Chuck Grassley

Mr. GRASSLEY

Mr. GRASSLEY. I ask for the yeas and nays.

Mr. GRASSLEY. Mr. President, the Senator from Minnesota is asking the Senate to put these provisions in law in the bankruptcy code for loans that are legal under State law. He would have this done in two ways: No. 1, he would say that the State judges could not enforce these debt collections; and, No. 2, he would say that in bankruptcy it could not be recovered in bankruptcy. First of all, these are legal contractual relations. They are legal under State law. So it ought to be questioned whether or not the Senate of the United States or the legislatures of Minnesota and Iowa ought to be making these determinations. It is my judgment that we should not use the bankruptcy code to upset the legal bankruptcy laws of the respective States. I ask my colleagues to vote this amendment down.

Mr. GRASSLEY

Mr. GRASSLEY. Mr. President, I ask unanimous consent that The Committee on Agriculture, Nutrition, and Forestry be authorized to meet during The session of The Senate on Tuesday, February 1, 2000 at 9:00 a.m., in SR-322, to conduct a full committee hearing to review The authority of The grain inspection, packers and stockyards administration (GIPSA).

Mr. GRASSLEY. Mr. President, I ask unanimous consent that The Committee on The Judiciary Subcommittee on Technology, Terrorism and Government Information be authorized to meet to conduct a hearing on Tuesday, February 1, 2000, at 10:00 a.m, in SD226.

Mr. GRASSLEY. Mr. President, I ask unanimous consent that The Committee on Banking, Housing, and Urban Affairs be authorized to meet during The session of The Senate on Tuesday, February 1, 2000, to conduct a markup on The renomination of Alan Greenspan to be Chairman of The Board of Governors of The Federal Reserve System, and concurrently a hearing on ``Loan Guarantees and Rural Television Service''.

Mr. GRASSLEY. Mr. President, I ask unanimous consent that The Committee on Health, Education, Labor, and Pensions be authorized to meet for a hearing on ``Medical Errors: Understanding Adverse Drug Events'' during The session of The Senate on Tuesday, February 1, 2000, at 10:00 a.m.

