definition. (The phrase ``or any similar agreement'' has been added to 
the definitions of ``forward contract,'' ``commodity contract,'' 
``repurchase agreement,'' and ``securities contract'' for the same 
reason.) To clarify this, subsection (a)(1) expands the definition of 
``swap agreement'' to include ``any agreement or transaction that is 
similar to any other agreement or transaction referred to in Section 
101(53B) of the Bankruptcy Code and that is of a type that has been, is 
presently, or in the future becomes, the subject of recurrent dealings 
in the swap markets and that is a forward, swap, future, or

[[Page 3765]]

option on one or more rates, currencies, commodities, equity securities 
or other equity instruments, debt securities or other debt instruments, 
quantitative measures associated with an occurrence, extent of an 
occurrence, or contingency associated with a financial, commercial, or 
economic consequence, or economic or financial indices or measures of 
economic or financial risk or value.''
  The definition of ``swap agreement'' in this subsection should not be 
interpreted to permit parties to document non-swaps as swap 
transactions. Traditional commercial arrangements, such as supply 
agreements, or other non-financial market transactions, such as 
commercial, residential or consumer loans, cannot be treated as 
``swaps'' under either the FDIA or the Bankruptcy Code because the 
parties purport to document or label the transactions as ``swap 
agreements.'' These definitions, and the characterization of a certain 
transaction as a ``swap agreement,'' are not intended to affect the 
characterization, definition, or treatment of any instruments under any 
other statute, regulation, or rule including, but not limited to, the 
statutes, regulations or rules enumerated in subsection (a)(1)(C). 
Similarly, Section 914 provides that the definitions of ``securities 
contract,'' ``repurchase agreement,'' ``forward contract,'' and 
``commodity contract,'' and the characterization of certain 
transactions as such a contract or agreement, are not intended to 
affect the characterization, definition, or treatment of any 
instruments under any other statute, regulation, or rule including, but 
not limited to, the statutes, regulations or rules enumerated in the 
definition of ``swap agreement.''
  The definition also includes any security agreement or arrangement, 
or other credit enhancement, related to a swap agreement, including any 
guarantee or reimbursement obligation related to a swap agreement. This 
ensures that any such agreement, arrangement or enhancement is itself 
deemed to be a swap agreement, and therefore eligible for treatment as 
such for purposes of termination, liquidation, acceleration, offset and 
netting under the Bankruptcy Code and the FDIA. Similar changes are 
made in the definitions of ``forward contract,'' ``commodity 
contract,'' ``repurchase agreement,'' and ``securities contract.'' An 
example of a security arrangement is a right of setoff; examples of 
other credit enhancements are letters of credit and other similar 
agreements. A security agreement or arrangement or guarantee or 
reimbursement obligation related to a ``swap agreement,'' ``forward 
contract,'' ``commodity contract,'' ``repurchase agreement'' or 
``securities contract'' will be such an agreement or contract only to 
the extent of the damages in connection with such agreement measured in 
accordance with Section 562 of the Bankruptcy Code (added by the Act). 
This limitation does not affect, however, the other provisions of the 
Bankruptcy Code (including Section 362(b)) relating to security 
arrangements in connection with agreements or contracts that otherwise 
qualify as ``swap agreements,'' ``forward contracts,'' ``commodity 
contracts,'' ``repurchase agreements'' or ``securities contracts.''
  The use of the term ``forward'' in the definition of ``swap 
agreement'' is not intended to refer only to transactions that fall 
within the definition of ``forward contract.'' Instead, a ``forward'' 
transaction could be a ``swap agreement'' even if not a ``forward 
contract.''
  Subsections (a)(2) and (a)(3) amend the Bankruptcy Code definitions 
of ``securities contract'' and ``commodity contract,'' respectively, to 
conform them to the definitions in the FDIA.
  Subsection (a)(2), like the amendments to the FDIA, amends the 
definition of ``securities contract'' expressly to encompass margin 
loans, to clarify the coverage of securities options and to clarify the 
coverage of repurchase and reverse repurchase transactions. The 
inclusion of ``margin loans'' in the definition is intended to 
encompass only those loans commonly known in the securities industry as 
``margin loans,'' such as arrangements where a securities broker or 
dealer extends credit to a customer in connection with the purchase, 
sale or trading of securities, and does not include loans that are not 
commonly referred to as ``margin loans,'' however documented. The 
reference in subsection (b) to a ``guarantee'' by or to a ``securities 
clearing agency'' is intended to cover other arrangements, such as 
novation, that have an effect similar to a guarantee. The reference to 
a ``loan'' of security in the definition is intended to apply to loans 
of securities, whether or not for a ``permitted purpose'' under margin 
regulations. The reference to ``repurchase and reverse repurchase 
transactions'' is intended to eliminate any inquiry under Section 555 
and related provisions as to whether a repurchase or reverse repurchase 
transaction is a purchase and sale transaction or a secured financing. 
Repurchase and reverse repurchase transactions meeting certain criteria 
are already covered under the definition of ``repurchase agreement'' in 
the Bankruptcy Code. Repurchase and reverse repurchase transactions on 
all securities (including, for example, equity securities, asset-backed 
securities, corporate bonds and commercial paper) are included under 
the definition of ``securities contract''. A repurchase or reverse 
repurchase transaction which is a ``securities contract'' but not a 
``repurchase agreement'' would thus be subject to the ``counterparty 
limitations'' contained in Section 555 of the Bankruptcy Code (i.e., 
only stockbrokers, financial institutions, securities clearing agencies 
and financial participants can avail themselves of Section 555 and 
related provisions).
  Subsection (a)(2) also specifies that purchase, sale and repurchase 
obligations under a participation in a commercial mortgage loan do not 
constitute ``securities contracts.'' While a contract for the purchase, 
sale or repurchase of a participation may constitute a ``securities 
contract,'' the purchase, sale or repurchase obligation embedded in a 
participation agreement does not make that agreement a ``securities 
contract.''
  Subsection (b) amends the Bankruptcy Code definitions of ``financial 
institution'' and ``forward contract merchant.'' The definition for 
``financial institution'' includes Federal Reserve Banks and the 
receivers or conservators of insolvent depository institutions. With 
respect to securities contracts, the definition of ``financial 
institution'' expressly includes investment companies registered under 
the Investment Company Act of 1940.
  Subsection (b) also adds a new definition of ``financial 
participant'' to limit the potential impact of insolvencies upon other 
major market participants. This definition will allow such market 
participants to close-out and net agreements with insolvent entities 
under sections 362(b)(6), 555 and 556 even if the creditor could not 
qualify as, for example, a commodity broker. Sections 362(b)(6), 555 
and 556 preserve the limitations of the right of close-out and net such 
contracts, in most cases, to entities who qualify under the Bankruptcy 
Code's counterparty limitations. However, where the counterparty has 
transactions with a total gross dollar value of at least $1 billion in 
notional or actual principal amount outstanding on any day during the 
previous 15-month period, or has gross mark-to-market positions of at 
least $100 million (aggregated across counterparties) in one or more 
agreements or transactions on any day during the previous 15-month 
period, sections 362(b)(6), 555 and 556 and corresponding amendments 
would permit it to exercise netting and related rights irrespective of 
its inability otherwise to satisfy those counterparty limitations. This 
change will help prevent systemic impact upon the markets from a single 
failure, and is derived from threshold tests contained in Regulation EE 
promulgated by the Federal Reserve Board in implementing the netting 
provisions of the Federal Deposit Insurance Corporation Improvement 
Act. It is intended that the 15-month period be measured with reference 
to the 15 months preceding the filing of a petition by or against the 
debtor.
  ``Financial participant'' is also defined to include ``clearing 
organizations'' within the meaning of FDICIA

[[Page 3766]]

