Dianne Feinstein

Mrs. FEINSTEIN

Mrs. FEINSTEIN. Mr. President. Today, I am introducing legislation to allow States, at their option, to enroll parents in the State Children's Health Insurance Program, known as S- CHIP. This bill could provide insurance to 2.7 million uninsured parents nationwide and 356,000 parents in California at a time when the uninsured rate in the country and in California continues to rise. Congress has appropriated a total of $17.2 billion for SCHIP for Fiscal Years 1998, 1999, and 2000, or about $4.3 billion for each Fiscal Year. SCHIP is a low-cost health insurance program for low-income children up to age 19 that Congress created in the Balanced Budget Act of 1997. After three years, SCHIP covers approximately two million children across the country, out of the three to four million children estimated to be eligible. Congress created SCHIP as a way to provide affordable health insurance to uninsured children in families that cannot afford to buy private insurance. States can choose from three options when designing their SCHIP program: 1. expansion of their current Medicaid program; 2. creation of a separate State insurance program; or 3. a combination of both approaches. California's SCHIP is known as the Healthy Families program and is set up as a public-private program rather than a Medicaid expansion. Healthy Families allows California families to use federal and State SCHIP funds to purchase private managed care insurance for their children. Under the federal law, States generally cover children in families with incomes up to 200 percent of poverty, although States can go higher if their Medicaid eligibility was higher than that when SCHIP was enacted in 1997 or through waivers by the Department of Health and Human Services. In California, eligibility was raised to 250 percent of poverty in November 1999, which increased the number of eligible children by 129,000. Basic benefits in the California SCHIP program include inpatient and outpatient hospital services, surgical and medical services, lab and x- ray services, and well-baby and well-child care, including immunizations. Additional services which States are encouraged to provide, and which California has elected to include, are prescription drugs and mental health, vision, hearing, dental, and preventive care services such as prenatal care and routine physical examinations. In California, enrollees pay a $5.00 co-payment per visit which generally applies to inpatient services, selected outpatient services, and various other health care services. The United States faces a serious health care crisis that continues to grow as more and more people go without insurance. The U.S. has seen an increase in the uninsured by nearly five million since 1994. Currently, 42 million people, or 17 percent, of the non- elderly population in the country are uninsured. In California, 22 percent, or 6.8 million, of the nonelderly are uninsured. A study cited in the May 2000 California Journal found that as many as 2,333 Californians lose health insurance every day. A May 29, 2000 San Jose Mercury article cited California's emergency room doctors who ``estimate that anywhere from 20 percent to 40 percent of their walk-in patients have no health coverage.'' Among the 1.85 million uninsured children in California, nearly two- thirds or 1.3 million are eligible for Medicaid or SCHIP, called Healthy Families in the state, according to the University of California at Los Angeles. Last year, we passed legislation enabling California to keep approximately $350 million of the $600 million unspent SCHIP funds. My state and others were at risk of losing funds because the law required states to use all their funds in three years and time was running out on the 1998 funds. Since my state and others still have these funds, as well as funds allotted in fiscal years 1999, 2000 and 2001, enrolling parents and more children could be a good way to increase enrollment. The bill we are introducing today would gives States the option to expand SCHIP coverage to parents whose children are eligible for the program at whatever income eligibility level the state sets. In my State, that would mean a family of four earning up to $42,625 would be eligible for coverage. This bill would retain current funding formulas, State allotments, benefits, eligibility rules, and cost-sharing requirements. The only change is to allow States the option to enroll parents. An SCHIP expansion should be accomplished without substituting SCHIP coverage for private insurance or other public health insurance that parents might already have. The current SCHIP law requires that State plans include adequate provisions preventing substitution and my bill retains that. For example, many States require that an enrollee be uninsured before he or she is eligible for the program. This bill does not change that requirement. This bill is important for several reasons. More than 75 percent of uninsured children live with parents who are uninsured. Many experts say that by covering parents of uninsured children we can actually cover more children. If an entire family is enrolled in a plan and seeing the same doctors, in other words, if the care is convenient for the whole family, all the members of the family are more likely to be insured and to stay healthy. This is a key reason for this legislation, bringing in more children by targeting the whole family. Private health insurance in the commercial market can be very expensive. The average annual cost of family coverage in private health plans is around $6,000. California has some of the lowest-priced health insurance, yet the State ranks fourth in uninsured. In California, high housing costs, high gas and electricity prices, expensive commutes, and a high cost-of-living make it difficult for many California families to buy health insurance. Over eight in ten of uninsured Californians are working, but they do not earn enough to buy private insurance. SCHIP is a practical and attractive alternative. Many low-income people work for employers who do not offer health insurance. In fact, forty percent of California small businesses, those employing between three and 50 employees, do not offer health insurance, according to a Kaiser Family Foundation study in June 2000. Californians in 1999 were 6.6 percentage points less likely to receive health insurance through employers than the average American, 62.8 percent versus 69.4 percent, according to UCLA experts. We need to give hard-working, lower income American families affordable, comprehensive health insurance, and this bill does that. The California Medical Association and Alliance of Catholic Health Care agree with us and support this legislation. I urge my colleagues to join me in supporting and passing this bill. By giving States the option to cover parents--whole families--we can reduce the number of uninsured, encourage the enrollment of more children, and help keep people healthy by maximizing this valuable, but currently under-utilized program.