Mr. GRASSLEY

Mr. GRASSLEY. Mr. President, it is always a pleasure to listen to the Senator from Minnesota because whether he is right or wrong, he always speaks with a great deal of passion. I want people who have ideas to have passion for those ideas. Senator Wellstone is a person who speaks with a great deal of passion and conviction. I disagree with a lot of the points he has made; otherwise, we would not have this legislation before us. On the other hand, on the subject of concentration, which he brought up, I have some sympathy for what he has said. The solution to the concentration problem is we should get this administration to vigorously enforce the antitrust laws both within the Justice Department and the Federal Trade Commission. There is a general feeling among people about whether the marketplace is working adequately and, consequently, support the antitrust laws. The antitrust laws are well written and have withstood a period of time, but enforcement is very much an issue. We are not talking about concentration, and we are not talking about enforcement of the antitrust laws when we deal with bankruptcy. We have a very real problem. We have seen a dramatic increase in bankruptcies over the last 6 or 7 years. In 1993, we had 875,202 bankruptcies, and in 1998, it shot up to 1,442,549. We have seen this dramatic increase in the number of bankruptcies during one of the most prosperous times in the history of our country. It has been the most prosperous for several reasons: One, information technology is helping to expand our economy and make it more efficient than ever before. The globalization of our economy has also reduced consumer costs, giving consumers more money to expend on other things. We have seen Congress balance the budget in the last 3 years, and it worked toward that for the last 6 years and made considerable progress. Now we are paying down the national debt for the third year in a row. All that has contributed to it. We are in the 18th year of economic expansion, which started in the second year of Ronald Reagan's administration. We had a turnaround in the economy after the stagflation of the seventies, and except for a 6- month period of time in 1992, we have had 18 years of economic expansion. During that period of economic expansion, we have had this very dramatic increase in bankruptcies. Why? I wish I could say there is just one reason, as the Senator from Minnesota seems to imply; that it is credit being extended too easily, too many credit cards. I agree that is a reason, but that is only one of the reasons. Another reason is we have a bankruptcy bar that has, quite frankly, encouraged bankruptcies. We have shown during previous debates on this bill where bankruptcy lawyers in California advertise in the media how to get out of paying alimony and child support by going into bankruptcy. These types of practices, obviously, are not ethical but are still being used. We also have the bad example set by the Federal Government of 30 years of deficit spending. If Uncle Sam can borrow money into the trillions of dollars over a period of 30 years, isn't it all right for Mary Smith and Tom Jones or the people who are working in Anywhere USA to go into debt as well? Uncle Sam did not set a very good example. Congress, doing the fiscal policy for Uncle Sam, did not set a very good example. It says to others: Yes, it's OK for you to go in debt. The Federal Government has turned that around in 3 years by balancing the budget and paying down some of the national debt and is on the road to paying down the national debt very dramatically over the next 10 to 15 years. We also have a situation where somehow financial responsibility is not considered a personal responsibility anymore. In other words, it is OK to go into debt and not pay your bills. There used to be a certain amount of shame connected with bankruptcy that does not seem to be there now. I gave four reasons--and there may be a lot more--of why we are probably in this situation where we have had 18 years of economic expansion since the second year of the Reagan administration and yet have a historically high number of bankruptcies, and during the best years of our economy, we have seen bankruptcies almost double in a period of 6 or 7 years. Consequently, we have this legislation before us. I do not disregard the words of the Senator from Minnesota that there are some people who are vulnerable and for whom we need to be concerned, but I say to the Senator from Minnesota, we are not extinguishing the principle that has been a part of the bankruptcy law for the last 102 years, permanent bankruptcy legislation. There are segments of our population in bad financial trouble, through no fault of their own, who need the help of bankruptcy. That could be death, divorce, a lot of medical expenses, a natural disaster, for instance, if you are a farmer or some other small businessperson, or maybe even a homeowner who had a natural disaster that was not properly insured. Our code says there are select groups of people who are in a bad financial situation, through no fault of their own, who should have a fresh start. I say to the Senator from Minnesota and all the other Senators who question this legislation, we keep that principle, but we also say this Congress has to send a clear signal to the 270 million people in this country that if you have the ability to repay some or all of your debt, you are not going to get off scot-free. There are large numbers of people who are getting off scot-free, albeit they may be a minority, but they are a significant minority, and it does not set a very good example for some people to be able to use the bankruptcy code as part of financial planning. We are saying to those who can repay that they have to repay, but we are also sending a signal through this legislation to credit card companies that are willy-nilly sending out credit cards that encourage bankruptcy or even a lack of personal responsibility. We are saying it has to be a new day. We want to discourage those people who maybe are low income, who should not have gotten, through their own fault, into debt, and are not in the classification of people who I say are entitled to a fresh start--that somehow they should think again about going into bankruptcy and only use bankruptcy as a last resort. We find that the 1978 law, obviously, has contributed some to the big increase in bankruptcies. This legislation passed by a very wide margin. So I do not think it was intended that the 1978 law ought to make it easier to go into bankruptcy. But, obviously, it sent that signal to a lot of people in America, as we have seen that the number of bankruptcies in 1980 was only 331,000 and now 18 years later, in 1998, the figures are 1,442,000. Something has happened recently. Again, I do not pretend to stand before the American people, or my colleagues in the Senate, and say passing a law is going to solve all these problems. I wish it would. It is going to be a combination of several things: the credit card companies or credit-granting companies to be more careful in who they grant credit to; a Congress to be financially responsible and, hence, set a good example for every taxpayer and citizen in this country that debt isn't OK; the bankruptcy bar to be a little more careful about encouraging people to go into bankruptcy and not to advertise that bankruptcy is OK as a way out; and then the law itself, by discouraging people who can repay to use the bankruptcy code for financial planning. In this whole process, I hope we then enhance personal responsibility. By enhancing personal responsibility, then we can reduce these numbers of bankruptcies and then reduce the economic problem we have--because we are not talking about something that does not make an impact upon everybody. Some people have put this at a $40 billion problem--$40 billion owed by those who go into bankruptcy and do not pay. Then every other consumer in America picks up part of that tab. We have no doubt about it, if you are shoplifting, the honest consumer, who does not shoplift, is going to pay the cost of shoplifting. This is somewhat the same. If you are a businessperson, and somebody does not pay their bills by declaring bankruptcy, the honest person buying goods from that same business is going to pick up the tab. And $400, on average, for a family of four, is what we pay for other people who do not pay. We hope to enhance personal responsibility. We hope to help the economy in the process. But most importantly, this is something that must be dealt with, and I think this legislation deals with it. That is the background for this legislation. I think it is necessary to give some of that background, as I respond to some of the specific issues that the Senator from Minnesota brought up. First of all, he mentioned the point that there has been some decline in the rate of growth of bankruptcies in recent years. We think that is true. It is a little bit too early to make that judgment. I hope it is true. I think it is a direct result of Congress talking about this horrible economic problem we have of $40 billion and the lack of personal responsibility which goes with that economic problem. Perhaps it is sending signals to some of the consumers to think twice about whether bankruptcy is the right direction to go in. Maybe it sent a signal to some of the bankruptcy lawyers in America to counsel people not to go into bankruptcy. I hope the leadership of this Congress over the last 3 years, in discussing this legislation--actually having passed it in the last Congress in both Houses, but not getting the final product to the President in time before adjournment--has done some good. So we have had a very modest decline in bankruptcies in 1999 as compared to 1998. But if you take the historical look--and I have referred to some of those figures since 1980--Senator Wellstone's point that the bankruptcy crisis is going away turns out to be false. I have referred to the 330,000 bankruptcies we had in 1980, the year the new code went into effect. But that has gone up to just under 1.4 million in 1999. Unlike the Senator from Minnesota, I think 1.4 million bankruptcies per year is a real crisis. In the past, in the middle 1980s, and even once during the 1990s, we have had some minor dips in the bankruptcy filings; but since then, as I have referred to, we have had this dramatic increase, almost doubling, in the last 6 or 7 years. I ask unanimous consent to have printed in the Record a table of the total filings, business filings, nonbusiness filings, and the percentage of consumer filings of total filings.

Mr. GRASSLEY. Mr. President, I yield myself such time as I may consume.

