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Search Terms: Abortion AND Bankruptcy Reform, House or Senate or Joint

Document 12 of 18.

June 13, 2000, Tuesday

SECTION: COMMERCE AND TRADE SPEECHES OR CONFERENCES

LENGTH: 4187 words

HEADLINE: PRESS CONFERENCE ON BANKRUPTCY REFORM LEGISLATION WITH: SENATOR PAUL WELLSTONE (D-MN) AND REPRESENTATIVE JERROLD NADLER (D-NY)

LOCATION: SENATE RADIO/TV GALLERY, THE CAPITOL, WASHINGTON, D.C.

TIME: 12:20 P.M. EDT DATE: TUESDAY, JUNE 13, 2000

BODY:
SEN. WELLSTONE: Hey, thanks for coming. And I think actually --

REP. NADLER: It's a great book. (Chuckles.)

SEN. WELLSTONE: It is a great book.

I think that we are organizing now a press conference of a lot of people around the country who are debtors to tell their story. And they may have to become their own citizen lobby. And I think there's going to be a lot of powerful stories that are going to be important for people here in the Senate and the House to hear. What I thought is -- at least I can only speak -- I can't speak for the Republican Caucus, but I can tell you that among Democrats there is a lot of reexamination of this bill going on. And I certainly would thank Congressman Nadler for being there from the very beginning.

What I wanted to report on today with you all -- and we're going to distribute this -- is a letter that we received -- I'm sure that, Jerry, you received the same letter -- late Friday evening from the White House. And this is a much stronger letter than we've seen before, and we're very pleased about this. I think that -- do you have the letter before you? Okay, I will just summarize.

The president points out in the letter -- one, I think, important sentence is, "We must also ensure that a reasonable fresh start is available for those who turn to bankruptcy as a last resort when facing divorce, unemployment, illness and uninsured medical bills. Bankruptcy reform legislation should strike the right balance." Then goes on to talk about how one-sided the House bill was. And I think that -- "While there appears to be some informal progress on some outstanding issues, it's very important that the resolution of all these issues be fair and that we ensure that we do not erode protections for all debtors when targeting the few who abuse the system."

This is a good letter, a strong letter, and the president mentioned several provisions that he's really worried about, and I'm just going to list them.

One, he's concerned that the final bill may not adequately address the problem of wealthy debtors who use overly broad homestead exemptions to shield assets from their creditors. This is something that we're fighting about right now, fighting hard. And you all know the issue, but again, one more time, it would be a little outrageous if while you're taking away a basic safety net for middle-income people, you're allowing people to shield several million dollars for a home that they own in Texas, Florida or wherever.

Second of all, the president focuses on his concern that the final bill may weaken important credit card disclosure provisions that will help ensure consumers understand the implications of the debt they're incurring. They weren't very strong in the first place, but it looks like there's an effort to even further weaken them.

I'm glad to see the president say, "This is a big issue to me."

Third, worried that the final bill may eliminate protections for reasonable retirement pensions that reflect years of contributions by workers and their employers.

And fourth of all, may include an anti-consumer provision eliminating existing laws against inappropriate collection practices when collecting from people who bounce a check.

Finally, the president is worried that some in the Congress will object to a reasonable provision that would end an abuse, which is the abuse of bankruptcy filings to avoid the legal consequences of violence, vandalism, and harassment, used to deny access to legal health services. And he mentions Senator Schumer's amendment.

The conclusion is, "I sincerely hope that a balanced, bipartisan bankruptcy bill will be completed this year, but I will not hesitate to veto unfair legislation that fails the test of balance" -- "fails the test of balance," "I will not hesitate to veto."

We have been waiting for a much stronger statement from the White House. We're going to distribute this letter to all of our colleagues.

I'll just simply say, one more time, this really -- the bankruptcy legislation, bankruptcy law is -- right now is really the safety net for middle-income people. And it's not the abuse, it's the people that are hit with not having a job. It's the people that are hit with a medical bill -- about 50 percent of the families. It's the people that go through a divorce. And to have this harsh bill, to take away basic protection, to put families in a situation where they may not be able to own their homes or their cars, where they may not be able to pay their bills, and where they may go completely under and can't rebuild their lives, and at the same time allow all of these exemptions and all of these benefits for wealthy people is really outrageous.

