February 8, 2001 Contact: Jeanne Lopatto, 202/224-5225
Good morning, and welcome to today's hearing on Bankruptcy Reform. I would first like to thank all of our witnesses for their time and cooperation. I hope that this hearing will serve to reinforce for all of us, especially the new members of the Committee, the pressing need for bankruptcy reform.
Of course, bankruptcy reform is by no means a new issue to this Committee or to the Congress. In fact, the Senate has literally been engaged in the process of deliberating on this issue for years, with numerous hearings, markups and votes -- and we should have, these are real reforms, needed reforms and compromises have made this product one that was supported by both houses of Congress with overwhelming bipartisan -- and veto-proof -- margins.
Following extensive studies by the National Bankruptcy Review Commission, a comprehensive bankruptcy reform bill was developed by Senators Grassley and Durbin in the Subcommittee on Administrative Oversight and the Courts in 1997. We marked up and reported that bill out of Committee in May of 1998. In September of 1998, the Senate passed bankruptcy reform by a vote of 97 to 1. This overwhelming Senate vote in favor of bankruptcy reform was followed by the appointment of conferees, negotiations with the house, and in October of 1998, a 300 to 125 House vote for the Conference Report. Although the motion to proceed to consideration of the conference report was agreed to in the Senate by a strong vote of 94 to 2, the Senate ran out of time for a vote on final passage before the end of the Congress.
So, in February of 1999, Representative George Gekas in the House introduced bankruptcy reform again, which passed out of the House in May of 1999 by another overwhelming vote of 313 to 108. Meanwhile, in the Senate, Senator Grassley worked together with Senator Torricelli, and in March of 1999, once again introduced bankruptcy reform legislation, which was again referred to the Judiciary Committee. The Judiciary Committee again marked up the bill and in May of 1999, we favorably reported it out of Committee to the floor. In February of last year, the reform legislation passed the Senate by an another impressive margin of 83 to 14. The Senate requested a conference, but the objection of a single member from the other side of the aisle blocked the appointment of conferees. As a result, we had to turn to an informal conference process with the House of Representatives, but fortunately, this process was bipartisan. With a great deal of dedication of members on both sides of the aisle, we reached a compromise agreement on well over 400 pages of bankruptcy reform legislation, and on all but two issues among the informal Conferees. In October of 2000, the House passed the bankruptcy reform Conference Report, and in December, the Senate passed it by yet another overwhelming vote of 70 to 28. Later that month, the President pocket-vetoed the bankruptcy reform legislation.
I provide this elaborate procedural history to make two points. First, the issue of bankruptcy reform is not a new one – it is quite familiar to all of us. Many of our witnesses today have testified before Congress on this issue. We have studied it, held hearings on it, compromised on it, and come to resolution on it with veto-proof margins, in both houses, time and again. An elaborate record that sets out the issues, documents the debate and makes the compelling case for reform is available to anyone who has the interest in giving it their attention. This leads me to my second point. Eventually, the process of deliberation needs to come to a close, and the will of the Congress needs to be exercised. As history has demonstrated repeatedly, bankruptcy reform is clearly the will of the Congress, and much needed for all American consumers.
I would like to take a moment to thank Senators Grassley and Sessions for their hard work and dedication to this important reform legislation over the past years. Also, I would like to thank the Committee's Ranking Democrat Member, Senator Leahy, along with Senators Biden and Durbin for their leadership in the area of consumer bankruptcy reform, as well as the other members of the Committee, both current and former, who have worked so hard on this important issue.
I am feeling somewhat like a broken record, but I feel compelled to state once again that we cannot afford to continue down the harmful path provided by current law, because abusive bankruptcy filings are harmful to all of us. Bankruptcy ends up costing all Americans in an amount that has been conservatively estimated at anywhere from $400 to $550 per household per year. And, contrary to what critics of reform would like us to believe, when someone files for bankruptcy, the negative repercussions go far beyond credit card companies and big businesses to whom money is owed but is not paid. The costs are passed on to all honest consumers who honor their commitment and pay their bills. This is an issue that profoundly impacts the average American -- bankruptcies end up hurting people who own or work in small businesses, who are members of credit unions, and spouses and children who are entitled to child support. We should preserve bankruptcy to provide a fresh start – but only for those who truly don't have the means to pay some of their debts as promised. I look forward to the testimony today, because I believe it will highlight some of the abuses that the current system allows to take place, and will address one more time the pressing need for this consumer bankruptcy reform, which more importantly provides many new consumer protections.
We are fortunate to be hearing testimony from Judge Edward Becker, Chief Judge of the United States Court of Appeals for the Third Circuit, Judge Randall Newsome of the United States Bankruptcy Court for the Northern District of California, Phillip Strauss, Principal Attorney from the San Francisco Department of Child Support Services and Brady Williamson, the former Chair of the National Bankruptcy Review Commission. We are also fortunate to be hearing from Ken Beine, president of Shoreline Credit Union in Two Rivers, Wisconsin, Dr. Robert Manning, a Senior Research Fellow from the University of Houston Law Center, Dean Sheaffer, vice president and director of credit for Boscov's department stores in Pennsylvania, Maria Vullo, an attorney with the firm of Paul Weiss, and Todd Zywicki, Assistant Professor of Law at George Mason University. I appreciate all of you appearing today, and look forward to your testimony.
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