[Congressional Record (Bound Edition), Volume 151 (2005), Part 3]
[Senate]
[Pages 3404-3422]
[From the U.S. Government Publishing Office, www.gpo.gov]




    BANKRUPTCY ABUSE PREVENTION AND CONSUMER PROTECTION ACT OF 2005

  The PRESIDING OFFICER. The Senate will resume consideration of S. 
256, which the clerk will report.
  The assistant legislative clerk read as follows:

       A bill (S. 256) to amend title 11 of the United States 
     Code, and for other purposes.

  Pending:

       Leahy Amendment No. 26, to restrict access to certain 
     personal information in bankruptcy documents.
       Dayton Amendment No. 31, to limit the amount of interest 
     that can be charged on any extension of credit to 30 percent.
       Feinstein Amendment No. 19, to enhance disclosures under an 
     open end credit plan.
       Nelson of Florida Amendment No. 37, to exempt debtors from 
     means testing if their financial problems were caused by 
     identity theft.
       Durbin Amendment No. 38, to discourage predatory lending 
     practices.
       Rockefeller Amendment No. 24, to amend the wage priority 
     provision and to amend the payment of insurance benefits to 
     retirees.

  The PRESIDING OFFICER. The Senator from Alabama.


                            Amendment No. 31

  Mr. SHELBY. Mr. President, I rise in opposition to the amendment 
offered by my colleague from Minnesota, Senator Dayton. Basically, he 
has offered an amendment to create a Federal usury law. While I 
understand and appreciate the good intentions of my colleague, I cannot 
support what amounts to Federal price controls. This is a mode of 
regulation from a bygone day.
  Price controls are a failed experiment that often hurt those who they 
are intended to help. Even if the price control envisioned in this 
amendment was never triggered, it would set a very bad precedent.
  Credit underwriting is the assessment of the risk. Interest rates are 
intended to reflect the risk of a particular credit. They have to.
  While I appreciate my colleague's concerns, I fear that his amendment 
will result in credit becoming less accessible to more Americans. 
Market forces are the best regulator of prices. As chairman of the 
Banking Committee, which has jurisdiction over consumer credit and 
price controls, I must oppose this amendment and encourage my 
colleagues to do so. We are going to have some hearings on similar 
matters in the Banking Committee, and I hope Senator Dayton would work 
with us in that regard.
  The PRESIDING OFFICER. The Senator from Maryland.
  Mr. SARBANES. Mr. President, I rise to underscore the statement just 
made by the chairman of the Banking Committee. This issue embraced in 
this amendment is very far-reaching. There have been no hearings on it. 
The chairman has indicated he intends to do some hearings on issues 
relating to the matter that is before us. It does not seem to me to be 
a wise or prudent course to consider what would, in effect, be a very 
major legislative step in the absence of appropriate consideration by 
the committee of jurisdiction; therefore, I intend to also oppose this 
amendment, primarily on those grounds.
  The substance is a complicated issue, and in any event it is very 
clear it needs to be very carefully examined and considered. I do not 
think that has occurred in this instance, and I hope my colleagues 
would perceive the matter in the same way.
  I thank the Chair.
  The PRESIDING OFFICER. The Senator from Massachusetts.


                            Amendment No. 44

  Mr. KENNEDY. Mr. President, I send an amendment to the desk.
  The PRESIDING OFFICER. Without objection, the pending amendments are 
set aside.
  The clerk will report.
  The assistant legislative clerk read as follows:

       The Senator from Massachusetts [Mr. Kennedy], for himself, 
     Mrs. Clinton, Mr. Kerry, Ms. Mikulski, Mr. Feingold, and Mr. 
     Dayton, proposes an amendment numbered 44.

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

(Purpose: To amend the Fair Labor Standards Act of 1938 to provide for 
                an increase in the Federal minimum wage)

        At the appropriate place, insert the following:

                     TITLE __--FEDERAL MINIMUM WAGE

     SEC. __01. SHORT TITLE.

       This Act may be cited as the ``Fair Minimum Wage Act of 
     2005''.

     SEC. __02. MINIMUM WAGE.

       (a) In General.--Section 6(a)(1) of the Fair Labor 
     Standards Act of 1938 (29 U.S.C. 206(a)(1)) is amended to 
     read as follows:
       ``(1) except as otherwise provided in this section, not 
     less than--
       ``(A) $5.85 an hour, beginning on the 60th day after the 
     date of enactment of the Fair Minimum Wage Act of 2005;
       ``(B) $6.55 an hour, beginning 12 months after that 60th 
     day; and
       ``(C) $7.25 an hour, beginning 24 months after that 60th 
     day;''.
       (b) Effective Date.--The amendment made by subsection (a) 
     shall take effect 60 days after the date of enactment of this 
     Act.

     SEC. __03. APPLICABILITY OF MINIMUM WAGE TO THE COMMONWEALTH 
                   OF THE NORTHERN MARIANA ISLANDS.

       (a) In General.--Section 6 of the Fair Labor Standards Act 
     of 1938 (29 U.S.C. 206) shall apply to the Commonwealth of 
     the Northern Mariana Islands.
       (b) Transition.--Notwithstanding subsection (a), the 
     minimum wage applicable to the Commonwealth of the Northern 
     Mariana Islands under section 6(a)(1) of the Fair Labor 
     Stnadards Act of 1938 (29 U.S.C. 206(a)(1)) shall be--
       (1) $3.55 an hour, beginning on the 60th day after the date 
     of enactment of this Act; and
       (2) increased by $0.50 an hour (or such lesser amount as 
     may be necessary to equal the minimum wage under section 
     6(a)(1) of such Act), beginning 6 months after the date of 
     enactment of this Act and every 6 months thereafter until the 
     minimum wage applicable to the Commonwealth of the Northern 
     Mariana Islands under this subsection is equal to the minimum 
     wage set forth in such section.

  Mr. KENNEDY. Mr. President, this amendment will increase the minimum 
wage from $5.15 an hour to $7.25 an hour over roughly a 2-year period. 
My friend from Pennsylvania, Senator Santorum, will offer his own 
minimum wage amendment, and he will do so later on in the afternoon. We 
intend to debate this and vote on it, subject to the agreements of the 
leaders, probably late Monday afternoon, and we will take the 
opportunity during Monday afternoon to get into greater details. Both 
Senator Santorum and I have agreed that we would each make a brief 
presentation on this item at this time.
  We have not seen an increase in the minimum wage for 8 years. At the 
present time, the minimum wage has fallen to the second lowest level in 
the last 45 years. Since 1938, the minimum wage has been increased on 
eight different occasions. On most of those occasions it has been with 
bipartisan support. Republicans have recognized that we ought to treat 
people fairly and decently, and those at the lower level of the 
economic ladder ought to be able to have a livable wage. President 
Eisenhower felt that way, President Ford felt that way, and the first 
President Bush felt that way. We are asking the Senate to join us in 
going back to having the minimum wage at least increase to a reasonable 
level.
  Now, who are the minimum wage earners? The minimum wage earners are 
men and women of dignity. Even though they get paid at a minimum wage, 
they work hard, they take a sense of pride in what they achieve, and 
they do a hard day's work. More often than not, they not only have one 
job, but they have two jobs and sometimes even three jobs.
  What sort of jobs do the minimum wage workers have? First, many of 
them are teachers' aides in our school systems, working with the young 
students of America. Many others are working in our nursing homes, 
looking after the parents who were part of the ``greatest generation,'' 
men and women

[[Page 3405]]

who sacrificed for their own children, men and women who brought this 
country through the Great Depression. These are men and women of 
dignity who take a sense of pride in their work.
  Beyond that, who are they? This is basically a women's issue because 
the great majority of the millions of people who would benefit from 
this minimum wage increase are women. It is a children's issue because 
a one-third of those women have children. So it is a women's issue and 
it is a children's issue. It is also a civil rights issue because many 
who earn the minimum wage are men and women of color. So it is a family 
issue, a women's issue, a children's issue, a civil rights issue, and, 
most of all, it is a fairness issue. Americans understand fairness. 
What they understand is anyone who will work 40 hours a week, 52 weeks 
of the year, should not have to live in poverty in the United States of 
America. That is what this issue is all about. That is what the vote 
will be on, on Monday next, whether we are going to say to millions of 
our fellow citizens that they will not have to live in poverty, 
although they will still be earning below the poverty rate.
  What the amendment will do is the following. It is the equivalent of 
2 years of childcare. It will provide full tuition for a child in a 
community college, or a year-and-a-half of heat and electricity, or 
more than a year of groceries, or more than 9 months of rent.
  This might not sound like very much to the Members of this body who 
have seen their pay increase seven times since we have last increased 
the minimum wage. But we ought to be able to say here and now that we 
will join the traditions of an Eisenhower, a Ford, and the first 
President Bush, Democrat and Republican Presidents alike, and say those 
working Americans who work at some of toughest and most difficult jobs, 
men and women of pride and dignity, ought to be paid a fair wage. That 
is what this amendment is about. We look forward to a further debate 
when we have the opportunity to do so on Monday next.
  The PRESIDING OFFICER. The Senator from New York.
  Mr. SCHUMER. Mr. President, I ask unanimous consent to temporarily 
set aside the pending amendments to offer an amendment.
  The PRESIDING OFFICER. Without objection, it is so ordered.


                            Amendment No. 42

  Mr. SCHUMER. The amendment is at the desk. I ask for its immediate 
consideration.
  The PRESIDING OFFICER. The clerk will report the amendment.
  The assistant legislative clerk read as follows:

       The Senator from New York [Mr. Schumer], for himself, Mr. 
     Bingaman, Mr. Durbin, and Mrs. Feinstein, proposes an 
     amendment numbered 42.

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

     (Purpose: To limit the exemption for asset protection trusts)

        On page 205, between lines 16 and 17, insert the 
     following:

     SEC. 332. ASSET PROTECTION TRUSTS.

       Section 548 of title 11, United States Code, as amended by 
     this Act, is further amended by adding at the end the 
     following:
       ``(e) The trustee may avoid a transfer of an interest of 
     the debtor in property made by an individual debtor within 10 
     years before the date of the filing of the petition to an 
     asset protection trust if the amount of the transfer or the 
     aggregate amount of all transfers to the trust or to similar 
     trusts within such 10-year period exceeds $125,000, to the 
     extent that debtor has a beneficial interest in the trust and 
     the debtor's beneficial interest in the trust does not become 
     property of the estate by reason of section 541(c)(2). For 
     purposes of this subsection, a fund or account of the kind 
     specified in section 522(d)(12) is not an asset protection 
     trust.''.

  Mr. SCHUMER. Mr. President, I will be very brief. This amendment 
closes the so-called millionaires loophole. If any of you happened to 
read yesterday's New York Times, there is in existing law a hidden 
loophole which basically says if you are a millionaire and want to file 
a certain trust in one of five States, you can hide all your money even 
though you declare bankruptcy. So the irony is, in this bill, while we 
are talking about people who make $35,000 or $40,000 or $45,000 and we 
want to make sure they do not abuse bankruptcy, the law allows this 
abuse of bankruptcy.
  The Bankruptcy Abuse Prevention and Consumer Protection Act, which I 
am introducing along with my colleagues Senators Durbin, Feinstein, and 
Bingaman, and I believe Senator Clinton as well, will close this 
loophole.
  You do not have to be a resident of these five States, but you can be 
a millionaire or billionaire and stash away assets: mansions, racing 
cars, yachts, investments, in a special trust, and you can hold onto 
that windfall after bankruptcy. That is not fair. We will debate the 
amendment later this afternoon. I want to notify my colleagues and 
place it in order on the floor.
  The amendment has been read?
  The PRESIDING OFFICER. Yes, it was.
  Mr. SCHUMER. It is now in order so I will yield the floor.
  Mr. KENNEDY. Will the Senator yield?
  Mr. SCHUMER. I am happy to.
  Mr. KENNEDY. One of the concerns many of us had in this bill is the 
interest of fairness. I think fairness ought to be standard for any 
piece of legislation. As it is currently before us, we will have those 
who will be able, with their homestead exemption, to preserve 
homesteads valued at millions and millions of dollars and, on the other 
side, individuals will lose completely all of their savings because 
they will lose their homes. There is no fairness there.
  The Senator from New York is pointing out in another area the issue 
of fairness. Those who have resources and have wealth and have the 
contacts will be able to shelter their resources while basically 
middle-income working families, the working poor who are trying to get 
by and have seen an explosion of different costs, on housing, on health 
care, on tuition, will be buried.
  This will be another dramatic example where those who have it will be 
able to preserve it and those who have been struggling will lose it.
  Mr. SCHUMER. I thank my colleague. He is exactly on point. It is 
outrageous that someone worth millions or billions of dollars can 
declare bankruptcy and then shield their assets in this trust so they 
do not come before the bankruptcy court. The Senator, my friend from 
Massachusetts, is exactly right; we are talking about people who make 
$45,000 and we are going after them, yet we are allowing millionaires 
and billionaires to use this loophole. Of course, it is not all 
millionaires and billionaires, it is a small number who go into 
bankruptcy and who abuse it. We can close it. We will debate this 
amendment later this afternoon, but let us hope that we do not have a 
lockstep, let's vote ``no'' on everything. It would be hypocritical to 
say we have to close abuses on middle-income people and not close 
abuses on the very wealthy.
  I will be happy to continue to yield to my friend.
  Mr. KENNEDY. I will ask a final question. A third of all the 
bankruptcies are among those who are earning below the poverty line. 
Does the Senator think they will be able to take advantage of this 
loophole?
  Mr. SCHUMER. I would say to my colleague from Massachusetts, they 
can't even afford the lawyer to write the first page of the trust that 
these others can. Again, the question answers itself. What is good for 
the goose is good for the gander. What is good for someone below the 
poverty line certainly ought to be good for millionaires and 
billionaires who want to abuse the bankruptcy process.
  I yield the floor in deference to my colleague from Pennsylvania.
  The PRESIDING OFFICER (Mr. Alexander). The Senator from Pennsylvania 
is recognized.


                            Amendment No. 44

  Mr. SANTORUM. Mr. President, I understand I only have a couple of 
minutes, so I will be very brief. I want to speak on the issue of 
minimum wage. I know the Senator from Massachusetts has offered this 
amendment on the minimum wage to this package. I will be opposing the 
Kennedy amendment

[[Page 3406]]

and will be offering an alternate to this amendment. But let me explain 
first why I oppose the Kennedy amendment.
  First, it doesn't belong on this bill. Even the amendment I will 
offer as an alternative does not belong on the bill. I have spoken to 
Senator Kennedy and others about what I believe is the appropriate 
place for this discussion. That is the welfare reform bill. It will be 
a bill that will come here and have a lot of amendments and it focuses 
on how we help those who are transitioning from welfare to work, how we 
help them and give them the support they need to be able to have work 
that pays well enough for them to get out of poverty. I think this 
discussion fits best, and I would argue has the better chance of 
actually ending up in a final bill and being sent to the President, on 
the welfare bill as opposed to here, which I think everyone recognizes 
is a bill that has been worked on for years and years and years.
  We have a bill that has bipartisan support, with the hope of trying 
to get this to the President at a propitious time. So I would make the 
argument, No. 1, first and foremost I would oppose the Kennedy 
amendment on that ground.
  Second, I suggest----
  Mr. KENNEDY. Will the Senator yield for a question on that part?
  Mr. SANTORUM. I only have about 1 minute and I am happy to yield to 
the Senator from Massachusetts for a brief question.
  Mr. KENNEDY. I offered the amendment on the TANF bill last year and 
the bill was pulled because it was offered as an amendment. So that is 
part of our frustration.
  Mr. SANTORUM. I respect the Senator from Massachusetts. I think there 
is a little different environment. I think there is a broad group who 
will deal with the reauthorization of welfare and deal with that and 
get a bill passed and sent to Congress this year, and you will 
certainly have my support trying to get that done in a fashion that I 
believe reinstates work requirements, which have fallen off because of 
the drop in the welfare rolls across America.
  The second reason I oppose the Kennedy amendment is because the 
increase is too dramatic at this point. We are talking about an over $2 
increase, over a 40-percent increase in the minimum wage. While I do 
support a modest proposal, something about half that amount, I think 
that is the wise thing to do in this economy, which is not to put a 
jolt of that nature into what is already a concern about inflation. To 
be able to put that kind of minimum wage increase in I think would fuel 
inflationary fears. It would have strong negative repercussions in our 
economy, broadly.
  While I do understand the need now that it has been almost 8 years 
without a minimum wage increase, I think what I will be offering is a 
modest one that comports with and will fit within this economy. We do 
some things to address the issue of small businesses, which the 
amendment of the Senator from Massachusetts does not do.
  We don't want to disproportionally affect those poor communities, or 
hurt the small business neighborhood store or cleaners or whatever the 
case may be that is trying to make ends meet by putting this kind of 
increased cost on them as high as the Kennedy amendment would be, or 
even as high as what I would suggest, without some sort of relief to 
compensate very small businesses. I think that would be unwise and it 
would hurt the community. We want to help by providing more resources. 
Increasing the minimum wage does not help those small businesses in 
that community. I think it would have a bad, overall negative effect on 
the very poor communities of our society.
  I see my time is up. I yield the floor.