So we need this letter from the president, and we've been calling for this for some time now, Jerry. And I'm really pleased that the president is getting much more engaged with this issue, and we thank him.

Congressman Nadler?

REP. NADLER: Well, thank you. I'm Congressman Jerrold Nadler of New York. And I'm the ranking Democrat on the House Subcommittee on Commercial and Administrative Law, which has jurisdiction over bankruptcy legislation. And along with Congressman Conyers, I led the opposition to this bill in the House.

Let me start by thanking Senator Wellstone for his courageous stand in opposing this bill and in taking it on initially, at one point almost single-handedly, in the Senate. Without his opposition, I think this bill might have been passed by now. And now we have a good stand -- chance to either stop it or to amend it so it isn't as destructive of people's lives as it might otherwise be.

The president is to be commended for sending a forceful and clear message to those who are trying to write the special-interest legislation in secret, behind closed doors, out of the view of the American people and of most members of Congress. In fact, industry lobbyists are carrying around copies of the latest draft, even as the Republican majority has refused to share a copy with the Democratic minority in the House.

So the president's letter, which draws a number of clear lines in the sand, is important because it puts the negotiators on notice that in making their secret agreements, there are limits to what they can do for their favorite special-interest groups. Indeed, if there was ever an object lesson in the need for campaign finance reform, this bankruptcy bill is it. Various industries have, according to reports in many publications, including the Wall Street Journal, spent tens of millions of dollars seeking a multitude of special favors in this bill, everyone from pawnbrokers to credit card companies, to shopping center owners, to the bill collectors who Senator Hatch wants to exempt from the Fair Debt Collection Act. The list goes on and on and on.

Perhaps most outrageous are the efforts by Republican supporters of this bill to remove language that was passed by the Senate by 80 votes. That language would end the growing practice by people who illegally terrorize women and their health care providers to evade lawful penalties for their conduct by abusing the bankruptcy law. We may differ on the question of abortion, but no one should support physical assault and terrorism. And certainly Congress should not condone it by allowing wrongdoers to abuse bankruptcy in order to get off the hook. In this respect, the president's very strong statement is important and worthwhile.

Unless this legislation is drastically overhauled or killed, the loser in this process will be the American people. Average homeowners, middle class families who hit illness or hard times, and small businesses that need to reorganize will all suffer if these secret special-interest deals are put into law in the dead of night, with no scrutiny by the public and little scrutiny by their representatives in Congress. It's a bad way to legislate because the least fortunate, those who cannot afford high-priced lobbyists, will be the losers.

Let me add that, remember, most people who go into bankruptcy do so for one of three reasons: catastrophic health -- health catastrophe, divorce, or someone who has lost their job and can't get another job so quickly or a job that pays nearly as much. Notice that, contrary to the propaganda of ever-rising bankruptcy filings, a report just came out yesterday that bankruptcy filings have fallen a full 10 percent in the last year. And this is, I think, the second or third year in a row in which bankruptcy filings have fallen, without this legislation.

I find it particularly ironic that we could even consider legislation like this, that so badly squeezes middle- and low-income people at a time of real distress in their lives, at the same time, in the same Congress -- at least the same House, not yet the Senate, that passes a repeal of the estate tax on the wealthiest people in our society.

It's just mind-boggling.

But I am very grateful and gratified at the president's letter drawing a number of lines in the sand, and I hope it will operate to either eliminate or greatly modify this bill so it is not nearly as harmful as it presently stands to be.

SEN. WELLSTONE: We'll take questions. I want to just follow up on one thing Jerry said. I -- we have been, both of our offices have been working closely with the White House. Many other senators who couldn't be here today because there's a key Judiciary Committee -- Senator Leahy is there, Feingold's there -- dealing with capital punishment, and there's another hearing on pharmaceutical, cost of pharmaceutical drugs that Senator Kennedy is at. There are a number of other people that have been engaged in this. I'm going to bring this letter to the attention of everyone in our caucus in about a half an hour.

