Jerrold Nadler

Mr. NADLER

Mr. NADLER. Mr. Speaker, I yield 4 minutes to the gentlewoman from Texas (Ms. Jackson-Lee).

Mr. NADLER. Mr. Speaker, how much time do I have remaining?

Mr. NADLER. Mr. Speaker, I yield myself such time as I may consume. I would simply observe, Mr. Speaker, that the gentleman from California apparently was unaware of the subject matter of this motion. We are not talking here about people who are irresponsible, if that is what it is; or perhaps just down on their luck; perhaps they did not have health insurance and needed an expensive operation; got laid off, whatever. We are talking here about people who pay their debts on time every month and for whom the credit card companies now want to say they cannot get credit because they pay their debts. That is what the subject of this motion is. So let us not talk about irresponsibility. And let us not debate about the balanced budget. That is a separate debate. Let us talk about what we are talking about, and what we are talking about is this motion to agree with the Senate amendment, which says that the credit card companies should not be able to charge extra or to eliminate credit all together to a credit card holder simply because he or she commits the terrible sin of paying their debt on time. That is the amendment. So let us not talk about responsibility here. This person is meeting his responsibility or her responsibility. Now, I would like to address the argument of the gentleman from Pennsylvania, who says that if the banks are not earning enough money from these people because they pay their debts on time, and they are not paying, therefore, interest charges; if we do not allow the banks to shut off credit to them; if we do not allow the banks to charge them a special extra fee, to penalize them for paying their debts on time, then that extra cost of the banks will be passed on to the consumer. Frankly, that is not true. In fact, it is nonsensical and history proves it. When we voted in the early 1980s to deregulate interest rates, we were told, hey, the inflation rate in 1979 was 17, 18 percent. We cannot have an interest rate ceiling of 6 percent. The bank is losing money. So we will deregulate the interest rate, we will let the banks charge 20, 21 percent and, of course, when general interest rates come down, the credit card interest rates will also come down. Well, the general interest rates came down. The current Federal Reserve rate is 5.25 percent, and they are thinking of lowering it further. Mortgage rates have come down, car loans have come down, everything has come down except credit card interest rates. They came down from 22 to about 18 percent, but they are way up there, and that is why the profitability jumped. And who in this country really believes that if we allow the banks to gouge people who pay their debts on time that this profitability will not simply go up? Who believes that banks will pass that savings on to the consumer? Who believes that they will lower the interest rates that they have held artificially high by semi-monopolistic practices for the last 15 years? That is absurd. I daresay if I proposed an amendment to mandate that the banks lower the interest rates to reflect this cost, people on that side of the aisle would say, that is terrible, that is socialistic, I do not know what it is, it is paternalistic. But the banks are not going to lower the interest rates. They have not for the last 15 years. It is way above their costs. And that is why from everything else they do they are making a profit in the 1 to 2 percent range. From credit cards they are making a profit in the 4 to 5 percent range because they are gouging the consumers now. They will continue to gouge the consumers. And this is one more way of gouging the consumers they have invented. And the gentleman thinks we should not prevent them from enjoying the fruits of their inventiveness on a new way to gouge consumers. So I hope we pass this; we accede to the Senate amendment, and at least have a little control here and a little sympathy for the responsible consumer who pays his debts. Mr. Speaker, I reserve the balance of my time.

Mr. NADLER. Mr. Speaker, I yield myself 1 minute. Mr. Speaker, I believe the free enterprise system is by far the best economic system that we have discovered thus far in terms of the production of wealth in services. It produces a bounty of goods to distribute. But the free market is not perfect. If it were perfect, we would not have this problem. If it were perfect, we would not have to regulate HMOs, which gouge their customers and sacrifice the quality of medical care to the bottom line, although I am sure some people think that is impossible in a free enterprise system. The market is not perfect. If it were perfect, interest rates on credit cards would not average today's 17.7 percent. It is an oligopoly. Yes, there are some banks, banks we never heard of in some small town somewhere that will offer a credit card at 11 percent or 9 percent. But the big ones that have 90 percent of the business, that spend a lot of money on marketing, they are up in 17 and 18 and 21 and 19 percent, and they get away with it because the free market is not perfect. We need this protection.