                            Amendment No. 31

  The PRESIDING OFFICER. Under the previous order, the hour of 2 p.m. 
having arrived, there will be 4 minutes equally divided on debate in 
relation to amendment No. 31.
  Who yields time?
  The Senator from Minnesota.
  Mr. DAYTON. Mr. President, this legislation is entitled ``The 
Bankruptcy Abuse Prevention and Consumer Protection Act.'' 
Unfortunately, there is actually very little consumer protection in it.
  My amendment would add some much needed consumer protections to the 
bill and end one of the principal abuses that drives people into 
bankruptcy--exorbitant interest rates.
  My amendment would limit the maximum annual interest rate that could 
be charged to any consumer by any creditor to 30 percent. Thirty 
percent is still a very high interest rate--far too high, in my view.
  Inflation is currently running around 2 percent. The interest rate on 
3-month Treasury bills is 2.75 percent. The prime lending rate is 5.5 
percent. So 30 percent is exorbitantly high, but it is much less than 
the 384 percent that is being charged by money centers in Minnesota, or 
the 535-percent annual interest rate charged by centers in Wisconsin, 
or the 1,095-percent interest rate being charged by the County Bank of 
Rehoboth Beach in Delaware. That is not just predatory lending, that is 
``terroristic'' lending.
  My amendment would apply to any rate of interest charged by any 
creditor to any borrower for any purpose. However, it would not preempt 
any State, local, or private restriction that imposes a lower rate of 
interest.
  For example, 21 States, which include my home State of Minnesota, cap 
interest rates for credit cards. Minnesota's ceiling is 18 percent. 
That would still apply. Yet when money centers operate in Minnesota at 
384 percent interest, that limit would be 30 percent.
  Again, under my amendment, whenever a creditor is limited to a lower 
interest rate, that lower rate would apply. Whenever there is no 
interest cap, or wherever that cap is higher than this amendment's 30-
percent limit, then this 30-percent annual interest rate would apply.
  I urge my colleagues to support this amendment. It has the support of 
the Consumer Federation of America, the National Association of 
Consumer Advocates, and the U.S. PIRG.
  I yield the floor.
  The PRESIDING OFFICER. Who yields time?
  Mr. HATCH. Mr. President, let me just say a few words about why this 
amendment is not a good amendment and one that should be voted down.
  This would cap the interest rate for consumer credit extensions at 30 
percent in this country, and, frankly, would preempt many States' usury 
laws unless the State has a lower interest rate.
  In other words, preemption of State laws is something we sought to 
avoid in this bill. We have refused to do so in the homestead 
provisions, so there is no reason to touch the State usury laws as 
well.
  There is no dispute that lending agencies are already heavily 
regulated. We have already restricted usury rates on first-lien loans. 
Additionally, special usury provisions in the National Bank Act and 
Federal Deposit Act preempt State usury laws for national State banks.
  We did not preempt these State laws haphazardly as we would do today 
by passing the Dayton amendment.
  I believe we should stick with the bill as written. We have taken 
this into consideration. We have worked long and hard over 8 years to 
get this right. And, frankly, I think this amendment is an 
inappropriate amendment and should be voted down.
  I hope our colleagues will vote it down.
  I yield the remainder of our time.
  Mr. President, I ask for the yeas and nays.
  The PRESIDING OFFICER. Is there a sufficient second?
  There is a sufficient second.
  The question is on agreeing to the amendment. The clerk will call the 
roll.
  The assistant legislative clerk called the roll.
  Mr. DURBIN. I announce that the Senator from Wisconsin (Mr. Feingold) 
and the Senator from Hawaii (Mr. Inouye) are necessarily absent.
  The PRESIDING OFFICER. Are there any other Senators in the Chamber 
desiring to vote?
  The result was announced--yeas 24, nays 74, as follows:

[[Page 3407]]



                      [Rollcall Vote No. 20 Leg.]

                                YEAS--24

     Akaka
     Bayh
     Boxer
     Byrd
     Clinton
     Conrad
     Corzine
     Dayton
     Dodd
     Dorgan
     Feinstein
     Harkin
     Jeffords
     Kennedy
     Lautenberg
     Levin
     Lieberman
     Mikulski
     Murray
     Pryor
     Rockefeller
     Salazar
     Schumer
     Stabenow

                                NAYS--74

     Alexander
     Allard
     Allen
     Baucus
     Bennett
     Biden
     Bingaman
     Bond
     Brownback
     Bunning
     Burns
     Burr
     Cantwell
     Carper
     Chafee
     Chambliss
     Coburn
     Cochran
     Coleman
     Collins
     Cornyn
     Craig
     Crapo
     DeMint
     DeWine
     Dole
     Domenici
     Durbin
     Ensign
     Enzi
     Frist
     Graham
     Grassley
     Gregg
     Hagel
     Hatch
     Hutchison
     Inhofe
     Isakson
     Johnson
     Kerry
     Kohl
     Kyl
     Landrieu
     Leahy
     Lincoln
     Lott
     Lugar
     Martinez
     McCain
     McConnell
     Murkowski
     Nelson (FL)
     Nelson (NE)
     Obama
     Reed
     Reid
     Roberts
     Santorum
     Sarbanes
     Sessions
     Shelby
     Smith
     Snowe
     Specter
     Stevens
     Sununu
     Talent
     Thomas
     Thune
     Vitter
     Voinovich
     Warner
     Wyden

                             NOT VOTING--2

     Feingold
     Inouye
       
  The amendment (No. 31) was rejected.


                            Amendment No. 37

  The PRESIDING OFFICER. Under the previous order, there will be 4 
minutes equally divided for debate in relation to amendment No. 37.
  The Senator from Florida.
  Mr. NELSON of Florida. Mr. President, there is one exception the 
Senate should consider to this bankruptcy bill in filing bankruptcy, 
and that is when someone incurs debts due to no fault of their own. 
When someone incurs debts through no fault of their own because their 
identity has been stolen and they are forced to go into bankruptcy, why 
should we force them not to take chapter 7 in bankruptcy, instead to go 
through chapter 13?
  If you don't think identity theft and bankruptcy therefrom is a 
problem, look at the top consumer complaints of the Federal Trade 
Commission and notice 39 percent are identity theft. Don't think you 
are immune from identity theft. Did you hear the news on Friday night 
that Bank of America has had the records of 1.2 million Federal 
employees stolen, including 60 Senators in this Chamber? You are 
potential victims, including this Senator. I am on the list. So why 
should we not hear the pleas of people all across the land?
  A story from Florida where identity was stolen, they ran up $40,000. 
They can't pay that off. Another case in New York, a friend stole 
identity and ran up $300,000. The person had no choice but go into 
bankruptcy. Surely this is an example of an exception to this bill that 
we should make.
  The PRESIDING OFFICER. The Senator from Utah.
  Mr. HATCH. Mr. President, I rise in opposition to the Nelson 
amendment, although I commend the Senator from Florida in his work on 
this issue of identity theft. This amendment is written so broadly, it 
actually invites fraud despite its well-intentioned purposes. I 
understand there will be several hearings on the issue of identity 
theft, and I look forward to working with my friend from Florida and my 
other colleagues to find a solution. But for now, this is written so 
broadly that I think it actually invites fraud. I hope my colleagues 
will oppose the amendment because it would cause a lot of difficulty on 
this bill.
  Mr. NELSON of Florida. Will the Senator yield for a clarification?
  Mr. HATCH. I am happy to yield.
  Mr. NELSON of Florida. Does the Senator realize that in my amendment 
anyone who incurs less than $20,000 of debt as a result of identity 
theft would not be eligible to become an exception under the bankruptcy 
bill?
  Mr. HATCH. I do. But it is written so broadly that anybody who claims 
they have been defrauded, whether they have or have not, qualifies 
under your amendment. That is way too broad under this bill. I am happy 
to work with the distinguished Senator, and we will see what we can do 
later in this Congress. I hope everybody will vote down this amendment.
  The PRESIDING OFFICER. The question is on agreeing to amendment No. 
37.
  Mr. LEAHY. 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 legislative clerk called the roll.
  Mr. DURBIN. I announce that the Senator from Wisconsin (Mr. Feingold) 
and the Senator from Hawaii (Mr. Inouye) are necessarily absent.
  The PRESIDING OFFICER (Mr. Coleman). Are there any other Senators in 
the Chamber desiring to vote?
  The result was announced--yeas 37, nays 61, as follows:

                      [Rollcall Vote No. 21 Leg.]

                                YEAS--37

     Akaka
     Baucus
     Bayh
     Boxer
     Byrd
     Cantwell
     Clinton
     Conrad
     Corzine
     Dayton
     Dodd
     Dorgan
     Durbin
     Feinstein
     Harkin
     Jeffords
     Kennedy
     Kerry
     Kohl
     Landrieu
     Lautenberg
     Leahy
     Levin
     Lieberman
     Lincoln
     Mikulski
     Murray
     Nelson (FL)
     Obama
     Pryor
     Reed
     Reid
     Rockefeller
     Salazar
     Sarbanes
     Schumer
     Stabenow

                                NAYS--61

     Alexander
     Allard
     Allen
     Bennett
     Biden
     Bingaman
     Bond
     Brownback
     Bunning
     Burns
     Burr
     Carper
     Chafee
     Chambliss
     Coburn
     Cochran
     Coleman
     Collins
     Cornyn
     Craig
     Crapo
     DeMint
     DeWine
     Dole
     Domenici
     Ensign
     Enzi
     Frist
     Graham
     Grassley
     Gregg
     Hagel
     Hatch
     Hutchison
     Inhofe
     Isakson
     Johnson
     Kyl
     Lott
     Lugar
     Martinez
     McCain
     McConnell
     Murkowski
     Nelson (NE)
     Roberts
     Santorum
     Sessions
     Shelby
     Smith
     Snowe
     Specter
     Stevens
     Sununu
     Talent
     Thomas
     Thune
     Vitter
     Voinovich
     Warner
     Wyden

                             NOT VOTING--2

     Feingold
     Inouye
      
  The amendment (No. 37) was rejected.
  Mr. McCONNELL. Mr. President, I move to reconsider the vote and lay 
that motion on the table.
  The motion to lay on the table was agreed to.
  The PRESIDING OFFICER. The majority whip.
  Mr. McCONNELL. Mr. President, I ask unanimous consent that Senator 
Byrd be recognized for up to 10 minutes and that at 3:25 the Senate 
vote in relation to the Durbin amendment No. 38 with no amendments in 
order prior to the vote.
  The PRESIDING OFFICER. Is there objection?
  Mr. DORGAN. Mr. President, reserving the right to object.
  The PRESIDING OFFICER. The Senator from North Dakota.
  Mr. DORGAN. Mr. President, I did not quite understand the last 
portion of the unanimous consent request. I understand Senator Byrd 
shall be recognized for 10 minutes, and then what transpires?
  Mr. McCONNELL. Then we move to the Durbin amendment, with a vote at 
3:25.
  Mr. DORGAN. My understanding is Senator Byrd will take 10 minutes. I 
have no objection to the vote at 3:25, but I ask unanimous consent that 
the request be modified and I be recognized following Senator Byrd's 
comments.
  Mr. McCONNELL. I ask unanimous consent that Senator Dorgan be 
recognized at the conclusion of Senator Byrd's remarks.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  The Senator from West Virginia.
  Mr. BYRD. Mr. President, I thank the Chair, and I thank Senator 
McConnell and also my own leadership for the kindness in arranging for 
me to speak at this time.
  (The remarks of Mr. Byrd pertaining to the introduction of S. 515 and 
S. 514 are located in today's Record under ``Statements on Introduced 
Bills and Joint Resolutions.'')
  The PRESIDING OFFICER. The Senator from North Dakota.
  Mr. DORGAN. Mr. President, we are dealing with the bankruptcy bill. I 
am going to send an amendment to the desk. I ask the pending amendment 
be set aside so my amendment may be considered.

[[Page 3408]]

  The PRESIDING OFFICER. Without objection, it is so ordered.


                            Amendment No. 45

       (Purpose: To establish a special committee of the Senate to 
     investigate the awarding and carrying out of contracts to 
     conduct activities in Afghanistan and Iraq and to fight the 
     war on terrorism)

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

       The Senator from North Dakota (Mr. Dorgan), for himself and 
     Mr. Durbin, proposes an amendment numbered 45.

  Mr. DORGAN. I ask unanimous consent the reading of the amendment be 
dispensed with.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  The amendment is printed in today's Record under ``Text of 
Amendments.''
  Mr. DORGAN. Mr. President, I send that amendment to the desk on 
behalf of myself and Senator Durbin, who joins me as a cosponsor of the 
amendment.
  The bankruptcy reform bill on the floor of the Senate today 
ostensibly deals with the subject of those who would attempt to cheat 
with respect to filing bankruptcy. We have had a lot of discussion on 
the floor about the abuse of bankruptcy. There is no question about 
that; there is some of that. It is called cheating. But there is 
another form of cheating going on now to which very little attention is 
paid, and my amendment attempts to deal with it.
  I am going to put up a chart that shows $2 million dollars on a 
table, in a room somewhere in Iraq. These are Americans holding this 
cash. This cash is to be deposited in a plastic bag to pay contractors 
in Iraq. The contractors are told ``bring a bag and we will fill your 
bag with cash.'' That is the way you pay bills over there.
  This particular picture was given to us by this gentleman here, who 
was working in Iraq. He said it was like the Wild West; just bring your 
bag and fill it with cash.
  His testimony, which we heard at a hearing of the Democratic Policy 
Committee, followed the testimony of others that we have received about 
the massive waste, fraud, and abuse in contracting that has been going 
in Iraq. The American taxpayers are taking it on the chin, but none of 
the authorizing committees of jurisdiction in the U.S. Senate are 
holding hearings about this.
  Well, the Democratic Policy Committee has held some oversight 
hearings. The testimony at the hearings is absolutely devastating.
  Halliburton charges for 42,000 meals to be served in a day to 
American soldiers. It is determined, however, that the company is only 
serving 14,000 meals a day. So they are charging the taxpayer for 
42,000 meals to be served to soldiers when in fact they are only 
serving 14,000 meals.
  We hear about the payment of $7,500 a month to lease SUV vehicles. We 
hear about the ordering of 50,000 pounds of nails, that turn out to be 
of the wrong size, and just get dumped by the side of the road. We hear 
about $40 to $45 a case for soda pop.
  A senior manager from the Defense Department, who used to be in 
charge of providing fuel for vehicles in war zones, testified that 
Halliburton was charging $1 more per gallon for gasoline than they 
should have. There are overcharges adding up to $61 million on that 
issue alone.
  One fellow came to a DPC hearing and he held up towels. He worked for 
a subsidiary of Halliburton. He ordered towels because the soldiers 
needed the towels and they got a requisition order. Guess what. KBR, 
Halliburton's subsidiary, charged nearly double the cost of regular 
towels because they insisted on having the KBR logo embroidered on the 
towels. So the U.S. taxpayer gets soaked because the company wants 
their logo on the towels. It is extraordinary what is happening here, 
and nobody seems to care that much.
  We heard of contractors that were driving $85,000 brand new trucks in 
the country of Iraq, and whenever they had flat tires or a plugged fuel 
lines, they abandoned the vehicles and just bought new ones. The 
American taxpayer is paying for all of that, and nobody seems to care.
  Well, in the years of 1940 and 1941, Harry Truman, as we were about 
to enter World War II, got into his car and drove around this country 
touring air bases and military installations. He came back and 
suggested a special committee be impaneled in Congress. That committee 
became known as the Truman Committee, and was active for several years. 
They saved, by today's accounts, somewhere close to $15 billion by 
exposing waste, fraud, and abuse. That was a Democratic Senator working 
at a time when there was a Democrat in the White House. He didn't care 
whether anyone was embarrassed. On behalf of the American taxpayer, he 
insisted that we get to the bottom of waste, fraud, and abuse.
  I offer today an amendment that would establish a special bipartisan 
committee of the Senate on war, reconstruction, and contracting. Four 
members of the committee would be selected from the majority and three 
members from the minority. It would have subpoena power, and it would 
put a magnifying glass on the massive amounts of money being wasted, 
being abused, and in some cases simply being defrauded from the 
American taxpayer. We owe it to the American taxpayers to do this.
  We have pending right now before this body another request for $82 
billion. Most of that is to provide resources for the soldiers, not all 
of it but most of it. In addition to that, there is some $15 billion to 
this yet unspent for the reconstruction of Iraq. That is American 
taxpayers' money which is in the pipeline.
  You hear about all of this waste, fraud, abuse, and the 
whistleblowers, and then you ask, Who is minding the store? Who is 
looking after all this?
  Another witness testified at the hearing we held recently about a 
company that went to Iraq. Two guys went to Iraq with no experience and 
no money. They just showed up. They wanted to be a contracting company. 
Guess what. They won a contract, all right. They had delivered to them 
$2 million in cash, and they were suddenly a security contractor at the 
airport. Then their employees turned whistleblowers on them. They said 
the company was taking forklifts, repainting them, and selling them 
back, and setting up front companies offshore so they could buy and 
sell at overinflated charges. A couple of employees turned 
whistleblowers and they were threatened to be killed for doing it. That 
company, I am told, got over $100 million in contracting in the country 
of Iraq.
  One final point: Do you know that when the allegation was made that 
this contractor was ripping off the Coalition Provisional Authority, 
which was a U.S. creation and represented us in Iraq, the U.S. Justice 
Department failed to intervene under the False Claims Act because they 
said defrauding the Coalition Provisional Authority is not the same as 
defrauding the American taxpayer. There is something fundamentally 
wrong with that. This amendment would address that as well, by 
specifying that the investigation called for in this amendment should 
include the Coalition Provisional Authority spending.
  I have the amendment at the desk. I said I offered it on behalf of my 
colleague, Senator Durbin, and myself, and I hope others as we move 
along. I understand this is not strictly a bankruptcy amendment, but we 
must waste no more time to establish a committee by which there is real 
oversight in the matter of contracting abuses that waste billions of 
dollars of the American taxpayers' money.
  Mr. BYRD. Mr. President, will the distinguished Senator yield for a 
question?
  Mr. DORGAN. I am happy to yield.
  Mr. BYRD. Actually, the question will be very easy to answer. But for 
the moment, I must say to the very distinguished Senator that this is 
one Senator who is not at all surprised at what he found. I can 
remember when we had Mr. Bremer before the Senate Appropriations 
Committee to be heard. I asked him, after a while during which he 
delivered testimony and answered