And one other thing I'm going to say, Jerry, and we open up for discussion, is I really believe, I truly believe that Democrats, much less Republicans, if this -- if we don't stop this legislation or dramatically change it for the better, are going to be -- I'm trying to figure out what -- are going to deeply regret their vote when, a year from now, we have stories of families that literally are going under because of a medical bill, Jerry, and they're going to lose their home, they're not going to be able to pay for the groceries, they're not going to be able to feed their kids, they can't make -- they have forced out of Chapter 7 and Chapter 13. There are going to be a lot of stories like that. And I want to tell you, people are going to really regret having supported this. This never should have gone through here the way it did, and -- hopefully. And we're now -- we're really in an all-out fight to stop it. And this letter from the president only can help, Jerry.

Let's open up for questions. Please.

Q Since you say you're in an all-out fight to stop it, how many senators do you think are with you on these points the president has outlined -- (off mike)?

SEN. WELLSTONE: I think there are -- actually, I've been really heartened -- I'm not trying to spin anything -- I've really been heartened that there are two different issues: how many, and then particular senators that feel strongly about it. Let me take the second part first.

There are a number of people who I think feel very strongly about some of the questions that the president has raised, and they are not about to give in on this. And that, of course, has to do with the shadow conference and what they can agree upon. There are individual senators who feel very strongly about some of these provisions, or lack of provisions.

In the more general front, there -- it was interesting when Tom Harkin said: "You know, this thing just sort of came up, and I didn't really have any idea the way in which -- how this affects so many average people. This is really an outrage." There are a number of people who are really, I think, becoming very engaged in this.

Just as an example, I was sitting next to Chris Dodd today during the hearing on prescription drug costs. And he said to me, "You know, I want to become very engaged in this." And he is very angry about the bill in its present form. And in our caucus, a number of people are starting to speak up that haven't spoken up before.

So I think that there is definitely some opposition. The Bartlett and Steel (sp) piece helped. We passed that around to everyone. The editorials in newspapers, the commentary, the articles that have been written by you all and others, have really helped us because frankly, the more people write about it and the more people actually look at what's being proposed and what the consequences will be for the lives of people in the country, the better off we are.

But the truth of the matter is we are in a -- this is a tough fight. And what we are trying to do, of course, is head off any kind of effort to reach some agreement and jam it into an unrelated conference report and just bring it here. Now, of course, I will -- on the Senate side -- Jerry can't do it on the House hold -- I'll hold that up for four or five days or as long as I can do so. But we would rather not get to that point. We'd like to see this -- we'd like to stop this bill or have a different bill.

REP. NADLER: And I'd just like to add one thing to that.

This bill went through the House and the Senate last year, after a several-year propaganda campaign with a lot of money behind it from the credit-card companies and the big banks. And it takes time after I don't think most people really understood the implications of what it would do -- and it has taken time to catch up with the lies, with the phony studies that were bought and paid for, that showed all kinds of nonsensical things. It was originally said that 25 percent of Chapter 7 filers could afford to repay a lot of their debts. Now, everybody concedes it about 3 percent, if that many.

And a year ago, people would have said 25 percent; now, nobody even maintains that. The truth is beginning to catch up. It takes time because the truth doesn't have the money behind it. And a lot of people, I suspect, wouldn't vote the same way they did a year ago. And we don't have any headcounts in the House because we haven't been whipping it, but I suspect the vote would be quite different if it occurred again.

SEN. WELLSTONE: There are really almost two -- there's the substance of this and the fact that the more people understand it, the more discussion there is about this in public, the better the chance we have of either stopping it or really insisting on a different bill.

There's another issue, which is process, and again, I just think it's an abuse of our legislative process to put this into an unrelated conference report, and we -- in every way I know how, I will raise Cain if that happens, and I hope it doesn't.