Mr. NADLER. Mr. Speaker, how much time do I have remaining?

Mr. NADLER. Mr. Speaker, I yield 1 minute to the gentlewoman from Texas (Ms. Jackson-Lee).

Mr. NADLER. Mr. Speaker, I yield 2\1/2\ minutes to the gentleman from Massachusetts (Mr. Kennedy).

Mr. NADLER. Mr. Speaker, I yield the balance of my time to the gentleman from Massachusetts (Mr. Kennedy).

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

Mr. NADLER. Mr. Speaker, I yield myself such time as I may consume. Mr. Speaker, I am offering this motion in response to a disturbing practice that unfortunately has become all too common. Credit card companies have told the Congress that they need this bill to provide protection from irresponsible borrowers who abuse the bankruptcy system to evade debts that they can repay. I do not agree with the bill and I do not agree with that contention, but even if that were true, the practice that some credit card companies have now engaged in is unconscionable. Some credit card companies now discriminate against the most responsible borrowers by cutting off their credit card or charging other fees to borrowers who commit the terrible sin of paying their bills in full and on time each month. This form of discrimination against the most responsible borrowers is intolerable and outrageous. On the one hand they are telling us that borrowers are irresponsible and we should do something about that. On the other hand, they want the right to discriminate against borrowers who act responsibly. Mr. Speaker, in response to this phenomenon, the other body adopted an amendment offered by the junior Senator from Rhode Island, Mr. Reed, which would prohibit this practice. It is an amendment to the Truth in Lending Act. It makes sense, it is fair, and it reinforces the theme that the sponsors of this bill have been stressing, the theme of shared responsibility in lending between borrower and creditor. The House bill tightens the noose around the necks of bankrupt Americans, but does nothing to ensure that banks are also required to act responsibly. This amendment and the others adopted by the Senate will help bring some balance to an unbalanced bill. Mr. Speaker, this is a real problem. Around the country, credit card customers who are most responsible with their borrowing practices have received letters from issuers which say, and I am now going to quote, Our records indicate this account has had no finance charges assessed in the last 12 months. Unfortunately, the expense incurred by our company to maintain and service your account has become prohibitive; and, as a result, in accordance with the terms of your card holder agreement, we are not reissuing your credit card. The message is clear. Be responsible but not too responsible. It reveals the true agenda of the supporters of this bill, which is not to encourage responsible borrowing but to allow banks to squeeze borrowers even further. The banks were able to kill an amendment to prohibit the outrageous double fees at ATMs, a little balance and fairness. Credit card companies have claimed that they need to cancel accounts which do not incur finance charges because the cost of servicing these accounts is, quote, ``prohibitive.'' That is not true. Each year, an average $3,000 is charged to a credit card. The 2 percent interchange fees on these cards, which equals $60, would seem to more than cover the average industry cost of $25 needed to service an account for a year. Americans hold over $450 billion in consumer debt; and with the average interest rate on credit card balances at 17.7 percent in an era of low interest rates generally, the overall profitability of credit card lending is apparent. In fact, we know that the credit card departments are the major profit centers in the banks today. This amendment also will not bar lenders from cutting off cards or charging fees for other legitimate reasons. It would only block those actions if they are used to discriminate against the most responsible and conscientious borrowers. Mr. Speaker, I urge my colleagues to support the motion to instruct the conferees. Let us have a bill which stresses balance and a shared responsibility in the credit card market. Let me say also, Mr. Speaker, I hope, let me take this opportunity to express the hope, that the published reports that we have seen in which Members of the majority party have indicated that the Members from this House will get together with the majority party members from the other House and make an agreement and a deal behind the scenes and by implication will shut out the minority and to make a conference a sham, I hope that those reports are inaccurate. I hope that will not happen. I hope that what has happened in certain other conferences where a behind-the-scenes deal is made and the conference is a sham and the members of both bodies from the minority party are completely shut out and are presented with a completed bill, take it or leave it, I hope that is not going to be repeated in this instance. Because if we are going to have a responsible bill that the President will not veto, that would be a very bad idea if that were to occur. Mr. Speaker, I reserve the balance of my time. Permission To Postpone Electronic Vote On Motion To Instruct Conferees

Mr. NADLER. Mr. Speaker, I offer a motion to instruct.