[[Page 3409]]

questions, if he would be able to remain or come back before the 
committee for some additional questions--meaning the same day--if the 
chairman should ask him to do so. His answer was, ``I am too busy.''
  I came back to our caucus on that day, and I believe he came to the 
caucus at the same time. I told this to my caucus while Mr. Bremer was 
there. It was a shocking thing to me--an individual claiming he is too 
busy, and yet he is asking for quite a great amount of money to be 
appropriated, $2 billion.
  I am not at all surprised at this. I believe as time goes on we will 
find more and more of these kinds of stories. I congratulate the 
distinguished Senator on the excellent work he is doing in bringing 
these things to light.
  Now the question: Will the distinguished Senator add me as a 
cosponsor to his amendment?
  Mr. DORGAN. Mr. President, I would be happy to do so.
  Mr. President, I ask unanimous consent that the Senator from West 
Virginia be added as a cosponsor.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. BYRD. I thank the Senator.
  Mr. DORGAN. I thank the Senator from West Virginia.
  I see the hour of 3:25 has arrived. I believe by a previous order we 
have other business. I appreciate the opportunity to offer my 
amendment, and hopefully we will have a vote on it at some point in the 
future.


                            Amendment No. 38

  Mr. President, I ask for the yeas and nays on the Durbin amendment.
  The PRESIDING OFFICER. Is there a sufficient second?
  There is a sufficient second.
  The question is on agreeing to the amendment. The clerk will call the 
roll.
  The assistant legislative clerk called the roll.
  Mr. DURBIN. I announce that the Senator from Wisconsin (Mr. Feingold) 
and the Senator from Hawaii (Mr. Inouye) are necessarily absent.
  The PRESIDING OFFICER. Are there any other Senators in the Chamber 
desiring to vote?
  The result was announced--yeas 40, nays 58, as follows:

                      [Rollcall Vote No. 22 Leg.]

                                YEAS--40

     Akaka
     Baucus
     Bayh
     Bingaman
     Boxer
     Byrd
     Cantwell
     Clinton
     Collins
     Conrad
     Corzine
     Dayton
     Dodd
     Dorgan
     Durbin
     Feinstein
     Harkin
     Jeffords
     Kennedy
     Kerry
     Kohl
     Landrieu
     Lautenberg
     Leahy
     Levin
     Lieberman
     Lincoln
     Mikulski
     Murray
     Nelson (FL)
     Obama
     Pryor
     Reed
     Reid
     Rockefeller
     Salazar
     Sarbanes
     Schumer
     Stabenow
     Wyden

                                NAYS--58

     Alexander
     Allard
     Allen
     Bennett
     Biden
     Bond
     Brownback
     Bunning
     Burns
     Burr
     Carper
     Chafee
     Chambliss
     Coburn
     Cochran
     Coleman
     Cornyn
     Craig
     Crapo
     DeMint
     DeWine
     Dole
     Domenici
     Ensign
     Enzi
     Frist
     Graham
     Grassley
     Gregg
     Hagel
     Hatch
     Hutchison
     Inhofe
     Isakson
     Johnson
     Kyl
     Lott
     Lugar
     Martinez
     McCain
     McConnell
     Murkowski
     Nelson (NE)
     Roberts
     Santorum
     Sessions
     Shelby
     Smith
     Snowe
     Specter
     Stevens
     Sununu
     Talent
     Thomas
     Thune
     Vitter
     Voinovich
     Warner

                             NOT VOTING--2

     Feingold
     Inouye
      
  The amendment (No. 38) was rejected.
  The PRESIDING OFFICER. The Senator from Arkansas is recognized.


                            Amendment No. 40

  Mr. PRYOR. Mr. President, I ask unanimous consent that the pending 
amendment be set aside and I call up amendment No. 40.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  The clerk will report.
  The assistant legislative clerk read as follows:

       The Senator from Arkansas [Mr. Pryor] proposes an amendment 
     numbered 40.

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

(Purpose: To amend the Fair Credit Reporting Act to prohibit the use of 
 any information in any consumer report by any credit card issuer that 
is unrelated to the transactions and experience of the card issuer with 
   the consumer to increase the annual percentage rate applicable to 
        credit extended to the consumer, and for other purposes)

        At the appropriate place, insert the following:

     SEC. __. LIMITATION ON USE OF CONSUMER REPORTS.

       (a) In General.--Section 604(d) of the Fair Credit 
     Reporting Act (15 U.S.C. 1681b(d)) is amended to read as 
     follows:
       ``(d) Limitation on Use of Consumer Report.--
       ``(1) In general.--A credit card issuer may not use any 
     negative information contained in a consumer report to 
     increase any annual percentage rate applicable to a credit 
     card account, or to remove or increase any introductory 
     annual percentage rate of interest applicable to such 
     account, for any reason other than an action or omission of 
     the card holder that is directly related to such account.
       ``(2) Notice to consumer.--The limitation under paragraph 
     (1) on the use by a credit card issuer of information in a 
     consumer report shall be clearly and conspicuously described 
     to the consumer by the credit card issuer in any disclosure 
     or statement required to be made to the consumer under this 
     title.''.
       (b) Technical and Conforming Amendment.--Section 
     604(a)(3)(F)(ii) of the Fair Credit Reporting Act (15 U.S.C. 
     1681b(a)(3)(F)(ii)) is amended by inserting ``subject to 
     subsection (d),'' before ``to review''.

  Mr. PRYOR. Mr. President, I offer my amendment because I want to 
address a practice in the credit card industry. Basically, what happens 
with some card companies--and not all of them, certainly--is they make 
it a practice to look at their cardholders' credit reports on a monthly 
basis. When they find that the cardholder has a late payment maybe on a 
utility bill, or a car note, or whatever the case may be, they will 
actually raise the interest rate on the cardholder, even though they 
may have made every credit card payment on time. They use that as a 
justification to raise the interest rate on the cardholder.
  I think that is an unfair practice. It is fraught with all kinds of 
problems, including the problem that many of these credit reports 
contain errors. I have certainly been subject to those. I am sure 
almost every Senator in this Chamber has been subject to an error on 
their credit report at one time or another. The credit card companies 
don't take that into consideration. They will routinely increase 
interest rates. I think it is an unfair business practice.
  We are talking about bankruptcy. We all know that one of the main 
reasons people get into financial trouble is because they have credit 
cards. Sometimes they abuse them. Sometimes the interest rate is so 
high that it creates great difficulty on our citizens.
  I think this amendment is important. I think it is one we can 
certainly justify, and I think it is one that, if people take a look at 
it, they would think this is a bad industry practice and this is a way 
to, hopefully, decrease the number of bankruptcies and the number of 
families in America who get into financial trouble, if some of these 
hidden methods of increasing interest rates are taken away.
  With that, I yield the floor and 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. SPECTER. Mr. President, I ask unanimous consent that the order 
for the quorum call be rescinded.
  The PRESIDING OFFICER. Without objection, it is so ordered.


                            Amendment No. 48

  Mr. SPECTER. Mr. President, I have sought recognition to support a 
technical amendment, which I send to the desk.
  The PRESIDING OFFICER. Without objection, the pending amendment is 
laid aside. The clerk will report the amendment.
  The assistant legislative clerk read as follows:

       The Senator from Pennsylvania [Mr. Specter] proposes an 
     amendment numbered 48.


[[Page 3410]]


  The amendment is as follows:

(Purpose: To increase bankruptcy filing fees to pay for the additional 
duties of United States trustees and the new bankruptcy judges added by 
                               this Act)

       On page 194, strike line 13 and all that follows through 
     page 195, line 22, and insert the following:

     SEC. 325. UNITED STATES TRUSTEE PROGRAM FILING FEE INCREASE.

       (a) Actions Under Chapter 7, 11, or 13 of Title 11, United 
     States Code.--Section 1930(a) of title 28, United States 
     Code, is amended--
       (1) by striking paragraph (1) and inserting the following:
       ``(1) For a case commenced under--
       ``(A) chapter 7 of title 11, $200; and
       ``(B) chapter 13 of title 11, $150.''; and
       (2) in paragraph (3), by striking ``$800'' and inserting 
     ``$1000''.
       (b) United States Trustee System Fund.--Section 589a(b) of 
     title 28, United States Code, is amended--
       (1) by striking paragraph (1) and inserting the following:
       ``(1)(A) 40.63 percent of the fees collected under section 
     1930(a)(1)(A) of this title; and
       ``(B) 70.00 percent of the fees collected under section 
     1930(a)(1)(B);'';
       (2) in paragraph (2), by striking ``one-half'' and 
     inserting ``75 percent''; and
       (3) in paragraph (4), by striking ``one-half'' and 
     inserting ``100 percent''.
       (c) Collection and Deposit of Miscellaneous Bankruptcy 
     Fees.--Section 406(b) of the Judiciary Appropriations Act, 
     1990 (28 U.S.C. 1931 note) is amended by striking ``pursuant 
     to 28 U.S.C. section 1930(b)'' and all that follows through 
     ``28 U.S.C. section 1931'' and inserting ``under section 
     1930(b) of title 28, United States Code, 31.25 of the fees 
     collected under section 1930(a)(1)(A) of that title, 30.00 
     percent of the fees collected under section 1930(a)(1)(B) of 
     that title, and 25 percent of the fees collected under 
     section 1930(a)(3) of that title shall be deposited as 
     offsetting receipts to the fund established under section 
     1931 of that title''.
       (d) Sunset Date.--The amendments made by subsections (b) 
     and (c) shall be effective during the 2-year period beginning 
     on the date of enactment of this Act.
       (e) Use of Increased Receipts.--
       (1) Judges' salaries and benefits.--The amount of fees 
     collected under paragraphs (1) and (3) of section 1930(a) of 
     title 28, United States Code, during the 5-year period 
     beginning on the date of enactment of this Act, that is 
     greater than the amount that would have been collected if the 
     amendments made by subsection (a) had not taken effect shall 
     be used, to the extent necessary, to pay the salaries and 
     benefits of the judges appointed pursuant to section 1223 of 
     this Act.
       (2) Remainder.--Any amount described in paragraph (1), 
     which is not used for the purpose described in paragraph (1), 
     shall be deposited into the Treasury of the United States to 
     the extent necessary to offset the decrease in governmental 
     receipts resulting from the amendments made by subsections 
     (b) and (c).

  Mr. SPECTER. Mr. President, this amendment, as I have noted, makes a 
technical correction to ensure that the bill does not violate our 
budget laws. It has come to my attention that the bankruptcy bill could 
draw a potential point of order because of two provisions in S. 256.
  The first provision is section 1223 of the bill, which authorizes the 
creation of 28 new bankruptcy judgeships. According to the CBO's most 
recent cost estimates for S. 256, these new judges will account for $45 
million in direct Federal spending over a 10-year period. Specifically, 
the mandatory spending would be earmarked for the judges' pay and 
benefits.
  The second provision subject to this amendment, section 325, 
addresses the filing fees for bankruptcy and amounts that are directed 
to a trust fund that compensates bankruptcy trustees. Under current 
practice, a percentage of bankruptcy filing fees paid by a debtor is 
allocated to a trust fund that compensates bankruptcy trustees, while 
the remaining percentage of the filing fee is paid into the Treasury 
and counted as Federal revenue.
  Section 325 of the bill, however, will now increase the allocation 
percentages from the filing fees that are directed to the trust fund. 
But because the bill's percentage increase will result in a 
corresponding decrease of Federal revenue, CBO has reported this 
provision will result in a net revenue loss for the Treasury. 
Specifically, the Congressional Budget Office estimates the revenue 
loss at $226 million over 5 years, $456 million over 10 years.
  After reviewing this matter with the Budget Committee, we are 
proposing through this amendment to offset the direct spending from the 
judgeships and revenue losses from the section 325 percentage by 
increasing the bankruptcy filing fees in chapters 11 and 7.
  The amendment also tries to limit revenue losses by sunsetting after 
2 years the increased allocation percentage measure in sections 325(b) 
and 325 (c). By doing so, we estimate that the bill will provide 
sufficient offsets to cover the potential budgetary problems facing 
this bill.
  Specifically, the amount of the increased filing fees that is greater 
than the amount that would have been collected, but for this 
legislation, is earmarked towards the payment of salaries and benefits 
for the judges. The remaining amounts from the increased filing fees 
are also used to offset the Federal revenue loss caused by section 325 
for the 2 years that the provision stays in existence. I believe this 
amendment represents the best way of creating offsets within the bill. 
It will obviate the need to strike the bankruptcy judgeships provision 
altogether and, most importantly, allow this bill to survive a 
potential budget point of order.
  To the extent there are concerns that the increase in bankruptcy 
filing fees will make it more difficult for financially strapped 
debtors to use chapter 7, let me remind my colleagues that I pushed for 
an amendment in committee during the 105th Congress to give bankruptcy 
courts the discretion to waive filing fees for lower income debtors. 
The committee accepted that amendment and it is now embodied in section 
418 of the bill.
  This amendment removes a significant procedural obstacle that could 
jeopardize the prospect of this bill's passage in the Senate. As such, 
I urge my colleagues to support this amendment.
  What this all boils down to is we need new bankruptcy judges. We have 
to pay their salaries and their health benefits, and we do not want to 
run afoul of the budget laws which would strike down the entire bill 
unless we got 60 votes.
  Mr. President, in the absence of any other Senator seeking 
recognition, 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. DURBIN. Mr. President, I ask unanimous consent that the order for 
the quorum call be rescinded.
  The PRESIDING OFFICER. Without objection, it is so ordered.


                            Amendment No. 49

  Mr. DURBIN. Mr. President, I ask unanimous consent to set aside the 
pending amendment, and I send an amendment to the desk.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  The clerk will report.
  The assistant legislative clerk read as follows:

       The Senator from Illinois [Mr. Durbin] proposes an 
     amendment numbered 49.

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

 (Purpose: To protect employees and retirees from corporate practices 
   that deprive them of their earnings and retirement savings when a 
                     business files for bankruptcy)

       On page 499, strike line 3 and all that follows through 
     page 500, line 2, and insert the following:

     SEC. 1402. FRAUDULENT TRANSFERS AND OBLIGATIONS.