(as amended by the CFMA and Section 906 of the Act). This amendment, 
together with the inclusion of ``financial participants'' as eligible 
counterparties in connection with ``commodity contracts,'' ``forward 
contracts'' and ``securities contracts'' and the amendments made in 
other Sections of the Act to include ``financial participants'' as 
counterparties eligible for the protections in respect of ``swap 
agreements'' and ``repurchase agreements,'' take into account the CFMA 
and will allow clearing organizations to benefit from the protections 
of all of the provisions of the Bankruptcy Code relating to these 
contracts and agreements. This will further the goal of promoting the 
clearing of derivatives and other transactions as a way to reduce 
systemic risk. The definition of ``financial participant'' (as with the 
other provisions of the Bankruptcy Code relating to ``securities 
contracts,'' ``forward contracts,'' ``commodity contracts,'' 
``repurchase agreements'' and ``swap agreements) is not mutually 
exclusive, i.e., an entity that qualifies as a ``financial 
participant'' could also be a ``swap participant,'' ``repo 
participant,'' ``forward contract merchant,'' `commodity broker,'' 
``stockbroker,'' ``securities clearing agency'' and/or ``financial 
institution.''
  Subsection (c) adds to the Bankruptcy Code new definitions for the 
terms ``master netting agreement'' and master netting agreement 
participant.''
  The definition of ``master netting agreement'' is designed to protect 
the termination and close-out netting provisions of cross-product 
master agreements between parties. Such an agreement may be used (i) to 
document a wide variety of securities contracts, commodity contracts, 
forward contracts, repurchase agreements and swap agreements or (ii) as 
an umbrella agreement for separate master agreement between the same 
parties, each of which is used to document a discrete type of 
transaction. The definition includes security agreements or 
arrangements or other credit enhancements related to one or more such 
agreements and clarifies that a master netting agreement will be 
treated as such even if it documents transactions that are not within 
the enumerated categories of qualifying transactions (but the 
provisions of the Bankruptcy Code relating to master netting agreements 
and the other categories of transactions will not apply to such other 
transactions).
  A ``master netting agreement participant'' is an entity that is a 
party to an outstanding master netting agreement with a debtor before 
the filing of a bankruptcy petition.
  Subsection (d) amends section 362(b) of the Bankruptcy Code to 
protect enforcement, free from the automatic stay, of setoff or netting 
provisions in swap agreements and in master netting agreements and 
security agreements or arrangements related to one or more swaping 
agreements or master netting agreements. This provision parallels the 
other provisions of the Bankruptcy Code that protect netting provisions 
of securities contracts, commodity contracts, forward contracts, and 
repurchase agreements. Because the relevant definitions include related 
security agreements, the references to ``setoff' in these provisions, 
as well in section 362(b)(6) and (7) of the Bankruptcy Code, are 
intended to refer also to rights to foreclose on, and to set off 
against-obligations to return, collateral securing swap agreements, 
mater netting agreements, repurchase agreements, securities contracts, 
commodity contracts, or forward contracts. Collateral may be pledged to 
cover the cost of replacing the defaulted transactions in the relevant 
market, as well as other costs and expenses incurred or estimated to be 
incurred for the purpose of hedging or reducing the risks arising out 
of such termination. Enforcement of these agreements and arrangement 
free from the automatic stay is consistent with the policy goal of 
minimizing systemic risk.
  Subsection (d) also clarifies that the provisions protecting setoff 
and foreclosure in relation to securities contracts, commodity 
contracts, forward contracts, repurchase agreements, swap agreements, 
and master netting agreements free from the automatic stay apply to 
collateral pledged by the debtor but that cannot technically be ``held 
by'' the creditor, such as receivables and book-entry securities, and 
to collateral that has been repledged by the creditor and securities 
re-sold pursuant to repurchase agreements.
  The current codification of section 546 of the Bankruptcy Code 
contains two subsections designated as ``(g)''; subsection (e) corrects 
this error.
  Subsections (e) and (f) amend sections 546 and 548(d) of the 
Bankruptcy Code to provide that transfers made under or in connection 
with a master netting agreement may not be avoided by a trustee except 
where such transfer is made with actual intent to hinder, delay or 
defraud and not taken in good faith. This amendment provides the same 
protections for a transfer made under, or in connection with, a master 
netting agreement as currently is provided for margin payments, 
settlement payments and other transfers received by commodity brokers, 
forward contract merchants, stockbrokers, financial institutions, 
securities clearing agencies, repo participants, and swap participants 
under Sections 546 and 548(d), except to the extent the trustee could 
otherwise avoid such a transfer made under an individual contract 
covered by such master netting agreement.
  Subsections (g), (h), (i) and (j) clarify that the provisions of the 
Bankruptcy Code that protect (i) rights of liquidation under securities 
contracts, commodity contracts, forward contracts and repurchase 
agreements also protect rights of termination or acceleration under 
such contracts, and (ii) rights to terminate under swap agreements also 
protect rights of liquidation and acceleration.
  Subsection (k) adds a new section 561 to the Bankruptcy Code to 
protect the contractual right of a master netting agreement participant 
to enforce any rights of termination, liquidation, acceleration, offset 
or netting under a master netting agreement. Such rights include rights 
arising (i) from the rules of a derivatives clearing organization, 
multilateral clearing organization, securities clearing agency, 
securities exchange, securities association, contract market, 
derivatives transaction execution facility or board of trade, (ii) 
under common law, law merchant or (iii) by reason of normal business 
practice. This reflects the enactment of the CFMA and the current 
treatment of rights under swap agreements under section 560 of the 
Bankruptcy Code. Similar changes to reflect the enactment of the CFMA 
have been made to the definition of ``contractual right'' for purposes 
of Sections 555, 556, 559 and 560 of the Bankruptcy Code.
  Subsections (b)(2)(A) and (b)(2)(B) of new Section 561 limit the 
exercise of contractual rights to net or to offset obligations where 
the debtor is a commodity broker and one leg of the obligations sought 
to be netted relates to commodity contracts traded on or subject to the 
rules of a contract market designated under the Commodity Exchange Act 
or a derivatives transaction execution facility registered under the 
Commodity Exchange Act. Under subsection (b)(2)(A) netting or 
offsetting is not permitted in these circumstances if the party seeking 
to net or to offset has no positive net equity in the commodity 
accounts at the debtor. Subsection (b)(2)(B) applies only if the debtor 
is a commodity broker, acting on behalf of its own customer, and is in 
turn a customer of another commodity broker. In that case, the latter 
commodity broker may not net or offset obligations under such commodity 
contracts with other claims against its customer, the debtor. 
Subsections (b)(2)(A) and (b)(2)(B) limit the depletion of assets 
available for distribution to customers of commodity brokers. This is 
consistent with the principle of subchapter IV of chapter 7 of title 11 
that gives priority to customer claims in the bankruptcy of a commodity 
broker. Subsection (b)(2)(C) provides an exception to subsections 
(b)(2)(A) and (b)(2)(B) for cross-margining and other similar 
arrangements approved by, or

[[Page 3767]]

