OPPOSITION TO THE CONFERENCE REPORT ON THE BANKRUPTCY REFORM BILL -- HON. JOHN D. DINGELL (Extensions of Remarks - July 29, 2002)

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HON. JOHN D. DINGELL OF MICHIGAN IN THE HOUSE OF REPRESENTATIVES Friday, July 26, 2002

Mr. DINGELL. Mr. Speaker, I rise in opposition to the Conference Report on the Bankruptcy Reform bill (H.R. 333). The goal of the legislation, to ensure that debt that can be repaid is indeed repaid, is meritorious. However, the devil is in the details and many of these details are particularly devilish. This legislation will neither prevent more bankruptcies from occurring nor protect consumers. But it will sanction the continued predatory and abusive lending practices of the credit card industry, which has pressed hard for this legislation.

It is important to note that there is no consumer bankruptcy crisis in America. Despite the rascality perpetrated by the credit card industry, including the solicitation of minors, seniors and pets, personal bankruptcies are not increasing. In fact, even as the average household debt burden has continued to climb over the past few years, bankruptcies have dropped by around fifteen percent.

The only bankruptcy crisis we have in America is from companies like Enron and WorldCom. These corporations engaged in fraudulent accounting practices and then filed for bankruptcy to protect themselves from their creditors. These companies destroyed the lives and life savings of not only their employees, but investors everywhere. This conference report would not do anything to protect investors and employees from corporate wrongdoing such as this.

It is important to note, however, that this legislation will protect the large banks and other financial institutions that engage in predatory lending practices. This is wrong. Studies show that irresponsible and overly aggressive lending practices were behind the high level of bankruptcies in the mid 1990's. However, the industry has not learned its lesson. Even as the industry continues to experience high profits, it refuses to take responsibility for its poor lending practices and increases its marketing and credit extensions. Two years ago, the credit card industry increased its mail solicitations by about fourteen percent. Additionally, total credit extended, which includes unused credit lines and debt incurred by consumers, has approached three trillion dollars for the first time ever.

This outrageous behavior should not be rewarded. Unfortunately, the credit card industry has succeeded in winning enough support for a bill that encourages predatory lending at the expense of our most at risk citizens. Although a few helpful provisions were added to the bill, such as language to ensure that persons who use violence against clinics cannot shield their assets by filing for bankruptcy, on the whole, the bill hurts the poor and middle class. Americans deserve better, especially at a time when the economy has slowed and people's jobs are in jeopardy. As such, I urge all of my colleagues to oppose this wrongheaded piece of legislation.
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