       (a) Federal Fraudulent Transfer Amendments.--Section 548 of 
     title 11, United States Code, is amended--
       (1) in subsection (a)(1)--
       (A) by striking ``one year'' and inserting ``4 years'';
       (B) in subparagraph (A), by striking ``or'' at the end;
       (C) in subparagraph (B), by striking the period at the end 
     and inserting ``; or''; and
       (D) by adding at the end the following:
       ``(C) made an excess benefit transfer or incurred an excess 
     benefit obligation to an insider, if the debtor--
       ``(i) was insolvent on the date on which the transfer was 
     made or the obligation was incurred; or
       ``(ii) became insolvent as a result of the transfer or 
     obligation.'';
       (2) in subsection (b), by striking ``one year'' and 
     inserting ``4 years''; and
       (3) in subsection (d)(2)--
       (A) in subparagraph (C), by striking ``and'' at the end;
       (B) in subparagraph (D), by striking the period at the end 
     and inserting ``; and''; and

[[Page 3411]]

       (C) by adding at the end the following:
       ``(E) the terms `excess benefit transfer' and `excess 
     benefit obligation' mean--
       ``(i) a transfer or obligation, as applicable, to an 
     insider, general partner, or other affiliated person of the 
     debtor in an amount that is not less than 10 times the amount 
     of the mean transfer or obligation of a similar kind given to 
     nonmanagement employees during the calendar year in which the 
     transfer is made or the obligation is incurred; or
       ``(ii) if no such similar transfers were made to, or 
     obligations incurred for the benefit of, such nonmanagement 
     employees during such calendar year, a transfer or obligation 
     that is in an amount that is not less than 25 percent more 
     than the amount of any similar transfer or obligation made to 
     or incurred for the benefit of such insider, partner, or 
     other affiliated person of the debtor during the calendar 
     year before the year in which such transfer is made or 
     obligation is incurred.''.
       (b) Fair Treatment of Employee Benefits.--
       (1) Definition of claim.--Section 101(5) of title 11, 
     United States Code, is amended--
       (A) in subparagraph (A), by striking ``or'' at the end;
       (B) in subparagraph (B), by inserting ``or'' after the 
     semicolon; and
       (C) by adding at the end the following:
       ``(C) right or interest in equity securities of the debtor, 
     or an affiliate of the debtor, held in a pension plan (within 
     the meaning of section 3(2) of the Employee Retirement Income 
     Security Act of 1974 (29 U.S.C. 1002(2))), including an 
     employee stock ownership plan, for the benefit of an 
     individual who is not an insider, officer, or director of the 
     debtor, if such securities were attributable to--
       ``(i) employer contributions by the debtor or an affiliate 
     of the debtor other than elective deferrals (within the 
     meaning of section 402(g) of the Internal Revenue Code of 
     1986), and any earnings thereon; and
       ``(ii) elective deferrals (and any earnings thereon) that 
     are required to be invested in such securities under the 
     terms of the plan or at the direction of a person other than 
     the individual or any beneficiary, except that this 
     subparagraph shall not apply to any such securities during 
     any period during which the individual or any beneficiary has 
     the right to direct the plan to divest such securities and to 
     reinvest an equivalent amount in other investment options of 
     the plan;''.
       (2) Priorities.--Section 507(a) of title 11, United States 
     Code, is amended--
       (A) by redesignating paragraphs (8) and (9) as paragraphs 
     (9) and (10), respectively;
       (B) by redesignating paragraphs (6) and (7), as 
     redesignated by section 212, as paragraphs (7) and (8), 
     respectively;
       (C) in paragraph (7), as so redesignated, by striking 
     ``Sixth'' and inserting ``Seventh'';
       (D) in paragraph (8), as so redesignated, by striking 
     ``Seventh'' and inserting ``Eighth'';
       (E) in paragraph (9), as so redesignated, by striking 
     ``Eighth'' and inserting ``Ninth'';
       (F) in paragraph (10), as so redesignated, by striking 
     ``Ninth'' and inserting ``Tenth''; and
       (G) by striking paragraph (5), as redesignated by section 
     212, and inserting the following:
       ``(5) Fifth, allowed unsecured claims for contributions to 
     an employee benefit plan--
       ``(A) arising from services rendered before the date of the 
     filing of the petition or the date of the cessation of the 
     debtor's business, whichever occurs first; but only
       ``(B) for each such plan, to the extent of--
       ``(i) the number of employees covered by each such plan 
     multiplied by $15,000; less
       ``(ii) the aggregate amount paid to such employees under 
     paragraph (4), plus the aggregate amount paid by the estate 
     on behalf of such employees to any other employee benefit 
     plan.
       ``(6) Sixth, allowed claims with respect to rights or 
     interests in equity securities of the debtor, or an affiliate 
     of the debtor, that are held in a pension plan (within the 
     meaning of section 3(2) of the Employee Retirement Income 
     Security Act of 1974 (29 U.S.C. 1002(2)) and section 
     101(5)(C) of this title), without regard to when services 
     were rendered, and measured by the market value of the stock 
     at the time the stock was contributed to, or purchased by, 
     the plan.''.

  Mr. DURBIN. Mr. President, this is the bankruptcy reform bill. It is 
about 500 pages long. If I went to Illinois and asked the people I 
represent what they think we should do when it comes to bankruptcy, I 
am virtually certain that the first thing they would say to me is, you 
have to do something about these horrible corporate bankruptcies, 
Enron, WorldCom, and the list goes on, and the abuses which these 
officers and CEOs have demonstrated as heads of these corporations, the 
fact that because they were feathering their own beds when their 
companies went bankrupt, hurting shareholders, hurting employees, 
hurting investors in pension plans, and hurting retirees.
  I think my constituents in Illinois are right. When it comes to 
bankruptcy, that is the scandal in America. We read about it every day. 
There is another criminal trial. Somebody is on trial because of 
corporate malfeasance that lead to bankruptcy. It is going on right 
now.
  When one takes a look at this 500-page bill, how many pages in this 
bill address corporate bankruptcies? Five. Ninety-nine percent of this 
bill hardly relate to corporations at all. Ninety-nine percent relates 
to individuals and families who, through no fault of their own, in most 
circumstances, are crushed by debt and go to bankruptcy court. Ninety-
nine percent of this bill relates to bankruptcies of people who have a 
medical diagnosis they never anticipated and end up in treatment 
incurring medical expenses that their health insurance does not cover. 
That is almost half of the cases in bankruptcy court.
  So this bill is designed to make the bankruptcy process more 
difficult for those individuals and families to get out from under 
their debt. That is what this is about. So that at the end of the day, 
when we pass this legislation--and surely we will--the credit card 
companies and the banks will end up keeping people in debt longer. So 
that people facing a crushing debt, when all is said and done, will not 
be able to walk out of that court, having been declared bankrupt, and 
start their lives again. That is what this bill addresses.
  My amendment goes to the 5 pages about corporate bankruptcy. I 
believe this: If we are going to hold Americans and families to a high 
moral standard, if we are going to say to them that before they go into 
a bankruptcy court, pay their bills and prove to the court that they 
cannot pay their bills before we let them off the hook, if we are going 
to say that it is immoral and unjust for someone to go into a 
bankruptcy court and ask to be declared bankrupt and leave their bills 
and assets behind, if they, in fact, can pay, then fair enough.
  But my amendment says, if we are talking about justice and high moral 
standards, should we not also talk about these corporate CEOs and 
insiders? Should they not be held to a high moral standard? Should they 
not be held to the standard of justice? Sadly, this bill does not do 
it.
  When a corporation files for bankruptcy, their workers are left 
standing at the back of the line behind all the other creditors. Many 
of them lose their retirement savings, health care benefits and 
opportunities to get back to work and back on their feet.
  The story of Bethlehem Steel Corporation is a good illustration. 
After years of decline in the steel industry, Bethlehem Steel dissolved 
in January of last year. Along with the end of Bethlehem Steel, 95,000 
retired steelworker employees, who literally helped build America, lost 
the health care benefits they were promised. These are workers who, at 
the expense of their own health, went to work every day, played by the 
rules, paid into their pension plans, anticipated their health care, 
and yet because of the bankruptcy of Bethlehem Steel they were left 
unprotected. They lost their pension. They lost their benefits. They 
have nothing.
  The problem is not limited to just steel companies. WorldCom, a 
telecommunications company; Adelphia, a cable company; PG&E and Enron, 
energy companies; Conseco, an insurance company; Financial Corporation 
of America and HomeFed, banks; United Airlines, U.S. Airways, TWA, all 
in the transportation business; Texaco, K-Mart, Polaroid, household 
names. These are some of the once great corporate giants that ended up 
in bankruptcy. They employed hundreds of thousands of Americans, but 
once the companies filed for bankruptcy, their employees were left with 
nowhere to turn.
  This bankruptcy bill does not even talk about those bankruptcies and 
those employees and the problems that they face.
  Many of the companies that filed for bankruptcy over the past few 
years are also associated with world-class scandals: Global Crossing, 
WorldCom, Adelphia, and, of course, the grand-daddy of them all, Enron. 
Those corporate giant names are synonomous with corruption, 
malfeasance, and greed; they are synonomous, from my point of view, 
with immoral corporate

[[Page 3412]]

conduct and unjust treatment of their shareholders, workers, and 
retirees.
  It is even more painful to think that while the workers and retirees 
of these scandal-tainted companies were left with little more than 
their dignity, the corporate executives and the insiders escaped with 
their treasures.
  When companies are headed for bankruptcy, the corporate insiders know 
it is going to happen long before the worker out in the plant, and that 
is especially true when these same insiders are cooking the books. They 
know where the corporate loot is hidden, and they are going to get 
their hands on it when they can.
  One might say that as soon as he saw the tip of the iceberg far ahead 
of the ship, the captain of the Titanic sneaked out on the deck, jumped 
in the lifeboat, went overboard with food, water, and life-vests, and 
left everybody else behind. That is what happened. Bon Voyage!
  Let me describe a case study of the worst: Enron. This is the poster 
child for corporate corruption.
  Enron of Houston, TX. During the 1990s, Enron was the envy of every 
executive in corporate America: creative, aggressive, growing fast, 
money coming in hand over fist, Fortune 500's top 10 list of assets 
with close to $100 billion, and doing business in far-flung reaches of 
commerce.
  By the year 2000, Enron stock had increased in value by 1,700 percent 
since its first shares were issued in the 1980s. It had 21,000 
employees in the United States and all around the world.
  But not everything was coming up roses for Enron. Behind the glass 
walls of the corporate skyscraper in Houston, something very opaque was 
going on.
  Listen to these famous names: Ken Lay, Jeff Skilling, Andrew Fastow. 
The company's top three executives obviously realized their 
astronomical success was not based on reality or truth. It was based on 
hype, speculation, and deceit. It was all smoke and mirrors.
  Wall Street analysts later were forced to admit that they made out-
of-control valuations of this company based on the puffery of these 
corporate bandits. All the while, these executives cooked up ingenious 
schemes to move assets on and off the books, create phony partnerships, 
offshore accounts, and so-called ``special purpose entities.''
  These were just corporate accounting tools designed to move around 
assets on paper. Why would they do that if they had nothing to hide? 
Ken Lay, Jeff Skilling, Andrew Fastow, and others at Enron were 
undeniably the masters of manipulation.
  We talk in this bankruptcy bill about what we are going to do with 
people who are abusing the bankruptcy court. This bill addresses the 
waitress with a second part-time job who is a single mother raising a 
couple of children who just was diagnosed with breast cancer and ends 
up with medical treatment and bills she cannot pay. She is forced 
finally to go to bankruptcy court.
  This bill says, we are going to take care of her. In this bill we 
will give her a long list of things to do to prove that she is not 
taking advantage of the bankruptcy court.
  But when it comes to these smoothies--Ken Lay, Jeff Skilling, and 
Andrew Fastow at Enron, and other corporations--this bill is silent. We 
are for morality when it comes to working families. Obviously, we are 
not for morality when it comes to these corporate cheats.
  They kept the perception up at Enron that they were making money even 
when they were not, but eventually it fell apart.
  On October 16, 2001, Enron reported a third-quarter loss of $618 
million and shareholder equity loss of $1.2 billion. The date October 
16, 2001, is important. A week later, on October 22, the Securities and 
Exchange Commission announced an inquiry into the company.
  On November 8, 2001, Enron filed an amendment to its financial report 
revising its income back 4 years to 1997, 4 years of lies, it turns 
out, once they were caught. They came forward and disclosed $586 
million in losses, and obviously investor confidence and their stock 
values cratered.
  The next day Ken Lay entered into a deal with Dynergy Corp. to sell 
Enron for $10 billion, in a desperate attempt by him to keep that 
company afloat. A few days later he was forced to admit that Enron was 
not worth the amount he wanted to sell it for.
  Naturally the deal with Dynergy was called off, and on December 2, 
2001, Enron filed for bankruptcy.
  Let me tell you what happened to two groups of Enron employees during 
the last few weeks of the company's solvency.
  Here is Mr. Lay. Everybody knows his face now. CEO Ken Lay is the man 
who made over $200 million from Enron stock, and $19 million in 
bonuses. Other executives in the Enron Corporation received bonuses as 
high as $5 million. While that was going on, while the company was 
heading toward a bankruptcy, there were over 5,000 employees who lost 
their jobs and thousands more who lost millions in retirement savings.
  Our bill goes after the employees who lost their jobs. Our bill goes 
after the employees who lost their health care. Our bill goes after 
retirees who ended up penniless and were forced into bankruptcy court. 
We are going to get real tough on them.
  But how about Mr. Lay? What price is he going to pay for his 
misconduct? In this bill, no price at all. Everyone knows about Ken 
Lay's extravagance.
  I won't venture to assert whether Ken Lay had any actual insight or 
knowledge which he took advantage of insider information as he made 
sales of stock he held in Enron. Those are decisions for a judge and 
jury.
  But what is certain is that Ken Lay pocketed $81.5 million in loan 
advances from his company while Enron was cascading toward bankruptcy--
$81.5 million for this man who couldn't run his company correctly. All 
told, he received over $200 million in Enron stock and $19 million in 
bonuses.
  During the same time Jeff Skilling raked in $66.9 million.
  The board of directors was sharing in these good times as well. 
Sixteen members of the corporate board made a combined total of $164 
million, just on selling shares they had in the company. If you add all 
the other corporate insiders and executives at Enron with the corporate 
directors and all the amounts they pilfered from the company from 1998 
to 2001, the grand total comes to well over $1 billion.
  Now let's see how the employees at Enron fared.
  There is an old country song by Jerry Reed called, ``She Got the 
Goldmine, I Got the Shaft.'' It could be the theme song for Enron 
workers.
  Of the 21,000 people worldwide who worked for Enron, 12,200 were 
enrolled in their pension plan. Over 60 percent of the assets in the 
plan invested in Enron stock and all of Enron's matching contributions 
went into company stock as well. But the Enron stock, which once sold 
as high as $90 during its heyday, became worthless. The workers' losses 
were aggravated during the course of the weeks when they were locked 
out of the pension plans and could not even sell the stock as the value 
of the stock was cratering.
  Under Federal law, companies are not allowed to let their employees 
withdraw their investment while the company switches pension plan 
administrators. And wouldn't you know it, Enron chose to switch their 
plan administrator on October 16, 2001.
  Remember that date? That's the very same date I mentioned earlier, 
when they announced they were writing off more than $1 billion in 
charges to their books. This meant that thousands of employees sat by 
helplessly and watched their retirement plan literally disappear before 
their eyes.
  On October 18, 2001, while Enron workers were frozen out of amending 
their pension plan, the stock price was down to $32 a share. By the 
time the hurricane blew over and they finally could get to their funds, 
Enron stock value plummeted to 26 cents per share. Needless to say, the 
company went into bankruptcy. The employees at Enron could do nothing 
but sit by and watch their savings melt away during that time.
  Thousands of these employees lost their jobs as a result of the Enron