Mr. NADLER. Mr. Speaker, will the gentleman yield?

Mr. NADLER. Mr. Speaker, I believe that it is germane simply because it is in the Senate bill, and that makes it conferenceable and germane.

Mr. NADLER. Mr. Speaker, I yield myself such time as I may consume. Mr. Speaker, I am going to ask for a vote on this motion because I understand the intent of the distinguished chairman when he says he will convey to the conferees, if we do not seek a vote, he will convey to the conferees our views on this matter, but he will also tell them it is not germane to the House bill. In other words, he will quietly seek, the majority will quietly seek to kill this amendment and we will never hear about it again. So I want a vote on this motion. This motion really shows what is going on here. Look at this chart here. We are told that the increasing number of bankruptcies is because middle-income and low-income Americans are generally deadbeats, that they are people of no character, that the moral stigma associated with welching on your debts is no longer around, people go bankrupt very easily. That is the whole basis for this unfortunate bill. Whereas in fact, we know that 15 years ago, in 1983, the average bankruptcy filer had debts, personal debts equal to 75 percent of his annual income. Today the average chapter 7 filer, the average bankruptcy filer has debts equal to 125 percent of his annual income. So today it is not that people are filing for bankruptcy as the first thing when they get into trouble. It is that they are in way over their heads. They are in way over their heads, and they do not file until they are absolutely desperate. Their debts are 125 percent of their annual income. The banks, having extended the credit recklessly, now want to do two things they want to do to the person who has gotten in over their head, because they keep throwing credit cards and credit at people who do not have that kind of income, they want us to crack down on bankruptcy so people cannot get out from under their debt. That is the chief point of this bill. Now they also want to say to those people who actually pay their debts on time, let us milk them for more money, too. If you have a credit card and you use it and you pay your bill in full on time every month, they are not making enough money off you. So they want and they are starting to say, we are going to cancel your credit card, or we are going to charge you a higher fee. And the Reed amendment says they cannot do that. They cannot charge a higher fee to someone who pays his debts in full each month than to someone who does not, and they cannot eliminate the credit card for that reason. It is not a sin to pay your debts on time. Look at that quote from the letter I read before from the bank, I forget which bank, to a creditor, You pay your debts on time and that is terrible. It costs us a lot of money. Let us look at this chart here. This chart shows the profitability of the credit cards as against the profitability of the banking system. Look at it here. The banking system's return on assets has averaged, since 1971, about 1 percent. Went down in 1987, with the stock market crash, to a little over, about a third of a percent and more recently was up at about 1.5 and 1\2/3\ percent, but about 1 percent. But look at the profitability of the credit cards. We all know what has happened to the credit cards. In the early 1980s, we deregulated the banks. We eliminated the interest rate ceiling on credit cards because in the late 1970s we had huge inflation and the interest rate was below the inflation level and the banks lost money for a couple years. So we said, no more limits. What happened? Well, the interest rates shot up. Interest rates on everything else, car loans, mortgages, cost of money to the banks has come way down, but the credit cards have stayed up there at almost 18 percent average. Do you know what the mortgage rate is today? It is 6.25 or 6.3 percent on a mortgage, on a 30-year mortgage. It is somewhat similar to single digits for car loans. But for credit cards, the average is 17.7 percent. So what happened to the profitability? Here is where we deregulated the interest rates. It went up to about 5 percent and for the last 17 or 18 years, it has stayed between 5 and 4 percent, most recent measurement about 4\2/3\ percent, 4 times, 3\1/2\ to 4 times higher than the general profitability of the whole system. So that banks are making out like bandits on the credit cards. They are making plenty of money. But it is not enough. After all, they have lent recklessly in foreign countries and we have got to really squeeze the American consumer to pay the banks back for what they have lost on investments in Russia and Argentina and other places. So let us squeeze the people. Those who got into, got in over their heads, who have debts amounting to more than 100 percent of their annual income and are filing for bankruptcy, let us pass this bill. Let us spend $40 million in campaign contributions and lobbying to pass this bill to enable us to really squeeze these consumers and make it harder for someone in over his head to go bankrupt and, for those who go bankrupt, make it harder for them to get out of it. But that is not enough. Quite separate from this bill, let us tell those terrible people who actually pay their debts on time every month, we do not want your business, because we are not making enough money off you. We are making real money. The 2 percent interchange fees on these charges equal $60. The average cost of servicing the account is $25. It seems to average, my arithmetic tells me, a $35 profit per year without any interest. But that is not enough. They are using the ability to cut off people from credit or to impose extra fees for the sin of paying their bills on time. This amendment, Mr. Speaker, does not, unfortunately, deal with the other evils in this bill, but this amendment, which the Senate voted for, which is in the Senate version of the bill, simply says a creditor may not solely, because a consumer has not incurred finance charges in connection with an extension of credit, one, refuse to renew or continue to offer the extension of credit to that consumer; or, two, charge a fee to that consumer in lieu of a finance charge. That is the entire amendment. So we will have a vote on the floor. Let the American people see who in this House thinks that the banks should be able to gouge in this way the debtor who pays his debts on time and who does not. I urge the Members of this House to vote for this motion to instruct the conferees to agree to the Senate amendment and it will show us who cares about consumers, at least a little, and who only cares about the profitability of the credit card companies. Mr. Speaker, I reserve the balance of my time.