Mrs. FEINSTEIN. Mr. President, today, Senator Olympia Snowe and I are introducing a bill to guarantee that the decision of how long a patient stays in the hospital is left to the attending physician. Our legislation would require health insurance plans to cover the length of hospital stay for any procedure or illness as determined by the physician to be medically appropriate, in consultation with the patient. The bill is endorsed by the American Medical Association, the American College of Surgeons, the American College of Obstetricians and Gynecologists, and the American Psychological Association. We are introducing this bill because many people, patients and physicians, have told us that HMOs set limits on hospital stays that are shorter than what the attending physicians believe are medically necessary. In my view, only the physician who is taking care of the patient understands the patient's full medical history and the patient's medical condition and needs. Every patient's condition and course of illness varies. Patients respond differently to treatments. Complications arise. The doctor should decide when patients are medically ready to be discharged, not an insurance plan. The American Medical Association has developed patient-based discharge criteria which say: ``Patients should not be discharged from the hospital when their disease or symptoms cannot be adequately treated or monitored in the discharge setting.'' A number of physicians have shared with me their great frustration with the health care climate, in which they feel they spend too much of time trying to get permission and justify their decisions on medical necessity to insurance companies. A California pediatrician told me of a child with very bad asthma. The insurance plan authorized 3 days in the hospital; the doctor wanted 4-5 days. He told me about a baby with infant botulism (poisoning), a baby with a toxin that had spread from the intestine to the nervous system so that the child could not breathe. The doctor thought a 10-14 day hospital stay was medically necessary for the baby; the insurance plan insisted on one week. A California neurologist told my staff about a seven-year-old girl with an ear infection and a fever who went to the doctor. When her illness developed into pneumonia, she was admitted to the hospital. After two days she was sent home, but she then returned to the hospital three times because her insurance plan only covered a certain number of days. The third time she returned she had meningitis, which can be life threatening. The doctor said that if this girl had stayed in the hospital the first time for five to seven days, the antibiotics would have killed the infection and the meningitis would never have developed. Another California physician told my office about a patient who needed total hip replacement because her hip had failed. The doctor believed a seven-day stay was warranted; the plan would only authorize five. A Chico, California, maternity ward nurse put it this way: ``People's treatment depends on the type of insurance they have rather than what's best for them.'' A Laguna Niguel, California woman, Gwen Placko, wrote this to me: ``. . . doctors have become mere employees of for-profit insurance companies. They are no longer captains of their own `ships' so to speak. . . Only doctors should be the ones to make decisions for the direct treatment and benefit of their patients.'' Physicians say they have to wage a battle with insurance companies to give patients the hospital care they need and to justify their decisions about patient care. A study by the American Academy of Neurology found that the Milliman and Robertson guidelines used by many insurance companies on length of stay are ``extraordinarily short in comparison to a large National Library of Medicine database . .. And that [the guidelines] do not relate to anything resembling the average hospital patient or attending physician. . . .'' The neurologists found that these guidelines were ``statistically developed'' and not scientifically sound or clinically relevant. The arbitrary limits HMOs and insurance plans have set are resulting in unintended consequences. Some 7 in 10 physicians said that in dealing with managed care plans, they have exaggerated the severity of a patient's condition to ``prevent him or her from being sent home from a hospital prematurely.'' The American College of Surgeons said it all when this prestigious organization wrote: ``We believe very strongly that any health care system or plan that removes the surgeon and the patient from the medical decision-making process only undermines the quality of that patient's care and his or her health and well being. . . . specifically, single numbers [of days] cannot and should not be used to represent a length of stay for a given procedure'', April 24, 1997. ACS wrote, ``We believe very strongly that any health care system or plan that removes the surgeon and the patient from the medical decision making process only undermines the quality of that patient's care and his or her health and well being.'' The American Medical Association wrote, ``We are gratified that this bill would promote the fundamental concept, which the AMA has always endorsed, that medical decisions should be made by patients and their physicians, rather than by insurers or legislators. . . We appreciate your initiative and ongoing efforts to protect patients by ensuring that physicians may identify medically appropriate lengths of stay, unfettered by third party payers.'' The American Psychological Association wrote me, ``We are pleased to support this legislation, which will require all health plans to follow the best judgment of the patient and attending provider when determining length of stay for inpatient treatment.'' Americans are disenchanted with the health insurance system in this country, as HMO hassles never seem to end and physicians are effectively overruled by insurance companies. Doctors and patients feel that patient care is compromised in a climate in which anonymous insurance clerks interfere with medical decision- making. This bill is one step toward returning medical decision- making to those medical professionals trained to make medical decisions. To summarize, the Hospital Length of Stay Act of 2001: Requires plans to cover hospital lengths of stay for all illnesses and conditions as determined by the physician, in consultation with the patient, to be medically appropriate; Prohibits plans from requiring providers (physicians) to obtain a plan's prior authorization for a hospital length of stay; Prohibits plans from denying eligibility or renewal for the purpose of avoiding these requirements; Prohibits plans from penalizing or otherwise reducing or limiting reimbursement of the attending physician because the physician provided care in accordance with the requirements of the bill; and Prohibits plans from providing monetary or other incentives to induce a physician to provide care inconsistent with these requirements. It includes language clarifying that: nothing in the bill requires individuals to stay in the hospital for a fixed period of time for any procedure; plans may require copayments but copayments for a hospital stay determined by the physician cannot exceed copayments for any preceding portion of the stay. It does not pre-empt state laws that provide greater protection. It applies to private insurance plans, Medicare, Medicaid, Medigap, federal employees' plans, Children's Health Insurance Plan, the Indian Health Service.

Mrs. FEINSTEIN

Mrs. FEINSTEIN. Mr. President. Today, I am introducing legislation to allow States, at their option, to enroll parents in the State Children's Health Insurance Program, known as S- CHIP. This bill could provide insurance to 2.7 million uninsured parents nationwide and 356,000 parents in California at a time when the uninsured rate in the country and in California continues to rise. Congress has appropriated a total of $17.2 billion for SCHIP for Fiscal Years 1998, 1999, and 2000, or about $4.3 billion for each Fiscal Year. SCHIP is a low-cost health insurance program for low-income children up to age 19 that Congress created in the Balanced Budget Act of 1997. After three years, SCHIP covers approximately two million children across the country, out of the three to four million children estimated to be eligible. Congress created SCHIP as a way to provide affordable health insurance to uninsured children in families that cannot afford to buy private insurance. States can choose from three options when designing their SCHIP program: 1. expansion of their current Medicaid program; 2. creation of a separate State insurance program; or 3. a combination of both approaches. California's SCHIP is known as the Healthy Families program and is set up as a public-private program rather than a Medicaid expansion. Healthy Families allows California families to use federal and State SCHIP funds to purchase private managed care insurance for their children. Under the federal law, States generally cover children in families with incomes up to 200 percent of poverty, although States can go higher if their Medicaid eligibility was higher than that when SCHIP was enacted in 1997 or through waivers by the Department of Health and Human Services. In California, eligibility was raised to 250 percent of poverty in November 1999, which increased the number of eligible children by 129,000. Basic benefits in the California SCHIP program include inpatient and outpatient hospital services, surgical and medical services, lab and x- ray services, and well-baby and well-child care, including immunizations. Additional services which States are encouraged to provide, and which California has elected to include, are prescription drugs and mental health, vision, hearing, dental, and preventive care services such as prenatal care and routine physical examinations. In California, enrollees pay a $5.00 co-payment per visit which generally applies to inpatient services, selected outpatient services, and various other health care services. The United States faces a serious health care crisis that continues to grow as more and more people go without insurance. The U.S. has seen an increase in the uninsured by nearly five million since 1994. Currently, 42 million people, or 17 percent, of the non- elderly population in the country are uninsured. In California, 22 percent, or 6.8 million, of the nonelderly are uninsured. A study cited in the May 2000 California Journal found that as many as 2,333 Californians lose health insurance every day. A May 29, 2000 San Jose Mercury article cited California's emergency room doctors who ``estimate that anywhere from 20 percent to 40 percent of their walk-in patients have no health coverage.'' Among the 1.85 million uninsured children in California, nearly two- thirds or 1.3 million are eligible for Medicaid or SCHIP, called Healthy Families in the state, according to the University of California at Los Angeles. Last year, we passed legislation enabling California to keep approximately $350 million of the $600 million unspent SCHIP funds. My state and others were at risk of losing funds because the law required states to use all their funds in three years and time was running out on the 1998 funds. Since my state and others still have these funds, as well as funds allotted in fiscal years 1999, 2000 and 2001, enrolling parents and more children could be a good way to increase enrollment. The bill we are introducing today would gives States the option to expand SCHIP coverage to parents whose children are eligible for the program at whatever income eligibility level the state sets. In my State, that would mean a family of four earning up to $42,625 would be eligible for coverage. This bill would retain current funding formulas, State allotments, benefits, eligibility rules, and cost-sharing requirements. The only change is to allow States the option to enroll parents. An SCHIP expansion should be accomplished without substituting SCHIP coverage for private insurance or other public health insurance that parents might already have. The current SCHIP law requires that State plans include adequate provisions preventing substitution and my bill retains that. For example, many States require that an enrollee be uninsured before he or she is eligible for the program. This bill does not change that requirement. This bill is important for several reasons. More than 75 percent of uninsured children live with parents who are uninsured. Many experts say that by covering parents of uninsured children we can actually cover more children. If an entire family is enrolled in a plan and seeing the same doctors, in other words, if the care is convenient for the whole family, all the members of the family are more likely to be insured and to stay healthy. This is a key reason for this legislation, bringing in more children by targeting the whole family. Private health insurance in the commercial market can be very expensive. The average annual cost of family coverage in private health plans is around $6,000. California has some of the lowest-priced health insurance, yet the State ranks fourth in uninsured. In California, high housing costs, high gas and electricity prices, expensive commutes, and a high cost-of-living make it difficult for many California families to buy health insurance. Over eight in ten of uninsured Californians are working, but they do not earn enough to buy private insurance. SCHIP is a practical and attractive alternative. Many low-income people work for employers who do not offer health insurance. In fact, forty percent of California small businesses, those employing between three and 50 employees, do not offer health insurance, according to a Kaiser Family Foundation study in June 2000. Californians in 1999 were 6.6 percentage points less likely to receive health insurance through employers than the average American, 62.8 percent versus 69.4 percent, according to UCLA experts. We need to give hard-working, lower income American families affordable, comprehensive health insurance, and this bill does that. The California Medical Association and Alliance of Catholic Health Care agree with us and support this legislation. I urge my colleagues to join me in supporting and passing this bill. By giving States the option to cover parents--whole families--we can reduce the number of uninsured, encourage the enrollment of more children, and help keep people healthy by maximizing this valuable, but currently under-utilized program.