[[Page 3413]]

bankruptcy. Hundreds, perhaps thousands, were forced into bankruptcy 
themselves. But during the months and years that led up to this 
disaster, 29 Enron insiders and top execs walked away with over $1 
billion.
  I have talked to some of these Enron executives. There is no good 
explanation. Sadly, this legislation on bankruptcy we are discussing 
today will not hold them accountable.
  Let me give another case study: Polaroid. This is a company that many 
of the people in Congress from Massachusetts know all about. It filed 
for chapter 11 protection on October 12, 2001, just a couple of months 
before Enron did.
  Let me show you the chart on Polaroid. CEO Gary DiCamillo ran the 
company into the ground but received $1.7 million. Other executives got 
$4.5 million. Over 6,000 employees lost health and life insurance, and 
thousands lost severance pay. Forced to invest 8 percent of their pay 
in company stock, they lost their retirement savings, too.
  So these corporate insiders--whether Enron or Polaroid or WorldCom or 
others--were lining their own pockets, taking money out of the company 
destined for bankruptcy, and the ultimate losers were the employees and 
the retirees.
  The amendment which I sent to the desk is an attempt to level the 
playing field for employees, pensioners, and others who find themselves 
shut out of court when companies they work for file for bankruptcy.
  There are two provisions in this amendment to protect employees of 
bankrupt companies.
  First, my amendment would address fraudulent transfers made by 
corporate insiders, all those huge payouts and loans and bonuses and 
transactions that went to these corporate executives as the company was 
headed to bankruptcy, these are payouts that exceed anyone's sense of 
what is reasonable compensation. Under my amendment, those payouts will 
have to be scrutinized by the bankruptcy court.
  Think about that for a minute. These executives were being rewarded 
with millions, sometimes hundreds of millions of dollars out of 
corporations headed for bankruptcy.
  Most of the time, you are rewarded with a bonus for a good job. They 
are being rewarded as their company is heading into debt and eventually 
disbanding. So they know what is going on. They are grabbing the money 
before they hit bankruptcy court. The money they grab out of the 
corporation is at the expense of people who loaned money to the 
corporation, especially at the expense of their workers and retirees. 
They end up taking the money that otherwise would have gone into the 
pension funds and putting it in their own pockets.
  My amendment gives the bankruptcy court the tools to investigate and 
treat these fishy, self-serving deals Ken Lay and Jeff Skilling and 
Andrew Fastow and others at Enron cut for themselves. It gives the 
judge the power to review questionable insider transfers. That is only 
reasonable.
  It includes a fair and workable formula for what the court can 
determine might be excessive.
  It also extends the period of time a bankruptcy court can go back and 
recapture the assets of these executives, a 4-year reachback instead of 
the 1 year allowed under current law and the 2 years proposed in this 
bill.
  As I described in the Enron example, some of the most outrageous 
transactions by the Enron executives took place 3 or 4 years before the 
company filed bankruptcy, so this bill would not even touch them. This 
bill lets those corporate insiders end up in their mansions with 
hundreds of millions of dollars squirreled away at the expense of the 
retirees who lost their pensions and their health care. By recapturing 
these assets, this provision would make more money available for 
employees and retirees and act as a deterrent to future corporate 
executives seeking the same sort of sweetheart deal.
  But this is not all about Enron. Let me give you other examples in 
the headlines today.
  WorldCom CEO Bernie Ebbers. He took $366 million in personal loans 
and his contract called for a $1.5 million yearly pension. Not bad. Mr. 
Ebbers ought to be proud. His skills and talents as CEO took his 
company, WorldCom, into the record books as the largest bankruptcy in 
the history of the United States. While he is grabbing all of the money 
out of the corporation, it is sinking like a rock.
  John Jenkins, the former president of Global Crossing. He took more 
than $1 million in pension benefits--something called ``transitional 
assistance,'' consulting fees, and other benefits, as his company was 
spiraling downward.
  Let us take a look at Kmart and its CEO, Chuck Conaway. As Kmart was 
falling apart, eventually becoming the largest American retailer to 
file bankruptcy, Mr. Conaway received a $9 million golden parachute. 
About one-half of it was a severance package. But his former employer 
decided to give him a little break as he left this bankrupt 
corporation. A $5 million loan was forgiven. Talk about a Blue Light 
Special at Kmart, this one takes the cake.
  John Rigas of Adelphia Communications took about $1 million per month 
from the company while he and others used it as their personal piggy 
bank. According to the indictment from the U.S. Attorney, the Rigas 
family used company loans to buy Adelphia shares and engage in insider 
transactions between Adelphia and other companies controlled by the 
Rigas family. Here is one example of how they fared. Rigas and his sons 
used $2.3 billion in off-balance-sheet loans from the company to build 
themselves a private 18-hole golf course at the cost of $13 million. 
Not bad for a cable guy. He raided his corporation for $2.3 billion at 
the expense of shareholders and retirees.
  What does this bill do to that kind of corporate bandit? Nothing. 
This bill focuses on the employees who lost their jobs. This bill 
focuses on the retirees who lost their health care and their pension. 
This bill makes it tough for them.
  This is inspired by our feeling that we need more morality and 
justice in our bankruptcy courts. But wouldn't you start at the top? 
Wouldn't you start with the biggest thieves in the business--the people 
who broke a record when it comes to bankruptcy and raiding these 
corporations?
  These insiders knew what they were doing. They saw their companies 
going down, and they grabbed everything they could get their hands on. 
They canceled their workers' pension plans and benefits.
  My amendment says we would go back 4 years before the bankruptcy to 
recover that money and put it in the hands of creditors, employees, and 
retirees.
  The second part of my amendment directly helps employees of these 
companies with some relief in bankruptcy court. This gives them a place 
in line as creditors that they currently don't have.
  The amendment gives them a priority unsecured claim in bankruptcy for 
the value of company stock which was held for their benefit in an 
employee pension plan, unless the plan beneficiary had the option to 
invest the assets in some other way.
  Under current law, these retirees who ended up with the short end of 
the stick in these retirement plans have nowhere to turn. They are not 
even in line in priority for these claims. My amendment would fix that.
  The amendment determines the value of these claims to be measured by 
the market value of the stock at the time it was contributed to the 
plan.
  In other words, the employee who was not at fault in the collapse of 
his employer corporation ought to have a fair claim for the fair value 
of his contribution to his pension plan as it was valued when he made 
that contribution. That's only fair.
  My amendment is simple, yet necessary. I urge my colleagues to 
support it.
  In conclusion, I am proud of the support of the groups behind this 
amendment--the U.S. Public Interest Research Group, the National 
Consumer Law Center, Consumers Union, Consumer Federation of America, 
Consumer Action, AFL-CIO, United Auto Workers, United Steel Workers of 
America, and the American Federation of Teachers.

[[Page 3414]]

  I ask unanimous consent to have their letters of support printed in 
the Record.

  There being no objection, the material was ordered to be printed in 
the Record, as follows:

         American Federation of Labor and Congress of Industrial 
           Organizations,
                                    Washington, DC, March 3, 2005.
       Dear Senator: The bankruptcy-reform bill currently before 
     the Senate will result in severe injustice to thousands of 
     workers and consumers and we urge you to oppose it. The 
     Bankruptcy Abuse Prevention and Consumer Protection Act of 
     2005 (S. 256) is basically unchanged from the version drafted 
     by the financial services industry in the mid-1990s, It 
     remains a one-sided attempt to favor creditor interests at 
     the expense of working families who have suffered the loss of 
     a job, high medical bills, and other unforeseen financial 
     emergencies. Senators Rockefeller, Kennedy, Durbin and 
     Feingold will offer amendments to improve this bill, and we 
     urge you to support them.
       Supporters of S. 256 suggest that the current system is 
     riddled with ``high rollers'' who are gaming the system to 
     get out of paying their fair share. To the contrary, studies 
     suggest that 90% of these filing for bankruptcy do so because 
     of circumstances largely outside their control. In recent 
     years, business failures and mass layoffs resulting from 
     corporate fraud have lead to innumerable individual 
     bankruptcies, Rather than correcting deficiencies in current 
     law that fail to protect workers in these circumstances, the 
     bill places new burdens on working families when they are 
     most vulnerable.
       We strongly support Senator Rockefeller's amendment to 
     raise the current wage priority cap from $4,950 to $15,000 
     because the amounts owed to workers frequently exceed the per 
     employee cap. Senator Rockefeller's amendment would also 
     eliminate arbitrary payment rules that prevent workers from 
     collecting compensation owned to them by a bankrupt employer. 
     Importantly, Senator Rockefeller's amendment will compensate 
     workers who lose retiree health benefits by requiring 
     bankrupt companies to provide cash payments for replacement 
     coverage.
       The AFL-CIO also urges you to support amendments that will 
     he offered by Senator Kennedy to protect low-income families 
     from means testing and unnecessary paperwork and to protect 
     workers who declare bankruptcy after becoming unemployed 
     because of outsourcing or a mass layoff.
       We also support Senator Feingold's amendment to remove 
     provisions that impose substantial new requirements on small 
     businesses attempting to reorganize under Chapter II. There 
     is no justification for increasing the hurdles that small 
     businesses already face in trying to survive financial 
     distress.
       Finally, we urge you to support amendments that will be 
     offered by Senator Durbin to restrain bankrupt employers from 
     rewarding corporate insiders and other senior managers with 
     large bonuses and excessive perks at the same time that their 
     employees suffer economic devastation from the loss of a job 
     or their savings in a company 401(k).
       In sum, S. 256 is an unnecessarily harsh and one-sided bill 
     that will penalize countless working Americans facing 
     financial crises beyond their control. The AFL-CIO strongly 
     urges you to support the above-mentioned amendments to this 
     deeply flawed bill.
           Sincerely,
                                                   William Samuel,
     Director, Department of Legislation.
                                  ____

                                                    March 2, 2005.
     Hon. Richard J. Durbin,
     U.S. Senate,
     Washington, DC.
       Dear Senator Durbin: The undersigned national consumer 
     organizations applaud you for offering amendments to the 
     Senate bankruptcy bill (S. 256) that would better protect 
     employees and retirees in the event of a corporate 
     bankruptcy. The inclusion of these amendments will bring 
     much-needed balance to a harsh and one-sided bill that would 
     harm many families that have suffered genuine financial 
     misfortune.
       The raft of corporate scandals in the last few years has 
     exposed many flaws in a system of market oversight that used 
     to be the envy of the world. Many investors lost faith in our 
     markets, tens of thousands of employees lost their jobs and 
     workers and retirees have lost significant portions of their 
     pension plans.
       It is essential that Congress take a comprehensive approach 
     to reform. The Sarbanes-Oxley Act to reform corporate 
     accounting practices took an important first step. It is 
     bringing much needed improvements to the quality and 
     independence of the audits of public companies and help to 
     restore investor confidence. But this law was never intended 
     to give employees and retirees more power to combat the 
     tactics of corporate officers who systematically loot their 
     corporations and line their pockets, even as their companies' 
     financial position starts to deteriorate. To do that, one 
     must change corporate bankruptcy laws.
       These amendments will help employees and retirees prevent 
     corporate officers from pillaging their earnings and 
     retirement savings in two of important ways:
       It increases the power of bankruptcy judges to nullify 
     fraudulent transfers of benefits and money by corporate 
     officers, and to examine off-book transactions. This will 
     increase the ability of employees to recover assets that have 
     been stripped.
       It increases the ability of employees to recover the value 
     of company stock, when the stock was purchased because 
     employees were not allowed to choose other investment 
     options.
       These amendments are the important ``next step'' in 
     reforming our corporate accountability laws. It is being 
     introduced at a time when Congress is poised to pass a 
     personal bankruptcy law that will make it more difficult for 
     moderate-income individuals who have been harmed by economic 
     disruption, corporate scandals and personal misfortune to get 
     a financial fresh start. We commend you for focusing on the 
     kind of bankruptcy reform that will help, not hurt, 
     employees, retirees and working families.
           Sincerely,
     Travis B. Plunkett,
       Legislative Director, Consumer Federation of America.
     Edmund Mierzwinski,
       Consumer Programs Director, U.S. Public Interest Research 
     Group.
     Susanna Montezemolo,
       Policy Analyst, Consumers Union.
     Linda Sherry,
       Editorial Director, Consumer Action.
     John Rao,
       Staff Attorney, National Consumer Law Center.

  Mr. DURBIN. Mr. President, these groups and their members know what 
happened with these companies.
  I am troubled by the fact that the Senate has spent this entire week 
talking about bankruptcy abuse and making it tough for families trying 
to pay medical bills, making this process more difficult for the 
guardsmen and reservists who were activated to go overseas to serve our 
country only to lose their business at home and face bankruptcy when 
they return.
  There is nothing in this bill to help them. There is nothing in this 
bill to help them with medical bills.
  Senator Kennedy was here on the floor yesterday. He had an extreme 
suggestion, a radical idea. Senator Kennedy said, if you lose 
everything because of medical bills, we are going to protect your 
little home--$150,000 worth of your home--so that when it is all said 
and done, as sick as you may be, you will at least have a home. But 
that proposal was rejected. I am not sure of the vote on that 
amendment, 58-39, somewhere in that range but a partisan vote. Everyone 
on this side--virtually everyone--voted against it.
  According to that vote, we can't help those people. They have to face 
the reality. They have to face up to the fact they won't have a home to 
go to when it is all over.
  But what about the mansions these CEOs go to, the millions of dollars 
they have drained out of these corporations for their own personal 
benefit to buy mansions, to buy golf courses, to create a lifestyle 
with $30,000 shower curtains? Are we going to hold them accountable for 
raiding these corporations and driving them into bankruptcy? The answer 
is no. Not a word in this bill holds them accountable.
  I urge my colleagues. If you can work up a rage over the possibility 
that someone with medical bills that are overwhelming goes to 
bankruptcy court seeking relief from their debts, can you work up a 
little bit of discomfort over these CEOs and bandits of the major 
corporations? Can you bring yourselves to say maybe we will hold them 
accountable, too, for their misconduct?
  It would be a new day in this Senate, a grand departure from the 
debate as it has gone down at this point. We have never come close to 
this yet. I haven't heard a word yet from the other side--not a word on 
this floor by the supporters of this bankruptcy bill about these 
corporate bankruptcies and what they have done to hundreds of 
thousands, if not millions, of unsuspecting investors, workers, and 
retirees.
  The Durbin amendment will give my colleagues a chance to do something 
about it.

[[Page 3415]]

  I urge my colleagues to support it.
  I yield the floor.
  The PRESIDING OFFICER. The Senator from New Jersey.
  Mr. LAUTENBERG. Mr. President, I ask unanimous consent I be permitted 
to speak as in morning business.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  (The remarks of Mr. Lautenberg are printed in today's Record under 
``Morning Business.''
  Mr. LAUTENBERG. I yield the floor.
  The PRESIDING OFFICER (Mr. DeMint). The Senator from Massachusetts is 
recognized.


                            Amendment No. 49

  Mr. KENNEDY. Mr. President, this legislation that we have before us 
cracks down unfairly on large numbers of hard-working families that are 
in dire financial straits because of a sudden serious illness or 
because their loved ones are fighting in Iraq. Yet, this bill blatantly 
ignores the real abuses in our bankruptcy laws: the corporate abuses 
that have become epidemic in recent years. It is the worst corporate 
misconduct since before the Great Depression.
  Some of these companies were brought down by outright criminal 
activities. Many more of them were driven into bankruptcy by the greed 
and mismanagement of a small group of reckless insiders who ignored 
their responsibility to their employees and their stockholders alike.
  Current law on corporate bankruptcy is grossly inadequate in dealing 
with these problems. Often, the very insiders whose misconduct brought 
the company down do very well in bankruptcy. The people who suffer the 
most are the innocent victims, the employees, the retirees.
  Increasingly, the bankruptcy court has become a place where corporate 
executives go to get permission to line their own pockets and break 
their promise to their workers and retirees. That kind of abuse is 
terribly wrong, and it is our responsibility to prevent it.
  Instead, we are considering a 500-page bankruptcy bill that virtually 
ignores this issue. It does nothing to address the corporate looting by 
high-level insiders. It does nothing to protect a company's workforce 
from losing their jobs, their health care, and their pensions. This 
bill should not move forward until those glaring omissions are 
corrected, and the Durbin amendment is the way to do it.
  Take a close look at the examples of executives in some of America's 
largest corporations, and see how lavishly they benefitted while their 
companies went into bankruptcy. Top executives made sure they were well 
provided for at the company's expense. Yet, loyal employees and their 
families were left to struggle on their own.
  A major corporation in Massachusetts, Polaroid, filed for bankruptcy 
in 2001. In the months leading up to the company's filing, $1.7 million 
in incentive payments were made to its chief executive officer on top 
of his $840,000 salary. The company also received the approval of the 
bankruptcy court to make $1.5 million in payments to senior managers to 
keep them on board. And these managers collectively received an 
additional $3 million when the company's assets were sold.
  Yet, just days before Polaroid filed for bankruptcy, it canceled the 
health and life insurance benefits for more than 6,000 retirees. It 
also canceled the health insurance coverage for workers with long-term 
disabilities, and halted the severance benefits for thousands of 
workers who had recently been laid off.
  Polaroid employees had been required to contribute to the company's 
Employee Stock Ownership Plan. When the company failed, their 
retirement savings were virtually all wiped out.
  The loss was devastating for workers like Karl Farmer, a Polaroid 
engineer in Massachusetts for more than 30 years. He had been required, 
as had other Polaroid employees, to pay 8 percent of his pay into the 
company's Employee Stock Ownership Plan. At its peak, this stock was 
worth over $200,000. But after the company declared bankruptcy, the 
stock was worthless. And he also lost his severance pay and medical 
benefits.
  Or take Betty Moss of Smryna, GA. Betty and her husband retired and 
were traveling across the country in their camper when they learned 
that Polaroid had stopped her severance pay and that they had lost her 
health insurance and life insurance. Because of the fall in Polaroid 
stock, her retirement savings plunged from $160,000 to only a few 
hundred dollars.
  The loss of health insurance and life insurance benefits was 
particularly devastating for long-term disabled workers. With their 
disabilities, they cannot go back to work, and they have no way to 
obtain other insurance coverage.
  Sally Ferrari of Saugus, MA, was diagnosed with Alzheimer's disease 
after working for Polaroid for 20 years. In recent years, she required 
round-the-clock care. Yet, Polaroid cut off her health care benefits in 
bankruptcy, which meant that her husband had to stay at work full time 
until he recently passed away in order to provide medical coverage for 
his wife.
  I also have letters from other employees.