Mr. GRASSLEY. The Senator from Minnesota also made reference to some changes in the bankruptcy code that were made by Senator Dole in 1984 which allowed judges to dismiss chapter 7 cases in cases of--these are the words from the statute--``substantial abuse'' of the bankruptcy code. I spoke to this point a week ago. Obviously, the Senator from Minnesota did not have an opportunity to hear my remarks. But he would have heard me state, in detail, how the 1984 legislation has not worked at all, regardless of its good intentions. Because under the 1984 legislation, creditors are banned by law from bringing evidence of abuse to the attention of the judge. Here we have a law that says if there is substantial abuse of the bankruptcy code, then the judge can determine that that certain bankrupt does not have a right to be in bankruptcy court. But then we have another section that says creditors who might know about this abuse cannot bring evidence of that abuse to bankruptcy court. So it seems that the 1984 legislation was designed not to work. We correct that in this legislation by making it possible for people to bring evidence of such substantial abuse to the bankruptcy judge, for it to be considered, and if the judge agrees, then that person cannot continue to abuse the public at large by making misuse of the bankruptcy courts to get out of paying debt. I also remember the Senator saying that tightening bankruptcy law will not reduce the costs of bankruptcy. All I can say is, the Clinton administration's own Treasury Secretary, Larry Summers, said in one of our hearings that reducing bankruptcies could help reduce interest rates. And what helps lower-income people more in America than reducing interest rates? It really helps the very people the Senator from Minnesota speaks of as being vulnerable and as a class of citizens about whom we should all have concern, and I believe all do have concern. I have an example of a vulnerable person at the other end, a person who has been substantially harmed by somebody who went into bankruptcy. It isn't just people who go into debt who are vulnerable and can be hurt by bankruptcy; there are a lot of other hard-working people who are hurt by other people who go into bankruptcy. I hope this body will remember that every abusive bankruptcy hurts scores of Americans. I will read, without using names, from a constituent in Keokuk, IA, writing to me about the need for the passage of this legislation. She had read a headline in the local paper that said: The Senate may toughen bankruptcy laws. ``My son''--I will not use the name--``works for a local electric company as a meter reader full time during the day and then goes right to work nearly every evening and on Saturdays with his own growing washing, vacuuming business. He works so hard to do a good job for his customers. He takes his responsibilities as a father of five very seriously. During the last 3 to 4 months, he has been doing a job for an out-of-town gentleman.'' Then the last name is given. ``I believe he is in the Des Moines area. I have learned that he has several businesses and is known to be a crook.'' That is why I don't want to use the names; I don't know whether he is a crook or not, but that is the writer's judgment. ``Of course--then she uses the name of her son--'' had no idea about this person's background, but he eagerly wanted the work and took the work. He felt especially good about it because one of his men is very poor, one of the workers he hires for his moonlighting business, and so he turned the job over to him so he could make extra money. ``The sorry ending of this story is, as you might have guessed, just last week Kenny called the original hiring company where Kenny works directly doing cleanup jobs. And before he could talk to the manager about not being paid by this gentleman from Des Moines, Mike told Kenny that he had just called to inform him that he had declared bankruptcy. He owed Kenny over $3,600. To him, this might as well have been $36,000 because of some new, very expensive equipment purchased to be able to handle the additional work. ``Something must be done to keep crooks from sticking hard-working people like my son, who associate with him in good faith, from dropping the hatchet--you know the numbers when it comes to poor management--and then take the easy way out at everyone else's expense.'' Then in capital letters: ``It is wrong and it should not be allowed.'' So there are hard-working mothers and fathers in America, I say to the Senator from Minnesota, who are vulnerable and hurt by other people who take advantage of them and go into bankruptcy. On another point the Senator from Minnesota made, perhaps he isn't aware that the organization of prosecutors who enforce child support says this bill, S. 625, will help women and children who are owed child support. On this point, in fact, there is no point. Both parties have worked hard on this legislation in the compromises that have taken place over the last 2 or 3 years. We are not going to let people use the bankruptcy code to get out of paying child support. Yet we are still hearing, this very day, that old argument that may have had some credibility 2 or 3 years ago but that we had taken care of almost that long ago because it was a very important point raised. But those points are still being made. So I ask my colleagues, as they consider that point made by the Senator from Minnesota, to whom are you going to listen: The people who actually collect child support--that is, the organization of prosecutors who enforce child support who say this is a good bill and will help women and children--or are you going to listen to Washington special interest think tanks that are using smoke and mirrors to say this bill will make it more difficult to collect child support? I think those who prosecute know the difficulty of collecting that. I hope my colleagues will listen to the prosecutors who get child support who say this bill will help women and children. Finally, I wish the Senator from Minnesota had at least mentioned title II, subtitle A, which is entitled: Abusive Creditor Practices. We know creditors can be abusive, and we address that problem to make sure there is a level playing field between creditors and debtors when it comes to the bankruptcy courts. We have numerous new consumer protections. Understand, there are some customers who don't want to go into bankruptcy, and they try to negotiate with their creditor to avoid going to court. That is a good step we want to preserve and encourage. But if that customer then has to declare bankruptcy because of not being able to negotiate, then the creditor is severely limited in his ability to collect that debt. To me, this is real consumer protection that should not be forgotten as we vote on this legislation. I will now turn to a specific amendment the Senator from Minnesota is offering as well and to oppose his amendment that is referred to as the payday loan. For those who don't know, this type of loan happens when a borrower gives a personal check to someone else and that person gives the borrower cash in an amount less than the amount of the personal check. The check isn't cashed if the borrower redeems the check for its full value within 2 weeks. The fact is that payday loans are completely legal transactions in many States. If a financial transaction is explicitly legal under State law, to me, it isn't wise that we use the bankruptcy code to try to undo that transaction. First of all, using the bankruptcy code for this purpose leads to perverse results because the only people who will receive any benefit or relief will be those who file for bankruptcy. Then you have all those other people who are using payday loans who never file for bankruptcy. These people who have taken out loans but don't take the easy way out in bankruptcy court will still have to pay back their loan. So if this is a problem, it seems to me the Senator from Minnesota ought to work to help everybody, not only those who go into bankruptcy court. Then you also have the perverse result of people who don't have the money to file for bankruptcy who will have to pay the loan as agreed. Even if you share Senator Wellstone's distaste for payday loans, this amendment won't benefit the poorest of the poor because most of the poorest of the poor don't seek bankruptcy relief. Earlier during the course of the debate, my colleague from Utah, Senator Hatch, sought to include language in an amendment that would have changed the Fair Debt Collection Practices Act. This act is in the jurisdiction of the Banking Committee. At that very time, the ranking Democrat on the Banking Committee, the Senator from Maryland, indicated that he would not consent to allowing changes to the Fair Debt Collection Practices Act on a bankruptcy bill. So to be fair, then, the portion of Senator Wellstone's amendment changing the Fair Debt Collection Practices Act should be stricken out in deference to the jurisdictional objections that have been lodged by the ranking Democrat on the Banking Committee. So I am asking Senator Wellstone to listen to the arguments of his fellow Democrat about jurisdiction and respect the jurisdiction of the particular committees. If the Senator from Minnesota doesn't want to honor this objection, I think his proposed changes to the Fair Debt Collection Practices Act represent poor policy at least. His amendment would not say that lenders can't offer payday loans. His amendment would say that you aren't allowed to use State courts to collect the debt, even if the debt is completely legal under that same State law. In fact, the State of Minnesota specifically allows payday loans, as does my home State of Iowa. I don't think the Federal Government has any business telling State judges they can't enforce debts that are fully legal under the laws of that particular State. I would have confidence in my State legislature correcting this economic and social problem, if it is one in our State. I haven't studied it enough to know whether it is, but I have confidence that my State legislators would correct that. I hope the Senator from Minnesota has the same confidence that his State legislators know what is best for Minnesota, not those of us in the Congress of the United States. I also think this amendment would have the effect of making it harder for the poor and those with bad credit histories to gain access to cash--the very people the Senator from Minnesota is so concerned about because, in his words, ``they are so vulnerable.'' People who use payday loans simply can't get loans through traditional sources because they are too risky, so a payday loan may be the only way they can get quick cash to pay for family emergencies or essential home and auto repairs. I know the intentions of my good friend from Minnesota are honorable, but the effect of this amendment would be to make it harder for poor people to get help when they need that help the most. I hope this amendment by the Senator from Minnesota will be defeated. I yield the floor.