Mrs. FEINSTEIN

Mrs. FEINSTEIN. I asked unanimous consent that the time I have used be charged to the Senator from New Mexico, along with any time I might have remaining so that he might use it in support of the amendment and, if it is agreeable, that Senator Jeffords might follow me.

Mrs. FEINSTEIN. I thank the Chair and thank the distinguished author of the bill. Madam President, I want to begin by thanking both Senators Feingold and McCain not only for this bill but also for their many forays out in the countryside where I think they have really brought home the cause of campaign spending reform to the American people. I have had the privilege, as have you, of voting for this bill a number of times. I will vote for it again. I will vote for it without amendments, and I will probably vote for it with amendments. This bill addresses a significant problem, and that is soft money. By eliminating soft money from federal campaigns, I think S. 27 cures the most dastardly problem with the way campaigns are currently conducted. I think the amendment that Senator Snowe and Senator Jeffords have added to the campaign reform bill makes it an even better bill. So we have a good bill before us. Madam President, a while back, when Senator Alan Simpson was a Member of the Senate, and we had just concluded a meeting of the Judiciary Subcommittee on Immigration--it was a Friday--I said to Senator Simpson: Are you going home? He said: Yes, I'm going home to Wyoming to campaign. I said: Well, you have no notice to set up an event. And he said: Well, I just go to Cody, and I go and have lunch at the grill, and I see everyone in Cody. So that is the way I campaign. It brought home to me how different campaigns are across this great land. In California, a State with more people than 21 other States combined, you cannot just go home and, without making plans, go into the corner drugstore and campaign. Campaigns are, indeed, very costly. I have been involved in four statewide campaigns in the last decade. I have raised well over $50 million: $23 million in 1990, in a race for Governor; $8 million in 1992, in my first race for the Senate; and 2 years later, $14 million in the 1994 election. My opponent in that election spent $30 million of his personal wealth in his attempt to defeat me. In this past race, just concluded, I raised $9 million. Now, whereas I support McCain-Feingold as it is, I must also comment that the Domenici amendment we are now considering has a good deal to recommend in it. Let me talk about my own experience, from the 1994 election I just mentioned. It was February. It was raining outside. I turned on the television to watch the Olympics, and what did I see? I saw a full spot--in February--by my opponent--a minute spot in the middle of the Olympics. My heart dropped into my heels, and I knew at that instant that I was in for a grueling campaign. In fact, my opponent was able to have what we call a maximum buy on television for all but 2 weeks of the remaining part of the year because he was able, quite simply, to write a check to pay for that advertising. You don't have to hire a certified public accountant. You don't have to hire fundraisers. You don't have to spend tens of thousands of dollars on computers and so on and so forth. It is a very different campaign if a person has extraordinary private wealth. That is where the Domenici amendment becomes important in all of this because it aims to level the playing field. In that 1994 campaign, I saw how important trying to level the playing field is. The fundraising demands I faced were extraordinary. I am a pretty good fundraiser. As it turned out, I simply couldn't keep up with my opponent's spending. I couldn't keep up with $30 million of personal wealth. I could raise about $14.5 million. And to do that, I had to put some of my own money into that race. What Senator Domenici is trying to do with his amendment is to say that the person who is going to put his or her own wealth into a race must say so up front. If the amount the candidate intends to spend is going to exceed $500,000, then the opponent of the self-financing candidate can have the hard money contribution caps raised threefold. If the wealthy candidate spends between $500,000 and $1.0 million, then the hard money contribution limits increase fivefold. Over $1.0 million, and the new hard money limits stay in place, and limits are lifted on direct party contributions and coordinated expenditures. The Domenici amendment doesn't prohibit wealthy candidates from spending their own money to run for the House or Senate, but it is an attempt to level the playing field for their opponents if they do. Increasingly, I see that only wealthy candidates are going to run in some of these big races unless we do something to level that playing field. I understand Senator DeWine may well put forward an amendment to modify the new caps set forth in the Domenici amendment. I would prefer to see the caps modified. As I understand the procedure, at the end of the 3 hours of debate, there will be a motion to table Domenici amendment. I certainly will vote not to table this amendment. It is important that we try to level the playing field. I also will mention one other amendment I will either make myself or support, if it is offered by others. That is an amendment to increase the hard money cap per candidate per election. In the early 1970s, nearly 30 years ago, $1,000 was set as the hard money cap per election: $1,000 for the primary and $1,000 for the general. That was really fine in those days. You could have a lot of volunteer help. There was not an in-kind requirement. You could raise money more easily. Since that time, we have had something called inflation. Senator McCain pointed this out the other day. Thirty years ago, a car cost $2,700. Now it costs $22,000. The cost of campaigning has risen even more dramatically. I can tell the Senate, television spots have increased. The price of stamps has increased. The price of campaign stationery has increased. The price of direct mail has increased. The price of telemarketing has increased. Virtually every aspect of campaigning, from the salaries for consultants to the paper on which you write--all of it is much more expensive today. Frankly, we should increase the hard money contribution cap, either to $3,000 per election, which would keep pace with inflation, or at least to $2,000. As I said, I can certainly vote for the McCain- Feingold bill as it is. But if candidates are going to have any chance to keep up with these independent campaigns, with these independent interest groups that operate without contribution limits or disclosure requirements, we should look at raising the hard money contribution limit. At the appropriate time, I will offer an amendment to do just that. For my purposes right now, I indicate my support for the Domenici amendment. I ask unanimous consent that my time be charged to the sponsor of the amendment, Senator Domenici. I also ask unanimous consent that Senator Jeffords follow me.

