Jerrold Nadler

Mr. NADLER

Mr. NADLER. Mr. Speaker, today I joined with several of my colleagues to introduce the Assault Weapon Ban Enhancement Act of 1999. This legislature is designed to strengthen the existing ban and to respond to efforts by gun manufacturers and importers to cosmetically alter their weapons to avoid the ban. I was a proud cosponsor of the Assault Weapon Ban Enhancement Act that passed in 1994, and I remain a strong supporter of that law. It specifically prohibited nine categories of pistols, rifles, and shotguns. It also had a ``features test'': that is, it bans semiautomatic weapons with multiple features (e.g., detachable magazines, flash suppressors, folding rifle stocks, and threaded barrels for attaching silencers) that appear useful in military and criminal applications, but that are unnecessary in shooting sports. The Department of Justice recently released a report on the ``Impacts of the 1994 Assault Weapons Ban: 1994-96.'' Among the report's key findings are that ``criminal use of the banned guns declined, at least temporarily, after the law went into effect.'' It said that further studies were needed to assess the long-term effects. It also stated that ``evidence suggests that the ban may have contributed to a reduction in the gun murder rate and murders of police officers by criminals armed with assault weapons.'' But the report also observed that the ban could be easily avoided by gun manufacturers and importers. It said that ``shortening a gun's barrel by a few millimeters or `sporterizing' a rifle by removing its pistol grip and replacing it with a thumbhole in the stock, for example, was sufficient to transform a banned weapon into a legal substitute.'' That is why we have to do more. We have witnessed, in gun shows and advertisements on the Internet and in magazines, a new brand of assault weapon, specifically designed to avoid the ban, but still lethal and potentially harmful to the American public. The BATF has recently approved a new weapon--the VEPR. We fear that gun makers will use the VEPR as a prototype of a new generation of weapons that seek to avoid the ban and flood the U.S. market with high-powered deadly assault rifles--assault rifles in fact; but evading the 1994 legal definition. Our gun import laws are like a series of sieves. The first sieve is the 1989 ban on the importation of assault weapons, and the 1994 ban on the domestic manufacture of assault weapons. But there are some holes in this sieve. The second sieve--the Clinton Administration's April, 1998 ruling--has slightly smaller holes and blocks a few more weapons, including some guns that were cosmetically altered to avoid the first ban. The final sieve is the Nadler bill, which has the smallest holes. It stops guns that would have been determined to be assault weapons except for the fact that they had a thumb hole stock instead of a pistol grip. It stops guns that can be easily modified to accept high capacity magazines, or that use .22 caliber ammunition. Now, some guns will still make it through the Nadler sieve. Regular sporting rifles, and weapons that can't be modified to accept large capacity magazines would still be able to be imported. But the Nadler bill is designed to strengthen an already good law and to prevent manufacturers from evading the assault weapons ban. This legislation was designed to head off the influx of this next generation weapon, before these guns are used in the next round of deadly violence. This is a forward-looking bill, that will take strong preventive action now, so that we do not hear about another awful tragedy later. If we act quickly, we can do a world of good, and save countless lives.

Mr. NADLER

Mr. NADLER. Mr. Chairman, I offer an amendment.

Mr. NADLER. Mr. Chairman, I yield 2\1/4\ minutes to the gentlewoman from California (Ms. Lofgren).

Mr. NADLER. Mr. Chairman, how much time do we each have, please?

Mr. NADLER. Mr. Chairman, I yield myself such time as I may consume. Mr. Chairman, the gentleman from Virginia gave the game away a few minutes ago when he said that he is going to be introducing a bill, along with others, on embracing most of these same provisions on class action suits in general. And that is the proper forum to discuss these issues. Why here, only with respect to Y2K? Well, why not get away with it where one can? Why not make a different rule for Y2K? There is no justification for that. I disagree with the gentleman's positions on class actions, but the proper forum to debate those is in general for class actions. If it is proper to require these specific notice provisions in a class action suit in Y2K, it is proper to require them in all class actions and we ought to debate that separately. But let us talk for a moment about the effect on Y2K. These provisions will eliminate 95 percent of class action suits. How many people will be able to afford the tens of thousands or the hundreds of thousands or the millions of dollars up front just for the notice provisions? That is why we have notice provisions in the law now, but not overly burdensome notice provisions. What the gentleman's bill would do, without this amendment, would be to say an individual cannot start a class action suit unless they can come up with all this money up front. And the intention is, little guys should not sue big guys. Big guys should do whatever they want and not be subject to justice in our courts. And that is what this bill would do. The Judicial Conference said the Federalization provisions would clog the courts. The gentleman says diversity cases are going down. Yes, they went down by 6 percent, but this would open up almost all cases to Federal diversity jurisdiction now, and that would clog the courts. One person in the class lives in a different State, we have diversity jurisdiction under this bill, which means essentially every class action suit will be in Federal Court. That will clog the Federal courts. I would remind everybody that most judicial personnel, better than 95 percent of judicial personnel, are in State courts, not Federal courts. This would make the victim pay. It is another whole discussion whether we should turn our American justice system upside down and make the victim pay if he loses the lawsuit, pay all the court costs. This is a discussion for a general bill. It is not a discussion for the Y2K bill. In summary, these provisions do not belong in this bill and they would say, essentially, to big businesses, do not bother getting themselves into shape for Y2K because nobody except another big business is going to be able to sue them because we are eliminating class actions here. And if that is the intent, then we ought to be up front about it and say we do not believe that the courts are for little people to sue big people, because that is what this bill does.