Mr. GRASSLEY. Mr. President, I had a chance to listen very closely to what the Senator from Michigan said. As the sponsor of the amendment, he ought to have the attention of those of us who oppose his amendment. I say that this amendment detracts some from the purpose of the legislation. Maybe it is meant to. To the extent it is, I hope people will vote against it. To the extent that people see this as a legitimate part of what we are debating, then I would offer this point. I am going to offer more than one point very central to the amendment, and then I will stick to my remarks. But the fact is there is a way to handle this problem to make sure that these companies don't get off scot-free. I am going to refer to a product that Senator Heflin from Alabama-- before he retired from the Senate--and I worked very closely on, which was bankruptcy legislation. During the years he and I served together-- I think 14 or 16 years--during that period of time when we were in the majority on this side, I chaired the committee and he was the ranking minority member. When his party was in control, he was chairman and I was the ranking minority member. I am going to refer to some legislation we were able to get passed in 1994 when he was chairman of the committee. I think it is a thoughtful and bipartisan way to deal with this. First of all, I believe this amendment proposed by the Senator from Michigan is unsound as a matter of policy. Congress has previously dealt with difficult questions of what to do about companies facing massive tort liability and then filing for bankruptcy. We dealt with this, as I indicated, in a bipartisan way, and I think in a way that had a great deal of thought behind it. In 1994, I worked with Chairman Heflin to create a very specific process for asbestos companies that were filing for bankruptcy as a result of a massive number of lawsuits against asbestos manufacturers by those people who had asbestosis. Senator Heflin and I wanted to help these companies continue as an ongoing business concern, but we also wanted to ensure that the victims of asbestos-related illnesses wouldn't be left out in the cold. In the 1994 bankruptcy bill, we created a process where asbestos companies could be discharged of their tort liabilities but only if they created a trust fund, under the control of a bankruptcy judge, to pay victims. This process has worked well and has received favorable comment by the National Bankruptcy Review Commission. This amendment from Senator Levin, however, doesn't use a similar approach. This amendment merely provides that gunmakers and sellers can't discharge their tort liabilities. As a result, the amendment has no concern for the employees of the makers or retailers of guns. Under this amendment, retailers from giants such as Wal-Mart and Kmart all the way down to the small family-owned stores could face massive liabilities and be forced to lay off workers. In the case of the Heflin-Grassley legislation of 1994, as I indicated, we allowed the companies to continue to operate and to continue to have their employment, and in the process victims were not harmed in any way because of the trust fund. It seems to me, unless there is some ulterior motive other than helping victims with this legislation, that we should think about that approach--an approach that protects victims, an approach that makes the person who is guilty of wrongdoing have tort apply to pay that tort. Consequently, if that is not the approach, I think it reveals the real purpose of the amendment. I question that the amendment might be about making sure that tort plaintiffs receive compensation if any of the questionable antigun lawsuits were to succeed because that is not what is going to happen. This amendment is merely an effort to drive all segments of American industry involved with guns out of business, even if thousands of innocent, hard-working American employees have to pay the price. Consequently, I urge my colleagues to vote against this amendment. One other thing about the amendment is the presumption is so stated by the Senator from Michigan that this is just one addition--I think he would say that this is the 19th addition --to a long list of exceptions that are nondischargeable through the bankruptcy court. I think he is mistaken about how bankruptcy works for corporations and chapter 11 because his amendment applies just to corporations. Section 1141 of chapter 11 has two separate discharge provisions. It has one section for corporations and it has one for individuals. The discharge provision for corporate debtors discharges all debts. The discharge provision for individuals lists nondischargeable debts. So the idea this exception to discharge is just one more of a long list of 18 is flatout wrong. From this standpoint, then, the amendment by the Senator from Michigan is unprecedented, and I will be glad to share the code sections with my colleagues, if they desire. But subsection (a) discharges a debtor from any debt that arose and that applies to the corporations. But subsection (2) says the confirmation of a plan does not discharge an individual debtor. From that standpoint, this is not one of a long list of things that are nondischargeable.