Mrs. FEINSTEIN

Mrs. FEINSTEIN. Mr. President, I rise in support of the Kohl- Feinstein amendment to cap the homestead exemption at $125,000 for all States, and to eliminate from our bankruptcy laws a loophole so large that you could fit a $50 million mansion right through it. This amendment will correct a longstanding discrepancy between the States, a discrepancy that on the one hand forces most debtors to struggle to pay back every dime they owe, but on the other hand allows many of the most ``wealthy'' debtors declaring bankruptcy to shield their assets in multi-million dollar homes. The discrepancy I speak of occurs because in five States, Florida, Texas, South Dakota, Iowa and Kansas, where debtors are allowed to keep their homes no matter what they owe, or to whom they owe it, and no matter how much the home is worth. The ``homestead'' laws in these five States differ radically from the other 45: Many States have virtually no homestead exemption at all. In Michigan, for instance, the cap is $3,500; in Pennsylvania, just $300. Other States, recognizing a benefit in allowing debtors some ability to remain in their homes as they dig out of bankruptcy, place slightly higher caps on their homestead exemptions and allow debtors to keep $15,000, $30,000, $60,000, or even $75,000 equity in their homes. My own State of California has a sliding scale cap, ranging from $75,000 for most debtors to $125,000 for seniors. Massachusetts and Minnesota have relatively high caps of $200,000, and Minnesota's cap even goes to $500,000 for farms, the highest cap of all the States that have at least some restriction on how much equity can be protected. A vast majority of the 50 States have homestead caps of under $125,000, and this bill would do nothing to affect those States. The glaring exceptions are those five cases where a State has chosen to allow debtors to hide assets in luxury homesteads and essentially avoid their obligations under Federal bankruptcy law. What does this mean? This means that wealthy debtors facing bankruptcy can take their remaining assets, buy a home in one of those five States, and tell their creditors to get lost. Their assets are protected permanently. Let me give an example of homestead abuse that has been highlighted in the press and even on ``Sixty Minutes.'' When this Wall Street financier and convicted felon finally declared bankruptcy, he listed more than $140 million in debts and only $15,805 in assets. But one particular asset was not itemized, and the financier was not obligated to itemize it. That asset was his 37,000 square foot Florida mansion, worth an estimated five to $6 million. This ``house'' has ten bedrooms, two libraries, a business center, a double gourmet kitchen, an indoor squash and racquetball court, an indoor basketball court complete with electronic scoreboard, a private movie theater, full weight and exercise rooms, a swimming pool, a spa, an outdoor entertainment area, game rooms, a nine-car garage, a lakefront gazebo, an elevator, 21 bathrooms, and a 6,000 square foot quest house. The quest house alone has been described as a mansion in and of itself. But in Florida, the entire home, 21 bathrooms and all, as well as the property on which it sits, is completely exempt from the bankruptcy laws. The ``bankrupt'' financier owes millions, but through careful planning he can continue to live like a king. Meanwhile, his creditors can only stand outside the gates of the home and look with awe upon the home they paid for--$140 million in debts, and nothing his creditors can do. And this case is not all that unique. Actors, Wall Street financiers, participants in felonious savings and loan scandals, and others, all have taken advantage of the homestead exemption loophole. Essentially, these five States act as heavens for the most determined avoiders of debt, an escape of last resort for wealthy individuals who play fast and loose with their money. A General Accounting Office study of bankrupt debtors who take advantage of the homestead loophole in Florida and Texas alone found that each year more than 400 wealthy debtors are able to protect more than $100,000 in equity in their home, at a cost to creditors of $120 million. The bankruptcy reform bill as a whole attempts to increase personal responsibility by forcing more people to repay more of their debts. This goal is a good one, but the bill as drafted sends mixed signals. To poor debtors struggling to climb out of bankruptcy and to simply put a roof over the heads of their family, the bill takes a stern view, debts must be paid back, assets must be sold, and you'll face some hard years ahead. To more sophisticated debtors, many of whom had every advantage before making the bad, or even criminal, decisions that led to bankruptcy, the bill says that with a little planning, you can get away scot free. This is just plain wrong. This bankruptcy bill forces lower- and middle-class families to give up the family computer in many instances. The bill takes your second television set and even family heirlooms. The bill requires most debtors to enter strict payment plans to pay back even extraordinary medical or other debts incurred due to circumstances beyond their control. Yet the homestead exemption allows sophisticated debtors to avoid repayment entirely. This must be changed. That is why Senator Kohl and I are proposing a cap of $125,000. For States that already have a cap of or below that $125,000 level, and this is almost every State in the Union, this amendment will do nothing to change current bankruptcy proceedings. For those few States that have chosen to provide a safe haven for debtors fleeing from their creditors, this amendment will create a new, national cap that must be followed. The last time the Senate considered a homestead cap, an even lower $100,000, we approved of the cap by an overwhelming margin. The provision was watered down during a shadow conference so that in the end, the conference report and now this bill do virtually nothing to prevent debtors from shielding millions of dollars in luxurious mansions. Some will argue that the current bill does provide a ``compromise'' homestead exemption cap. As drafted, that cap only applies if a debtor purchases a home within two years of bankruptcy. Any good bankruptcy attorney will tell you that this provision can be easily avoided. In fact, dozens of professors and attorneys have told us just that. I ask unanimous consent that their letter be printed in the Record after my remarks.