       This letter is from David Maniscalco. He was injured while 
     working for Polaroid. Now he is unable to work, and his 
     medical bills are consuming his family's savings and his 
     retirement because Polaroid took away total health care 
     coverage. He points out:
       After Polaroid declared bankruptcy, they terminated all the 
     people on long term disability, and terminated all of our 
     Medical, Life and Dental Insurance. I wear a fiberglass back 
     brace and sleep in a hospital bed and am not able to work. My 
     wife changed jobs in order to have medical insurance for 
     herself. And I am on Medicare and a secondary insurance. The 
     cost to us is $895.00 a month for medical insurance alone. 
     The problem is, we're using our retirement money to help with 
     the cost of our medical insurance.

  Here you have the corporate officials well taken care of, and the 
loyal employees were notified with less than 24 hours. And this is how 
they end up. How? Because they go to bankruptcy court. Does this bill 
do anything about protecting those individuals? Absolutely zero. 
Absolutely nothing. Absolutely nothing.
  We have here a letter from Elaine Johnson. She lost a lung to cancer. 
When Polaroid went into bankruptcy, she lost her health insurance, too. 
She writes:

       When Polaroid declared bankruptcy, I lost my life 
     insurance, medical and dental insurance. Because of my 
     disability, I'm unable to get other insurance and another 
     job.

  Once you have these serious illnesses, it is virtually impossible to 
ever get your health insurance again. I have a son who had osteosarcoma 
at 12 years old. He, as an individual--he is 43 years old--cannot get a 
health insurance policy today no matter what he is prepared to pay for 
it, unless he goes into some kind of group. Why? Because he had cancer 
at one particular time.
  Here you have individuals who have disabilities who are tied into 
their company's program. The company has made a commitment to them. And 
then what happens? At the time they go into bankruptcy court, one of 
the first things that happens is the corporate officials free 
themselves from the obligations to pay the employees' health insurance, 
and they are left out in the cold.
  The list goes on. Polaroid employees, like Betsy Williams of Waltham, 
MA, were financially devastated by the loss of medical and health care 
benefits. Betsy was with Polaroid for 28 years, and she thought, when 
she came down with lupus, her company's disability, health and life 
insurance would cover her. She writes:

       When I received an unsigned letter from Polaroid 
     Corporation in July of 2002 stating that I (along with other 
     employees on Long Term Disability) would be terminated by the 
     company and my medical, dental and life insurance benefits 
     would end, I was shocked and dismayed. Unable to work because 
     of my disabilities, my husband (who is also disabled) and I 
     are forced to pay approximately $1,125/month for a Medicare 
     Health plan and an additional $400-$500/month for 
     prescription co-payments, supplies, etc.; no available dental 
     plan, and I was only able to get 50% of my life insurance at 
     an exorbitant rate. We now have two mortgages; our groceries 
     are bought with a credit card; and we are holding on 
     financially by a thread.

  There it is. That is the person who is going to get burned with this 
bill. That is the person who is going to be marched in. That is the 
person who is

[[Page 3416]]

going to be required to pay $10, $15, $20 a week, $80 a month on into 
the future under this bill. But do we do anything about the corporate 
executives? Absolutely nothing.
  And the list goes on. These are hard-working people who were crushed 
when Polaroid cut their benefits. Yet, while they suffered, Polaroid 
executives filled their pockets to overflowing.
  When the chief financial officer left, she got a $600,000 pension. 
Recently, she received $1 million in severance pay from Royal Dutch/
Shell Company, even though she left under a cloud of scandal. And 
Polaroid's former president is now the president and CEO of one of the 
country's largest staff outsourcing companies. He plans to take the 
company public soon and will reap enormous profits.
  Enron, as my friend and colleague, the Senator from Illinois, pointed 
out, is another flagrant example of massive company looting while 
employees lost everything. Enron executives cashed out more than $1 
billion of company stock when they knew the company was in trouble. And 
just before the company declared bankruptcy, its top executives were 
paid bonuses as high as $5 million each to stay on.
  Enron workers, however, were forced to hold their company stock until 
the age of 50. They were subject to blackout periods that executives 
were not.
  They lost a total of $1 billion in retirement savings. Thousands of 
them lost their jobs. Thousands lost their health insurance. Thousands 
of them will be dragged into bankruptcy court under this particular 
legislation.
  Yet we have WorldCom, another shameful case. Bernie Ebbers is on 
trial for corporate fraud. I don't know how many Americans read the 
newspapers yesterday, but Bernie Ebbers is on trial. He received 
millions of dollars in personal loans from the company and was 
originally granted a pension worth $1.5 million a year. This week he 
denied knowing anything about the biggest accounting fraud in history. 
``I don't know about technology. I don't know about financing. I don't 
know about accounting,'' he claimed.
  What about those people I just mentioned who worked for Polaroid all 
their lives and because of the bankruptcy lost their health insurance, 
do you think they will be able to give those kinds of answers? Not 
under this bill.
  Ordinary Americans will not have this defense when they are facing 
bankruptcy. Countless WorldCom employees who honestly knew nothing 
about the fraud wound up losing their jobs and their retirement.
  Another example is the popular retailer Kmart. As Kmart was teetering 
on the edge of bankruptcy, the company bought two new corporate jets. 
Once it finally went into bankruptcy, CEO Chuck Conaway was given a $9 
million golden parachute. Meanwhile 57,000 Kmart workers lost their 
jobs, and the company closed 600 stores.
  Abuses like these have made the headlines, but this bankruptcy bill 
doesn't deal with them. It comes down hard on those families who have 
critical health bills, families who are touched by cancer and heart and 
stroke, families who have children with disabilities. It comes down 
hard on those individuals and lets these people off free. And we call 
that fair? Take away their homes if they live in 40-odd States, but let 
them keep millionaire homes in Texas and Florida. And they do nothing 
about it, the proponents of this bill, nothing. Call that fair? Call 
this bill fair?
  We know what it is. It is making the various bankruptcy courts the 
collection agencies for the credit card companies. Mr. American 
Taxpayer, you are going to be paying for more bankruptcy judges and 
staff and buildings because there are going to be so many more people 
who are going to be thrown into bankruptcy. The fastest growing group 
of bankruptcy filers is the elderly, individuals fifty-five and older, 
who are being hit with increased medical costs. As I mentioned the 
other day, they are seeing increased premiums on Medicare--wait until 
they get their new prescription drug program and start paying the costs 
for that, which is an inadequate program that has special provisions in 
it that have giveaways to the HMOs and to the prescription drug 
companies. They are just going to end up paying more and more, Mr. 
American Taxpayer, to support these courts of bankruptcy, and they are 
going to squeeze our fellow citizens out all the more. Meanwhile other 
people are getting $9 million golden parachutes.
  Senator Durbin's amendment will stop the travesty of high-level 
corporate insiders walking away with millions of dollars in bankruptcy 
while workers and retirees are left emptyhanded. This amendment will 
strengthen the ability of bankruptcy courts to invalidate fraudulent 
transfers by corporate insiders. The current legislation does zero, 
nothing. The proponents of this legislation have opposed this effort by 
the Senator from Illinois. This amendment will strengthen the ability 
of bankruptcy courts to invalidate fraudulent transfers. Currently the 
court can only compel the return of money improperly taken out of the 
company in the preceding year. In many instances the looting has taken 
place over a number of years, and the court has no authority to go 
after those lost assets. This amendment will allow bankruptcy judges to 
reach back as far as 4 years to recover corporate assets.
  It also empowers the court to review and set aside the excess benefit 
transfers made to corporate management while the company was insolvent 
or which contributed to the company's insolvency. These sweetheart 
deals often take the form of huge bonuses, golden parachutes, and other 
payments to corporate executives before the public learns that the 
company is in trouble. Such payments violate the most basic principle 
of fiduciary duty, and the bankruptcy court should have the power to 
correct these wrongs. Every dollar recovered from these outrageous 
inside deals is another dollar that will be there to compensate 
workers, retirees, and other creditors.
  Finally, our amendment--I welcome the opportunity to cosponsor it 
with the Senator from Illinois--will give a priority claim in 
bankruptcy to employees who are forced to invest their retirement 
savings in employer stock.
  Polaroid workers lost their retirement because they were required to 
invest 8 percent of their pay in their company as a condition of 
holding their jobs. Workers at Enron were also forced to keep their 
company stock until the age of 50 and subject to blackout periods 
during which they couldn't sell their stock, but the company executives 
could. Under current bankruptcy law, workers have no way to recover 
from these losses. They deserve a chance to recover some of what they 
lost. This amendment will provide it.
  The issue is simple fairness. We learned even yesterday about the new 
loophole, about trusts that are going to be created so those 
individuals who may go into bankruptcy and who have resources can go 
out and hire a lawyer and shelter their income from any kind of 
bankruptcy court. But the average worker can't do that. The average 
worker out there working a lifetime for a company and then dismissed, 
the company then goes into bankruptcy, can't do that.
  They can't hold onto their homes like so many of the wealthiest 
individuals in our country. In Florida they will be able to do it, but 
they won't be able to do it in most of the other States. In Texas they 
can do it, but not in most of the other States. Yet here on the floor 
of the U.S. Senate, the Senate refused, absolutely refused to show any 
consideration to home ownership for people who have worked hard all of 
their lives, just having $150,000 in equity.
  This issue is about fairness. If a corporation has gone into 
bankruptcy, those who ran the ship aground certainly should be not be 
enriched at the very time those who depend on the company for their 
livelihood are driven into poverty. Yet that is what happens all too 
often in corporate bankruptcy today. Any bankruptcy bill which fails to 
address these critical issues is a cruel hoax on the American people.
  I urge my colleagues to support the Durbin amendment, recognizing 
that bankruptcy reform has to apply to corporations, too.

[[Page 3417]]

  I yield the floor 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. SCHUMER. Mr. President, I ask unanimous consent that the order 
for the quorum call be rescinded.
  The PRESIDING OFFICER. Without objection, it is so ordered.


                            Amendment No. 42

  Mr. SCHUMER. Mr. President, I rise in support of my amendment No. 42 
and will call for the yeas and nays on my amendment at the appropriate 
time.
  Mr. President, I rise to speak to my amendment to the Bankruptcy 
Abuse Prevention and Consumer Protection Act to close an ugly loophole 
that protects millionaires, while at the same time this bill will 
punish, among others, veterans' families and sick people with mountains 
of medical bills.
  The front page of yesterday's business section in the New York Times 
ran a story on a shocking loophole in bankruptcy law that is a windfall 
for the wealthy, called the millionaire's loophole. Let me read to you 
a little bit about it. I am going to read from the New York Times here. 
The headline is:

       Proposed law in bankruptcy has loophole; wealthy could 
     shield many assets in trust.
       The bankruptcy legislation being debated by the Senate is 
     intended to make it harder for people to walk away from their 
     credit card and other debts. But legal specialists say the 
     proposed law leaves open an increasingly popular loophole 
     that lets wealthy people protect substantial assets from 
     creditors, even after filing for bankruptcy.

  Here is the problem. In five States--Alaska, Delaware, Nevada, Rhode 
Island and Utah--millionaires and even billionaires can stash away 
their assets--whether it be a mansion, racing car, a yacht, or any kind 
of financial asset or investment, or even a suitcase filled with cash--
in a special kind of trust, so that they can hold on to that windfall 
even after filing for bankruptcy. When they file for bankruptcy, these 
wealthy people, creditors would not be able to reach anything in those 
trusts. So here you have wealthy people filing for bankruptcy and yet 
having huge amounts of assets protected in a little trust hidden away.
  The bill tries to address the infamous homestead exemption by 
attaching a $125,000 ceiling to it. But it doesn't matter. A 
millionaire doesn't need a home to protect his or her assets. All they 
need is a good lawyer, a pencil, paper, and one of these trusts.
  As one legal expert said: With this loophole, the wealthy won't need 
to buy houses in Florida or Texas to keep their millions. So if anyone 
is manipulating the system, it is these guys. By the way, you don't 
have to be in these five States. All you have to do is file the trust 
in one of these States. My great State of New York, I am happy to say, 
is blessed with many millionaires. We hope there are more of them. But 
they should not be allowed to file in Delaware, or Utah, or Alaska a 
trust that allows them to declare bankruptcy and yet keep their assets. 
It is a basic way for wealthy people to not pay their debts.
  We have heard a lot in this bill about people who gamble profligately 
and waste their money and declare bankruptcy. That is an abuse that the 
bill should, in my judgment, close. But then why are we continuing to 
allow it to remain in the law? It is not this bill that does it; it is 
in the law. But as we close those methods of using bankruptcy 
abusively, how can we leave this one open? This ``million dollar 
bankruptcy baby'' deserves an Oscar for the best legal loophole for the 
wealthy. This millionaire's loophole is so bad that it must be knocked 
out before this fight is over. There is no question that, without this 
amendment, the bankruptcy laws will continue to make it easier for 
millionaires to keep their millions than for poor people to simply stay 
afloat.
  I hope my colleagues on the other side of the aisle will join me in 
that amendment. I know there seems to be some kind of edict that you 
cannot vote for any amendment. Can we please make an exception for this 
one? I am sure just about everybody agrees with us. I am joined in this 
amendment by my colleagues Senators Bingaman, Durbin, Feinstein, and 
Clinton; they have cosponsored the amendment. This amendment closes 
this millionaire's loophole by forcing those who seek to use these 
trusts to cheat. It only allows them to protect as much as $125,000 in 
assets in these trusts and not a penny more. In other words, it makes 
it analogous to what we do for homes in the homestead exemption in this 
bill.
  Again, if we don't want wealthy people to be able to hide their 
assets in their homes and escape the rigors of the bankruptcy law, why 
would we allow them to do that in trusts? To clarify, the amendment 
doesn't adversely affect retirees who have saved for a lifetime to 
build a retirement nest egg. The solution is straightforward. It is 
written in the spirit of the bill. In fact, when looking at statements 
made by some of this bill's greatest champions, you would think they 
would have no problem accepting this amendment in the bill.
  The bill's sponsor is a good man. I am now on his committee. He is 
known as having a great deal of integrity. Well, here is what Senator 
Grassley said about the bill. This was in one of his State's local 
papers: Filing for chapter 7 bankruptcy, he said, ``was not intended to 
be a convenient financial planning tool where deadbeats can get out of 
paying their debts scot-free, while honest Americans who play by the 
rules have to foot the bill.''
  I agree with that statement. This amendment fits the words of Senator 
Grassley exactly. Why would we not include this amendment in the bill? 
That is the essence of the amendment we have. Deadbeats exist in all 
tax brackets. There are some middle-class deadbeats. There are some 
poor deadbeats, of course. What about the wealthy deadbeats? Why are 
they treated differently than everybody else?
  I hope my friends on the other side of the aisle, because of this 
grand edict ``don't vote for any amendment,'' don't end up protecting 
wealthy deadbeats from the same punishment they are doling out to those 
who are not so financially fortunate.
  I have listened to my Republican friends and their concerns about the 
abuse of our bankruptcy system by gamblers, hustlers, and cheaters. I 
have listened for a number of years, and I share those concerns. But I 
hope my colleagues will come to the floor to vote for this amendment 
that will end the egregious millionaire's loophole. Make no mistake 
about it, I am not against millionaires and billionaires. I think it is 
great when an American achieves success and makes a lot of money. But 
don't declare bankruptcy and hide your assets and shed your debts. The 
people who should least be able to do this are the wealthy.
  I hope my colleagues will vote for this amendment, which will end the 
egregious millionaire's loophole. We cannot let a few bad apple 
millionaires evade the system by cutting and running on their debts. 
This bill, I am afraid, of course, doesn't go after just the bad 
apples. That is an issue my colleague from Massachusetts has been ably 
taking up on the floor, as have many other of my colleagues. It 
actually labels the whole bushel of bankruptcy filers rotten.
  I wish the bill made more of a distinction between those who are 
abusive, who gamble, or who are profligate and try to shake off their 
debt, and those who have run into real hardship because they are in the 
military or because they have health care problems. The bill makes no 
distinction between those two groups and that is wrong. We need to make 
sure the bill targets the Nation's cheats and not its cheated. I urge 
my colleagues to close the millionaire's loophole by voting for this 
amendment.
  Mrs. FEINSTEIN. Mr. President, I rise today to join my colleague from 
New York, Senator Schumer, in offering an amendment which would address 
a serious loophole in the bankruptcy bill we are now considering it 
allows rich debtors to unfairly shield assets from their creditors.
  In recent years a number of financial and bankruptcy planners have 
taken advantage of the law of a few States to create what is called an 
``asset protection trust.'' These trusts are basically

[[Page 3418]]

mechanisms for rich people to keep money despite declaring bankruptcy. 
They are unfair, and violate the basic principle of this underlying 
legislation that bankruptcy should be used judiciously to deal with the 
economic reality that sometimes people cannot pay their debts, but to 
prevent abuse of the system.
  This loophole is an example of where the law, if not changed, 
permits, or even encourages, such abuse.
  The amendment is simple: It sets an upper limit on the amount of 
money that can be shielded in these asset protection trusts, capping 
the amount at $125,000. This amount parallels the limit placed on the 
similar ``homestead exemption'' elsewhere in the bill. The homestead 
exemption allows some assets to be protected from creditors in 
bankruptcy where they are in the form a residential home.
  The bottom line: Wealthy people will be able to preserve only 
$125,000 in an asset protection trust.
  This amount, $125,000, is not a small sum. It is more than enough to 
ensure that the debtor is not left destitute. But I believe it is a 
reasonable amount. It is deliberately based on the now-accepted 
$125,000 limit for the homestead exemption, which will also remain 
available to a debtor.
  Yesterday the New York Times, in an article entitled Proposed Law on 
Bankruptcy Has Loophole detailed the potential problem in this bill. 
The article quotes Professor Elena Marty-Nelson, a law professor at 
Nova Southeastern University in Florida, who states:

       [i]f the bankruptcy legislation currently [before the 
     Senate] gets enacted, debtors won't need to buy houses in 
     Florida and Texas to keep their millions [t]he millionare's 
     loophole that is the results of these trusts needs to be 
     closed.