Mr. NADLER. Mr. Chairman, I yield myself such time as I may consume. Mr. Chairman, this amendment would strike the sections of the bill which place severe limits and, I would say, gut any possibility of class-action suits in Y2K situations. The bill's unnecessary class action provisions will do nothing to address the Y2K problem and serve only to restrict the rights of millions of consumers who may be negatively affected by the negligence of some. In addition, they will burden the Federal courts, and it will impede justice for many others as well. Some of the provisions that would do this, one provision would require plaintiffs to prove in a class-action suit that there was a material defect as to a majority of the members of the class. This provision places a huge burden on the plaintiffs and on the court and is totally unnecessary. Plaintiffs would now be required to interview and document the same type of damage on thousands of people with identical injuries. For example, in a case involving 17,000 doctors, a recent case, about 8,500 doctors would have had to document that they were all harmed in the same way because they all had the same defective computer program. This is a total waste of money. The only reason for this provision is to make it more difficult for people to file class-action lawsuits. After all, why are there class- action lawsuits in the first place? Class actions are used by large groups of people who have suffered the same injury from a single defendant or group of defendants. When more than a million people were cheated out of $150 each because of fraud by Sears Roebuck a couple of years ago, it did not make sense for all of them to sue individually for $150. It could not have been done. Without a class-action proceeding, Sears Roebuck would have profited from its fraud to the tune of $168 million. By joining together, the victims, individuals or small businesses who are victimized by intentional or by negligent torts, can seek their damages collectively and hold the tort-feasors responsible. Class actions let the little guys sue the big guys, which, as I understand, is why some people want to eliminate them. They also help the courts. Why should the courts be forced to hear the same story over and over again? Second, the bill would limit access to the courts by requiring notice of the action to be sent by mail, return receipt requested. That would cost, according to the Post Office, $2.65 plus postage for each individual. So that means, for those 17,000 doctors cases, it would have cost $51,000 just to send a one-page notice. What a waste of money. What if there were more than 17,000 plaintiffs? What if, as in the Sears case, there were over a million? It would have cost over $3 million just for notice to institute the lawsuit. This is simply ridiculous and is another attempt to prevent class- action lawsuits, which is the only way for the powerless victims to hold the powerful accountable. It sends a message in the context of this bill that large companies do not have to make any real efforts to prepare for Y2K problems. After all, most victims of their negligence in failing to prepare will not be able to sue them because it would cost hundreds of thousands or millions of dollars just for the notice provision. The bill also removes almost all Y2K class-action lawsuits to Federal court. It overrides State law. It would require that any amount in controversy over a million dollars, which in any class-action almost all are for over a million dollars, it would go to Federal court. It would provide that if there is one diversity of citizenship, if a million people in New York claimed damages and one in New Jersey, that goes to Federal court. This overburdens the Federal courts. Judge Stapleton of the Court of Appeals for the Third Circuit testified on behalf of the Judicial Conference that this class-action provision in this bill would significantly disrupt the administration of justice in the Federal courts, which are overburdened. Of course, we hear from the other side of the aisle all the time in favor of not infringing on the rights of the States. That is what we were told in the bankruptcy debate last week. We could not have a ceiling on the homestead exemptions because a couple States would not like that. This bill infringes on the traditional authority of States to manage their own judicial business. By shifting all these State-created causes of action to Federal court, the bills confront the Federal courts with the time-consuming responsibility of engaging in a lot of choice-of-law decisions. Finally, I will mention that the State courts provide most of the Nation's judicial capacity, so we should not limit access to this capacity in the face of the burden that Y2K litigation may impose. Contrary to the stated goals of this litigation, the class-action provisions, by essentially eliminating class actions and federalizing those that would remain, would seriously impair our ability to efficiently resolve Y2K disputes and again says to major companies, ``Do not bother fixing the Y2K problem. The cost will be passed on to your customers and consumers because they will not be able to sue you because of the normal cost of litigation. We will not let them consolidate those costs in a class action, which is the only way small customers, small consumers ever can sue big tort-feasors.'' This provision should be called the ``Tort-feasors Rights Act of 1999.'' Mr. Chairman, I reserve the balance of my time.

Mr. NADLER. Mr. Chairman, how much time do I have and how much time does the gentleman from Virginia have?

Mr. NADLER

Mr. NADLER. Mr. Speaker, I rise today in recognition of the first annual Memorial Day for the Gay, Lesbian, Bisexual and Transgender community. This special day has been established to remember the many who have lost their lives due to killings, beatings, and suicides that have resulted from the homophobic attitude prevalent in our society and throughout history. Every year, on the anniversary of the Warsaw ghetto uprising, the world commemorates Yom Hashoah or the Day of Remembrance for the Holocaust. Although several museums throughout the United States and Europe include exhibits recalling the homosexual experience during the Nazi era, most Yom Hashoah services fail to mention that part of Hitler's reign of terror was the systematic attempt to eliminate homosexuals from Germany. It is estimated that, under his plan, tens of thousands of homosexuals were arrested and thousands were confined to death camps along with others he deemed ``undesirable.'' Today's solemn remembrance is part of an effort to remove the veil of silence about this tragic history of persecution and killing, underscore the seemingly endless chain of hate crimes, and provide education aimed at eradicating intolerance and violence against gay, lesbian, bisexual and transgender persons. I salute Congregation Beth Simchat Torah, the Church of the Holy Apostles, the International Association of Lesbian and Gay Children of Holocaust Survivors and the many other religious and community organizations that have joined in coalition to cosponsor today's solemn commemoration of the many lives lost as a result of a national reaction to homophobia. May their lives serve as reminders of the horrors of prejudicial acts of this kind. Let us honor their memory by committing ourselves to ending bigotry toward all people regardless of who they are or who they love.