submitted to and not rendered ineffective by, the Commodity Futures 
Trading Commission, as well as certain other netting arrangements.
  For the purposes of Bankruptcy Code, sections 555, 556, 559, 560, and 
561, it is intended that the normal business practice in the event of a 
default of a party based on bankruptcy or insolvency is to terminate, 
liquidate or accelerate securities contracts, commodity contracts, 
forward contracts, repurchase agreements, swap agreements, and master 
netting agreements with the bankrupt or insolvent party.
  The protection of netting and offset rights in sections 560 and 561 
is in addition to the protections afforded in sections 362(b)(6), 
(b)(7), (b)(17), and (b)(28).
  Under the Act, the termination, liquidation, or acceleration rights 
of a master netting agreement participant are subject to limitations 
contained in other provisions of the Bankruptcy Code relating to 
securities contracts and repurchase agreements. In particular, if a 
securities contract or repurchase agreement is documented under a 
master netting agreement, a party's termination, liquidation, and 
acceleration rights would be subject to the provisions of the 
Bankruptcy Code relating to orders authorized under the provisions of 
SIPA or any statute administered by the SEC. In addition, the netting 
rights of a party to a master netting agreement would be subject to any 
contractual terms between the parties limiting or waiving netting or 
set off rights. Similarly, a waiver by a bank or a counterparty of 
netting or set off rights in connection with QFCs would be enforceable 
under the FDIA.
  Section 502 of the Act clarifies that, with respect to municipal 
bankruptcies, all the provisions of the Bankruptcy Code relating to 
securities contracts, commodity contracts, forward contracts, 
repurchase agreements, swap agreements, and master netting agreements 
(which by their terms are intended to apply in all proceedings under 
title 11) will apply in a Chapter 9 proceeding for a municipality. 
Although sections 555, 556, 559, and 560 provide that they apply in any 
proceeding under the Bankruptcy Code, Section 502 makes a technical 
amendment in Chapter 9 to clarify the applicability of these 
provisions.
  New section 561 of the Bankruptcy Code clarifies that the provisions 
of the Bankruptcy Code related to securities contracts, commodity 
contracts, forward contracts, repurchasing agreements, swap agreements, 
and master netting agreements apply in a proceeding ancillary to a 
foreign insolvency proceeding under new Chapter 15.
  Subsections (l) and (m) clarify that the exercise of termination and 
netting rights will not otherwise affect the priority of the creditor's 
claim after the exercise of netting, foreclosure, and related rights.
  Subsection (n) amends section 553 of the Bankruptcy Code to clarify 
that the acquisition by a creditor of setoff rights in connection with 
swap agreements, repurchase agreements, securities contracts, forward 
contracts, commodity contracts and master netting agreements cannot be 
avoided as a preference.
  This subsection also adds setoff of the kinds described in sections 
555, 556, 559, 560, and 561 of the Bankruptcy Code to the types of 
setoff excepted from section 553(b).
  Subsection (o), as well as other subsections of the Act, adds 
references to ``financial participant'' in all the provisions of the 
Bankruptcy Code relating to securities, forward and commodity 
contracts, and repurchase and swap agreements.
  Section 908 amends section 11(e)(8) of the Federal Deposit Insurance 
Act to explicitly authorize the FDIC, in consultation with appropriate 
Federal banking agencies, to prescribe regulations on recordkeeping by 
any insured depository institution with respect to QFCs only if the 
insured depository institution is in a troubled condition (as such term 
is defined in the FDIA).
  Section 909 amends FDIA section 13(e)(2) to provide that an agreement 
for the collateralization of governmental deposits, bankruptcy estate 
funds, Federal Reserve Bank or Federal Home Loan Bank extensions of 
credit, or one or more QFCs shall not be deemed invalid solely because 
such agreement was not entered into contemporaneously with the 
acquisition of the collateral or because of pledges, delivery, or 
substitution of the collateral made in accordance with such agreement.
  The amendment codifies portions of policy statements issued by the 
FDIC regarding the application of section 13(e), which codifies the 
``D'Oench Duhme'' doctrine. With respect to QFCs, this codification 
recognizes that QFCs often are subject to collateral and other security 
arrangements that may require posting and return of collateral on an 
ongoing basis based on the mark-to-market value of the collateralized 
transactions. The codification of only portions of the existing FDIC 
policy statements on these and related issues should not give to any 
negative implication regarding the continued validity of these policy 
statements.
  Section 910 adds a new section 562 to the Bankruptcy Code providing 
that damage under any swap agreement, securities contract, forward 
contract, commodity contract, repurchase agreement, or master netting 
agreement will be calculated as of the earlier of (i) the date of 
rejection of such agreement by a trustee or (ii) the date of 
liquidation, termination or acceleration of such contract or agreement.
  New section 562 provides important legal certainty and makes the 
Bankruptcy Code consistent with the current provisions related to the 
timing of the calculation of damages under QFCs in the FDIA.
  Section 911 amends SIPA to provide that an order or decree issued 
pursuant to SIPA shall not operate as a stay of any right of 
liquidation, termination, acceleration, offset, or netting under one or 
more securities contracts, commodity contracts, forward contracts, 
repurchase agreements, swap agreements, or master netting agreements 
(as defined in the Bankruptcy Code and including rights of foreclosure 
on collateral), except that such order or decree may stay any right to 
foreclose on or dispose of securities (but not cash) collateral pledged 
by the debtor or sold by the debtor under a repurchase agreement or 
lent by the debtor under a securities lending agreement. (A 
corresponding amendment to FDICIA is made by section 906). A creditor 
that was stayed in exercising rights against such securities would be 
entitled to post-insolvency interest to the extent of the value of such 
securities.
  Section 912 generally protects asset-backed securitization 
transactions from legal uncertainties and disruptions related to the 
bankruptcies of certain parties and allows for the further development 
of structured finance. Asset securitization involves the issuance of 
securities supported by assets having an ascertainable cash flow or 
market value. Securitization of receivables, such as small-business 
loans, commercial and multifamily mortgages, and car loans, allows for 
the funding of such loans from capital market sources. The process 
generally enlarges the pool of capital available and reduces financing 
costs for vital lending purposes such as the financing of small-
business operations and home ownership.
  Through a number of definitions designed to ensure that the exclusion 
from property of the estate applies only to the intended type of 
transaction, new section 541(b)(5) of the Bankruptcy Code excludes from 
the property of a debtor's estate any ``eligible asset'' (and proceeds 
thereof) to the extent that such eligible asset was ``transferred'' by 
the debtor, before the date of commencement of the case, to an 
``eligible entity'' in connection with an ``asset-backed 
securitization.'' Each term is explicitly defined to reflect its 
specific role or application in the securitization process to ensure 
that only bona fide securitizations are eligible for the safe harbor 
exclusion. All defined elements of a securitization must be present for 
the safe harbor to apply. Other commercial transactions lacking any of 
the defined elements, such as transactions documented and structured as 
collateralized lending arrangements and other commercial asset sales or 
financings that are unrelated to securitization transactions,

[[Page 3768]]

would be ineligible for the safe harbor provided by section 541(b)(5).
  The phrase ``to the extent'' in new section 541(b)(5) makes clear 
that a portion of the eligible asset may remain part of the debtor's 
estate, for example, where the eligible entity obtains the right to 
receive only interest payments on the first 10 percent of payments due 
on a receivable in connection with an asset-backed securitization. In 
addition, the reference to section 548(a) in new section 541(b)(5) will 
make clear that the safe harbor does not supersede a trustee's power to 
avoid fraudulent transfers.
  New section 541(b)(5) is not intended to override state law 
requirements, if any, regarding ``perfection'' of an asset sale. 
However, regardless of strict compliance with such state law 
requirements, new section 541(b)(5) is intended to provide an exclusion 
of the debtor's interest in eligible assets (and proceeds thereof) from 
the debtor's estate, upon compliance with section 541(b)(5). Thus, 
despite an eligible entity's failure to have properly perfected a sale 
for state law purposes, the eligible assets in question would remain 
excluded from the debtor's estate. In such event, however, a third 
party creditor with an interest in such eligible assets under state law 
would not be precluded from asserting, outside of the bankruptcy 
proceedings, such interest against the issuer or any other party 
purporting to have an interest in those assets. In other words, the 
amendments do not purport to extinguish any party's interest in the 
securitized assets other than the debtor's interest to the extent 
transferred by the debtor to the securitization vehicle. In order to 
provide certainty to participants in the asset-backed securities market 
(including both issuers and purchasers of such securities), it is noted 
that the ``strong-arm'' provisions of section 544 of the Bankruptcy 
Code are not intended to override the general rule set forth in new 
section 541(b)(5) so as to bring such assets back into the debtor's 
estate.
  Frequently, asset securitizations involve the issuance of more than 
one class of securities with differing payment priorities, 
subordination provisions and other characteristics. The definition of 
``asset-backed securitization'' contained in new section 541(e)(1) 
requires that at least one tranche of the asset-backed securities 
backed by the eligible assets in question be rated investment grade, 
thereby requiring that each asset-backed securitization as to which 
eligible assets are excluded from the debtor's estate be a carefully 
reviewed transaction subjected to third party scrutiny by a nationally 
recognized statistical rating organization. The investment-grade rating 
requirement applies only when the security is initially issued. In view 
of the cost and time associated with obtaining an investment-grade 
rating, such ratings are generally not pursued for smaller 
transactions. These and other burdens of the rating process add further 
protection against potential abuse of the safe harbor for sham 
transactions and ensure its application of its intended purpose--to 
preserve payments on asset-backed securities issued in the public and 
private markets.
  New section 541(e)(4) defines the term ``eligible asset.'' This 
definition is based upon the definition provided in rule 3a-7 under the 
Investment Company Act of 1940, which provides an exemption from 
registration under the Investment Company Act for issuers of asset-
backed securities (i.e., issuers in the business of purchasing, or 
otherwise acquiring, and holding eligible assets). The phrase ``or 
other assets'' is intended to cover assets often conveyed in connection 
with securitization transactions such as letters of credit, guarantees, 
cash collateral accounts, and other assets that are provided as 
additional credit support. This phrase would also cover other assets, 
such as swaps, hedge agreements, etc., that are provided to protect 
bondholders against interest rate, currency and other market risks. The 
inclusion of cash and securities as eligible assets allows so-called 
market-value based securitizations of equity and other non-amortizing 
securities to fall within the purview of the amendment, although 
securitizations of such securities are not included under Rule 3a-7 and 
therefore would be subject to regulation under the Investment Company 
Act if another exemption therefrom were not available.
  New sections 541(e)(3) and (4) define the terms ``eligible entity'' 
and ``issuer,'' respectively. The definitions exclude operating 
companies by encompassing only single purpose entities. Because 
securitization transactions often involve intermediary transferees, an 
eligible entity can be either an issuer or an entity engaged 
exclusively in the business of acquiring and transferring eligible 
assets directly or indirectly to an issuer.
  New section 541(e)(5) defines the term ``transferred.'' In order for 
the eligible assets to be excluded from the debtor's estate under 
section 541, the debtor must represent and warrant in a written 
agreement that such eligible assets were sold, contributed or otherwise 
conveyed with the intention of removing them from the debtor's estate 
pursuant to section 541 (whether or not reference is made to section 
541 in the written agreement). The definition makes clear that the 
debtor's written intention as to the exclusion of the eligible assets 
will be honored, regardless of the state law characterization of the 
transfer as a sale, contribution or other conveyance, and regardless of 
any other aspect of the transaction (such as the debtor's holding an 
interest in the issuer or any securities issued by the issuer, the 
ongoing servicing obligation of the debtor; the tax and accounting 
characterization; or any recourse to the debtor, whether relating to a 
breach of a representation, warranty or covenant, or otherwise) which 
may affect a state law analysis as to the true sale.
  Section 913, subsection (a) provides that the amendments made under 
Title IX take effect on the date of enactment.
  Subsection (b) provides that the amendments made under Title IX shall 
not apply with respect to cases commenced, or to conservator/receiver 
appointments made, before the date of enactment. The amendments would, 
however, apply to contracts entered into prior to the date of 
enactment, so long as a Bankruptcy Code case were commenced or a 
conservator/receiver appointment were made on or after the date of 
enactment under any Federal or state law.
  Section 914 provides that the meaning of terms used in Title IX are 
applicable for purposes of Title IX only, and shall not be construed or 
applied so as to challenge or affect the characterization, definition, 
or treatment of any similar terms under any other statute, regulation, 
or rule, including the Gramm-Leach-Bliley Act, the Legal Certainty for 
Bank Products Act of 2000, the securities laws (as that term is defined 
in Section 3(a)(47) of the Securities Exchange Act of 1934), and the 
Commodity Exchange Act.
  Mr. HUTCHINSON. Mr. President, I rise in support of S. 420, the 
Bankruptcy Reform Act of 2001, and I commend Senators Grassley, Hatch, 
and Sessions for their hard work, dedication, and perseverance. As a 
result of their efforts, a sense of balance and fairness has been 
restored to our legal system and American consumers and businesses will 
both benefit.
  This bill is long overdue as over the past decade there has been an 
explosion in the number of bankruptcy filings. Last year, there were 
1.25 million total bankruptcy filings in America, in 1990, a mere ten 
years earlier, there were 782,960 filings. In Arkansas, there were 
7,062 filings in 1990 and 16,784 in 2000. This explosion is due in no 
small part to the current Bankruptcy Code's generous, no questions 
asked policy of providing complete debt forgiveness under Chapter 7 
without seriously considering whether a person filing bankruptcy can 
repay some or all of those debts.
  Furthermore, the United States economy loses $40 billion annually as 
a result of bankruptcy filings and the U.S. Department of Justice 
estimates that creditors lose $3.22 billion every year because of 
bankruptcies filed by persons who could repay their debts. These losses 
are passed on to all consumers--including, and especially,

