FYI
----- Forwarded by Mark Taylor/HOU/ECT on 01/31/2001 08:50 PM -----

	Stacy Carey <SCAREY@ISDA.ORG>
	01/31/2001 05:02 PM
		 
		 To: US REGULATORY COMMITTEE <USREGCOMM@isda.org>
		 cc: 
		 Subject: Grassley Bankruptcy Legislation Press Release



Attached is Grassley's press release in case you have not yet seen it.

----------------------------------------------

For Immediate Release
Tuesday, Jan. 31, 2001


Grassley Continues Effort to Overhaul Bankruptcy System
WASHINGTON - Sen. Chuck Grassley introduced legislation last night to
overhaul the nation's bankruptcy system.

The bill he introduced - S.220 - is identical to the final conference report
approved last year by the Senate and House of Representatives but
pocket-vetoed by President Clinton.

Grassley said that he looks forward to Senate action on the measure which
had veto-proof support last year. Senators voted 70-28 for the final
package, and the House gave the conference report unanimous approval in
December. Rep. George Gekas is expected to reintroduce the legislation in
the House.

The Senate Majority Leader has indicated that the bankruptcy reform bill
could be ready for consideration by the Senate as early as next week.
Grassley said the proposal which he sponsored last year with Sen. Robert
Torricelli of New Jersey "is unfinished business that has strong bipartisan
support in Congress and at the grassroots."

The reform measure is aimed at reducing the number of bankruptcies filed
each year by fixing weaknesses in the code and designing a more balanced,
fair approach for debtors and creditors. The number of bankruptcies have
soared during the last decade despite a historically strong economy. And,
according to a study released late last year, experts are predicting a 15
percent increase in bankruptcies in 2001.

The legislation advanced by Grassley and Gekas also includes permanent
status and an expansion of Chapter 12, which is tailored to help farmers
reorganize debt and stay in the business of farming. It also includes a
patients' bill of rights for residents of nursing homes and hospitals that
declare bankruptcy. Another key provision helps to strengthen the Medicare
Trust Fund by prohibiting the discharge of debts arising from inflated bills
and fraudulent claims.

The legislation reintroduced today reflects the bipartisan, bicameral
agreement reached late last year on the most comprehensive reform of
bankruptcy law since 1978.

Grassley said "reforming the system will be good for consumers and families.
It would bring more fairness for those who work hard to pay their bills.
Every bankruptcy filed puts upward pressure on interest rates, so decreasing
the number is good for people trying to buy a new house or pay for a car.
Reforming the bankruptcy system will help usher in a new era of greater
personal responsibility." The Iowa senator began his effort to reform the
bankruptcy system in 1997, when he held a hearing on the relationship
between credit card debt and consumer bankruptcy.

The bill that resulted addresses the problems caused by irresponsible
consumerism, an aggressive credit industry, lax bankruptcy laws and
lawyer-run bankruptcy mills. It sets up a flexible formula for bankruptcy
judges to channel those with repayment capacity to Chapter 13. Currently,
the overwhelming majority of debtors file under Chapter 7, which effectively
wipes away their debts. Only about one-third of debtors opt to file under
Chapter 13, which requires some repayment plan to reimburse creditors.

The measure also seeks to improve the bankruptcy system for consumers by
promoting credit counseling services and educational courses for debtors
prior to filing a bankruptcy petition. The plan strengthens enforcement and
penalties against coercive tactics by creditors. It penalizes creditors who
seek a double-payment and establishes tough penalties for creditors who use
threats to coerce debtors into voluntarily agreeing to pay a debt which
could be wiped away in bankruptcy.

The legislation will minimize court dockets and keep costs down. It promotes
the alternative dispute resolution process by saying that if someone in
financial trouble tries in good faith to work out a reasonable repayment
plan, but a creditor rejects this, then the ability of the creditor to
collect in bankruptcy will be sharply curtailed.

The bill also would make Chapter 12 for farmers a permanent part of the
bankruptcy code. The package strengthens this tool for farmers by making an
increased number of farmers eligible for Chapter 12 protections and making
the federal government last on the list of creditors when a farmer sells
farm assets during reorganization. Changing the treatment of capital gains
taxes under Chapter 12 would give farmers greater flexibility in
reorganizing their financial affairs.

Finally, the reform proposal includes:

- a provision to protect quality of care for patients - especially nursing
home residents - when a health care provider is in bankruptcy. Current law
does not guarantee the well-being of patients in a bankruptcy case. Two
years ago, residents of a California nursing home were literally evicted
onto the street by a bankruptcy trustee.

- a provision setting new requirements for credit card companies and protect
consumers. These provisions reflect some of the most significant
pro-consumer legislation considered by the Senate in a decade. Under the
measure, creditors are required to display prominently a minimum payment
warning on every credit card statement. This feature would include a
toll-free number for credit card holders to learn how many months it would
take to repay a certain balance with minimum monthly payments. It also
requires credit card solicitations to disclose when a low introductory rate
ends and what the subsequent rate will be. And, it requires credit card
solicitations via the Internet to comply with the Truth in Lending Act.

- unprecedented new protections for child support claimants. The reform bill
allows claimants to access otherwise off-limits property and has the support
of key child support advocates.

- limits on the ability of individuals to protect assets by purchasing an
expensive home. Right now, there are no limits on the value of a homestead
that is off-limits to creditors. Although the General Accounting Office
found only scant evidence of systemic abuse of the homestead exemption, the
bankruptcy reform bill includes changes long-advocated by Sen. Herb Kohl of
Wisconsin and Sen. Jeff Sessions of Alabama to put a $100,000 cap on home
equity acquired within two years prior to declaring bankruptcy. The
Kohl-Sessions proposal requires that an individual establish residency for
two years prior to bankruptcy in order to claim the homestead exemption of a
particular state. The bill also allows creditors to seize any home equity
acquired with the intent to delay or hinder collection efforts within seven
years prior to declaring bankruptcy. And it says the home equity built up
applies to the $100,000 cap even if an individual relocates from one state
to another.

Since 1990, the rate of personal bankruptcy filings has increased almost 100
percent. Since 1980, the number of Americans declaring bankruptcy has
exploded from 331,264 to just under 1.4 million last year. Filings began to
increase dramatically after 1985, despite the strong economy.

-30-


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