Mr. NADLER

Mr. NADLER. Mr. Chairman, I yield myself 1 minute. Mr. Chairman, the gentleman from Pennsylvania (Mr. Gekas) talked about a provision in the bill, in his bill, which would allow landlords to evict debtors without obtaining permission of the bankruptcy court, and that that substitute would eliminate that provision, which it would do. Every other creditor has to get permission of the bankruptcy court to have an exemption from the automatic stay. Advocates of battered women and those involved in rehabilitating debtors have expressed concerns that these unsupervised evictions would pose a threat to the debtor's safety and to the safety of his family, and would pose a threat to debtors' ability to remain productive wage earning citizens. There is a fundamental question. Why should a property owner be in a different position to be exempt from an automatic stay, a different position than any other creditor? We do not see an answer to that question. Every creditor has the same provisions. There is no reason why one creditor should be in a preferred position, and that is why the provision is in the substitute.

Mr. NADLER. Mr. Chairman, I yield 2\1/2\ minutes to the distinguished gentlewoman from California (Ms. Lee).

Mr. NADLER. Mr. Chairman, I offer an amendment in the nature of a substitute.

Mr. NADLER. Mr. Chairman, I ask unanimous consent that the amendment in the nature of a substitute be modified in the form I have placed at the desk.

Mr. NADLER. Mr. Chairman, if the gentleman will yield, I am informed by distinguished counsel that they were typos and errors in drafting, that he made no substantive changes.

Mr. NADLER. I do not think I would call the work of the staff sloppy. I would think in view of the haste it was hasty because of the committee schedule.

Mr. NADLER. Mr. Chairman, I yield myself such time as I may consume. (Mr. Nadler asked and was given permission to revise and extend his remarks.)