[[Page 3769]]

those who responsibly pay at least part of their debts but choose not 
to use the bankruptcy code to escape them. The Congressional Budget 
Office estimates that as a result each American household pays an extra 
$400 annually in the form of higher costs for goods, services, and 
credit.
  The Bankruptcy Reform Act of 2001 will reduce the number of frivolous 
bankruptcy filings while still allowing those who truly need help to 
obtain a fresh start. I am proud to support this legislation and I ask 
my colleagues to join me in support of the Bankruptcy Reform Act of 
2001.
  Mrs. MURRAY. Mr. President, I rise to express my support for the 
bankruptcy reform legislation. This legislation offers an imperfect but 
fairly balanced approach to reforming the bankruptcy system. Through 
the amendment process we have improved the bill, but it could be more 
fair to all sectors of our society. I am disappointed some good 
amendments that would have improved the legislation were rejected.
  The bankruptcy reform legislation that passed the House a couple of 
weeks ago is less friendly to individuals in adverse circumstances not 
of their own doing. If this bankruptcy reform bill is weakened in 
conference, I will have a hard time supporting it. I will likely oppose 
a conference agreement that looks at all like the House bill.
  In recent years, consumer bankruptcy filings have dramatically 
increased. We debated bankruptcy reform in the last two Congresses. 
Those discussions showed our desire to elevate personal responsibility 
in consumer financial transactions; to prevent bankruptcy filings from 
being used by consumers as a financial planning tool; and, to recapture 
the stigma associated with a bankruptcy filing. It is clear the system 
is broke, and bankruptcy reform is needed.
  I voted for bankruptcy reform in both the 105th and 106th Congresses, 
and I plan to vote for this bill. Despite these votes, I have 
reservations about how the unintended consequences of this bill will 
affect the less fortunate.
  The bill will have an enormous impact on women and child support. The 
largest growing group of filers are women, usually single mothers. The 
bill's overall philosophy of pushing debtors from chapter 7 to chapter 
13 will have an unintended effect on women. They usually have fewer 
means and are more susceptible to crafty creditors seeking to 
intimidate and reaffirm their debts. They need the protection of 
chapter 7, but could be pushed into chapter 13.
  Women will also be disadvantaged by provisions in this bill that fail 
to prioritize domestic obligations. Under the provisions of this bill, 
women will find themselves competing with powerful commercial creditors 
for necessary resources, such as past-due child support, from spouses 
who are in bankruptcy. It is unfair to place the critical needs of 
families and single mothers trying to survive behind those of well-off 
commercial creditors.
  Another problem with this bill is the new filing requirements are 
very complex, which could result in unintended discrimination against 
lower-income individuals and families. Many low-income families don't 
have the means to combat most creditors. Because debtors must prove 
they are filing for legitimate reasons, those without the means to 
combat powerful commercial interests will be placed at an unfair 
disadvantage.
  I was also disappointed that the U.S. Senate failed to adopt some 
very good amendments that would have significantly improved the bill. 
Senator Kohl offered an amendment that would have limited the practice 
of wealthy debtors shielding themselves from creditors in bankruptcy 
behind State homestead exemption laws that allow them to shelter large 
amounts of money in a new home. His amendment would have placed a 
national cap on this exemption, and limited the abusive practice of 
sheltering large amounts of money in large homes. I supported this 
needed amendment, but it was rejected on the floor of the Senate.
  Several amendments were also offered that would have restricted the 
marketing to and use of credit cards by young people. Credit card 
companies are aggressively marketing to young people, and many young 
people are getting into massive debt. Companies should only be allowed 
to offer credit cards to those who can pay for them.
  Finally, I am disappointed that amendments were rejected that would 
have limited predatory lending practices. Some of these predatory loans 
can have interest rates over 100%.
  I was pleased to see that the bill included language to end the 
practice of using the bankruptcy code to escape civil punishment for 
violence, intimidation or threats against individuals using family 
planning services. This provision was added in the Judiciary Committee 
and greatly improves the bill. It ensures that those who violate the 
law cannot escape justice through the bankruptcy laws. This critical 
provision of this bill that must not be stripped or drastically changed 
in conference.
  Overall, this is a decent bill that will improve on the current 
abuses of the bankruptcy system. While I have concerns over many of 
this bill's provisions, I hope they can be dealt with in conference or 
in future legislation.
  This bill should be strengthened in conference, not weakened as has 
happened to other versions of bankruptcy legislation. I will closely 
examine a conference agreement with this in mind before voting to send 
this legislation to the President.
  Mr. LEVIN. Mr. President, once again the Senate will vote on a 
bankruptcy reform bill. In the last session of Congress, when the 
bankruptcy bill came before the Senate, I voted in favor of the bill. I 
said at the time that because of the amendments adopted in the Senate, 
the bill was a more reasonable approach to bankruptcy reform that had 
been reported by the Judiciary Committee. However, I further stated 
that if the legislation came back from conference, without those modest 
amendments, I would consider opposing the bill. In the end, the 
bankruptcy legislation came back from conference in a form that I could 
not support. The conferees who worked out the differences on the bill 
deleted or weakened many of the provisions I had supported.
  Today, I will vote for this bill with the hope that it does not 
return from conference in a form I cannot support. The Senate today 
adopted the Kohl amendment establishing a nationwide homestead cap. 
That provision must be retained in conference. The Senate has now 
spoken twice with respect to homestead abuse. We cannot legitimately 
reform the bankruptcy system if we do not prevent wealthy debtors from 
shielding luxurious homes while shedding thousands of dollars of debt 
in bankruptcy.
  In addition, the conferees should keep in the final bill, the 
amendment making debts arising from clinic violence nondischargeable, 
the amendment on landlord-tenant, the amendment on separated spouses, 
and the amendment on the means test with respect to high energy costs. 
It is also my hope that the conference will yield more protections for 
consumers.
  If the bankruptcy bill comes back from conference without these and 
some of the other reasonable amendments adopted in the Senate, I may 
once again be forced to oppose the final legislation.
  Mrs. CLINTON. Mr. President, I rise today in support of final passage 
of S. 420, the Bankruptcy Reform Act. Many of my colleagues may 
remember that I was a strong critic of the bill that passed out of the 
106th Congress because I did not believe it provided a balanced 
approach to bankruptcy reform.
  While we have yet to achieve the kind of bankruptcy reform I believe 
is possible, I have worked with a number of people over the past three 
years to make improvements that bring us closer to our goals, 
particularly when it comes to child support.
  Women can now be assured that they can continue to collect child 
support payments after the child's father has declared bankruptcy. The 
legislation makes child support the first priority during bankruptcy 
proceedings.