Mr. GRASSLEY

Mr. GRASSLEY. The article I refer to raises important questions, even new questions, about Mr. Mancuso's integrity and judgment. At some point down the road, this body may be called upon to confirm or not confirm Mr. Mancuso's nomination because it has been suggested that President Clinton is expected to nominate him to be the next Department of Defense Inspector General. If that happens, then each Member of this body would need to weigh all the facts bearing on Mr. Mancuso's fitness to serve as the Pentagon's watchdog, which is also the Pentagon's top cop. In October, my staff on the Judiciary Subcommittee on Administrative Oversight and the Courts issued, for me, a report on the Defense Criminal Investigative Service. I am going to refer to that, as it is always referred to, as the DCIS--Defense Criminal Investigative Service. I strongly urge my colleagues to read this report. It substantiated allegations of misconduct on the part of senior DCIS management, including Mr. Mancuso, and at least one of his investigators, Mr. Mathew Walinsky. Mr. Mancuso at that time was Director of DCIS, and he was so from 1988 until 1997. Since that report was issued in October, my staff has been inundated with new complaints about alleged misconduct by Mr. Mancuso and mismanagement at DCIS while Mr. Mancuso was the Director of DCIS. My staff is now in the process of evaluating these allegations to determine if they have merit. Once that review has been conducted, I may issue a second report. Getting back to Mr. Wilson's article in the National Journal, by comparison, instead of my report opening up a new can of worms, Mr. Wilson's article has opened an old can of worms--in this case, Navy worms. It explores Mr. Mancuso's role in the investigation of misconduct at the infamous Tailhook convention in September 1991. By reopening this very unfortunate episode in naval history, Mr. Wilson has shed new light on Mr. Mancuso's fitness to move into the inspector general's slot. Mr. Wilson reports that the U.S. Court of Military Appeals condemned Mr. Mancuso and the DCIS for, in their words, ``heavy-handed investigative tactics that trampled constitutional rights.'' According to Mr. Wilson, Mr. Mancuso's tactics included ``threats, intimidation, falsification of interviews, and overreliance on lie detectors.'' In an opinion issued on January 11, 1994, on the Tailhook case, the U.S. Court of Military Appeals denounced Mr. Mancuso's tactics. The court compared the Tailhook case review process, which was set up by Mr. Mancuso, to sort of an assembly line justice, where investigative and judicial functions were merged and blurred. ``Merged'' and ``blurred'' are words the court used. ``Assembly line'' are words the court used. The court called Mr. Mancuso's assembly line justice ``troublesome.'' Going on to quote the court: At best, it reflects a most curiously careless and amateurish approach to a very high profile case by experienced military lawyers and investigators. At worst, it raises the possibility of a shadiness in respecting the rights of military members caught up in a criminal investigation that cannot be condoned. That is what the U.S. Court of Military Appeals had to say. That is the highest military court in our land. It is often called the United States Court of Appeals of the Armed Forces. So this highest court has condemned Mr. Mancuso for ``shadiness.'' The court said his practices were ``careless and amateurish'' and even ``troublesome.'' The court said he and his investigators failed to respect the constitutional rights of members of the armed services. I hope the Chair will agree that these are very serious charges about a person whom the President may nominate for our confirmation as inspector general of the Department of Defense. The court's criticism-- again referring to the Court of Military Appeals--may help to explain why the Tailhook investigation was a total failure. The entire investigation probably cost the taxpayers close to $10 million and involved several thousand interviews. Unfortunately, not one single naval aviator who faced an assault charge was ever convicted by a court-martial. As the Director of DCIS, Mr. Mancuso led the Tailhook investigation. He is accountable for failing to conduct it as a professional. A legitimate question for my colleagues and for the President: Should that same man, a man who used shady investigative tactics, a man who failed to respect naval judicial process in Tailhook, be confirmed as the Pentagon's watchdog? It is legitimate to ask if Mr. Mancuso is the best person to fill that position. I leave those thoughts with my colleagues over the next several weeks as this nomination may come up for consideration. I yield the floor. Exhibit No. 1 [From the National Journal, January 22, 2000] Tailhook May Soil Choice for Pentagon's Mr. Clean (By George C. Wilson) The man President Clinton is expected to nominate as inspector general of the Defense Department--the Pentagon's top cop--is coming under increased scrutiny in the Senate for questionable official conduct. Questions surround his role in the Tailhook sexual assault investigation of the early 1990s and his handling of his own investigators, one of whom pleaded guilty to stealing a 13-year-old boy's identity to obtain a false passport. Donald Mancuso, the Pentagon's acting inspector general and probable nominee for the permanent job, formerly led the Defense Criminal Investigative Service. DCIS, which conducts most of the fraud and misconduct investigations at the Defense Department, had taken over the Tailhook investigation in 1992 after the Navy was accused of botching it. During the Tailhook investigation, naval aviators accused Mancuso's agents of heavy-handed tactics that trampled their constitutional rights. These tactics, they maintained, included threats, intimidation, falsification of interviews, and overreliance on lie detectors. In the end, no aviator was convicted at court-martial for misconduct at the Tailhook convention, which was held in September 1991 at the Las Vegas Hilton. The U.S. Court of Military Appeals, in its review of the Tailhook cases, criticized military lawyers and the IG's investigators--who were supervised by Mancuso--for procedures that were ``troublesome.'' The court faulted investigators for an approach that was ``curiously careless and amateurish,'' and that didn't sufficiently respect the rights of suspects. Several lawyers who defended Tailhook aviators told National Journal that they stand ready to cite examples of misconduct by DCIS agents if the Mancuso nomination moves forward. Their testimony could widen and escalate a battle over Mancuso that Sen. Charles Grassley, R-Iowa, began at the end of the past congressional session. White House attorneys had focused on Grassley's earlier objections, but they apparently had not looked into Mancuso's Tailhook role when they told National Journal recently that they saw no reason to recommend he not be nominated. Grassley up to now had focused his objections on Mancuso's supposedly poor judgment while director of the Defense Criminal Investigative Service from 1988-97. Grassley accused Mancuso of coddling a deputy after the deputy confessed to stealing a dead boy's identity in an effort to get a false passport for still-mysterious reasons. Defense Secretary William S. Cohen has mounted a stout defense of Mancuso and has told Grassley that none of the Senator's objections should bar him from advancement. However, the Tailhook connection, which Grassley's investigators have just begun to probe, may turn the Mancuso nomination into a ``bolter''--pilot talk for an airplane that misses the arresting wires stretched across an aircraft- carrier deck and so fails to land. Grassley will do his best to exploit the Tailhook connection in hearings and on the Senate floor. Former Navy Secretary John W. Warner, R-Va., chairman of the Senate Armed Services Committee, which would hold confirmation hearings on