Mr. NADLER. Mr. Chairman, I am reluctantly offering this substitute in the hope that it will open the door to rational discussion and an eventual compromise that will ensure both that people will be unable to game the system and that all parties, debtors and creditors alike, will be treated fairly in our bankruptcy courts. It is an attempt to foster dialogue and compromise and I hope it will not be misconstrued as my idea of an ideal bankruptcy bill. I certainly do not agree with everything in the substitute, and I hope no one will pull sections out of it and say that I think this is a good idea. But I certainly do agree with the main changes we make from the Gekas bill. In its current form, this bill provides ample loopholes for the wealthy, well-advised debtor to escape his or her obligations in bankruptcy but sets numerous traps for the middle and low-income debtor who will face unnecessary litigation and costs, unrealistic legal requirements and legal presumptions which bear no relation to reality. The bill will destroy businesses, it will destroy families and it will destroy lives. America is better than that. We can get at that small percentage of people. The ABI, the American Bankruptcy Institute, estimated 3 percent of debtors can afford to repay 20 percent or more of their debt. The creditors said oh, no, they are wrong, it is double that, 6 percent. We can get at that small percentage, 3 or 6 percent of people who are abusing the system, without making costs skyrocket and without violating the rights of small debtors and creditors. The substitute I am offering makes several major changes in the bill before us. It makes two changes in the so-called means test. First, it would look at a debtor's real income rather than his past income. The bill would average the previous 6 months of income and create a legal presumption that this is what the debtor will receive every month for the next 5 years, but we know this is wrong. For example, people are making $50,000 at middle management at IBM and they are laid off, now they are making a much less amount of money. That is why they are going bankrupt. One cannot presume that they are making $50,000. This amendment would look at their real income and it looks forward, it does not look back. Second, the means test does not look at your actual expenses, it looks at what some IRS bureaucrat thinks that the average expense in your part of the country ought to be. The substitute makes the same change here as the Hyde-Conyers amendment we voted on a few minutes ago would have done. In the last Congress, the majority declared the IRS to be the great Satan and held hearings designed to show that these guys could not be trusted. We even passed legislation to reform the IRS which specifically directed the IRS to drop these guidelines and to fashion new ones with greater leniency because we thought these guidelines were inaccurate and too harsh. Yet this bill would require that those same guidelines that we judged last year to be inflexible, inaccurate and too harsh should now be applied without any flexibility at all. We have been told that you could just put the debtor through a home computer and find out how much bankruptcy relief they are entitled to. The gentleman from Illinois (Mr. Hyde) is right, the IRS should not be entrusted with this task. If the real circumstances do not match your income from the last 6 months and what the IRS says your landlord should be charging you, never mind what he actually does charge you, the bill allows you to go to court and plead extraordinary circumstances. In other words, to get the court to look at your real situation, you have to hire a lawyer and litigate a motion. It is right in the bill, and it is the first roadblock in the path of someone with no money who really needs bankruptcy relief. How many people who really have no money are going to be able to afford to litigate the question of whether their daughter's braces are extraordinary circumstances? Why should they have to? Any reasonable means test would say, what are your real means, what is your real income, what are your real expenses? Not what does the IRS think the average rent or the average mortgage payment in the Northeast ought to be, what is your mortgage payment? You cannot take the IRS estimate to the bank. The substitute has the court look at reality from the very beginning of the case, no Alice in Wonderland. The substitute allows the debtor to bring to the court's attention at the beginning of the case changes in his or her circumstances which would make the 6-month lookback for income unrealistic. No special motions, no litigation. Part of the filing. Unlike the bill, in addition to allowing people to pay for private school and counting that as part of his expenses, our bill would allow expenses for public school, if any, and for home schooling. Private school should not get a special preference over public schools and over home schooling. We have also heard a great deal about the effect nondischargeability will have on families and child support. Let us talk about what this bill adds, why it is a problem and what this substitute would do. The first addition to nondischargeability would make nondischargeable purchases in the aggregate of $250 or more in the 90 days before the bankruptcy filing, it would assume that that is for luxury goods or services. But it presumes that that $250 is for purchase of luxury goods. If you put your groceries, your gas and your dry cleaning on a credit card for 3 months for your family, do you think that would be more than $250? Now, the credit card company would get to drag you to court and you would have to prove that it is not a luxury good. The presumption would be that it is a luxury good and should be nondischargeable in bankruptcy. You bought a new dishwasher. Could the old one have been fixed? Can you not do it by hand? Go prove it, at the cost of litigation. But the main point is that this is a litigation trap for people who are really broke and cannot afford a lawyer to defend the discharge action. The same with the other section which makes nondischargeable debts on a credit card incurred to pay nondischargeable debts. We have seen today that banks are sending live checks and preapproved credit cards to people, even kids, and saying use it for whatever you want. Now the same banks want to say, ``Hey, wait a minute, you paid your tax bill with your credit card. We want our debt on the credit card that you used to pay your tax to survive bankruptcy because you should not have paid it with your credit card.'' They do not have to prove any improper intent. They simply make the debt nondischargeable. The result, these credit card debts would survive a bankruptcy discharge and would compete with other more important nondischargeable debts after the case is over. Your ex-wife wants to collect child support. Too bad. Let her go and compete with a lawyer for Chemical Bank, which would now be made nondischargeable. That is why advocates for women, for families with kids, for crime victims, Mothers Against Drunk Driving have spoken out so consistently against this provision of the bill. The substitute also includes improvements to Chapter 11 which protects family farms. The substitute raises, to keep pace with inflation, the limit on who can file for Chapter 12, and it assures that proceeds from the sale of farm equipment are used to help reorganize the farm and not to go only to taxes. Like the bill, it also makes Chapter 12 permanent. It is the same language that is in the bipartisan bill introduced by the gentleman from Michigan (Mr. Smith) and the gentleman from Minnesota (Mr. Minge). We have played politics with family farms too long. There is a crisis in the farm belt. They need these improvements to the law and they need Chapter 12 to be permanent. We should do it whether the big banks that hold farm mortgages like it or not. There are a number of provisions in this bill for credit card disclosure, the same provisions that were in the amendment that the gentleman from Massachusetts (Mr. Delahunt) offered in committee, that the Committee on Rules refused to make permanent. I will just mention one. Under this bill, the credit card companies tell you the interest rate is X and your minimum payment is $10, but they do not tell you that if you pay the minimum, how long it will take you to repay. It will take you 200 years to repay your debt. And what percentage of income you will pay, 300 percent. They would have to tell you those kinds of disclosures so you would know that. The last piece I want to discuss concerns a matter that is very important to me, child support enforcement. As a member of the New York State Assembly, I wrote most of the State's child support enforcement laws. There have been a great many fig leafs placed on this bill to make it appear as if the bill is not anti-family and would not very greatly damage child support enforcement, but the truth is it most certainly would. There are two ways in which this bill would hurt child support enforcement. In Chapter 7 we are making credit card debts or many of them, as I have already mentioned, nondischargeable. So mom, after the bankruptcy is finished now, now has to compete with the bill collector or the attorney from Chemical Bank to collect the nondischargeable debt, because there is more debt that is now nondischargeable. She has got to compete for it. But the sponsors of the bill say, no, no, no. We are giving child support a priority so she will not have to compete. But of course, as any bankruptcy attorney knows, priorities only exist in bankruptcy court. Once one has the discharge, they are no longer in bankruptcy court, the priorities are wiped out, the Federal jurisdiction is wiped out, the bankruptcy proceeding is over, and now she is still stuck trying to compete in the real world out there, perhaps in State court with Chemical Bank's attorney or whoever, to collect her child support as against their nondischarged credit card debt, and priorities do not exist and do not help us. Second, the bill defines debts owed to the government for past-due child support as domestic support. In a Chapter 13 repayment proceeding the bill says we cannot approve, the judge cannot approve, a Chapter 13 repayment plan to pay the debts unless the plan includes payment of all the child support due. Period. But it defines the child support as debts owed to the government for past-due support as well as debts owed to the custodial parent, to mom, to care for the child. So if the means test that is inserted into Chapter 13 finds that there is enough disposable income to pay the child support to mom but there is not enough disposable income to pay the child support to mom and pay the government the debts that are owed, we cannot confirm the Chapter 13 plan, there is no Chapter 13, they cannot go bankrupt. They are too rich for Chapter 7, they are too poor for Chapter 13, they cannot get any bankruptcy protection, and mom is left out there trying to collect her child support against every other debtor, every other creditor, with no protection at all. The last issue of debtor coercion I want to address involves something called reaffirmation agreements. There has been a great deal of publicity about people being coerced into signing away their rights to a discharge or agreeing to waive that right without fully understanding what they are signing. This amendment would require court review for reaffirmations of unsecured debts and of very small amounts. It would also require disclosure to the debtor so he knows, so he understands, what he is agreeing to. Placing some limits on reaffirmations, requiring some disclosure and some court oversight, not in every case but in those cases that are most likely to result in abuses, is important. To the extent that reaffirmation is like nondischargeable debts, limit a debtor's post-discharge resources, they interfere with child support. The bill would abolish the right to bring a class action. We all remember a few years ago when Sears Roebuck cheated over a million people through fraud into fraudulent reaffirmations. A class action suit was brought, and $168 million in damages was paid to over a million people. The average recovery was $150 per person. Sixty million dollars criminal penalty was assessed. This bill says: We want to crack down on the little guy, but the big guys, if they are crooks, we do not want them to be subject to class action lawsuits. They cannot maintain a class action lawsuit, and so Sears Roebuck would get away with it if they only had delayed until this bill has passed. This substitute would remove this provision. The only way one can sue the little guys, can sue the big guys, is through a class action suit. I hope that Members will support the substitute instead of H.R. 833. The substitute is supported by the administration. It is a giant step toward a fair and balanced bill and a giant step away from the gridlock we experienced in the last Congress. If my colleagues want real and fair bankruptcy reform, support the substitute. If they do not want a bill that will be vetoed and leaving us with nothing at the end of the session, support the substitute. Mr. Chairman, I reserve the balance of my time.