Mr. NADLER. Mr. Speaker, I yield myself such time as I may consume. Mr. Speaker, I would observe that the distinguished chairman of the subcommittee a moment ago, on the motion to instruct, talked about its germaneness to the House bill. Although he said it was conferenceable, he conceded that it was conferenceable, I am not clear but I think he said he objected to it but he did not discuss it on the merits. He did not say why it is a good idea or a bad idea. I would like to hear whether he agrees with this or whether he thinks this is a good idea or a bad idea, whether he thinks that it is right that credit card companies are going to cut off the credit or discriminate against the 40 percent of credit card holders who pay their balances in full each month? In other words, does he oppose this or not? I would like to know anybody's views on the merits of this. Mr. Speaker, I reserve the balance of my time.

Mr. NADLER. Mr. Speaker, I yield myself such time as I may consume. Mr. Speaker, this provision is in the Senate bill. It was fully debated on the Senate floor. It has been a matter of discussion. It has been debated in the Committee on Banking and Financial Services of this House and, frankly, if we were going to have a special order that would be after the instructions to the conferees were voted or not voted. Frankly, I am a little surprised that no one has anything to say about the merits of this idea. Perhaps they think it is self-evident. I certainly do. The 40 percent of credit card holders who pay their bills on time should not have their credit withdrawn for that or be discriminated against in other ways. I hope, therefore, the House will vote for this motion, which I recognize is not binding on the conferees, any instruction is not, but is a good expression of the will of the House, which hopefully the conferees will take into account. Mr. Speaker, I reserve the balance of my time.

Mr. NADLER. Mr. Speaker, I yield 4 minutes to the gentleman from New York (Mr. LaFalce), ranking member of the Committee on Banking and Financial Services. (Mr. LaFALCE asked and was given permission to revise and extend his remarks.)