  Professor Elizabeth Warren of Harvard Law School is also quoted in 
the article. She notes that:

       [t]his is just a way for rich folks to be able to slip 
     through the noose on bankruptcy and, of course, the double 
     irony for her is that the proponents of this bill keep 
     pressing it as designed to eliminate abuse.

  I unanimously consent that the full text of the article be printed in 
the Record.

                [From the New York Times, Mar. 2, 2005]

                Proposed Law on Bankruptcy Has Loophole

                        (By Gretchen Morgenson)

       The bankruptcy legislation being debated by the Senate is 
     intended to make it harder for people to walk away from their 
     credit card and other debts. But legal specialists say the 
     proposed law leaves open an increasingly popular loophole 
     that lets wealthy people protect substantial assets from 
     creditors even after filing for bankruptcy.
       The loophole involves the use of so-called asset protection 
     trusts. For years, wealthy people looking to keep their money 
     out of the reach of domestic creditors have set up these 
     trusts offshore. But since 1997, lawmakers in five states--
     Alaska, Delaware, Nevada, Rhode Island and Utah--have passed 
     legislation exempting assets held domestically in such trusts 
     from the federal bankruptcy code. People who want to 
     establish trusts do not have to reside the five states; they 
     need only set their trust up through an institution in one of 
     them.
       ``If the bankruptcy legislation currently being rushed 
     through the Senate gets enacted, debtors won't need to buy 
     houses in Florida or Texas to keep their millions,'' said 
     Elena Marty-Nelson, a law professor at Nova Southeastern 
     University in Fort Lauderdale, Fla., referring to generous 
     homestead exemptions in those states. ``The millionaire's 
     loophole that is the result of these trusts needs to be 
     closed.''
       Yesterday in Washington, Republicans in the Senate beat 
     back the first in a series of Democratic amendments aimed at 
     softening the effects of the bankruptcy bill on military 
     personnel, and the majority leader of the House vowed to get 
     quick approval of the bill if the Senate did not 
     significantly alter it.
       ``We will grab hold of it just like we did class action if 
     it is a good and clean bankruptcy reform bill,'' said 
     Representative Tom DeLay, a Texas Republican, referring to 
     the quick action the House took last month on a measure 
     limiting class-action lawsuits.
       The Senate bill is favored by banks, credit card companies 
     and retailers, who say it is now too easy for consumers to 
     erase their debts through bankruptcy. It is almost identical 
     to previous versions that have been introduced in Congress, 
     unsuccessfully, since 1998. Perhaps because the current bill 
     was written so long ago, some legal authorities say, it does 
     not address the new state laws that have allowed asset 
     protection trusts to flourish.
       ``This is just a way for rich folks to be able to slip 
     through the noose on bankruptcy, and, of course, the double 
     irony here is that the proponents of this bill keep pressing 
     it as designed to eliminate abuse,'' said Elizabeth Warren, a 
     law professor at Harvard Law School. ``Yet when provisions 
     that permit real abuse by rich people are pointed out, the 
     bill's proponents look the other way.''
       Senator Charles E. Grassley, an Iowa Republican, is the 
     main sponsor of the bankruptcy bill. His press secretary, 
     Beth Levine, said the senator's staff was unaware of the 
     trusts and the loophole for the wealthy that they 
     represented. ``The senator is always open to suggestions for 
     closing these loopholes,'' she said.
       Money held in asset protection trusts can elude creditors 
     because federal bankruptcy law exempts assets governed by 
     ``applicable nonbankruptcy law.'' Intended to preserve rights 
     to property under state law, the exemption makes it difficult 
     for creditors to get hold of assets that they would not be 
     able to seize through a nonbankruptcy proceeding in state 
     court.
       Asset protection trusts have become increasingly popular in 
     recent years among physicians, who fear large medical 
     malpractice awards, and corporate executives, whose assets 
     are at greater peril now because of new laws. The Sarbanes-
     Oxley legislation, for example, requires chief executives and 
     chief financial officers to certify that their companies' 
     financial statements are accurate; anyone who knowingly 
     certifies false numbers can be fined up to $5 million. In 
     addition, under Sarbanes-Oxley, executives may have to 
     reimburse their companies for bonuses or other incentive 
     compensation they received if their company's financial 
     reports have to be restated in later years. ``Given all the 
     notoriety of what we're seeing today, from HealthSouth to 
     WorldCom, there is probably more of an impetus for executives 
     to consider going this route,'' said Scott E. Blakeley, a 
     lawyer at Blakeley & Blakeley in Irvine, Calif. ``And yet in 
     the bankruptcy bill, this topic is not touched.''
       While it is difficult to quantify how much money is sitting 
     in domestic asset protection trusts, their popularity is 
     undeniable, bankruptcy specialists said. ``I've heard figures 
     for foreign asset protection trusts and those probably are in 
     the billions,'' said Adam J. Hirsch, a law professor at 
     Florida State University. ``I haven't seen any figures for 
     domestic asset protection trusts, but they could very well be 
     the same.''
       Current federal bankruptcy law protects assets held in a 
     type of trust, known as a spendthrift trust, traditionally 
     set up by one family member to benefit another. But current 
     law does not protect the assets of people who set up 
     spendthrift trusts to benefit themselves. And the law limits 
     the purposes of the trusts that qualify for exemption. 
     Retirement planning or paying for education are two approved 
     purposes for such trusts. By contrast, domestic asset 
     protection trusts can be set up by the same people who plan 
     to benefit from them. In addition, there are no caps on the 
     dollar amount of assets they can hold and no restrictions on 
     their purpose, Ms. Marty-Nelson said. One limitation is that 
     the trusts cannot be set up by people who are already 
     insolvent.
       The states that allow these trusts do so to attract the 
     significant money management and trustee fees that accompany 
     them, Mr. Hirsch said. ``It's what is known in the parlance 
     of legal policy analysis as a race to the bottom,'' he said.
       The authors of the Delaware law, for example, noted when it 
     was passed in 1997 that it was meant to ``maintain Delaware's 
     role as the most favored jurisdiction for the establishment 
     of trusts.''
       In some ways, asset protection trusts are similar to the 
     homestead exemption that keeps homes in Florida, Texas and 
     other states out of the reach of creditors. But the 
     bankruptcy law now under consideration limits this exemption 
     to $125,000 for those who purchased the home within 40 months 
     of their bankruptcy filing or for those who have committed 
     securities fraud.
       Ms. Marty-Nelson said the bankruptcy bill should at least 
     apply such a cap to domestic asset protection trusts. Better 
     yet, she said, the bill should exclude these trusts from the 
     federal exemption altogether.
       ``Congress can and should close this huge loophole,'' she 
     said.

  Mrs. FEINSTEIN. I believe it is critical that we appropriately reform 
our bankruptcy system, and I applaud the efforts of Senator Grassley 
and others to do that. But it is important that we ensure that, 
wherever possible, loopholes subject to abuse are closed. This is just 
such a loophole. I hope that my colleagues will join me and Senator 
Schumer in closing this one.
  Mr. KENNEDY. Mr. President, the most disturbing thing about this 
supposed ``bankruptcy reform'' is the utter lack of fairness and 
balance in the legislation. It gets tough on working families who are 
facing financial hardship due to a health crisis, a job loss caused by 
a plant closing, or a military call up to active duty. The laws of 
bankruptcy are being changed to wrest every last dollar out of these 
unfortunate families in order to further enrich the credit card 
companies.

[[Page 3419]]

  However, the authors of this legislation look the other way when it 
comes. to closing millionaire's loopholes and ending corporate abuse. 
The bill fails to deal effectively with the unlimited homestead 
exemptions in a few States which allow the rich to hold on to their 
multi-million dollar mansions while middle class families in other 
States lose their modest homes. And, the bill totally fails to address 
the shocking abuse of millionaires hiding their assets in so-called 
``asset protection trusts,'' placing them completely beyond the reach 
of creditors. They can hold on to their wealth merely by signing a 
paper placing title their bank accounts, stocks, bonds, and other 
holdings in the name of a trust. The wealthy debtors don't even have to 
change their residences or put all of their money into a country estate 
in Florida or Texas. All they need to do is file a trust document in 
one of the five States that allow this subterfuge. They do not have to 
relinquish control over their property and it can continue to be used 
to support their extravagant lifestyle.
  Unfortunately, average families facing bankruptcy don't have large 
bank accounts and stock portfolios so they cannot take advantage of 
this loophole. Most couldn't even afford to hire a lawyer to set up the 
trust. However, that's all right because the asset protection trust 
scam was not designed for them. It was designed to protect millionaire 
deadbeats, people who ran their companies into the ground leaving their 
creditors and their former employees holding the bag. It was designed 
to protect those who took the money and ran.
  Somehow the authors of this bill, after eight years of studying the 
bankruptcy code in search of ways to tighten the law so that more 
people would be held accountable for their debts--somehow they 
overlooked this loophole. I wonder how they could have missed this one. 
I guess they were just too busy finding ways to make working families 
pay a few more dollars to the credit card companies.
  Fortunately, the New York Times did expose this outrageous loophole 
and Senator Schumer has offered an amendment to close it. It will 
empower the bankruptcy court to reach out and pull the assets in these 
abusive trusts back into the bankruptcy, using those assets to help pay 
creditors. The vote on this amendment will be a real test of the 
sincerity of those who say their goal is to hold debtors more 
accountable for the money they owe. I would hope that same desire to 
enforce personal responsibility applies to the millionaire deadbeat who 
hides his assets as well as the working family struggling to survive.
  Mr. GRASSLEY. Mr. President, I oppose the Schumer amendment. This is 
an issue that just needs more time for us to determine whether there is 
an abuse that needs to be addressed. We need to ensure that this 
amendment doesn't have unintended consequences. For instance, it 
doesn't define the term ``asset protection trust'' and therefore we 
aren't even sure what we are being asked to vote on. Further, it not 
only covers asset protection trusts, but also covers ``similar 
trusts.'' Until we have had time to really understand whether this is a 
loophole, and if it is, how to close it in a way that doesn't harm 
innocent third parties.
  In addition, this issue is even more complex because it implicates 50 
different State laws. We don't know enough at this point about how it 
works. This would override at least some State laws, like the homestead 
cap would. I think it is important to look at this issue, have a 
hearing and consult with senators whose States might be uniquely 
affected. Be sure, however, that my opposition to this amendment 
doesn't mean that I will not ultimately find that this issue needs to 
be addressed at some future date. I think that all the work we have 
done on this bill, the compromises we have reached should not be 
disrupted by this last-minute proposal that has not been well thought 
out.
  I yield the floor 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. McCONNELL. 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. McCONNELL. Mr. President, I ask unanimous consent that the Senate 
now proceed to a series of stacked votes in relation to the following 
amendments: Schumer amendment No. 42 and Rockefeller amendment No. 24; 
further, that no amendments be in order to the amendments prior to the 
votes; that the second vote be limited to 10 minutes in length; and 
that there be 1 minute on each side to explain these amendments prior 
to the vote.
  The PRESIDING OFFICER. Without objection, it is so ordered.


                            Amendment No. 48

  Mr. McCONNELL. Mr. President, I ask unanimous consent that the 
pending Specter amendment No. 48 be agreed to and the motion to 
reconsider be laid upon the table.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  The amendment (No. 48) was agreed to.


                            Amendment No. 42

  Mr. McCONNELL. Mr. President, I ask for the yeas and nays on the 
Schumer amendment.
  The PRESIDING OFFICER. Is there a sufficient second?
  There appears to be a sufficient second.
  The PRESIDING OFFICER. Who yields time on the amendment?
  Without objection, time is yielded back.
  The question is on agreeing to amendment No. 42 offered by the 
Senator from New York, Mr. Schumer. The yeas and nays have been 
ordered. The clerk will call the roll.
  The legislative clerk called the roll.
  Mr McCONNELL. The following Senator was necessarily absent: the 
Senator from Oklahoma (Mr. Inhofe).
  Further, if present and voting, the Senator from Oklahoma (Mr. 
Inhofe) would have voted ``no.''
  Mr. DURBIN. I announce that the Senator from California (Mrs. Boxer), 
the Senator from New Jersey (Mr. Corzine), the Senator from Wisconsin 
(Mr. Feingold), and the Senator from Hawaii (Mr. Inouye) are 
necessarily absent.
  The PRESIDING OFFICER (Mr. Thune). Are there any other Senators in 
the Chamber desiring to vote?
  The result was announced--yeas 39, nays 56, as follows:

                      [Rollcall Vote No. 23 Leg.]