Mr. NADLER. Mr. Chairman, I yield 4 minutes to the distinguished gentleman from Michigan (Mr. Conyers), the ranking member of the Committee on the Judiciary. (Mr. CONYERS asked and was given permission to revise and extend his remarks.)

Mr. NADLER. Mr. Chairman, I yield 3 minutes to the gentlewoman from Texas (Ms. Jackson-Lee). (Ms. JACKSON-LEE of Texas asked and was given permission to revise and extend her remarks.)

Mr. NADLER. Mr. Chairman, I yield myself such time as I may consume. Mr. Chairman, we have heard in the last few minutes echoes of the propaganda of the credit card industry. But the facts are, we have heard that lots of people can pay their bills and are not. The American Bankruptcy Institute, in the first nonbipartisan study that was not bought and paid for by the credit card industry, said and concluded earlier this year that 3 percent of bankruptcy filers could afford to pay 20 percent or more of their bills. The creditors say that is not true, it is twice as much. All right, granted, maybe 6 percent, between 3 and 6 percent can afford to pay 20 percent or more of their bills. So let us not continue to hear this slander against American citizens as deadbeats. We also heard that because all these people are not paying their bills to the credit card companies, the average American pays $400 or $500 more in credit card fees. The fact is, credit card fees 10 years ago were 16, 17, 18 percent. Interest rates have come down, mortgage rates have come down, the prime rate has come down, car loan fees have come down, but credit card rates are still 16, 17, 18, 19 percent, and they will stay there, no matter what we do with this bill. This bill will not result in any pass-through to consumers. It will simply mean more profits for the credit card companies. If Members think differently, I have a few bridges in my home district I would like to sell to Members. Secondly, we have heard about the means test. This substitute imposes a fairer means test, a means test that looks at real income; not what you used to make before you were fired and laid off, which is why you went bankrupt, but what you are making now and likely to make; and real expenses, not what the IRS thinks the rent ought to be, but what the rent actually is. That is the only fair means test. Do not forget, the means test is used in Chapter 13 for everybody, not just in Chapter 7 with a safe harbor. The bill provides no class actions against the greatest malefactors. Let Sears Roebuck get away with stealing $168 million from people in bankruptcy. The substitute says no, if you are cracking down on the little guys, crack down on tort feasors and crooks who are big guys. Do not stop the class action. The bill says we are going to, or it does not say so, but the effect is to murder child support enforcement. We know some people, that the supporters of this bill say they have fixed it, but they have not fixed it. The so-called priority does not survive the bankruptcy and the discharge, post-discharge. Mom still has to compete with Chemical Bank's attorney, because the priority does not survive the bankruptcy proceeding. And in Chapter 13, if you cannot pay the government, if the means test says you do not have enough money to pay the government, then you cannot confirm the plan and you cannot pay the child support. That is why the only people concerned with child support in any way who are supporting this bill are the people in charge of collecting money for the government, the Fort Dietrick people, the Attorneys General, not the people concerned with the women. This bill murders small businesses. We have a way of saving that in this provision, and ditto for farmers. We heard the gentleman from Virginia (Mr. Goodlatte) say it is a balanced bill. It is not a balanced bill. The substitute makes it more balanced. The administration says they will veto it because it is not a balanced bill. The gentleman from Illinois (Mr. Hyde), who is not exactly a noted liberal, says this bill is imbalanced. He says, ``I asked staff to give me a list of what the creditors are getting out of this bill. I have pages and pages and pages of advantages that the creditor community is getting from this bill. I was going to read a list of what the creditors were getting under this bill. I will not do it, I assume you know, but there are 12 or 13 pages of single-spaced printed changes that benefit the creditors.'' Very imbalanced. That is why this bill is opposed. It is opposed by all the labor unions, by the Leadership Conference on Civil Rights, by the National Partnership for Women and Families, the National Women's Law Center, the consumer groups; and all the bankruptcy groups that know about bankruptcy, the Bankruptcy Conference, the Commercial Law League, and the National Association of Bankruptcy Trustees and Bankruptcy Attorneys. Mr. Chairman, I urge support for the substitute to make this a more balanced bill, and I yield back the balance of my time.