a Mancuso nomination, is likely to plead with the President not to nominate anybody who would pull Congress back into the Tailhook swamp. The U.S. Court of Military Appeals denounced the tactics of Mancuso's agents in an opinion issued on Jan. 11, 1994, on a Tailhook case against Navy Lt. David Samples. The defendant had been charged with participating in the ``gantlet'' in which drunken pilots groped, and in some cases assaulted, dozens of women who ventured down the third-floor hallway at the Hilton. Samples charged that he endured his own intensive gantlet of interrogations as one naval officer after another advised him to tell what he knew and, in his view, guaranteed him complete immunity if he did. After undergoing the Navy interviews, he was immediately interrogated by DCIS in assembly line fashion. In court testimony, Special Agent Matthew A. Walinsky of DCIS attributed the assembly line idea to DCIS Director Mancuso: ``We felt that, or the director [of the] DCIS felt that, it was one of the ways that we could have a resolution in the case and be fair to everybody that was involved in [the] case, so that they would have a walk-away'' from any further entanglement in the Tailhook mess. The U.S. Court of Military Appeals assailed the arrangement: ``The assembly line technique in this case that merged and blurred investigative and justice procedures is troublesome. At best, it reflects a most curiously careless and amateurish approach to a very high profile case by experienced military lawyers and investigators. At worst, it raises the possibility of a shadiness in respecting the rights of military members caught up in a criminal investigation that cannot be condoned.'' Mancuso, when asked by National Journal to respond to the court's denunciation, said: ``The quote [from the decision] was taken out of context and exhibits a lack of understanding of the technique being discussed. . . . DCIS played a minor role in the `assembly line technique' as described in the opinion. The DCIS investigation of the Tailhook matter was handled thoroughly and professionally.'' But Charles W. Gittins of Middletown, Va., a defense attorney in the Tailhook case, charged in an interview with National Journal that Mancuso's DCIS agents ``routinely violated naval officers' rights with threats of retribution for failure to cooperate,'' Gittins said that Mancuso's supervision of his investigators ``left much to be desired. I would have concern if Mancuso became IG about his integrity and commitment to the rule of law.'' He added he would welcome the chance to give such testimony to Congress. Robert B. Rae of Virginia Beach, Va., another Tailhook defense attorney and a former U.S. attorney, said that Mancuso ``abused his position [as DCIS director] and showed a general disregard for laws of military justice'' during the Tailhook investigation. ``He intentionally failed to comply with the judge's order to produce evidence and documents on several occasions. We need somebody [as inspector general] who makes the ethical decision, not the politically correct one. He [Mancuso] was politically motivated.'' Mancuso told National Journal that ``while I don't remember being directly involved with either of these defense counsels during the Tailhook investigation, it is not unusual for defense counsels to disagree with the government's investigation techniques. I categorically deny that I have ever intentionally failed to comply with any judge's order.'' He said that as DCIS director, he worked to ensure that both sides received all requested information promptly. As Pentagon inspector general, Mancuso would be responsible for supervising 1,228 employees, including 323 criminal investigators, and for overseeing a budget of $136.8 million annually. He would be paid a salary of $118,400 a year. Grassley is particularly vexed about what Mancuso did--and did not do--about Larry Joe Hollingsworth, a deputy at DCIS who was responsible for keeping agents in line, but who committed a felony that a hearing judge termed ``bizarre.'' In 1992, Hollingsworth found in the records of a Florida library the obituary of Charles W. Drew, who died at age 13. Hollingsworth decided to assume the boy's identity. And by posing as the deceased boy's half brother, Hollingsworth obtained the identification papers he needed to apply for a passport in Charles' name. He appended pictures of himself to the passport application and signed it in such a muddled way that the State Department investigated, leading to Hollingsworth's arrest, indictment, and confession to one count of fraud. Why would a 46-year-old, $92,926-a-year Pentagon executive with more than 20 years' experience investigating other people's crimes commit one himself? ``In the last few years,'' Hollingsworth wrote right after his arrest, ``I have seen repeated news stories about how easy it would be'' to assume someone else's identity. ``I decided to see if it was true. This was a Walter Mitty fantasy, however, for excitement and not to hurt anyone.'' Special Agent Sean O'Brien of the State Department told investigators with Grassley's Senate Judiciary Administrative Oversight and the Courts Subcommittee that ``there were at least 12 overt acts of fraud perpetrated by Mr. Hollingsworth over the course of one year.'' O'Brien told the investigators that ``passport fraud is always committed in furtherance of a more serious crime . . .'' On April 29, 1996, Mancuso wrote, on assistant inspector general stationery, to federal Judge T.S. Ellis III of the U.S. District Court in Alexandria, VA., while the jurist was weighing what penalty to impose on Hollingsworth. ``To this day,'' he wrote, ``there is no evidence that Mr. Hollingsworth has ever done anything improper relating to his duties and responsibilities as a DCIS agent and manager. . . . It is our intention to consider removal action against him after the conclusion of the criminal charges. . . . I would ask that you also consider the severity of these administrative actions as you pronounce sentencing.'' Grassley accused Mancuso of showing poor judgment in writing what the Senator considered a plea for leniency. Grassley also criticized Mancuso for letting Hollingsworth retire at 50 in 1996 with full pay, 12 years ahead of schedule--a decision that cost the taxpayers an extra $750,000, Grassley said. Mancuso denied asking for leniency. He told National Journal that that ``my intent in writing the letter was to advise the judge of SA [Special Agent] Hollingsworth's past job performance while assigned to DCIS, not to ask for leniency. In fact, nowhere in my letter is the term `leniency' used.'' Hollingsworth, after pleading guilty, was sentenced in June 1996 to supervised probation for two years and was fined $5,000, plus $195.30 a month to pay for the cost of supervising him while on probation. He also had to serve 30 days of jail time on weekends, perform 200 hours of community service, and pay a $50 special assessment. The majority staff of Grassley's subcommittee on Nov. 2 filed a 64-page report highly critical of Mancuso's conduct. Cohen responded to Grassley on Dec. 28 that his staff had found nothing in the subcommittee's report to shake his ``complete confidence in Mr. Mancuso's abilities and integrity. Nothing I have seen has caused me to doubt Mr. Mancuso's ability to ably, fairly, and honestly lead the Office of the Inspector General.'' ``Bill,'' Grassley wrote back to Cohen on Jan. 7, ``you and I have known each other for many years, I know, if given an accurate report on the facts in the case, you would not defend the integrity of the acting IG.'' Since vote-counters have apparently concluded that Grassley does not have enough Senate allies to defeat the nomination, the White House intends to nominate Mancuso when Congress reconvenes. Will the stubborn Iowan resort to a filibuster, or will he place a simple hold on the nomination, in light of Tailhook and other charges? ``I don't know yet,'' Grassley replied.