Q And on that point, what is the current strategy that you're hearing about the process, and how the --

SEN. WELLSTONE: Yeah. Well, I think right now, the current strategy -- I don't know how to be disingenuous, I don't want to be -- I think the current strategy right now is, and this is where the president's letter is why we wanted to do this quick press conference, because the president's letter really helps us. The current strategy is to have some of the people who are key to whether or not there can be an agreement, you know, among the conference committee to really hold out strong, and I think the president is sort of pinpointing some particular issues that are real important here. The whole question, again, of the -- the --

REP. NADLER: The abortion?

SEN. WELLSTONE: Well, the whole question of the Schumer amendment -- I was forgetting Chuck's name for a minute. The Schumer amendment is really key. The question of whether or not there can be more coercive practices in collection and whether there is a weakening of consumer protection is key. The whole question of the homestead exemption is very, very important. A lot of people are drawing a line on that.

So the more we can make sure that people who are on that conference committee hold the line on those questions, the better off we are. The more we can raise questions about this being put in an unrelated conference report, the better off we are. I almost think the most important thing of all is just the kind of publicity that's really starting to come out helps. And time is -- we'll just have to see. We'll just -- anything we -- every way that we can try to stop this, we're going to do so.

As I say, this is the president's letter. Next week we'll have a lot of consumers and people that will be affected by this come into Washington, D.C. and talking about how this will affect them. We're going to keep turning up the heat until we do everything we can, and we're determined to try to win.

I think if this went through, it would be one of the worst -- I think it would be one of the biggest -- biggest -- I'm trying to think of the right way to say it. I think it would --

REP. NADLER: Shaftings.

SEN. WELLSTONE: Shaftings -- is that right? -- of ordinary citizens that's taken place for a long time in this Congress, and believe me, there have been some others. But this is about the worst.

Q Are you finding yourself, Senator, at odds with Senator Daschle, Senator Torricelli?

SEN. WELLSTONE: Yeah.

Q And how are you handling that? And how's that playing out in the caucus?

SEN. WELLSTONE: I think the answer is yes -- the answer to the first question. And, you know, there's -- but it's okay, I mean, in terms -- you know, it's just there are different viewpoints, and we're okay in the caucus. But I think more people are speaking up now in opposition than ever have before, and I think there are more Democrats that are questioning this than before, and that's good. And I hope that's the case in the Republican side too. This really --

Q Do you think the numbers that have been released a few days ago, are going to have any effect on the legislation?

SEN. WELLSTONE: Well -- do you want to go first?

REP. NADLER: Yeah, well, that remains to be seen. We obviously hope so. I mean, the whole propaganda campaign for this bill -- remember the whole rationale for this bill is that there's a huge increase in bankruptcy filings, in spite of the prosperous era, that can be explained only, allegedly -- this isn't true -- but they said it could be explained only by the fact that social mores have changed, the stigma is no longer associated with it and people are filing for bankruptcy as a first option. It's almost a financial planning instead of as a last resort, and that's why we have to crack down on these abuses. People who can afford to be bailed out of their debts are abusing the system by filing for bankruptcy.

Now, the fact that -- well, first of all, the fact is that -- I mean, that is simply not true. I mean, the damning statistic on that is that in 1983, before the so-called rise started, the average Chapter 7 filer had a debt-to-income ratio of .74; that is the average Chapter 7 filer owed in debts about 74 percent of his annual income. Today, or at least last year, the latest figures we have, the average 7 filer is 1.24, which means he owes 124 percent of his income in debts, which means people are more reluctant. When they accumulate 75 percent of their income in debts, they still don't file, on average, till they get to another -- to 124 percent, which is -- so they're much more reluctant to file, they're much more desperate before they file. So it just totally knocks this into a cocked hat.

And the fact that in the last couple of years, bankruptcy filings have been going down -- 10 percent in the last year, which is a very substantial decrease -- should knock the argument out from this.

But I suspect that a lot of the motivation of this has nothing to do with this argument. It's simply a grab by the credit card companies and some of the banks for -- to squeeze money out of people. And they'll invent some other argument.

But for anybody who's looking at this in Congress, to see that the alleged reason, the continuing increase and substantial increase in bankruptcy filings in fact has been reversed without this legislation and gone down 10 percent, that should knock the whole thing out. And we'll see if it does.