Mr. NADLER. Mr. Chairman, I demand a recorded vote.

Mr. NADLER. Mr. Chairman, I wanted to discuss a few things about this bill: first, the alleged need for it. And I want to stress that even though I am going to say there is no necessity for this bill, the Democratic substitute answers the nonexisting problem which they posit. We are told the need for this bill is that the American people, especially the American middle class, are a bunch of deadbeats, that there is a huge increase in bankruptcy filings, which there is, and that the reason for this huge increase in bankruptcy filings is that we have changed social mores. There is no more stigma associated with bankruptcy. People used to be very reluctant to declare bankruptcy. Now they do it as a financial planning instrument, and they are deadbeats, and, therefore, we have got to crack down on it because the credit card companies are not making enough money. What is the truth of the matter? The truth is that is nonsense. Sure there are a lot more bankruptcy filings, but why? The figures tell a very different story. First of all, if it were true that the reason for the increase in bankruptcy filings were a change in social mores where people are more easily going to bankruptcies, then people would be going bankrupt when they are less in debt, when they are less in trouble. The figures say differently. In 1983, before the surge in bankruptcy filings started, the average person who filed for bankruptcy had debts equal to 74 percent of his income. If one has that much debt compared to income, they file for bankruptcy. Today, the average bankruptcy filer has debts equal to 125 percent of his income; so people are 50 percent more desperate before they go into bankruptcy. They are less eager to file, they are more reluctant to file, they are further in the hole before they file. So why then do we have such an increase in bankruptcy filings? Here is the answer: If we look at society at large, not at just bankruptcy filings but at society at large, we can find two things. We find the bankruptcy filings rising, but we also find the household debt burden as a percentage of income rising right along with it. Look how those two lines match. Mr. Chairman, credit card companies, used to be when I was in college it was hard to get credit. Today they shove it at high school kids. Today they shove credit cards at people who are already 80 percent of their income in debt, of their annual income. That is the real problem, irresponsible lending by the credit card companies. More and more credit is being given to people. People are getting more and more in debt. Just as the debt-to-income ratio rises, the bankruptcy filing rate rises right in tandem. By the way, we are told that in 1978 Congress made the bankruptcy laws easier, and in the early eighties we started seeing an increase in bankruptcy because the laws are too easy; now we have to crack down. Look at Canada. Canada has very harsh bankruptcy laws, harsher even than they want to make our laws in this bill. It has always been very harsh, and yet they have had the same increase in bankruptcies. We can date it. When did it start in Canada, the increase in bankruptcies? In 1968. Why 1968? That is the year when the Visa card went into Canada, and they have had the same problems we have had with very harsh bankruptcy laws. So this is a myth. The myth that the American middle class are deadbeats and that we have to crack down and squeeze a little bit more money out of them when they go bankrupt, it is a myth. The Democratic substitute does squeeze it, but it squeezes it in a more rational way. Let us talk about four things that this bill does. We are told that we ought to have a means test, needs-based bankruptcy. People should not simply get a discharge of their debts; they should have to repay if they can. I will agree to that. We all agree to that. If people can repay, they should do so, and there should be a means test to see if they can repay, but a means test should mean a means test. What is your income? What are your unavoidable expenses? The difference is how much can afford to be repaid. What does this bill do? Does it look at current income, at anticipated income? No. It looks back at income for 6 months before one files bankruptcy and assumes that is going to be the income. It is pretty common in this country today for someone to be making $50,000, $75,000, $80,000 a year as middle management at IBM or some other big company, laid off. Now he is making $25,000 at McDonald's or as a consultant. That is the new underemployment for the middle class, a consultant. Well, he is making $25,000. He contracted debts based on an income of $75,000. Now he goes bankrupt. This bill does not look at his new income, which is $25,000, or his prospective income which is $25,000. They look at what his income used to be, $75,000. Is that fair or rational? Does it make sense? No. The other half of the means test, what are your expenses? Well, what is your rent? What is your mortgage payment? Does this means test look at this? No. It looks at what the IRS thinks in its guidelines the average mortgage or rent ought to be in the Northeast or the southwestern United States, in guidelines so harsh the Congress told IRS to junk them last year, but for bankrupts we are going to do the same. So we have to really crack down on the debtors. What about the dishonest creditor? Sears Roebuck was adjudged to have defrauded bankrupt people, debtors, $168 million in a class action suit last year. We cannot let that happen again. Big business crooks have to be protected, so this bill says no more class action suits. Someone wants to sue the big malefactor, the big guy who is cheating people of millions of dollars, they better have a few hundred thousand dollars in legal fees. One person cannot bring that lawsuit and it cannot be done for a class. No class action lawsuits; only in bankruptcy and only against creditors. Small businesses, this bill murders small businesses. Many small businesses reorganize in bankruptcy. They get protections from their creditors. They manage to reorganize, get out of debt, and go on. This bill imposes such rigid requirements and such time lines on them that they will liquidate and kill jobs in businesses that could have survived. Finally, child support, they claim that this bill saves child support. No, it does not. It kills child support enforcement. How? Two ways. Chapter 7, it says that not only are child support payments nondischargeable, so is credit card debt nondischargeable, so there is more to compete with mom. Who is going to collect the debt, mom or the credit card attorney? They say we will give priority to mom; we will give priority to child support. Priorities are irrelevant after the discharge. When someone is not in bankruptcy court anymore, priorities do not apply, and in Chapter 13 they say a person cannot have a Chapter 13 repayment plan accepted by the court unless all the child support is paid, there is a plan to pay all the child support. They count as child support debts owed the government, so if the means test in Chapter 13 says he can pay enough money to pay the child support to the custodial parent but not enough to pay the debt he owes to the government, not enough, cannot do it, cannot confirm a plan, too rich to go bankrupt in Chapter 7, too poor to go bankrupt in Chapter 13, cannot go bankrupt at all, and she is out there competing with every other debt collector in the world. What chance does she have? This bill also hurts farmers. There is no reason for such a harsh, one-sided bill. The Democratic substitute is a very harsh bill. I personally would not vote for it if it were a freestanding bill. I think it is too harsh, but it does everything reasonably that should be done and does not do some of these terrible things of prohibiting class actions, murdering child support, having an unfair means test, hurting small businesses. That is why the administration will veto the bill. That is why every union is opposed to it, every consumer group, every professional bankruptcy group. Anybody who knows anything about bankruptcy in the profession is opposed to this bill, except for the credit card issuers and the banks. So I urge a ``yes'' vote on the Democratic substitute and a ``no'' vote on the bill.