[[Page 3770]]

  This year, we have made more progress. The Senate agreed to include a 
revised version of Senator Schumer's amendment to ensure that any debts 
resulting from any act of violence, intimidation, or threat would be 
non-dischargeable. Earlier today, this body agreed to include a cap on 
the homestead exemption to ensure that wealthy debtors could not shield 
their wealth by purchasing a mansion in a state with no cap on 
homestead exemption. And finally, today I worked hard to make sure that 
once a person has been declared bankrupt, single mothers can still 
collect the child support they depend upon. Senator Hatch and I passed 
an amendment to ensure that child's custodian--usually the mother--will 
be informed by the bankruptcy trustee of her right to have the State 
child support agency collect the non-dischargeable child support from 
the ex-spouse.
  In addition, I was concerned about competing non-dischargeable debt 
so I worked hard with Senator Boxer to ensure that more credit card 
debt can be erased so that women who use their credit cards for food, 
clothing and medical expenses in the 90 days before bankruptcy do not 
have to litigate each and every one of these expenses for the first 
$750.
  Let me be very clear--I will not vote for final passage of this bill 
if it comes back from conference if these kind of reforms are missing. 
I am voting for this legislation because it is a work in progress, and 
it is making progress towards reform.
  Bankruptcy reform is important. I grew up with a father who worked 
hard to avoid having debts. In recent weeks, I have heard form many 
small credit unions throughout New York, hard working small lenders 
whose entire membership suffers when the credit union is faced with 
covering bankruptcy losses.
  One credit union from Hoosick Falls has assets of only $2.5 million, 
but when one of their members filed a Chapter 7 bankruptcy, this small 
credit union was left with a bill of thousands, which penalized the 
entire 1,000 membership with increased fees.
  Reform is needed. The right kind of reform is necessary. We're on our 
way toward that goal, and I hope we can achieve final passage of a good 
bankruptcy reform bill this year.
  Mrs. FEINSTEIN. Mr. President, I rise in support of final passage of 
the bankruptcy bill.
  The Senate has worked on this legislation for over four years. The 
Judiciary Committee, on which I sit, has debated this issue again and 
again, and we have even sent a bill to the President although that bill 
was fatally flawed and was vetoed as a result.
  This bill is by no means perfect. However, the bill now before us is 
better than the Conference Report we were faced with at the end of last 
year, and it is better and more balanced than the bill presented to us 
in the Judiciary Committee just a few weeks ago.
  I believe that the modifications to the legislation made in Committee 
and on the Floor merit a ``Yes'' vote on final passage.
  Since the bill's introduction, I have consistently supported its 
underlying goal of promoting personal responsibility--as, I think, has 
every member of this Senate. Debtors who can pay back what they owe, 
should pay what they owe or at least part of it.
  Moreover, the bankruptcy code should not be a haven for irresponsible 
individuals who have recklessly accumulated debts by spending freely 
without regard to the consequences. After all, bankruptcy has a 
societal cost.
  And although much has been made of the big credit card companies and 
banks, not every creditor is a big business. Many harmed by bankruptcy 
filings are small businessmen and women dry cleaners, home repair 
workers, and others.
  An empirical review of bankruptcy filings indicates that reform is 
needed. Despite a recent drop, bankruptcy filings continue to remain at 
unacceptably high levels.
  In 1980, individuals filed 287,000 bankruptcies.
  In 1999, more than 1.3 million Americans filed for bankruptcy--an 
increase of 358 percent over 20 years. Bankruptcy has become so 
commonplace that more than one in a hundred households will file for 
bankruptcy this year.
  The bill we are voting on today appropriately readjusts our 
bankruptcy laws so that bankruptcy filers must repay a portion of their 
debts, if they can do so. At the same time, the bill protects debtors 
below the median income who are truly in need of a fresh start.
  This bill assists single parents with children in collecting child 
support debt from the bankruptcy estate. Philip Strauss, Principal 
Attorney of the San Francisco Department of Child Support Services, 
testified on this issue at a February 8, Judiciary Committee hearing, 
noting that the Bankruptcy Act of 2001 ``will enhance substantially the 
enforcement of child support obligations against debtors in 
bankruptcy.''
  Specifically, the Bankruptcy Act of 2001 gives child support the 
highest priority of unsecured claims in a bankruptcy estate. Moreover, 
the bill prevents a debtor from confirming a bankruptcy plan if the 
debtor does not make full payment of any child support becoming due 
after the petition date.
  This bill is significantly improved from the Conference Report I 
voted against in December. While I voted for the Senate-passed 
bankruptcy bill in the 106th Congress, I voted against the Conference 
Report because the shadow conference deleted key Senate-passed 
amendments and did not strike a fair enough balance between creditors 
and debtors.
  For example, last year, the Conference Report deleted a Senate passed 
amendment that would prevent anti-abortion extremists from using 
bankruptcy laws to avoid paying civil judgements against them under the 
Freedom of Access to Clinic Entrances Act.
  The FACE Act has led to successful criminal and civil judgements 
against groups that use intimidation and outright violence to prevent 
people from obtaining or providing reproductive health services. This 
amendment is crucial to protecting a woman's safe access to 
reproductive services.
  This year, however, I am pleased that the Bankruptcy Act of 2001 has 
incorporated a modified version of the FACE amendment, and now makes 
``non-dischargeable'' all debts incurred for harassing, obstructing, or 
other threatening violence against a person seeking any lawful goods 
and services, including access to reproductive health clinics. I 
appreciate the efforts of Senators Schumer and Hatch in coming to this 
agreement.
  Additionally, this bill includes the Kohl-Feinstein homestead 
amendment, which places a nationwide $125,000 cap on the amount of 
money a bankruptcy filer can shield from creditors simply by buying a 
home. This amendment closes a loophole in bankruptcy code that permits 
wealthy bankruptcy filers to hide their assets in multimillion dollar 
estates.
  This bill contains my amendment to curb abuses by bankruptcy mills. 
These operations, generally under the control of a non-attorney 
bankruptcy petition preparer, are often linked with price gouging of 
debtors, incompetent service, and remain a significant source of fraud 
in the bankruptcy system. California, in particular, has suffered from 
the abuses of these mill operators.
  Bankruptcy courts will now have the authority to fine these mill 
operators $500 per violation, with triple fines if the mill operator 
does not tell debtor she was filing for bankruptcy or advises the 
debtor to hide assets. The amendment empowers the U.S. Trustee to take 
enforcement actions against the mills, sets maximum fees for petition 
preparers, and victims can sue for increased damages.
  In addition, the Senate bill includes a compromise amendment I forged 
with Senator Sessions and Senator Feingold to balance the needs of 
landlords and tenants, when a tenant files bankruptcy.
  Finally, this legislation contains my amendment directing the Federal 
Reserve Board to investigate the practice of issuing credit cards 
indiscriminately, without taking steps to ensure that consumers are 
capable of repaying

[[Page 3771]]

their debt, or in a manner that encourages consumers to accumulate 
additional debt.
  The amendment allows the Federal Reserve Board to issue regulations 
that would require additional disclosures to consumers, and to take any 
other actions, consistent with its statutory authority, that the Board 
finds necessary to ensure responsible industry-wide practices and to 
prevent resulting consumer debt and insolvency.
  It was my hope that we could improve this bill even more--with limits 
on how credit card companies provide products to minors, and with 
disclosure and other requirements to give consumers the tools to handle 
the burdens of credit card debt. I also believe bankruptcy judges 
should have some discretion in applying the means test. Unfortunately, 
several such amendments failed.
  So I do have concerns about this bill, and I know that I will make 
some people in my State unhappy by voting for it. I understand their 
point of view, and by voting for this legislation I am not turning my 
back on those concerns. I do think we should try this approach. If it 
turns out that this bill does not appropriately solve the current 
problems with our nation's bankruptcy laws, I will be on the front 
lines of the fight to reopen this debate and to fix the glitches.
  Nevertheless, this bill is a necessary, reasoned approach to solving 
some real problems with our bankruptcy laws. Abuses are rampant. For 
many, bankruptcy has become a financial planning tool, rather than its 
intended use as an option of last resort. Something must be done, and I 
will vote for this bill.
  Mr. DOMENICI. Mr. President, I rise today in support of the 
bankruptcy reform bill. We have been working on this reform for several 
years now. Indeed, we passed this bill last year, only to have it 
pocket vetoed by President Clinton. It is time we get it passed and 
signed by the President.
  Although there has been a slight decline in bankruptcies recently, 
the 1990s saw a steady increase, despite a robust economy. There are 
now more than a million bankruptcies a year. Many people are concerned 
that bankruptcy is being used as a financial planning tool and the 
public has become frustrated with many stories of bankruptcy abuse.
  This bill goes a long way to curbing the abuse without undercutting 
the truly needy debtor's right to a fresh start. This legislation 
accounts for the honest but unfortunate debtor who faces mounting bills 
as a result of medical expenses, divorce, and other reasonable causes.
  However, it prevents a debtor from pursuing a lavish lifestyle and 
then using bankruptcy to avoid obligations. Debtors must take 
responsibility for their spending. After all, the money creditors lose 
in bankruptcy is passed on to consumers in higher prices for consumer 
goods, services, and credit. This often has the greatest adverse affect 
on the neediest in our society.
  This bill strikes a fair balance between the interests of debtors and 
creditors. Those who truly need bankruptcy relief will receive a 
``fresh start'' under Chapter 7. Those debtors who can afford to repay 
some of their debt will be required to do so under a Chapter 13 
repayment plan. It is just common sense that a debtor who can afford to 
repay some of their debt should do so.
  Here's how the crux of the bill works. The bankruptcy court looks at 
100 percent of the debtor's living expenses, priority expenses, and 
secured debt. If after their review, the debtor can still pay $10,000 
or 25 percent of his or her debt, they are required to do so under a 
Chapter 13 repayment plan. This makes sense.
  The legislation also provides a $125,000 homestead exemption cap so 
that the debtor cannot declare bankruptcy but still retain his million 
dollar home. Again, this makes sense.
  This is reasonable reform that benefits debtors, consumers, and 
creditors alike and I will again vote for its passage.