Mrs. FEINSTEIN. Under this so-called ``compromise'' language, as long as a debtor plans a couple of years in advance, or already lives in one of those five States, there is no cap. This is a very soft cap, indeed. So the current language in the bill does not represent a real compromise, it does little to stop wealthy debtors from protecting their assets through bankruptcy and living the rest of their lives in luxury, while leaving their creditors with nothing. Bankruptcy is a federal matter. In fact, our Constitution explicitly gives Congress the right to establish ``uniform laws on the subject of bankruptcies throughout the United States.'' So this Congress is constitutionally authorized, even obligated, to see that bankruptcy laws are fair and uniform throughout our Nation. We must ensure that bankruptcy is a refuge of last resort for those truly in need of a fresh start, not just another financial planning tool to help felons and deadbeats protect their assets from creditors. This bill rightly encourages responsibility for those who enter bankruptcy, so that those who can pay their debts, do pay their debts. But we must encourage responsibility across the board, not just for those who cannot afford a god accountant or don't happen to live in Texas, Florida, Iowa, South Dakota or Kansas. I urge my colleagues to support his amendment. I thank my distinguished colleague, Senator Kohl, for working so diligently on this amendment. Exhibit 1 October 30, 2000. Re the Bankruptcy Reform Act Conference Report (H.R. 2415). Dear Senators: We are professors of bankruptcy and commercial law. We have been following the bankruptcy reform process with keen interest. The 91 undersigned professors come from every region of the country and from all major political parties. We are not a partisan, organized group, and we have no agenda. Our exclusive interest is to seek the enactment of a fair and just bankruptcy law, with appropriate regard given to the interests of debtors and creditors alike. Many of us have written before to express our concerns about the bankruptcy legislation, and we write again as yet another version of the bill comes before you. This bill is deeply flawed, and we hope the Senate will not act on it in the closing minutes of this session. In a letter to you dated September 7, 1999, 82 professors of bankruptcy law from across the country expressed their grave concerns about some of the provisions of S. 625, particularly the effects of the bill on women and children. We wrote again on November 2, 1999, to reiterate our concerns. We write yet again to bring the same message: the problems with the bankruptcy bill have not been resolved, particularly those provisions that adversely affect women and children. Notwithstanding the unsupported claims of the bill's proponents, H.R. 2415 does not help women and children. Thirty-one organizations devoted exclusively to promoting the best interests of women and children continue to oppose the pending bankruptcy bill. The concerns expressed in our earlier letters showing how S. 625 would hurt women and children have not been resolved. Indeed, they have not even been addressed. First, one of the biggest problems the bill presents for women and children was stated in the September 7, 1999, letter: ``Women and children as creditors will have to compete with powerful creditors to collect their claims after bankruptcy.'' This increased competition for women and children will come from many quarters: from powerful credit card issuers, whose credit card claims increasingly will be excepted from discharge and remain legal obligations of the debtor after bankruptcy; from large retailers, who will have an easier time obtaining reaffirmations of debt that legally could be discharged; and from creditors claiming they hold security, even when the alleged collateral is virtually worthless. None of the changes made to S. 625 and none being proposed in H.R. 2415 addresses these problems. The truth remains: if H.R. 2415 is enacted in its current form, women and children will face increased competition in collecting their alimony and support claims after the bankruptcy case is over. We have pointed out this difficulty repeatedly, but no change has been made in the bill to address it. Second, it is a distraction to argue--as do advocates of the bill--that the bill will ``help'' women and children and that it will ``make child support and alimony payments the top priority--no exceptions.'' As the law professors pointed out in the September 7, 1999, letter: ``Giving `first priority' to domestic support obligations does not address the problem.'' Granting ``first priority'' to alimony and support claims is not the magic solution the consumer credit industry claims because ``priority'' is relevant only for distributions made to creditors in the bankruptcy case itself. Such distributions are made in only a negligible percentage of cases. More than 95 percent of bankruptcy cases make NO distributions to any creditors because there are no assets to distribute. Granting women and children a first priority for bankruptcy distributions permits them to stand first in line to collect nothing. Women's hard-fought battle is over reaching the ex- husband's income after bankruptcy. Under current law, child support and alimony share a protected post-bankruptcy position with only two other recurrent collectors of debt-- taxes and student loans. The credit industry asks that credit card debt and other consumer credit share that position, thereby elbowing aside the women trying to collect on their own behalf. The credit industry carefully avoids discussing the increased post-bankruptcy competition facing women if H.R. 2415 becomes law. As a matter of public policy, this country should not elevate credit card debt to the preferred position of taxes and child support. Once again, we have pointed out this problem repeatedly, and nothing has been changed in the pending legislation to address it. In addition to the concerns raised on behalf of the thousands of women who are struggling now to collect alimony and child support after their ex-husband's bankruptcies, we also express our concerns on behalf of the more than half a million women heads of household who will file for bankruptcy this year alone. As the heads of the economically most vulnerable families, they have a special stake in the pending legislation. Women heads of households are now the largest demographic group in bankruptcy, and according to the credit industry's own data, they are the poorest. The provisions in this bill, particularly the many provisions that apply without regard to income, will fall hardest on them. Under this bill, a single mother with dependent children who is hopelessly insolvent and whose income is far below the national median income would have her bankruptcy case dismissed if she does not present copies of income tax returns for the past three years--even if those returns are in the possession of her ex-husband. A single mother who hoped to work through a chapter 13 payment plan would be forced to pay every penny of the entire debt owed on almost worthless items of collateral, such as used furniture or children's clothes, even if it meant that successful completion of a repayment plan was impossible. Finally, when the Senate passed S. 625, we were hopeful that the final bankruptcy legislation would include a meaningful homestead provision to address flagrant abuse in the bankruptcy system. Instead, the conference report retreats from the concept underlying the Senate-passed homestead amendment. ``The homestead provision in the conference report will allow wealthy debtors to hide assets from their creditors.'' Current bankruptcy law yields to state law to determine what property shall remain exempt from creditor attachment and levy. Homestead exemptions are highly variable by state, and six states (Florida, Iowa, Kansas, South Dakota, Texas, Oklahoma) have literally unlimited exemptions while twenty-two states have exemptions of $10,000 or less. The variation among states leads to two problems--basic inequality and strategic bankruptcy planning. The only solution is a dollar cap on the homestead exemption. Although variation among states would remain, the most outrageous abuses-- those in the multi-million dollar category--would be eliminated. The homestead provision in the conference report does little to address the problem. The legislation only requires a debtor to wait two years after the purchase of the homestead before filing a bankruptcy case. Well-counseled debtors will have no problem timing their bankruptcies or tying-up the courts in litigation to skirt the intent of this provision. The proposed change will remind debtors to buy their property early, but it will not deny anyone with substantial assets a chance to protect property from their creditors. Furthermore, debtors who are long-time residents of states like Texas and Florida will continue to enjoy a homestead exemption that can shield literally millions of dollars in value. These facts are unassailable: H.R. 2415 forces women to compete with sophisticated creditors to collect alimony and child support after bankruptcy. H.R. 2415 makes it harder for women to declare bankruptcy when they are in financial trouble. H.R. 2415 fails to close the glaring homestead loophole and permits wealthy debtors to hide assets from their creditors. We implore you to look beyond the distorted ``facts'' peddled by the credit industry. Please do not pass a bill that will hurt vulnerable Americans, including women and children. Thank you for your consideration. [Signed by 91 law professors.]

Mrs. FEINSTEIN

Mrs. FEINSTEIN. Mr. President, today, I am introducing legislation designed to eliminate injuries and deaths that result from crib accidents. While there are strict guidelines on the manufacture and sale of new cribs, there are still 25 to 30 million unsafe cribs sold throughout the U.S. in ``secondary markets,'' such as thrift stores and resale furniture stores. These cribs should be taken off the market, and either made safe, or destroyed. There are a number of reasons why unsafe cribs should be taken off the market. Each year, at least 50 children ages two and under die from injuries sustained in cribs. That is almost one child a week. The number of deaths from crib incidents exceeds deaths from all other nursery products combined. Over 12,000 children are hospitalized each year as a result of injuries sustained in cribs. To illustrate the need for this legislation, I want to share with you the story of Danny Lineweaver. At the age of 23 months, Danny was injured during an attempt to climb out of his crib. Danny caught his shirt on a decorative knob on the cornerpost of his crib and hanged himself. Though his mother was able to perform CPR the moment she found him, Danny lived in a semi-comatose state for nine years and died in 1993. This injury and subsequent death could have been prevented. Since Danny's accident, we have passed laws mandating safety standards for the manufacture of new cribs. But this is not enough. There are nearly four million infants born in this country each year, but only one million new cribs sold. As many as half of all infants are placed in secondhand, hand-me-down, or heirloom cribs, cribs that are sold in thrift stores or resale furniture stores. These cribs may be unsafe, and may in fact threaten the life of the infants placed in them. This legislation requires thrift stores and retail furniture stores to remove decorative knobs on the cornerposts of cribs before selling those cribs. Additionally, the bill prohibits hotels and motels from providing unsafe cribs to guests, or risk being fined up to $1,000. The Infant Crib Safety Act makes the sale of used, unsafe cribs illegal. I hope my colleagues will join me in putting a stop to preventable injuries and deaths resulting from unsafe cribs.