Mr. NADLER

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

Mr. NADLER

Mr. NADLER. Mr. Speaker, I rise to express my support for H.R. 4545, the Code of Conduct on Arms Transfers Act of 1998, introduced by Representatives McKinney and Rohrabacher. We must do more to curb arms sales and military assistance to dictators and human rights abusers around the world. The United States should stop supplying arms to governments that use these weapons to oppress and murder their civilian populations, as well as engage in illegal acts of aggression against their neighbors. The United States is a leading arms merchant to the world. In 1995, U.S. arms exports amounted to $15.6 billion, three times that of the next supplier and 49 percent of the world's arms exports. The United States must take the lead in curbing arms sales abroad. If we lead, the world will follow. Our nation's resources must not be used to prop up dictators or promote international aggression. The Code of Conduct on Arms Transfers Act would put an end to this shameful practice. This legislation would prohibit U.S. military assistance and arms transfers to a foreign government unless the President certifies that the country is genuinely democratic, does not engage in human rights violations, is not engaged in illegal acts of armed aggression, and participates in the United Nations Register of Conventional Arms by annually reporting to the U.N. the numbers and types of weapons it possesses and transfers. This bill also requires the Administration to work with other nations to limit arms transfers worldwide and urge other nations not to sell weapons to countries that the United States has deemed ineligible to receive U.S. arms sales. International cooperation, in the context of a reformed U.S. arms sales policy, is critical if we are to protect innocent people from military aggression by undemocratic governments. This is an essential component of the McKinney-Rohrabacher bill, and it will be most effective only after we begin to limit U.S. arms sales. The McKinney-Rohrabacher Code of Conduct would help the United States to bring its military policy into accord with its other international efforts to promote global peace, security, and prosperity. I urge my colleagues to cosponsor H.R. 4545. Thank you.

Mr. NADLER

Mr. NADLER. Mr. Speaker, I ask unanimous consent to have my name removed as a co-sponsor of H.R. 4095.

Mr. NADLER

Mr. NADLER. I yield to the gentleman from Texas.

Mr. NADLER. Mr. Speaker, I would like to enter into a colloquy with the distinguished chairman. Mr. Speaker, the 1990 amendments to the Immigration and Nationality Act created two new Visa categories, O and P, which provide for the temporary entry of aliens who have extraordinary ability in the sciences, arts, education, business, or athletics, and for the temporary entry of athletes and entertainers with lesser abilities. Clearly, Mr. Speaker, the O and P visa categories were created to ensure that entertainers, athletes and support personnel would no longer be admitted under the broad H-1 standard of omission but, instead, would come in under the O and P categories. It is my understanding, therefore, that this bill under consideration today does not pertain to the temporary admission of entertainers and their accompanying crews. Is that also the gentleman's understanding?

Mr. NADLER. Mr. Speaker, I thank the gentleman.

Mr. NADLER

Mr. NADLER. Mr. Chairman, I rise in opposition to H.R. 3975, controversial legislation that would impose expensive, highly intrusive criminal background checks on our nation's port employees. It is significant that this bill--with all its ramifications--has never been the subject of a hearing by the Judiciary Committee and to this day is not understood by most of the Members in this chamber. Today the House accepted by voice vote this controversial legislation as part of H.R. 4300, the Western Hemisphere Drug Elimination Act. This is no way for the House to conduct the people's business. At a time when we in Congress are attempting to stem the flow of drugs into our communities and schools, we are engaging in a broad brush rush to judgment about America's port-side workers. The way to accomplish our anti-drug trafficking goals is not by declaring that all longshore workers, including those with 20 or more years of service, are guilty. That is exactly what we are doing if H.R. 3975 is enacted. No one quarrels with the goal of finding methods to stem the flow of illegal drugs into this country. No one quarrels with the need to use any and all means to achieve this goal including seeking out those who would use their place of employment to give drug dealers and smugglers a free ride into our cities and towns. And no one quarrels with the notion that if we have a few bad apples working in our ports, let's stop them from helping those who would poison this country with illegal drugs. But make no mistakes about it. H.R. 3975 does not accomplish this goal and, in fact, would likely have adverse consequences on those who are serious about blocking illegal drugs at our borders and in our ports. It takes little imagination to conclude that if you want to stop the infestation of our citizens with dangerous drugs, then make working men and women employed at the transportation choke points--such as longshore workers--a major part of the solution by enlisting them as partners in this crucial endeavor. Let's not, because of political convenience, demonize hard working port employees by making all of them subject to expansive criminal background checks with no limit and no protections. By doing so we are passing value judgments about their criminal records or intentions with no justification other than anecdote. Perhaps worst of all we are passing these judgments without even giving all sides an opportunity to express their views before the committee of jurisdiction. If we have drug problems in a particular port let's do something about them. If drugs are passing through our transportation choke points let's give law enforcement authorities the tools and resources to do their job. But let's not demoralize potential allies in the war on drugs by declaring them a major criminal threat and making them all prove their innocence. Stopping the use of our nation's ports to ship illegal drugs in the United States is a goal I strongly support. H.R. 3975 does not accomplish that objective. I urge my colleagues to join me in opposing H.R. 3975 as a stand alone bill or as part of any legislation to be consideration by this House.