  Mr. DASCHLE. Mr. President, the bankruptcy bill before us today has 
come this far because it is needed to address the record number of 
bankruptcy filings this country has seen in recent years.
  The number of personal bankruptcies hit 1.4 million in 1998--a new 
record. While that number declined slightly last year--to 1.3 million 
bankruptcy filings--it is still too high. It is still nearly twice the 
number we saw in 1990, during the depths of a recession.
  What accounts for this increase?
  It's clear that most people who file for bankruptcy do so only after 
suffering a serious reversal, such as serious illness, divorce or job 
loss. And most do so only as a last resort.
  But economic conditions clearly are not the only factor. If they 
were, we would have seen a drop in bankruptcy filings during the 1990s, 
given the booming economy. Instead, we saw record increases during the 
90s.
  Clearly, some people are gaming and abusing the bankruptcy system. 
For them, the old stigma associated with bankruptcy has faded.
  The purpose of this bill is to stop those abuses.
  Many have asked--fairly--whether the solution it imposes is too tough 
on ordinary debtors who deserve the protection of bankruptcy court.
  Critics of this bill say that it makes it more difficult for people 
who have incurred overwhelming debts through no fault of their own to 
get back on their feet.
  In many ways, I agree with them.
  This bill could have been more balanced. It could have been crafted 
in a way that would have allowed all consumers to have their problems 
fully considered in bankruptcy court.
  A number of Democratic Senators offered amendments that would have 
made this bill better. Unfortunately, many of those amendments were 
rejected.
  I am pleased, however, that two key amendments were adopted. Both 
Senator Schumer's amendment on clinic violence, and Senator Kohl's 
amendment closing the homestead loophole, were needed to address real 
abuses of the bankruptcy code.
  If we are going to insist that consumers repay more of their debts, 
certainly we should also insist that people who resort to violence at 
health clinics must repay the debts they incur as a result of their 
illegal behavior. And certainly we must ensure that people who declare 
bankruptcy can't squirrel away millions of dollars in fancy homes that 
creditors can't touch.
  These abuses were not addressed in the bill President Clinton refused 
to sign last year. Their inclusion in this bill is one reason I am able 
to support it today.
  A bigger reason for my support is a basic principle that I grew up 
with. People who incur debts have a responsibility to repaying them if 
they can.
  That is a fundamental belief in South Dakota. It's part of the fabric 
of who we are.
  The pioneers who settled our state relied on each other during the 
hard times, the weak harvests, and at planting times. They knew they 
could trust each other to make good on their debts--because they had 
to.
  Their survival depended on it.
  Most people I know still feel that way.
  This bill is needed because of the people who do not share that 
belief--the minority of people who see bankruptcy as an easy out, 
rather than a last resort. It says to those people: ``Paying your debts 
isn't a matter of choice. It's a matter of honor. And it is a legal 
responsibility to which you will be held accountable.''
  There are real costs when somebody does not repay their debts. 
Somebody has to pick up the tab.
  Some of those costs fall on lenders. But some are passed on to honest 
borrowers who do repay their debts. They get stuck with higher interest 
rates. So there are consumers on both sides of this equation.
  Under current law, people can file under Chapter 7 to wipe out their 
debts, and a judge can throw out a case if he or she determines that 
the filer can afford to repay some of the debts. But there is no 
consistent legal standard for determining one's ability to pay.
  This bill establishes such a standard. It says that bankruptcy judges 
must

[[Page 3772]]

determine if a filer can pay $10,000--or 25 percent of his debts--over 
the next five years.
  It is important to note: This new standard does not apply to filers 
who--after deducting food, rent, transportation, education and other 
expenses--earn less than their state's median income. These people can 
still file for relief under chapter 7.
  Opponents of the bill say it imposes new legal hurdles and paper 
burdens on consumers that will deny many the protection they deserve. 
These are serious concerns.
  We must monitor implementation of this new standard closely. If this 
bill is enacted into law--if we see that creditors are abusing the 
provisions of this law to harass debtors--we have a moral 
responsibility to revisit this law. And I can tell you, I will be the 
first Senator on this floor calling for that re-examination.
  Time will tell if this bill strikes the right balance.
  The Senate has heard good arguments on both sides of this debate.
  Because of the improvements that were made in committee and on the 
floor, and because of the fundamental values with which I was raised, I 
will vote for it.
  At the same time, I urge the conferees who will take it up next to 
respect and preserve the balance in it, so it can continue to command 
the broad, bipartisan support it will need to reach the President's 
desk and be signed into law.
  Mr. GRASSLEY. Mr. President, I encourage my colleagues to vote for 
this important bankruptcy bill. We've been working on bankruptcy reform 
for a long time, and it's high time that we pass this bill. This bill 
will be a big step forward in restoring personal responsibility and in 
cracking down on bankruptcy abuse. It will also be a big step forward 
in providing key information to credit card customers and helping 
people manage their debt.
  Let me remind my colleagues that the fundamental question we face 
with this bill is whether or not people should repay their debts. S. 
420 provides that when a person can repay his or her debts, then that 
person won't be able to take the easy way out. The bill will end the 
free ride for wealthy deadbeats who walk away from their debts and pass 
the tab on to honest consumers. No more will those freeloaders get off 
scott free. But the bill does this by preserving the ability for people 
who truly need to go into bankruptcy and wipe away their debts so they 
can have a fresh start.
  The point I'm trying to make is that we have a good balance in the 
bill. Contrary to what our critics say, bankruptcy should not be easy. 
Yes, we need to have a way for people who are in dire straits to be 
able to start anew. Our bill does not close out the availability of 
bankruptcy for these people. Yet, it is just and fair for people who 
can pay their debts to do just that--pay up. I don't know what people 
think, but the fact is that someone has to pay if people walk away from 
their debts. It is not only businesses that have to pay--we all pay 
when people walk away from their debts. Economic losses from bankruptcy 
cause higher prices for goods and services, so everyone picks up the 
tab--consumers, small businesses, the economy.
  Our bill makes many improvements with the current system. We make it 
harder for people to commit fraud and abuse. We prioritize certain 
debts, such as child support and alimony. We include a number of 
consumer protections, such as more expansive disclosure requirements, 
credit counseling, and increased penalties for abusive creditors and 
deceptive advertising. These are all important steps in correcting many 
problems in the bankruptcy system.
  An important provision in the bill is the permanent extension of 
Chapter 12, which expired last June. Our family farmers need this 
crucial protection because they can face bankruptcy due to low 
commodity prices. The bill also provides significant new tax relief 
when they sell off assets. This is an extra reason to vote for this 
bill for my colleagues from farm country.
  So, let me remind my colleagues again what this bill does. S. 420 
reforms the bankruptcy system to require repayment of debts by 
individuals who have the ability to pay, while protecting the right of 
debtors to a financial fresh start. S. 420 strengthens protections for 
child support and alimony payments by making family support obligations 
a first priority in bankruptcy. S. 420 makes permanent Chapter 12 
bankruptcy for family farmers and lessens the capital gains tax burden 
on financially strapped farmers who declare bankruptcy.
  S. 420 also creates new protections for patients when hospitals and 
nursing homes declare bankruptcy. S. 420 requires credit card companies 
to disclose the dangers of making only minimum payments and prohibits 
deceptive advertising of low introductory rates. S. 420 strengthens 
enforcement and penalties against abusive creditors for predatory debt 
collection practices.
  So the bill is fair and balanced. S. 420 deserves to be passed by an 
overwhelming vote.
  Mr. LEAHY. Mr. President, I have tried over the last several weeks to 
improve this bankruptcy legislation through the legislative process. We 
were able to have an informative hearing and a productive Committee 
markup. Unfortunately, the Committee did not provide a Committee report 
to inform other Senators of what was good about the bill and what 
prompted eight members of the committee to vote against it.
  This important matter was, instead, rushed to the floor last week. 
Last Monday we began debating the bill, but on Tuesday, the first day 
the bill was open to amendment, the Republican leadership abandoned 
work on the bill. Instead, the Republican leadership chose to shift the 
Senate's attention to overriding the ergonomics rule that had been 
developed by the Department of Labor over the past decade.
  On Wednesday we returned to the bankruptcy bill but beginning on 
Thursday and carrying through until Tuesday of this week, the main 
focus of the debate were the competing budgetary amendment on providing 
a lockbox for Medicare. That too is an exceedingly important topic and 
one on which a majority of the Senate voted to adopt the Democratic 
lockbox proposal.
  That proposal is not in the bill because after the vote the 
Republican side invoked the Budget Act and the chair ruled that the 
amendment, although supported by a majority of the Senate was not 
consistent with the technical requirements of the Budget Act. That 
debate was a major disruption in our efforts to otherwise improve the 
bankruptcy bill.
  Beginning last Wednesday and continuing through today I have offered 
amendments to improve the bill and urged others with amendments to do 
the same. There has never been an effort to filibuster this debate or 
this bill. The only threat of a filibuster I can recall is when the 
Republican chairman of the Banking Committee spoke against certain 
amendments.
  That threat was overcome and with the commitment of Senator Grassley 
and the cooperation of Senator Hatch, we were able to obtain votes on 
the Schumer predatory lending amendment and in relation to the Durbin 
amendment. I thank both Senator Grassley and Senator Hatch for their 
cooperation in this regard. In fact, once the Senate had an opportunity 
to consider it, we voted to adopt the Schumer amendment.
  Despite the lack of a filibuster threat or a filibuster, the 
Republican Senate leadership filed a cloture petition on Monday 
afternoon. There was no need for cloture then or on Wednesday when, 
with the support of the Senate leadership, cloture was invoked. I voted 
against cloture. I voted against it because I reject the use of cloture 
as a time management tool. I believe that cloture is properly reserved 
in the Senate to those circumstances where unreasonable delay or a 
filibuster are interfering with the work of the Senate.
  Unfortunately, over the last 6 years the Republican leadership has 
abused the cloture process to avoid considering amendments and to 
interfere with the Senate doing its work. In my view, the invocation of 
cloture this