SEN. WELLSTONE: I think that I -- I wished I could disagree with the last point that Jerry made as to what's really driving this, but I maybe it's the teacher in me, my own background. But I do believe I just read this weekend a book by Elizabeth Warren -- some of you have actually talked with her -- called "The Fragile Middle Class." (Chuckling.) I mean, in some ways, to be honest, I'm learning more about this issue, as I found myself in the middle of this fight. And I do think that the latest data, the studies that are coming out, the letters that are pouring in here from bankruptcy professors, you know, law professors all around the country, Democrats, Republicans alike, can only help.

The irony of it is -- and I just hope it's not a bitter irony, but the irony right now -- we could try and make sure it's not a bitter irony -- is that I also think that's what makes some folks here in such a hurry to get -- jam this into a conference report and get it done, because time's on our side not only in terms of the legislative process, but time's on our side in terms of public knowledge about this. The more people know and the more discussion there is, the better off we are.

Q I know you object to the overall contents, but do you object to anything specifically in attaching it to the satellite bill, the satellite bill -- (off mike)?

SEN. WELLSTONE: I mean, I just think it's an abuse of the process to put it into any unrelated conference report, period.

REP. NADLER: We just heard, by the way, a rumor -- I don't know if you've heard it -- but that a totally unconnected bill dealing with amphetamines is going to be put into the bankruptcy bill, which will then be put into one of these unrelated conferences.

STAFF (?): That's already in there.

REP. NADLER: It's already in there.

This is a bill that's received no hearing, no markup, no discussion, no debate, at least in the House.

Q What is the concern over the homestead exemptions?

I'm wondering where the cap is now and what's being proposed under the

SEN. WELLSTONE: Well -- and Jerry's a little bit more of the expert than I am. But the latest -- and again, it's a little bit hard to -- this is not only kind of a fast-moving target, but in a way it's an invisible target. I mean, you just don't even -- you know, we're not -- no one is really letting us in, or, for that matter, very many people in as to what the final, quote, "deal" will be. But one of the proposals that's out there -- and for the last week I've been working with a bunch of people to talk to different Democrats who are in a key position on this to sort of bolster them and say "Don't agree to this, this is outrageous."

One of the, quote, "reforms" was "Okay, here's what we'll do. Yes, we knocked out the Kohl amendment. But what we'll do instead is we'll say that you had to have owned a home in Texas or Florida for at least -- for two years in order to get this exemption, in order to shield these assets." And our -- now what the -- again, I've seen some of Elizabeth Warren's (sp) memos, but we've now been in touch with people around the country who are pouring in the memos, you know, who know this. And they're saying, "Wait a minute. Anybody with their kind of economic resources can hire a lawyer and drag it out for two years." I mean, that's easy enough for people to handle that. And it's just -- so, in a sense, if you're going to let this continue to be the case in at least five states, then this is unsatisfactory. I mean, this is unacceptable. No way.

REP. NADLER: How do you justify a bill whose stated purpose is to crack down on people who abuse the law in order to stiff their creditors? That's the stated purpose of the bill. How do you allow a bill like that, and in which you're going to crack down in a lot of different ways, you're going to hurt a lot of people who aren't abusers, and still allow an unlimited exemption, an unlimited homestead exemption for rich people? So you're going to really stick it to the middle and low-income people, but the rich people, as long as they have a good attorney who tells them what to do, can shield everything from their creditors. That's a real abuse.

SEN. WELLSTONE: If they don't want to give that up -- so far they have not been willing to give up that exemption. And so far, frankly, that's one of the things that has helped us, I think, in blocking any kind of an agreement, you know, with a final, quote, "conference report".

REP. NADLER: And that's one of the things that the president specifically mentions is not acceptable.

SEN. WELLSTONE: Yep. It's a good letter.

Well, listen, thank you very much. And, you know, I'm going to be calling the White House to thank the president today, and then we're going to be staying active.

Thanks, Jerry.

REP. NADLER: Thank you, Paul.

END

LOAD-DATE: June 14, 2000

Document 12 of 18.


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