Mrs. FEINSTEIN

Mrs. FEINSTEIN. Mr. President, I rise in support of final passage of the bankruptcy bill. The Senate has worked on this legislation for over four years. The Judiciary Committee, on which I sit, has debated this issue again and again, and we have even sent a bill to the President although that bill was fatally flawed and was vetoed as a result. This bill is by no means perfect. However, the bill now before us is better than the Conference Report we were faced with at the end of last year, and it is better and more balanced than the bill presented to us in the Judiciary Committee just a few weeks ago. I believe that the modifications to the legislation made in Committee and on the Floor merit a ``Yes'' vote on final passage. Since the bill's introduction, I have consistently supported its underlying goal of promoting personal responsibility--as, I think, has every member of this Senate. Debtors who can pay back what they owe, should pay what they owe or at least part of it. Moreover, the bankruptcy code should not be a haven for irresponsible individuals who have recklessly accumulated debts by spending freely without regard to the consequences. After all, bankruptcy has a societal cost. And although much has been made of the big credit card companies and banks, not every creditor is a big business. Many harmed by bankruptcy filings are small businessmen and women dry cleaners, home repair workers, and others. An empirical review of bankruptcy filings indicates that reform is needed. Despite a recent drop, bankruptcy filings continue to remain at unacceptably high levels. In 1980, individuals filed 287,000 bankruptcies. In 1999, more than 1.3 million Americans filed for bankruptcy--an increase of 358 percent over 20 years. Bankruptcy has become so commonplace that more than one in a hundred households will file for bankruptcy this year. The bill we are voting on today appropriately readjusts our bankruptcy laws so that bankruptcy filers must repay a portion of their debts, if they can do so. At the same time, the bill protects debtors below the median income who are truly in need of a fresh start. This bill assists single parents with children in collecting child support debt from the bankruptcy estate. Philip Strauss, Principal Attorney of the San Francisco Department of Child Support Services, testified on this issue at a February 8, Judiciary Committee hearing, noting that the Bankruptcy Act of 2001 ``will enhance substantially the enforcement of child support obligations against debtors in bankruptcy.'' Specifically, the Bankruptcy Act of 2001 gives child support the highest priority of unsecured claims in a bankruptcy estate. Moreover, the bill prevents a debtor from confirming a bankruptcy plan if the debtor does not make full payment of any child support becoming due after the petition date. This bill is significantly improved from the Conference Report I voted against in December. While I voted for the Senate-passed bankruptcy bill in the 106th Congress, I voted against the Conference Report because the shadow conference deleted key Senate-passed amendments and did not strike a fair enough balance between creditors and debtors. For example, last year, the Conference Report deleted a Senate passed amendment that would prevent anti-abortion extremists from using bankruptcy laws to avoid paying civil judgements against them under the Freedom of Access to Clinic Entrances Act. The FACE Act has led to successful criminal and civil judgements against groups that use intimidation and outright violence to prevent people from obtaining or providing reproductive health services. This amendment is crucial to protecting a woman's safe access to reproductive services. This year, however, I am pleased that the Bankruptcy Act of 2001 has incorporated a modified version of the FACE amendment, and now makes ``non-dischargeable'' all debts incurred for harassing, obstructing, or other threatening violence against a person seeking any lawful goods and services, including access to reproductive health clinics. I appreciate the efforts of Senators Schumer and Hatch in coming to this agreement. Additionally, this bill includes the Kohl-Feinstein homestead amendment, which places a nationwide $125,000 cap on the amount of money a bankruptcy filer can shield from creditors simply by buying a home. This amendment closes a loophole in bankruptcy code that permits wealthy bankruptcy filers to hide their assets in multimillion dollar estates. This bill contains my amendment to curb abuses by bankruptcy mills. These operations, generally under the control of a non-attorney bankruptcy petition preparer, are often linked with price gouging of debtors, incompetent service, and remain a significant source of fraud in the bankruptcy system. California, in particular, has suffered from the abuses of these mill operators. Bankruptcy courts will now have the authority to fine these mill operators $500 per violation, with triple fines if the mill operator does not tell debtor she was filing for bankruptcy or advises the debtor to hide assets. The amendment empowers the U.S. Trustee to take enforcement actions against the mills, sets maximum fees for petition preparers, and victims can sue for increased damages. In addition, the Senate bill includes a compromise amendment I forged with Senator Sessions and Senator Feingold to balance the needs of landlords and tenants, when a tenant files bankruptcy. Finally, this legislation contains my amendment directing the Federal Reserve Board to investigate the practice of issuing credit cards indiscriminately, without taking steps to ensure that consumers are capable of repaying their debt, or in a manner that encourages consumers to accumulate additional debt. The amendment allows the Federal Reserve Board to issue regulations that would require additional disclosures to consumers, and to take any other actions, consistent with its statutory authority, that the Board finds necessary to ensure responsible industry-wide practices and to prevent resulting consumer debt and insolvency. It was my hope that we could improve this bill even more--with limits on how credit card companies provide products to minors, and with disclosure and other requirements to give consumers the tools to handle the burdens of credit card debt. I also believe bankruptcy judges should have some discretion in applying the means test. Unfortunately, several such amendments failed. So I do have concerns about this bill, and I know that I will make some people in my State unhappy by voting for it. I understand their point of view, and by voting for this legislation I am not turning my back on those concerns. I do think we should try this approach. If it turns out that this bill does not appropriately solve the current problems with our nation's bankruptcy laws, I will be on the front lines of the fight to reopen this debate and to fix the glitches. Nevertheless, this bill is a necessary, reasoned approach to solving some real problems with our bankruptcy laws. Abuses are rampant. For many, bankruptcy has become a financial planning tool, rather than its intended use as an option of last resort. Something must be done, and I will vote for this bill.

Mrs. FEINSTEIN

Mrs. FEINSTEIN. Mr. President, today, I am introducing legislation designed to eliminate injuries and deaths that result from crib accidents. While there are strict guidelines on the manufacture and sale of new cribs, there are still 25 to 30 million unsafe cribs sold throughout the U.S. in ``secondary markets,'' such as thrift stores and resale furniture stores. These cribs should be taken off the market, and either made safe, or destroyed. There are a number of reasons why unsafe cribs should be taken off the market. Each year, at least 50 children ages two and under die from injuries sustained in cribs. That is almost one child a week. The number of deaths from crib incidents exceeds deaths from all other nursery products combined. Over 12,000 children are hospitalized each year as a result of injuries sustained in cribs. To illustrate the need for this legislation, I want to share with you the story of Danny Lineweaver. At the age of 23 months, Danny was injured during an attempt to climb out of his crib. Danny caught his shirt on a decorative knob on the cornerpost of his crib and hanged himself. Though his mother was able to perform CPR the moment she found him, Danny lived in a semi-comatose state for nine years and died in 1993. This injury and subsequent death could have been prevented. Since Danny's accident, we have passed laws mandating safety standards for the manufacture of new cribs. But this is not enough. There are nearly four million infants born in this country each year, but only one million new cribs sold. As many as half of all infants are placed in secondhand, hand-me-down, or heirloom cribs, cribs that are sold in thrift stores or resale furniture stores. These cribs may be unsafe, and may in fact threaten the life of the infants placed in them. This legislation requires thrift stores and retail furniture stores to remove decorative knobs on the cornerposts of cribs before selling those cribs. Additionally, the bill prohibits hotels and motels from providing unsafe cribs to guests, or risk being fined up to $1,000. The Infant Crib Safety Act makes the sale of used, unsafe cribs illegal. I hope my colleagues will join me in putting a stop to preventable injuries and deaths resulting from unsafe cribs.