Mr. GRASSLEY. I suggest the absence of a quorum.

Mr. GRASSLEY. Mr. President, I would like to take a moment with my colleagues to discuss a recent article that was in the National Journal. It was about the Pentagon's Acting Inspector General, Mr. Donald Mancuso. The article was written by Mr. George Wilson. Mr. Wilson was a senior defense reporter at the Washington Post for many years. He left the Washington Post in 1991 to write books. He is now a columnist with the National Journal. Mr. Wilson is a top-notch reporter. He is respected for being very thorough and very fair. But, above all, he is respected for an uncanny ability to find the nub of a complex issue and expose it to public scrutiny in an interesting and also informative way. He had a recent article in the National Journal that is no exception. It has exposed a very raw nerve. The article is entitled: ``Tailhook May Soil Choice for Pentagon's Mr. Clean.'' It appeared in the January 22, 2000, issue of the National Journal on pages 260 and 261. Mr. President, I ask unanimous consent to have that article printed in the Record at the end of my remarks.

Mr. GRASSLEY

Mr. GRASSLEY. Madam President, I ask unanimous consent that the Senate proceed to the immediate consideration of S. Res. 249, submitted earlier by Senators Lott and Daschle.

Mr. GRASSLEY. Madam President, I ask unanimous consent that the resolution be agreed to, the preamble be agreed to, the motion to reconsider be laid upon the table, and that any statements relating to the resolution be printed in the Record.

Mr. GRASSLEY

Mr. GRASSLEY. Madam President, I ask unanimous consent that when the Senate completes its business today, it adjourn until the hour of 9:30 a.m. on Tuesday, February 1. I further ask that on Tuesday, immediately following the prayer, the Journal of proceedings be approved to date, the morning hour be deemed expired, the time for the two leaders be reserved for their use later in the day, and the Senate then resume debate on S. 625, the bankruptcy reform bill, under the previous order.

Mr. GRASSLEY. Further, I ask unanimous consent that the Senate stand in recess from the hours of 12:30 p.m. to 2:15 p.m. for the weekly policy conferences to meet.

Mr. GRASSLEY

Mr. GRASSLEY. Madam President, as in executive session, I ask unanimous consent that the injunction of secrecy be removed from the following convention transmitted to the Senate on January 31, 2000, by the President of the United States: Treaty on Mutual Legal Assistance in Criminal Matters with France, Treaty Document No. 106-17. I further ask unanimous consent that the convention be considered as having been read the first time, that it be referred, with accompanying papers, to the Committee on Foreign Relations and ordered to be printed, and that the President's message be printed in the Record.

Mr. GRASSLEY

Mr. GRASSLEY. Madam President, for the information of all Senators, the Senate will resume consideration of the bankruptcy reform bill at 9:30 a.m. tomorrow, with Senator Wellstone in control of the first hour. There are other remaining amendments that will be debated and voted on throughout Tuesday's and Wednesday's session of the Senate, with a vote on final passage expected to occur no later than Wednesday. As a reminder, in addition, a cloture motion has been filed on the motion to proceed to the nuclear waste disposal legislation, and that vote will occur following the completion of the bankruptcy bill during Wednesday's session of the Senate.

Mr. GRASSLEY

Mr. GRASSLEY. Madam President, I have had a chance to discuss this issue with the Senator from Wisconsin over a long period of time, both at the subcommittee level, the committee level, and during floor action on this bill which has been going on now since last October, with a long interim for a holiday break. I appreciate what the Senator from Wisconsin is trying to do. We have joined together on a bill dealing with one aspect of this problem and that happens to be a bill which deals with arbitration in the automobile industry. As the lead Member of the Senate on alternative dispute resolution issues, I certainly do not want alternative dispute resolution to be used in unfair ways. So following up on the request of the Senator from Wisconsin that if we could make some sort of arrangement for his not offering his amendment at this time--and he has withdrawn it--I have scheduled a hearing in my judiciary subcommittee on our bill. I hope to air some of these other problems the Senator has raised. I do have a great deal of sympathy for what the Senator from Wisconsin is attempting, but I think more groundwork needs to be done so we all have a better understanding of these issues before moving ahead at this time. The bottom line, I say to the Senator from Wisconsin--and I hope he will answer yes or no--is that I wish to make sure he is working with us between now and our hearing so every commitment I have made in regard to his offering or not offering his arbitration amendment to this bill at this time is to his satisfaction.

Mr. GRASSLEY

Mr. GRASSLEY. Madam President, on behalf of the majority leader, I ask unanimous consent that there be a period for the transaction of morning business, with Senators permitted to speak for up to 10 minutes each.

Mr. GRASSLEY

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

Mr. GRASSLEY. I think we are in morning business, right?

Mr. GRASSLEY

Mr. GRASSLEY. Madam President, if there is no further business to come before the Senate, I now ask unanimous consent that the Senate stand in adjournment under the previous order.