                                YEAS--39

     Akaka
     Baucus
     Bayh
     Biden
     Bingaman
     Byrd
     Cantwell
     Chafee
     Clinton
     Conrad
     Dayton
     Dodd
     Dorgan
     Durbin
     Feinstein
     Harkin
     Jeffords
     Kennedy
     Kerry
     Kohl
     Landrieu
     Lautenberg
     Leahy
     Levin
     Lieberman
     Lincoln
     Mikulski
     Murray
     Nelson (FL)
     Obama
     Pryor
     Reed
     Reid
     Rockefeller
     Salazar
     Sarbanes
     Schumer
     Stabenow
     Wyden

                                NAYS--56

     Alexander
     Allard
     Allen
     Bennett
     Bond
     Brownback
     Bunning
     Burns
     Burr
     Carper
     Chambliss
     Coburn
     Cochran
     Coleman
     Collins
     Cornyn
     Craig
     Crapo
     DeMint
     DeWine
     Dole
     Domenici
     Ensign
     Enzi
     Frist
     Graham
     Grassley
     Gregg
     Hagel
     Hatch
     Hutchison
     Isakson
     Johnson
     Kyl
     Lott
     Lugar
     Martinez
     McCain
     McConnell
     Murkowski
     Nelson (NE)
     Roberts
     Santorum
     Sessions
     Shelby
     Smith
     Snowe
     Specter
     Stevens
     Sununu
     Talent
     Thomas
     Thune
     Vitter
     Voinovich
     Warner

                             NOT VOTING--5

     Boxer
     Corzine
     Feingold
     Inhofe
     Inouye
  The amendment (No. 42) was rejected.
  Mr. McCONNELL. Mr. President, I move to reconsider the vote.
  Mr. HATCH. I move to lay that motion on the table.
  The motion to lay on the table was agreed to.
  Mr. McCONNELL. Mr. President, let me announce to all Members that 
following the next vote we will vote in relation to the Durbin 
amendment No. 49. We will have an explanation of 2 minutes equally 
divided. Both of these votes are going to be 10 minutes. We

[[Page 3420]]

are going to enforce the time on this vote. Everybody please stay in 
the Chamber at the convenience of all Members so we can finish this 
vote and the next vote within 10 minutes each, particularly this one.
  The PRESIDING OFFICER. There are 2 minutes evenly divided prior to 
the vote on the Rockefeller amendment.
  Who yields time?
  The Senator from West Virginia.
  Mr. ROCKEFELLER. Mr. President, this amendment is critical to making 
corporate bankruptcies fairer to the people who have worked in those 
corporations and toiled during the course of their lives and expect, 
reasonably, at end of their service, to have something to show for it.
  My amendment does three things.
  First, it allows employees to recover up to $15,000 in backpay or 
other compensation that is owed them.
  Second, my amendment would eliminate the accrual time period for 
calculation of priority claims. And, if we do not eliminate the accrual 
period, then increasing wage priority in the bill is meaningless.
  Finally, my amendment would provide at least some compensation to 
retirees whose promised health insurance has been taken away.
  Under my proposal, each retiree would be entitled to payment equal to 
the cost of purchasing comparable health insurance for a period of 18 
months.
  I encourage the support of my colleagues.
  Mr. BYRD. Mr. President, the great union leader, John L. Lewis, spoke 
of those who sup at labor's table and who have been sheltered in 
labor's house.
  That image thrives in West Virginia, where children are raised to 
believe that the fruits of their labor ought to yield a decent wage and 
comfortable living. Many work long hours, concerned less about titles 
and honors than providing for their families in the present and 
securing their retirement in old age.
  They devote themselves to their labors and take pride in their work 
and their employer. These workers are committed, hard-working 
individuals who contribute much and ask for nothing more than simple 
fairness. And so imagine how they are made to feel--the anguish, 
frustration, and betrayal they are made to feel--when they learn the 
pension they worked for, the health benefits they labored for, the 
security they toiled for, has vanished.
  That is what is happening in West Virginia to an alarming degree. 
Special Metals, Horizon Natural Resources, Weirton Steel, Wheeling-
Pitt, Kaiser Aluminum--all have filed for bankruptcy, endangering the 
health and pension benefits of workers and retirees.
  I scold not those who have sought to protect their employees but 
those scoundrels who have used bankruptcy to abandon their obligations.
  It is shattering to those workers and retirees affected. It cripples 
their faith in the moral values of an honest day's work for an honest 
day's pay. It's terrifying for retirees who cannot begin new careers. 
These independent, proud men and women fear becoming a burden to their 
children and grandchildren.
  I understand how they are made to feel, and I seek to help them, as I 
always have sought to help them. I support the Rockefeller amendment, 
and I commend my colleague for his endeavors in this regard.
  The PRESIDING OFFICER. The Senator from Utah.
  Mr. HATCH. Mr. President, this amendment would provide a nearly 
fourfold increase in claim amounts and strike the time period. That 
means it would be much harder to confirm a plan under Chapter 11. It 
will cost us jobs, because the debtor companies would not be able to 
survive the bankruptcy process.
  My colleague from the Finance Committee is concerned about the co-
provisions. Rest assured, they are bad. We all know how many 
compromises have been made on this bill. This amendment would undo 
years of hard work.
  I urge my colleagues to vote no on this amendment.
  I yield the remainder of my time.
  The PRESIDING OFFICER. The question is on agreeing to the amendment.
  Mr. HATCH. 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. McCONNELL. The following Senators were necessarily absent: the 
Senator from Oklahoma (Mr. Inhofe) and the Senator from Pennsylvania 
(Mr. Specter).
  Mr. DURBIN. I announce that the Senator from California (Mrs. Boxer), 
the Senator from New Jersey (Mr. Corzine), the Senator from Wisconsin 
(Mr. Feingold), and the Senator from Hawaii (Mr. Inouye) are 
necessarily absent.
  The PRESIDING OFFICER. Are there any other Senators in the Chamber 
desiring to vote?
  The result was announced--yeas 40, nays 54, as follows:

                      [Rollcall Vote No. 24 Leg.]

                                YEAS--40

     Akaka
     Baucus
     Bayh
     Bingaman
     Byrd
     Cantwell
     Clinton
     Collins
     Conrad
     Dayton
     Dodd
     Dorgan
     Durbin
     Feinstein
     Harkin
     Jeffords
     Johnson
     Kennedy
     Kerry
     Kohl
     Landrieu
     Lautenberg
     Leahy
     Levin
     Lieberman
     Lincoln
     Mikulski
     Murray
     Nelson (FL)
     Obama
     Pryor
     Reed
     Reid
     Rockefeller
     Salazar
     Sarbanes
     Schumer
     Snowe
     Stabenow
     Wyden

                                NAYS--54

     Alexander
     Allard
     Allen
     Bennett
     Biden
     Bond
     Brownback
     Bunning
     Burns
     Burr
     Carper
     Chafee
     Chambliss
     Coburn
     Cochran
     Coleman
     Cornyn
     Craig
     Crapo
     DeMint
     DeWine
     Dole
     Domenici
     Ensign
     Enzi
     Frist
     Graham
     Grassley
     Gregg
     Hagel
     Hatch
     Hutchison
     Isakson
     Kyl
     Lott
     Lugar
     Martinez
     McCain
     McConnell
     Murkowski
     Nelson (NE)
     Roberts
     Santorum
     Sessions
     Shelby
     Smith
     Stevens
     Sununu
     Talent
     Thomas
     Thune
     Vitter
     Voinovich
     Warner

                             NOT VOTING--6

     Boxer
     Corzine
     Feingold
     Inhofe
     Inouye
     Specter
  The amendment (No. 24) was rejected.
  Mr. FRIST. Mr. President, I move to reconsider the vote and to lay 
that motion on the table.
  The motion to lay on the table was agreed to.
  The PRESIDING OFFICER. The majority leader is recognized.
  Mr. FRIST. For the information of our colleagues, this will be the 
last rollcall vote tonight. We will have probably two votes at 5:30 on 
Monday.


                            Amendment No. 49

  The PRESIDING OFFICER. The Senator from Illinois.
  Mr. DURBIN. Mr. President, pursuant to unanimous consent, on the next 
amendment you should keep in mind Kenneth Lay who, on the road to 
bankruptcy, took $200 million out of Enron. Bernie Ebbers took $366 
million in personal loans out of WorldCom, and John Rigas took $2.3 
billion in loans for a golf course--driving the companies into 
bankruptcy at the expense of the stockholders, employees, and retirees. 
This amendment reaches back and brings that money to the people who 
need it. It also gives a claim in bankruptcy for the pension rights 
that are extinguished in bankruptcy. I ask for Members' support.
  The PRESIDING OFFICER. The Senator from Utah.
  Mr. HATCH. Mr. President, this is an important matter, but this 
amendment is too. I ask Members to vote no on the amendment.
  The PRESIDING OFFICER. The question is on agreeing to amendment No. 
49.
  Mr. DURBIN. 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.
  Mr. McCONNELL. The following Senators were necessarily absent: the 
Senator from Oklahoma (Mr. Inhofe) and the Senator from Pennsylvania 
(Mr. Specter).
  Mr. DURBIN. I announce that the Senator from California (Mrs. Boxer),

[[Page 3421]]

the Senator from New Jersey (Mr. Corzine), the Senator from Wisconsin 
(Mr. Feingold) and the Senator from Hawaii (Mr. Inouye) are necessarily 
absent.
  The PRESIDING OFFICER. Are there any other Senators in the Chamber 
desiring to vote?
  The result was announced--yeas 40, nays 54, as follows:

                      [Rollcall Vote No. 25 Leg.]

                                YEAS--40

     Akaka
     Baucus
     Bayh
     Biden
     Bingaman
     Byrd
     Cantwell
     Carper
     Clinton
     Conrad
     Dayton
     Dodd
     Dorgan
     Durbin
     Feinstein
     Harkin
     Jeffords
     Johnson
     Kennedy
     Kerry
     Kohl
     Landrieu
     Lautenberg
     Leahy
     Levin
     Lieberman
     Lincoln
     Mikulski
     Murray
     Nelson (FL)
     Obama
     Pryor
     Reed
     Reid
     Rockefeller
     Salazar
     Sarbanes
     Schumer
     Stabenow
     Wyden

                                NAYS--54

     Alexander
     Allard
     Allen
     Bennett
     Bond
     Brownback
     Bunning
     Burns
     Burr
     Chafee
     Chambliss
     Coburn
     Cochran
     Coleman
     Collins
     Cornyn
     Craig
     Crapo
     DeMint
     DeWine
     Dole
     Domenici
     Ensign
     Enzi
     Frist
     Graham
     Grassley
     Gregg
     Hagel
     Hatch
     Hutchison
     Isakson
     Kyl
     Lott
     Lugar
     Martinez
     McCain
     McConnell
     Murkowski
     Nelson (NE)
     Roberts
     Santorum
     Sessions
     Shelby
     Smith
     Snowe
     Stevens
     Sununu
     Talent
     Thomas
     Thune
     Vitter
     Voinovich
     Warner

                             NOT VOTING--6

     Boxer
     Corzine
     Feingold
     Inhofe
     Inouye
     Specter
  The amendment (No. 49) was rejected.
  Mr. LOTT. I move to reconsider the vote, and I move to lay that 
motion on the table.
  The motion to lay on the table was agreed to.
  Mr. LOTT. Mr. President, I ask unanimous consent to speak as in 
morning business for a couple minutes.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  (The remarks of Mr. Lott are printed in today's Record under 
``Morning Business.'')
  Mr. LOTT. I yield the floor, and 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 (Mr. Allen). Without objection, it is so 
ordered.


                            Amendment No. 50

  Mr. REID. I ask unanimous consent the pending amendment be laid 
aside.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. REID. I send an amendment to the desk on behalf of Senator 
Baucus.
  The PRESIDING OFFICER. The clerk will report.
  The legislative clerk read as follows:

       The Senator from Nevada [Mr. REID], for Mr. Baucus, 
     proposes an amendment numbered 50.

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

 (Purpose: To amend section 524(g)(1) of title 11, United States Code, 
 to predicate the discharge of debts in bankruptcy by any vermiculite 
   mining company meeting certain criteria on the establishment of a 
   health care trust fund for certain individuals suffering from an 
                       asbestos related disease)

       On page 47, strike lines 12 through 14, and insert the 
     following:

     SEC. 202. EFFECT OF DISCHARGE.

       Section 524 of title 11, United States Code, is amended--
       (1) in subsection (g)(1), by adding at the end the 
     following:
       ``(C)(i) Congress finds that--
       ``(I) the vermiculite ore mined and milled in Libby, 
     Montana, was contaminated by high levels of asbestos, 
     particularly tremolite asbestos;
       ``(II) the vermiculite mining and milling processes 
     released thousands of pounds of asbestos-contaminated dust 
     into the air around Libby, Montana, every day, exposing mine 
     workers and Libby residents to high levels of asbestos over a 
     prolonged period of time;
       ``(III) the responsible party has known for over 50 years 
     that there are severe health risks associated with prolonged 
     exposure to asbestos, including higher incidences of asbestos 
     related disease such as asbestosis, lung cancer, and 
     mesothelioma;
       ``(IV) the responsible party was aware of accumulating 
     asbestos pollution in Libby, Montana, but failed to take any 
     corrective action for decades, and once corrective action was 
     taken, it was inadequate to protect workers and residents and 
     asbestos-contaminated vermiculite dust continued to be 
     released into the air in and around Libby, Montana, until the 
     early 1990s when the vermiculite mining and milling process 
     was finally halted;
       ``(V) current and former residents of Libby, Montana, and 
     former vermiculite mine workers from the Libby mine suffer 
     from asbestos related diseases at a rate 40 to 60 times the 
     national average, and they suffer from the rare and deadly 
     asbestos-caused cancer, mesothelioma, at a rate 100 times the 
     national average;
       ``(VI) the State of Montana and the town of Libby, Montana, 
     face an immediate and severe health care crisis because--
       ``(aa) many sick current and former residents and workers 
     who have been diagnosed with asbestos-related exposure or 
     disease cannot access private health insurance;
       ``(bb) the costs to the community and State government 
     related to providing health coverage for uninsured sick 
     residents and former mine workers are creating significant 
     pressures on the State's medicaid program and threaten the 
     viability of other community businesses;
       ``(cc) asbestos-related disease can have a long latency 
     period; and
       ``(dd) the only significant responsible party available to 
     compensate sick residents and workers has filed for 
     bankruptcy protection; and
       ``(VII) the responsible party should recognize that it has 
     a responsibility to work in partnership with the State of 
     Montana, the town of Libby, Montana, and appropriate health 
     care organizations to address escalating health care costs 
     caused by decades of asbestos pollution in Libby, Montana.
       ``(ii) In this subparagraph--
       ``(I) the term `asbestos related disease or illness' means 
     a malignant or non-malignant respiratory disease or illness 
     related to tremolite asbestos exposure;
       ``(II) the term `eligible medical expense' means an expense 
     related to services for the diagnosis or treatment of an 
     asbestos-related disease or illness, including expenses 
     incurred for hospitalization, prescription drugs, outpatient 
     services, home oxygen, respiratory therapy, nursing visits, 
     or diagnostic evaluations;
       ``(III) the term `responsible party' means a corporation--
       ``(aa) that has engaged in mining vermiculite that was 
     contaminated by tremolite asbestos;
       ``(bb) whose officers or directors have been indicted for 
     knowingly releasing into the ambient air a hazardous air 
     pollutant, namely asbestos, and knowingly endangering the 
     residents of Libby, Montana and the surrounding communities; 
     and
       ``(cc) for which the Department of Justice has intervened 
     in a bankruptcy proceeding; and
       ``(IV) the term `Trust Fund' means the health care trust 
     fund established pursuant to clause (iii).
       ``(iii) A court may not enter an order confirming a plan of 
     reorganization under chapter 11 involving a responsible party 
     or issue an injunction in connection with such order unless 
     the responsible party--
       ``(I) has established a health care trust fund for the 
     benefit of individuals suffering from an asbestos related 
     disease or illness; and
       ``(II) has deposited not less than $250,000,000 into the 
     Trust Fund.
       ``(iv) Notwithstanding any other provision of law, any 
     payment received by the United States for recovery of costs 
     associated with the actions to address asbestos contamination 
     in Libby, Montana, as authorized by the Comprehensive 
     Environmental Response, Compensation, and Liability Act of 
     1980 (42 U.S.C. 9601 et seq.), shall be deposited into the 
     Trust Fund.
       ``(v) An individual shall be eligible for medical benefit 
     payments, from the Trust Fund if the individual--
       ``(I) has an asbestos related disease or illness;
       ``(II) has an eligible medical expense; and
       ``(III)(aa) was a worker at the vermiculite mining and 
     milling facility in Libby, Montana; or
       ``(bb) lived, worked, or played in Libby, Montana for at 
     least 6 consecutive months before December 31, 2004.''; and
       (2) by adding at the end the following:

  Mr. KENNEDY. Mr. President, Senator Sessions, on the floor yesterday, 
criticized Elizabeth Warren's study on bankruptcies, and the high 
percentage of bankruptcy filers who file because of significant debt 
related to illness and medical costs, uses.
  Senator Sessions cited a U.S. Trustee Program ``survey'' from 2002 
that looked into medical costs as a factor in bankruptcy. He argued 
that ``only

[[Page 3422]]

slightly more than 5 percent of unsecured debt reported in those cases 
was medically related;'' ``54 percent of the cases listed no medical 
debts whatsoever. I want to repeat that,'' he said.
  He also said that ``they found that 90 percent of the cases that did 
have medical debts reported debts of less than $5,000.''
  Elizabeth Warren sent a letter to the Judiciary Committee last month 
which pointed out many of the problems with this U.S. Trustee Program 
``survey'':
  The survey underreported both the breadth and impact of medical 
bankruptcies because of the way it was conducted.
  U.S. trustee's sample was limited only to chapter 7 cases and omitted 
chapter 13 cases. Families filing for bankruptcy under chapter 7 have 
an annual median income of $19,000. Therefore, the average medical debt 
identified by the U.S. trustee--the average is $5,000 for those with 
medical debt--is quite substantial for those families trying to cope 
with medical problems. Mr. President, $5,000 in medical debt is more 
than 25 percent of the annual income for that family.
  The petition data used by the Office of the U.S. Trustee does not 
include any medically related debts charged onto credit cards such as 
prescription medications, doctors visits, rehabilitation treatments, 
medical supplies, hospital bills, or even second mortgages that people 
have put on their homes to pay off hospital bills and other medical 
expenses, or cash advances, bank overdrafts or payday loans that people 
have incurred to pay for medical services when they are delivered or to 
pay medical bills that are outstanding. If any of these bills were paid 
by being charged on a credit card, then the trustee's survey would not 
include them in its figures.
  For these and other reasons, the petition data gathered by the U.S. 
Trustee Program provides very little information about medical 
bankruptcy. This is why it is so important to survey the debtors 
themselves in order to collect accurate data, the way the Harvard study 
actually did.
  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. FRIST. Mr. President, I ask unanimous consent that that the order 
for the quorum call be dispensed with.
  The PRESIDING OFFICER. Without objection, it is so ordered.

                          ____________________