Mrs. FEINSTEIN

Mrs. FEINSTEIN. Mr. President, I rise to thank Senators Murkowski and Bingaman for opposing this amendment and also to join them in saying that I believe this is a very dangerous amendment. It creates two classes of creditors. The first is a protected class; namely, certain Federal entities. Yesterday, I introduced into the Record a series of letters from virtually all of the electricity and natural gas providers. Those letters had one common theme, and that theme was that to do this is not only unprecedented, but it will probably force an involuntary bankruptcy because once the dam is broken, other creditors will then seek to protect their rights under bankruptcy law. Hence, it is a very dangerous amendment. The State of California is currently seeking to purchase the transmission lines of the utilities to be able to inject $7 billion and solve the problem. I urge a ``no'' vote on this amendment. Is all time expired?

Mrs. FEINSTEIN. Mr. President, how much of my time remains?

Mrs. FEINSTEIN. Mr. President, I don't believe the time has expired. I believe I have 2\1/2\ minutes. I will be happy to give some of that to the Senator from Alaska.

Mrs. FEINSTEIN. Thank you very much. Continuing: Based upon the foregoing, it should be clear that if Southern California Edison was involved in a bankruptcy proceeding, the proposed legislation would have significant impact upon Southern California Edison and its other creditors. Mr. President, this is the bankruptcy counsel. So we know two things: One, from bankruptcy counsel, that this amendment--the Wyden amendment and the Smith amendment--do in fact create two classes of creditors. And they do, in fact, give premier standing to one class of creditors, the Federal subsidized entities. Those entities are given preference in a bankruptcy. Secondly, we know in fact that the amount involved is a good deal more than the amount represented in this Chamber. We also know that virtually every other power producer and supplier-- every single one--believes that if this amendment were to pass, they would have to exercise their rights, which would be to push Southern California Edison and Pacific Gas and Electric into an involuntary bankruptcy and most probably in chapter 7, which would mean a dissolution of the companies involved. This would be tragic because the State has negotiated an agreement with two utilities to buy their transmission lines and to put $7 billion into the purchase of those transmission lines. The result would then be a securitization of that back debt and enable these utilities to pay their debtors and creditors without going into bankruptcy. So a plan to enable the payment of the debtors and creditors is now underway by the State. Various Members of this body may not like how the State is handling the problem, but the State does have the right to try to redress the debts and in fact is doing so. These amendments can only wreak devastation on that attempt. I strongly oppose the Wyden and Smith amendment.

Mrs. FEINSTEIN. Mr. President, I ask unanimous consent to use the remainder of Senator Bingaman's time.

Mrs. FEINSTEIN. I thank the Chair, and I would like to continue: This amendment seeks to give certain entities a favorable status in the event that California utilities fall into bankruptcy. That is what the Wyden amendment does. The letter goes on: Many companies have provided power to California's consumers and [this association] believes emphatically that all these entities deserve to be fully and fairly compensated. As do I, Mr. President. However, it is inappropriate for the Senate to try and create winners and losers in this desperate situation. Rather than orderly resolution, this legislation could lead to a premature declaration of bankruptcy and the inevitable liquidation of the California electric utilities' assets in a legal free-for-all. The American Gas Association, on behalf of all of the natural gas companies involved in this, also states the same thing. They go on, however, to say: As the preferred creditors would in actuality control the bankruptcy proceedings through their status, in effect Chapter 11 reorganization would not be an option. Liquidation of assets through Chapter 7 filing would result. Such action could cause serious disruption and harm to the utility customers, not to mention the non-preferred creditors. So, Mr. President, you have virtually all of the electric power producers, as well as the natural gas producers, in effect, saying that if you give these Federal entities preferred status, should there be a bankruptcy, they would, in effect, have to assert their rights to force an involuntary bankruptcy, and that then would put both of the utilities into chapter 7 rather than chapters 11 or 13. This was the theme--the dominant theme--from virtually every generator, producer, and creditor. I know of virtually no electric power producer or gas producer that believes this amendment will do anything other than trigger a bankruptcy of these two companies. Therefore, I am strongly in opposition to it. Last evening, the proponent of this legislation, Senator Wyden, said in fact the legislation does not do this. So we went out and we contacted the bankruptcy attorney for Pacific Gas and Electric. We asked them for a letter and their interpretation of the Wyden amendment. I have that letter. I will read it into the Record. My firm is special reorganization counsel to Southern California Edison. In connection with the debate over the Wyden Amendment to S. 420, it has been suggested that the Amendment is not intended to prefer the debt covered by the Amendment over the debts of other creditors of Southern California Edison and the other utilities affected by the Amendment. Please be advised that, in my view, the Amendment would do exactly that. This is the bankruptcy counsel for one of the utilities at risk of bankruptcy. The letter goes on: The purpose of the Wyden Amendment is to exclude from the binding effect of a plan of reorganization in chapter 11 certain creditors of the utility who provided wholesale electric power to the utility under certain conditions. It provides that such debts are nondischargeable. As a consequence, a utility in chapter 11 could not bind such preferred creditors under a plan of reorganization, and such creditors would be able to pursue the utility following confirmation of a plan to collect in full, in cash, their obligations while the other creditors were bound by the terms of a confirmed plan of reorganization. Depending upon the magnitude of such preferred claims, the utility might find it very difficult to confirm a plan under such circumstances. Such result would be very detrimental to not only the utility but to its other creditors. This is the bankruptcy counsel himself. It is also my understanding that there has been a suggestion in argument on behalf of the Amendment that the magnitude of the preferred obligations would not exceed $100 million to $200 million. I am advised by Southern California Edison that based upon the amount of power purchased during the emergency orders of the Federal Energy Regulatory Commission, the amount of power procured to serve Southern California Edison's customers substantially exceeded that amount.

Mrs. FEINSTEIN. Mr. President, I move to table the Wyden amendment and ask for the yeas and nays.

Mrs. FEINSTEIN

Mrs. FEINSTEIN. I will.

Mrs. FEINSTEIN. Thank you very much, Mr. President. I thank the ranking member of the Energy Committee, the Senator from New Mexico, Mr. Bingaman, for his remarks in opposition to the Wyden amendment. I also wish to thank Senator Murkowski, the chairman, who came to the floor last night and spoke against the amendment. Last evening, I submitted for the Record several letters in opposition to the amendment from the Electric Power Supply Association, the Edison Electric Institute, The Williams Companies, Calpine, Pacific Gas and Electric, Southern California Edison, International Brotherhood of Electrical Workers, The Utility Reform Network, a consumer group, and the American Gas Association, all in strong opposition to the Wyden amendment, and also with one general theme. That general theme is that if the Congress of the United States were to determine the order in which debts would be discharged, it would trigger a bankruptcy because those who are not favored in that order would seek to protect their right by moving both Pacific Gas and Electric and Southern California Edison into bankruptcy. Virtually every single letter reiterated that concern. I would like to reread from one of the letters so the Senate might understand the concern, and that is from the Electric Power Supply Association. That letter states: We are writing to express our deep concern and opposition to [the amendment]. Our fear is that this amendment could precipitate a financial crisis and exacerbate the already precarious situation in the West.