[[Page 3773]]

week on this bill was unnecessary and unfortunate. It signals a retreat 
from the progress shown by Senate adoption of S. Res. 8 in January and 
threatens a return to the dark days of the last few Congresses when 
cloture became a regular instrument, rather than the last resort, of 
Senate leadership.
  Through the legislative process, through our hearing and Judiciary 
Committee markup and by means of amendments being adopted on the Senate 
floor, we have made some progress. It is sufficient for me to support 
the bill.
  I had hoped and worked for a more open process. I wanted to be able 
to moderate the bill, improve it and be able to support it. I supported 
the bankruptcy bill that passed the Senate 97 to one in the 105th 
Congress.
  I even supported the bankruptcy bill that passed the Senate in the 
last Congress given the progress we showed during Senate consideration 
and in hopes that we would be able to continue to improve the bill in 
cooperation with the House. I vote for this bill in that same spirit--
to move the process forward and improve our legislative product. 
Unfortunately, last year the conference that resulted was under the 
auspices of the Foreign Relations Committee and not the Judiciary 
Committee and the product that resulted was changed and tilted too 
harshly against American consumers and working people. That was the 
modified bill that I voted against last year, that was the bill the 
President vetoed, and that was the bill that was the basis for S. 220 
and S. 420 this year.
  I am encouraged that we have included some privacy protection in the 
bill. The Leahy-Hatch amendment adopted by the Judiciary Committee to 
deal with the Toysmart.com-type situation and customer information of 
bankrupt companies is a good start. It is something I have worked on 
for some time and thank Senator Hatch for his joining with me in that 
effort.
  I am pleased that we were also able to add some protection today for 
shielding the identity of children whose names appear in bankruptcy 
records. By a vote of 99 to none, the Senate agreed to adopt our 
amendment. I thank Senator Hatch for joining with me in that effort, as 
well.
  I filed amendments to do more to enforce financial privacy laws and 
protections. Unfortunately, the bill still falls short in this regard.
  I am encouraged that we have made progress in assuring access to 
health clinics. Senator Schumer is to be commended for his steadfast 
efforts in this regard. The Schumer-Leahy amendment that the Senate 
adopted by a bipartisan vote with 80 Senators in favor last year was 
dropped in S. 220 and S. 420. I again want to commend Senator Hatch for 
working with Senator Schumer to include a modified version of Senator 
Schumer's amendment in the bill.
  I am encouraged that the Senate beat back an attempt to table the 
Kohl-Feinstein amendment and their sensible cap on the homestead 
exemption has been included in the bill. Throughout the debate 
Republican supporters have indicated that a key outstanding issue is 
the homestead exemption cap. That question was answered today when the 
Senate adopted the Kohl-Feinstein amendment today.
  I was pleased that we adopted the Bingaman LIHEAP amendment, which I 
cosponsored, and the Carnahan energy cost amendment.
  I am pleased that the Leahy amendment on separate spouses to protect 
battered women was adopted by a bipartisan majority of Senators and I 
thank them.
  I am encouraged that we were able to make other improvements in the 
measures included in the managers' package. We started work on that 
package last Friday. Unfortunately Republican delay prevented its 
adoption before the cloture vote on Wednesday.
  I regret that we have not made the progress that we should have, and 
that we have made in the past, in terms of providing consumers with 
greater disclosures and protections to help them avoid overextending 
their credit and consumption.
  Early in the debate I took the bill's supporters at face value when 
they argued that we need this bill to help small businesses. Those 
claims began this debate and were repeated today. In between I gave 
them the chance to show that they meant it by voting for a small 
business amendment that would have allowed small businesses, as already 
defined in the bill, priority over large corporate creditors. That 
amendment was unfortunately, and in my view unwisely, rejected.
  We have also heard claims from the outset of this debate and through 
today that the bill is needed to address the $500 a family ``tax'' that 
bankruptcy abuse loads onto each American family. I have been asking 
how this bill benefits the average American family and where that ``tax 
refund'' is achieved. I have heard only silence from the other side. I 
have noted in this year's debate and in debates past that billions of 
dollars in benefits that are expected to flow to credit card companies 
and other large corporate creditors, hundreds of millions to individual 
companies.
  What I have been asking is where this bill or those corporations' 
practices will pass those benefits on to ordinary Americans. Again, I 
have heard only silence. In fact, the benefits of this bill will flow 
to the profits of those large corporate interests. There is no 
provision in this bill to lower annual fees for credit cards, for 
example. There is no provision to lower interest rates for consumers. 
If this bill will benefit creditors to the tune of $5 billion or over 
the next several years, the why have they made no commitment to pass 
those benefits through to their customers and American consumers?
  Instead, what this bill does is require American taxpayers through 
our taxpayer-financed bankruptcy courts to assist creditors in their 
debt collection efforts and requires consumers to do more paperwork and 
confront more rules and hurdles and government bureaucracy to file for 
bankruptcy.
  I will continue to work in good faith with Chairman Hatch, Senator 
Grassley, Senator Sessions, Senator Biden and others who strongly 
support S. 420.
  I will continue to work through the legislative process to improve 
this measure, to add balance, moderation and fairness. I hope to be 
able to support the final legislative product after a productive 
conference. I trust that this Congress, the Senate conferees will 
support the Senate position where we have made improvements to the bill 
and not so easily abandon those advancements in our discussions with 
our House counterparts. Had we done that in the 105th Congress, three 
years ago, we would already have a reformed bankruptcy law. 
Unfortunately, that was not the position of Republican Senate conferees 
in those days.
  I commend all Senators on both sides of the aisle who have worked so 
hard this year to improve this bill. I commend those who have 
participated in our debates and discussions. I especially appreciate 
the help I received in managing this bill from Senator Schumer, who 
consented to manage from time to time when I could not and who is the 
Ranking Democrat on the Judiciary Subcommittee of jurisdiction, and 
Senator Reid, who remains a great help in some many ways on so many 
matters. I congratulate Senator Schumer, Senator Kohl, Senator 
Feinstein, and Senator Feingold for the improvements they have been 
able to make. I thank Senator Hatch for his courtesy to Senator Durbin 
on his alternative amendment and thank Senator Grassley for his 
courtesy to Senator Schumer with respect to his predatory lending 
amendment. I thank Senator Biden for his support of our efforts to have 
this matter considered by the Judiciary Committee.
  I thank the staffs of all Senators who participated in this debate 
for their hard work and, in particular, the staffs of Senators Kennedy, 
Biden, Kohl, Feinstein, Feingold, Schumer, Durbin, Daschle, and Reid 
and the staffs of Senators Hatch, Grassley and Sessions. In particular, 
I want to thank the following staff: Makan Delrahaim, Renee Augustine, 
Rita Lari, Kolan Davis, Ed Haden, Melody Barnes, Jim Greene, Victoria 
Bassetti, Jeff Miller, David Hantman, Tom Oscherwitz, Jennifer Leach, 
Bob Schiff, Ben Lawsky,