Mr. NADLER

Mr. NADLER. Mr. Speaker and I ask unanimous consent to revise and extend my remarks. Mr. Speaker, today we are debating a non-binding resolution that would express the sense of the Congress that because marijuana is a Schedule One controlled substance, and therefore an illegal drug, then its use for medicinal purposes should be prohibited. This is absurd. Medical use of marijuana is a public health issue; it is not part of the war on drugs. Marijuana has been proven to relieve the pain and suffering of seriously ill patients. It is unconscionable to deny an effective medication to those in need. It would seem that the Speaker of the House and the distinguished Chairman of our own Crime Subcommittee once agreed with that position. In 1981, Representative Newt Gingrich and Representative Bill McCollum, co-sponsored H.R. 4498, a bill introduced by the late Congressman Stuart McKinney, that would allow the medicinal use of marijuana. In 1985, Chairman McCollum again co-sponsored H.R. 2282, a bill reintroduced by Congressman McKinney, which would have allowed the medicinal use of marijuana. I, along with many others, would be very interested to learn why our colleagues changed their minds. Mr. Speaker, prestigious groups such as the National Academy of Sciences, the American Public Health Association, and the British Medical Association have endorsed the medical use of marijuana. I would like to refer my colleagues to an article that was published by the Journal of the American Medical Association (JAMA, June 21, 1995-Vol. 272, No. 23) for more detailed information regarding the legislative and medical history regarding the medicinal use of marijuana. Most recently, a National Institutes of Health report released in August of 1997 urged the federal government to play an active role in facilitating clinical evaluations of medical marijuana. More than 30 medical groups, including the ones I have previously cited, have endorsed prescriptive access to marijuana, under a physician's supervision. Several medical groups, including the American Medical Association and the American Cancer Society have endorsed a physician's right to recommend or discuss marijuana therapy with their patients. Several published studies have found that the best established medical use of marijuana is as an anti-nauseant for cancer chemotherapy. In addition, these same studies have found that medicinal use of marijuana has helped in treating patients with glaucoma, chronic muscle pain, multiple sclerosis, epilepsy, spinal cord injury, and paraplegia. Tens of thousands of cancer and AIDS patients use medical marijuana, and they report that it is effective in reducing the nausea and vomiting associated with cancer and AIDS treatment. In a 1990 survey, 44 percent of oncologists said they had suggested that a patient smoke marijuana for relief of the nausea induced by chemotherapy. Mr. Speaker, I would like to address the question of a state's right to implement policy that the voters of those states have supported. Many states have held, or are planning to hold, state referenda on the use of medical marijuana. Two states, California and Arizona, have successfully passed legislation to allow the prescribed use of marijuana for medicinal purposes. The voters of these states have spoken and in our democratic system they must be respected. Those on the other side of the aisle seem to constantly remind us of the power of big government over the ability of states to make their own policies. Who is championing big government now? Where are all the state's rights supporters on this issue? Finally, Mr. Speaker, permitting the medical use of marijuana to alleviate the pain and suffering of people with seriously ill conditions does not send the wrong message to children or anyone else. It simply says that we are compassionate and intelligent enough to respect the rights of patients and the medical community to administer what is medically appropriate care. It is time for this Congress to acknowledge that a ban on the medicinal use of marijuana is scientifically, legally, and morally wrong.