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The House in Committee of the Whole House on the State of the Union had under consideration the bill (H.R. 333) to amend title 11, United States Code, and for other purposes:

• Mr. POMEROY. Mr. Chairman, I rise in reluctant support of H.R. 333, the Bankruptcy Abuse Prevention and Consumer Protection Act of 2001. I share my colleagues' belief that personal bankruptcy filings impose a cost on all of us, and that debtors should not be allowed to use bankruptcy as a financial planning device. I also believe, however, that this legislation does not adequately address an important factor in bankruptcy reform--the sometimes predatory practices of creditors selling unsecured debt.

• Mr. Chairman, there is little dispute that the increase in bankruptcy filings represents a disturbing trend that must be addressed. When debtors are able to ``game the system'' and walk away from the consequences, the cost is transferred to creditors, and ultimately, to all American taxpayers. Congress can and should restore integrity to the bankruptcy system while ensuring that the system is fair to debtors and creditors. H.R. 333 would make several appropriate adjustments toward that end.

• While H.R. 333 does make important adjustments to the bankruptcy system, I believe that it fails to address several important issues. First and foremost, H.R. 333 provides inadequate relief for consumers from the misleading and often intentionally deceptive practices of some credit card companies. While there are many responsible creditors in this country, those that engage in predatory lending cause considerable harm, often to unsophisticated and moderate-income debtors. Such companies have become more aggressive in selling unsecured credit, using tactics like hidden fees and inadequate disclosure statements. Not surprisingly, according to the Office of the Comptroller of Currency, the amount of revolving credit outstanding (including credit card debt) increased seven-fold during 1980 and 1995. Between 1993 and 1997, during the sharpest increases in the bankruptcy filings, the amount of credit card debt doubled. It is simply illogical to me to address bankruptcy reform without also examining the marketing practices that lead to high rates of consumer debt.

• I am also concerned that this legislation includes an extraneous provision that would prevent U.S. courts from enforcing certain civil judgments rendered in foreign courts. This provision, Section 1310, is inconsistent with U.S. trade policy, interferes with state insurance regulation, and unnecessarily intrudes into private business dealings.

• Mr. Chairman, this provision was offered to protect a number of American investors from liability for monetary judgment imposed by British courts. The New York State Supreme Court for New York County and the U.S. District Court in Northern Illinois both found these judgments to be valid. The American investors are currently appealing these findings to, respectively, the Appellate Division of the New York State Supreme Court and the Seventh Circuit Court of Appeals. As the cases are currently pending before U.S. courts, I believe that Congressional interference is unwarranted. Eight U.S. circuit courts, including the Seventh Circuit, have previously held that the original dispute between these investors and Lloyd's should be heard in English courts.

• In addition, this provision, if enacted, would have serious repercussions for international trade policy and could invite retaliation by our trading partners. When U.S. businesses enter into international contracts, they often negotiate for U.S. courts to have jurisdiction over disputes that may arise. We cannot reasonably expect other countries to respect the judgments of U.S. courts if we override the decisions of foreign courts by legislative fiat. In fact, the U.S. State Department has said that this provision would interfere with its efforts to negotiate a new international convention on the enforcement of civil judgments.

• The National Association of Insurance Commissioners (NAIC) opposes this provision as an unwarranted intrusion on the traditional authority of states to regulate insurance. The NAIC is specifically concerned about the effect this provision could have on the large number of American insurance companies that depend on foreign insurers for insurance and reinsurance coverage.

• Mr. Chairman, as I stated earlier, I do support reform of the bankruptcy system, and will cast my vote in favor of this legislation. I am disappointed, however, that this legislation does not do a better job of addressing the

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  concerns I have raised. I am hopeful that those concerns may yet be satisfactorily addressed during the 107th Congress, and I look forward to working with my colleagues on both sides of the aisle to bring that about.

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