[[Page 3774]]

Natacha Blain, Jim Williams, Perry Lang, Mark Childress, Jonathan 
Adelstein, Eddie Ayoob, Peter Arapis, Liz McMahon, and Greg Cota. I 
appreciate the exceptional work of my counsel Ed Pagano, who has 
labored long and hard to help improve this bill.
  Although bankruptcy filing had been going down over the last two 
years, I have seen recent reports that link this bill with an expected 
rise in such filings. Unfortunately, the effect of House passage of its 
bill has been to generate fear in the public that people had better 
file for bankruptcy now rather than wait for the harsh and onerous new 
burdens contemplated in that bill and, unfortunately, in the Senate 
bill. I can understand if bankruptcy lawyers feel an obligation to 
advise their clients of the possibility that the terms and paperwork 
and costs of filing for bankruptcy may soon change.
  Indeed, a principal reason Senator Feinstein successfully opposed the 
Wyden-Smith amendment was a similar argument with respect to California 
utilities--that a prospective change in the law would force them into 
premature and possibly unnecessary bankruptcies.
  In much the same way that the Bush administration's talk about 
weakness in the economy has served to drive the market down, shatter 
consumer confidence and contribute to a further weakening, this drive 
for exacting requirements of those on the brink of insolvency seems to 
be accelerating bankruptcy filings and contributing to the economic 
downturn. That is an immediate and unfortunate byproduct of this 
effort.
  Perhaps it is appropriate that we end this phase of the debate today, 
on March 15. It is on this day that we are reminded to beware the Ides 
of March. There remains much about this bill that counsels caution. 
Unless it is further moderated and balanced in discussions between the 
Houses or at the insistence of the President, enactment of a bill like 
the one the Senate is voting on today will be the start of a process 
that will likely consume several years.
  Just as the overreaching that occurred in so-called immigration 
reform and welfare reform and telecommunications reform have required 
us to revisit those matters and still require corrections, so, too, the 
bankruptcy bill as currently constituted will result in hardships and 
consequences that will require us to return to these matters again and 
again in the days, months and years ahead.
  In addition, I expect we will be hearing more about this bill and the 
lobbying efforts and the contributions by the bill's corporate 
beneficiaries as soon as next week, when campaign finance reform is 
debated.
  Mr. HATCH. Mr. President, S. 420, the Consumer Bankruptcy Reform Act, 
is one of the most important legislative efforts to reform the 
bankruptcy laws in decades.
  I want to thank a few of the people who have worked on the bill. Let 
me first acknowledge the majority leader, who has worked very hard to 
keep this bill moving forward. Because of his dedication to the 
important reforms in this bill, we now have legislation that makes 
enormous strides in eliminating abuse in the bankruptcy system. I am 
also grateful to the assistant majority Leader, Senator Nickles, along 
with Senators Daschle and Reid for their efforts in trying to work with 
us to move the legislation forward.
  Let me also acknowledge the ranking Democratic member of the Senate 
Judiciary Committee, Senator Leahy, who has worked where he can to 
reach agreement on many of the bill's provisions, and who ably managed 
the bill for his side of the aisle. I also want to commend my 
colleagues, Senators Grassley, Biden and others for their sponsorship 
of and leadership on this much needed legislation. I particularly 
appreciate the dedication they have shown in working with me in making 
the passage of this bill an inclusive and bipartisan process.
  Also, let me express my thanks to Senator Sessions who has shown 
unwavering dedication to accomplishing the important reforms in this 
bill, to Senator Gramm for his efforts over the past several years in 
helping see sensible reform through the Senate, and to the many other 
members of the Senate for their hard work and cooperation.
  At the Committee staff level, let me acknowledge a few people who 
have worked very hard on this bill. Kolan Davis and Rita Lari Jochun, 
of Senator Grassley's staff, along with Ed Haden and Brad Harris of 
Senator Sessions' staff, all of whom deserve praise for their 
impressive efforts on this legislation. In addition, Judiciary 
Committee Staff Director, Makan Delrahim, who has been lead counsel on 
this bill, and Judiciary Committee Counsel, Rene Augustine, who has 
really been working day and night to make sure this bill stayed on 
track.
  Let me make one observation here. When we started this bankruptcy 
reform process, Rene didn't have any children, and by the time this 
bill becomes effective, she will have two children. Mr. President, I 
feel like I have given birth twice during this process myself. Thanks 
as well should be given to the Judiciary Committee's Chief Counsel, 
Sharon Prost, and all of the other Judiciary Committee staff who have 
worked hard on this.
  On Senator Leahy's Committee staff, I want to acknowledge Minority 
Chief Counsel Bruce Cohen, and thank counsel Ed Pagano for his efforts. 
In addition, I want to recognize the efforts of Jennifer Leach of 
Senator Torricelli's staff, as well as the dedicated work of Jim Greene 
of Senator Biden's staff, as well as the very able Ben Lawsky of 
Senator Schumer's staff.
  I also want to commend John Mashburn and Dave Horpe of the majority 
leader's staff, Stewart Verdery, Eric Ueland, and Matt Kirk of the 
Assistant Majority Leader's staff, and Eddie Ayoob of the Minority 
Whip's office for their efforts on this legislation.
  Also, my thanks goes to Laura Ayoud, and others in the office of 
Senate Legislative Counsel, for their extraordinary efforts that have 
made this legislation possible.
  The compelling need for this reform is underscored by the dramatic 
rise we have seen over the past several years in bankruptcy filings. 
The Bankruptcy Code was liberalized back in 1978, and since that time, 
consumer bankruptcy filings have risen at an unprecedented rate.
  Mr. President, the bankruptcy system was intended to provide a 
``fresh start'' for those who truly need it. We need to preserve the 
bankruptcy system within limits to allow individuals to emerge from 
financial hardship. What we do not need is to preserve the elements of 
the system that allow it to be abused--that allow some debtors to use 
bankruptcy as a financial planning tool rather than as a last resort. I 
firmly believe that by allowing people who can repay their debts to 
avoid their financial obligations, we are doing a disservice to the 
honest and hardworking people in this country who end up paying for it.
  Mr. President, again I would like to applaud the bipartisan efforts 
of my colleagues who have made S. 420 a broadly-supported bill. The 
impact of this important legislation not only will be to curb the 
rampant number of frivolous bankruptcy filings, but also will be to 
give a boost to our economy.
  Thank you. I yield the floor.
  Mr. President, I ask for the yeas and nays on final passage.
  The PRESIDING OFFICER. Is there a sufficient second?
  There is a sufficient second.
  The yeas and nays were ordered.
  Mr. HATCH. Mr. President, all time is yielded back.
  The PRESIDING OFFICER. The question is on the engrossment and third 
reading of the bill.
  The bill was ordered to be engrossed for a third reading and was read 
the third time.
  The PRESIDING OFFICER. All time has been yielded back. The bill 
having been read the third time, the question is, Shall the bill pass? 
The yeas and nays have been ordered. The clerk will call the roll.
  The legislative clerk called the roll.
  Mr. FITZGERALD (when his name was called). Present.
  Mr. REID. I announce that the Senator from California (Mrs. Boxer) is 
necessarily absent.
  I further announce that, if present and voting, the Senator from 
California (Mrs. Boxer) would vote ``nay''.

[[Page 3775]]

  The result was announced--yeas 83, nays 15, as follows:

                      [Rollcall Vote No. 36 Leg.]

                                YEAS--83

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

                                NAYS--15

     Brownback
     Corzine
     Dayton
     Dodd
     Durbin
     Feingold
     Harkin
     Hutchison
     Kennedy
     Kerry
     Nelson (FL)
     Reed
     Rockefeller
     Sarbanes
     Wellstone

                          ANSWERED ``PRESENT''

       
     Fitzgerald
       

                             NOT VOTING--1

       
     Boxer
       
  The bill (S. 420), as amended, was passed, as follows:
  [The bill was not available for printing. It will appear in a future 
edition of the Record.]
  Mr. REID. I move to reconsider the vote and move to lay that motion 
on the table.
  The motion to lay on the table was agreed to.
  Mr. REID addressed the Chair.
  The PRESIDING OFFICER. The Senator from Nevada.

                          ____________________