Mr. NADLER. Mr. Chairman, this amendment is harmless enough, and may do a little bit of good. I really do not think it is very important one way or the other. It is somewhat deceptive, however. It is somewhat deceptive. I am not going to urge a vote against it, but I do think we should have a word of caution here. It will lead to some misleading information because it demands that the credit card information tell us, the credit card information, not about our credit card, not about what we are doing, but about what some typical borrower might do if he were borrowing $500 or $300 or $1,000. Unfortunately, this amendment was made in order by the Committee on Rules in order to avoid making in order the amendment of the gentleman from Massachusetts (Mr. Delahunt) which had real consumer protections in it. The amendment of the gentleman from Massachusetts, which was voted down on a party line vote in the committee, requires actual disclosure of minimum payments and interest based on the actual debt on our own credit card, rather than have the information just give samples which may bear no relationship to our own situation. The amendment of the gentleman from Massachusetts (Mr. Delahunt) has disclosure on teaser rates and penalties. They have to tell us that, the disclosure on penalties for having no interest, for paying in full, disclosures regarding prohibiting soliciting kids, and makes other real consumer protections and disclosures. Unfortunately, the Committee on Rules chose to make this basically irrelevant amendment and somewhat misleading amendment in order, and did not put in order the real amendment by the gentleman from Massachusetts (Mr. Delahunt), which parallels the provisions the Senate put in, sponsored by Senator Durbin in last year's bill, but which the conference committee took out. Now, I understand the authors of this bill do not want real consumer protections in this bill. It is supposed to be a one-sided bill. But it is too bad we have these illusory protections and somewhat misleading instead of real protections. Just another ground for voting against the bill.

Mr. NADLER. Mr. Chairman, this amendment is really in the nature of the truth. We say that this bill imposes very onerous restrictions on small businesses. It imposes very sharp and restrictive time deadlines and terrible restrictions only on small businesses. We think this is going to result in a lot of businesses that otherwise would have the opportunity to reorganize in Chapter 11 to get protection from their debtors, reorganize, get back on their feet and survive and not lay off all their employees, it will require instead that a lot of these companies liquidate and go out of business and lay off their employees because they will not be able to meet these new restrictions. Now, the gentleman from Pennsylvania (Mr. Gekas) and the people on the other side say, no, that will not happen. Well, all this amendment says is, well, maybe they are right, maybe they are wrong. In a given case, the judge is looking over the situation in this case, and if the judge finds that there is a likelihood that this company, which is now seeking Chapter 11 protection from its creditors, could reorganize, could get back on its feet, could avoid liquidating, could avoid laying off its employees, but he further finds that if these new onerous restrictions are imposed and timetables that that would probably force the company out of business and would cost at least five jobs, it lets the judge say, ``It really looks like this is going to cost five jobs, so I will not impose these new restrictions on this small business.'' If the judge makes the finding that these new restrictions will kill this business, force this job loss and force this business out of business, the judge would be given the discretion to say, use the old law, not these new restrictions. What could be fairer than to look at the individual case? Now, the gentleman from Pennsylvania (Mr. Gekas) will say this is extensive litigation. No, it is not. It is simply a company asking for Chapter 11 protection and saying, ``Judge, we think we need X time but this gives us less time, and here is why we think we need so much additional time as we could have gotten under the old law,'' and the judge says either yes or no. Why not let the judge have that discretion? I know that the gentleman from Pennsylvania (Mr. Gekas) and other proponents of this bill do not trust human beings; they do not trust judges at all. They say throughout this bill judges have no discretion; they are always wrong. Maybe they are always wrong, but give them a chance to save some jobs and save some small businesses. That is all this amendment does. I do not see how anybody who cares about small businesses or jobs could oppose this amendment. It just boggles the mind.

Mr. NADLER. Mr. Chairman, this amendment does two things. The gentleman from Michigan (Mr. Conyers) described the impact on the single-asset realty. But it does something else, and we did not hear from the other side why it is so terrible, what it does, or why they rejected it in committee and reject it now, having nothing to do with single-asset real estate. What this does is say to the judge, is to give the judge discretion. When looking at a small business bankruptcy, the judge would have discretion to say, if he finds that imposition of these new onerous filing requirements and deadlines was likely to push that business into liquidation and cost more than five jobs, instead of enabling the business to reorganize, he is given the discretion to say, never mind these new restrictions, these new onerous requirements, better the business shall survive and not lay off the workers. Why not let judges have that discretion? Why insist that small businesses have to go out of existence and lay off these people? Let the judge have discretion, if he makes a finding that imposition of these new restrictions would likely cause the business to go out of existence instead of reorganizing, getting on its feet and saving the jobs. This is an anti-jobs bill. This is a pro-jobs amendment. I do not understand the opposition to it.