Mr. GRASSLEY

Mr. GRASSLEY. As everyone knows, we have started with the new Congress what we hope will be the final 2 days of the bankruptcy bill that we started sometime during the last 2 weeks of the session last year. We hope to finish by next Tuesday or Wednesday. We have the number of amendments down to about nine, with limits on debate on most of those amendments. It looks as if we can see the end of the debate and what I hope will be final passage. I think I can predict final passage because we did pass this legislation with only one or two dissenting votes during the year of 1998. At that particular time, it was too late in the session to get the bill back to the House before final adjournment, so obviously in 1999 we had to start over again. That is concluding now with the House passing the bill in the middle of last year by a veto- proof margin. At this point, I will say a few words about how we have thought of the proper role of bankruptcy over the course of our Nation's history. Congress' authority to create bankruptcy legislation derives from the body of the Constitution. Article I, section 8, clause 4, authorizes Congress to establish ``uniform laws on the subject of bankruptcy throughout the United States.'' Until the year 1898, we did not have permanent bankruptcy laws; they were temporary. They were temporary reactions to particular economic problems. With each successive bankruptcy act and each major reform of our Nation's bankruptcy laws, we have refined our concept of how bankruptcy should promote the important social goal of giving honest but unfortunate Americans a fresh start while at the same time we guard against the moral hazard of making bankruptcy too lax. Quite frankly, since 1978 that is exactly what has happened. In the last 6 or 7 years, we have seen an explosion of the number of bankruptcies, from about 700,000 to about 1.4 million. We do not have solid statistics on this, but hopefully that 100- percent rise in bankruptcies over the last 6 years has leveled off now. We think it has. If it has leveled off, hopefully it will start to decline. Some of that is attributable to our working on this legislation and sending a signal not only to people who are unfortunate and are considering bankruptcy, but to our entire society that Congress is taking a look at this 1978 legislation. The point of that legislation may not have been to make it easier to go into bankruptcy, but that has been the final product of that 1978 legislation. Hence, our reconsideration of that 1978 legislation with the amendments that are in this bill will send a signal to the people of this country that those who have the ability to pay should not be in bankruptcy in the first place. But if they decide to go into bankruptcy, they are not going to get off scot-free. That still retains our social practice, which has been that if they deserve a fresh start, they will still get it. The bill before us proposes fundamental reforms which are a logical outgrowth and an extension of our prior bankruptcy reform efforts. I am talking about certain reforms that have taken place over the last 102 years. From 1898, which is the start of our permanent bankruptcy legislation, until 1938, consumers had only one way to declare bankruptcy. It was called straight bankruptcy, or chapter 7 bankruptcy. Under chapter 7, which is still in existence, bankrupts surrender some of their assets to the bankruptcy court. The court sells these assets and uses the proceeds to pay creditors. Any deficiency, then, is wiped out, hence the term ``a fresh start.'' In 1932, the President recommended changes to the bankruptcy laws which would push wage earners into repayment plans. Later in the 1930s--and the exact date is 1938--Congress created, then, as a result of this suggestion 8 years before, chapter 13, which permits but does not require a debtor to repay a portion of his or her debts in exchange for limited debt cancellation and protection from debt collection efforts. Chapter 13 is still on the books to this very day, although it has been modified several times, most notably that modification in 1978. Under current law, the choice between chapter 7 and chapter 13 is entirely voluntary. Since it is entirely voluntary, that is the cause of part of the problems we have now. People who have the ability to repay, who might use chapter 13 of the bankruptcy code as part of their financial planning, try to get into 7 and do not have to go into 13. As a result of not going into 13, they can get off scot-free. Senators, decades before this Senator, saw a weakness in this. In the late 1960s, there was a distinguished Senator from Tennessee by the name of Albert Gore, Sr. He introduced legislation to push people into repayment plans. This proposal was reported to the Senate as part of a bankruptcy tax bill passed by the Finance Committee, but the Gore amendment ultimately died in the Senate. Later, in the mid-1980s, Senator Dole and a Congressman from Oklahoma by the name of Mike Synar tried to steer higher income bankrupts--those who could repay some of their debt, those who were going into bankruptcy chapter 7 to get off scot-free--to steer those people to chapter 13. That was a good idea by Senator Dole and Congressman Mike Synar. The efforts of Senator Dole and the Congressman, though, ultimately resulted in the creation of section 707(b). This section gives bankruptcy judges the power to dismiss the bankruptcy case of someone who has filed for chapter 7 bankruptcy if that case is--and these are the words from the law--if that case is a ``substantial abuse'' of the bankruptcy code. This idea sounds very good and probably was quite a step forward by Senator Dole and Congressman Synar, but it has not worked so well in the real world. First, the term ``substantial abuse'' has not been clearly defined, and its actual meaning is very unclear. Why? Not because of the intent of the authors, but because we have had so many conflicting court cases. The decisions have brought conflicts in this area of the law from different parts of the country, so people are not sure what the rules are. There is a second reason. Creditors and private trustees are actually forbidden from bringing evidence of abuse to the attention of the bankruptcy judge. I want to think that this was an oversight by Senator Dole and Congressman Synar. Or it may have been part of a necessary compromise at the time to take a small step forward. But it is unreasonable, if you believe there has been a substantial abuse of the bankruptcy code, and going into chapter 7 and, according to the language of the statute, there has been ``substantial abuse,'' that somehow knowledge of that cannot be brought to the attention of a bankruptcy judge by creditors and private trustees. The bill before our body corrects these two shortcomings. Under this bill, 707(b) now permits creditors and private trustees to file motions and actually bring evidence of chapter 7 abuses to the attention of the bankruptcy judge. This change is very important since creditors have the most to lose from bankruptcy abuse, and, of course, the private trustees are often in the best position to know which cases are abusive in nature. In certain types of cases where the probability of abuse is high, the Department of Justice is also required to bring evidence of abuse to the attention of bankruptcy judges. Additionally, the bill requires judges to dismiss or convert chapter 7 cases where the debtor has a clear ability to repay his or her debts. Under this bill, if someone who has filed for chapter 7 bankruptcy can repay 25 percent or more of his or her general unsecured debts, or a total of $15,000 over a 5-year period, then a legal presumption arises that this case should be dismissed or converted to a repayment plan under another chapter. Taken together, these changes will bring the bankruptcy system back into balance. I am sure it is a balance that Senator Dole and Congressman Synar sought in the first instance. Importantly, these changes preserve an element of flexibility so each and every debtor can have his or her special circumstances considered. That is important, as well, as we give some leeway, some flexibility, to the bankruptcy judge when this sort of evidence is brought. This will not put any group of bankrupts in a straitjacket. All of this means then that their unique situation will be taken into account. As we proceed to consider this bill, I hope my colleagues will keep in mind the balance of this legislation, the fair nature of this legislation, as well as its deep historical roots, not going back, I suppose, to the beginning of our country but, as far as a uniform permanent bankruptcy code, to 1898. I also think this is a tribute--as the Senator from Vermont spoke about earlier--that we have been working very closely between Republicans and Democrats on crafting a bipartisan measure. That reminds me again that, as with last fall when we first started consideration of this bill--we are continuing it now because we did not finish it last year--a great deal of credit goes to the Senator from New Jersey, Mr. Torricelli, for his outstanding cooperation with me on this legislation, in addition to Senator Leahy because as chairman of the subcommittee that handles this legislation, I had to work very closely, and enjoyed working very closely, with Senator Torricelli. We introduced the bill together. We got it out of subcommittee together. We got it out of the full committee together. This enjoyed a great deal of bipartisan support in the Senate Judiciary Committee. Lastly, I just ask my colleagues to come to the floor. We were told that a couple of the authors of these amendments would be prepared to come to the floor this afternoon to debate these amendments and, except for votes, to take care of some of these amendments. I hope my colleagues will come. I yield the floor.