Mrs. FEINSTEIN. Mr. President, I believe the unanimous consent order provided 5 minutes for Senator Hagel to speak against the Wyden amendment. Senator Hagel will not be able to be present, and I ask unanimous consent to use that time.

Mrs. FEINSTEIN. Mr. President, I ask unanimous consent that the order for the quorum call be rescinded.

Mrs. FEINSTEIN

Mrs. FEINSTEIN. Probably not more than an hour.

Mrs. FEINSTEIN. Mr. President, there is also a consumer organization, one that I am familiar with because while I was Mayor of San Francisco I had occasion to work with them. This group is The Utility Reform Network. In their letter they state: We are afraid this kind of legislation will harmfully impact whatever negotiations are happening at the State level to strike a balance that would cause all players to make some sort of sacrifice so we can all move forward. I have offered the testimony of the Governor of the State of California, who states that, yes, Senator Wyden's amendment would interfere with the negotiations that are going on today. The letter goes on to say: Let the bankruptcy laws remain status quo ante, in order to allow the settlement of all claims going forward. The Senate should not modify laws that were in place during this period, in order to choose winners or losers in California's energy debacle. Either there will be a settlement at the State level or the utilities will be forced to bankruptcy. That is certainly correct. If bankruptcy is the eventual solution, let the Federal bankruptcy judge, applying the laws that were in place during the crisis, resolve the equities. I could not agree more, Mr. President. I mentioned that right now the State of California is working diligently to ensure the utilities can make their payments. The State is negotiating to purchase the transmission assets of both of the investor-owned utilities in the State. This will provide an infusion of revenue into the ailing utilities that will enable them to begin to repay their creditors. If this amendment should trigger a run on the bank and generators or banks or other creditors find the only way they can protect their rights is to force a bankruptcy, the State of California will not be able to complete its plan to buy these transmission assets and have the utilities pay their debts. I am very hopeful this situation will be resolved in short order. The State has already come to preliminary agreements, and these agreements will likely be finalized within the next few months. California's creditors are also hopeful that this process will improve the chances that they will ultimately be repaid for all the debt they have incurred. I believe the public entities will be repaid. However, let me just say that some in the Northwest have charged that Bonneville Power Administration (BPA) has been forced to drain Federal reservoirs to supply power to California. I want to correct the record because those charges are mistaken. In December 2000, when the Secretary of Energy, Bill Richardson, issued the emergency order to Western utilities to sell power to California, BPA helped, but it helped in a way that also benefits the Northwest. It was an energy capacity exchange. In other words, they helped California meet their peak loads. And California, by that agreement, sent twice the energy back, using their excess capacity at night. So that helped BPA keep more water in the reservoirs when BPA has stated they really needed it. I am not critical of Senators Wyden and Smith for trying to protect their State. But what I am saying is, I have read almost a dozen letters from debtors and creditors intimately involved in the negotiations, all of whom oppose this. They do so because they believe it may well trigger a bankruptcy. I have read from the utilities involved--Southern California Edison, Pacific Gas and Electric--who also say, wouldn't it be ironic if the Federal Government were inadvertently to trigger a bankruptcy? I say to you that to move an amendment such as this at the time of critical negotiations is a huge mistake. I, for one, do not want to be responsible should it truly trigger both of these large investor-owned utilities to go into bankruptcy. Mr. President, I yield the floor.

Mrs. FEINSTEIN. Mr. President, a lot has been said tonight. Let me express what did happen. In 1996, the State of California passed a deregulation law. Republicans and Democrats voted for that law. A Republican Governor signed the law. The law was badly flawed. It essentially deregulated the wholesale end of power and kept regulated the retail end. That was a mistake. Additionally, it provided that 95 percent of the power of California would have to be bought on the spot or day-ahead market. It prevented the bilateral, long-term contracts which are a key part of the solution for California. And the flawed deregulation plan said that California had to buy power through something called a power exchange, which actually guaranteed a higher price for power. And the plan said that the utilities which had generation facilities would have to divest themselves of those generation facilities. The law was a gamble. It gambled that spot power would be cheaper to buy than the price of bilateral contracts. In fact, that was not the case. There was not enough power supply to meet the demand, so the spot power prices rose dramatically. I am one who strongly believes that you have to fix the marketplace; that you cannot deregulate on the wholesale end and not also deregulate on the retail end. Possible solutions include establishing a baseline rate, or realtime pricing, or tiered pricing, or something else. These possibilities would create an incentive for conservation and, in the long term, corrects the flawed power market. The remedies before the State are slightly different than the way I would have gone. It does not mean it is better or worse, but it is a different way. Up to this point, the State has spent $3.9 billion in buying power. The State of California is willing to authorize funds to buy the transmission lines to enable the utilities to then secure their debt. It is very easy to point fingers. It is very easy to castigate. It is very easy to call the State a lot of names. Nonetheless, I think the State should have the opportunity to work this situation out. There is the rub. This amendment does not basically allow that because either advertently or inadvertently, it creates a situation to which others will respond by driving the utility companies to bankruptcy. Let there be no doubt--in my mind there is no doubt--that others will respond to this situation by pushing these companies into bankruptcy. If they have to go into bankruptcy, they are not going to go into 11 or 13 to repay the debt. They are going to go into 7 to dissolve the debt and simply get out of the business of power distribution. So I am afraid that Senator Wyden, Senator Smith, and even my colleague from the State of California, Senator Boxer--I am afraid this is going to be counterproductive and it is going to produce something which can be devastating to everyone. If it were just me alone who said that, I would be too timid to stand up here and say that. I am joined by virtually all of the debtor and creditor community in saying it. I am even joined by some of the public utilities that Senator Wyden seeks to protect. The largest city in the State, Los Angeles, which produces its own power, does not support this because the city is worried about the same thing I am worried about. I say give the State the time. Senator Wyden and I do appreciate this--says, all right, we will work with you to create a time. I would like an opportunity to see if that is possible without launching the assault on bankruptcy that I am afraid will come out of the passage of the Wyden-Smith amendment. I represent the sixth largest economic power on Earth. If these utilities go into bankruptcy, as Senator Murkowski pointed out, it impacts hundreds of thousands of investors who have invested in the utilities, public retirement funds, other companies as well. It creates a situation which I think will have a major negative economic impact throughout the rest of the United States. If the State were not assiduously trying to work out this problem, I wouldn't feel so strongly. If there was nothing being done to solve the problem, I wouldn't feel so strongly. But two utilities have agreed with the State on terms to purchase the transmission lines. Therefore, when the remainder of that purchase is completed, there will be the money available to pay Bonneville, to pay the Western Power Association, to pay the cogenerators, to pay other generators, to pay the natural gas suppliers. And I hope in the securitization of the back debt, the banks, the large New York banks will also feel that the arrangements are in place to see that they will get paid back. Bankruptcy, I do not believe, will solve this problem. The degree to which this amendment would push these companies into bankruptcy, I think, is a gamble that is very unwise to take at this time.

Mrs. FEINSTEIN. If I may say to the distinguished Senator from Oregon, the point I don't understand is why you feel you won't be paid, why you feel you have to move ahead with this when everyone involved believes that moving ahead with it precipitates them to take action to force a bankruptcy, and if a bankruptcy is forced, it is chapter 7, where the company is dissolved and no one gets paid. That is my problem with this. This is why I believe it is so counterproductive.