Mr. NADLER

Mr. NADLER. Madam Speaker, I rise in opposition to this closed rule. Although for the second Congress in a row, the gentleman from Illinois (Mr. Hyde), the chairman of the Committee on the Judiciary, has promised to seek the most open rule possible, this certainly is not it. Of the 37 amendments filed, only 11 were made in order. Of those only four, including the Hyde-Conyers bipartisan amendment, can be said to come from Members who have expressed problems with the bill. Four out of 37. We will not have a real debate on consumer protection or on requiring creditor as well as debtor responsibility because the Delahunt-LaFalce amendment was not made in order. We will not have a real debate on child and family support--which this bill murders--because my amendment, which was written with the help of the National Women's Law Center and which would have placed debts to the family higher than debts to the government, and would have prevented the government from blocking a Chapter 13 reorganization plan if it provided for payments to family and other creditors but not payment in full in arrears to the government, was not made in order. We cannot debate those issues. We will not be allowed to vote on whether people who terrorize and murder women and their doctors should be allowed to discharge their civil debts as a result of such terrorist actions. Their civil penalties, should they be able to discharge their penalties in bankruptcy? We had such an amendment, but evidently clinic bombers and people who harass women seeking health care services and who violate the law to push their political agenda have more influence at the Committee on Rules than the bipartisan supporters of this amendment. The gentlewoman from Maryland (Mrs. Morella) and I had asked that in a bill which makes drunk boating debts nondischargeable, we could at least have a vote on making debts of clinic bombers nondischargeable. Madam Speaker, the gentleman from Massachusetts (Mr. Delahunt) spoke of the fact that this bill allows the homestead exemption in essence to continue, in some States unlimited. I think it is unfair but that is what the bill does. But we will not have a vote on my amendment that would have said, well, if you are going to allow States to have an unlimited homestead exemption for the rich, how about requiring that you have at least a limited homestead exemption for the poor? In my own State of New York, the homestead exemption is $9,500. Try to buy a house for $9,500. The Federal homestead exemption is 16,150, not exactly princely, but we are not going to have a debate or a vote on the amendment that would have said, ``If you're going to allow millionaires to have unlimited homestead exemptions in some States, at least require that all States allow the use of the Federal minimum homestead exemption of $16,000.'' We have to be fair to the rich, but we cannot be fair to the middle income and the poor. Madam Speaker, this bill hurts families, it hurts businesses, it will increase costs to the system, and it is opposed by most of the Nation's bankruptcy experts. We will not have a vote on the amendment to stop the provisions of this bill from killing small businesses. That amendment was not made in order. Many small businesses today, Madam Speaker, go bankrupt, they go into a Chapter 11 reorganization, they are entitled to try to be protected from their debts for a while while they work things out, and then they are saved, and they get on with it, they pay their debts, and a business and jobs are saved. Some businesses do not make it. They are liquidated. This bill puts so many new restrictions and burdens on small businesses, not big businesses, small businesses in bankruptcy proceedings, that we are told by the Small Business Administration and by others that it will result in a lot of small businesses that could have been saved going bankrupt. We had an amendment in committee defeated on a party line vote, an amendment in the committee that said that if the judge makes a finding of fact that imposing those restrictions would cost five or more jobs, the judge would have the discretion not to have these new restrictions on the small business so that the jobs could be saved and the business could be saved. That was voted down. The Committee on Rules thinks we should not have a chance to debate and vote on that provision on the floor. Should tractors and other farm implements in a family farm going bankrupt, should those tractors and farm implements be saved to help keep the farm in running order, or must they be surrendered to the government for payment of back taxes? Madam Speaker, we are not going to have a vote or a discussion of that either because, apparently, the Committee on Rules does not think saving family farms is important, or allowing the farmer in bankruptcy to keep his tractor, or his hoe, or whatever else it may be. The government's claim comes first, and to heck with the farmers. This bill, as I said, hurts families, it hurts small businesses, it hurts farmers, it hurts child support collectors, it hurts children, it will increase costs to the system, and it is opposed by most of the Nation's bankruptcy experts. The administration will veto the bill unless it is moderated, and we should support the administration's efforts to negotiate a good bill. That can only happen if we deny the sponsors of this bill the supermajority they need to roll the special interest legislation through unmodified. They have crafted this rule to avoid the really tough issues, so we must insist that those issues be considered today by rejecting the previous question. If the previous question is rejected, the minority will ask the two amendments be made in order, one which will protect child and spousal support, which the gentlewoman from Texas (Ms. Jackson-Lee) and I had hoped to offer, and one which would hold credit card lenders accountable and put an end to some of the most abusive practices which would have been offered by the gentleman from Massachusetts (Mr. Delahunt) and the gentleman from New York (Mr. LaFalce). We must defeat the previous question or we will not have an opportunity to consider placing some balance in this bill. So, Madam Speaker, I urge a no vote on the previous question, on the rule and on the bill. Madam Speaker, this rule is part of a pattern of silencing debate, of rushing through a bad bill with no serious consideration, a bill which will have implications for many, many years, and this rule deserves to be defeated.