Bankruptcy Abuse Prevention and Consumer Protection Act of 2005

BANKRUPTCY ABUSE PREVENTION AND CONSUMER PROTECTION ACT OF 2005 -- (Senate - March 08, 2005)

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Mr. SCHUMER. Mr. President, I hope everybody will pay attention to this debate, which has been going on intermittently in the Chamber for the last 4 or 5 years. Not much has changed, except the votes of some of my colleagues, if you can believe the press reports.

Let me start by saying I believe in bankruptcy reform. It is very wrong for people to abuse the code. But reform should be across the board, it should be applied fairly. It should not be just for some interests. When some interests are abused, we legislate on that, but when other interests are abused, we do not. It should not sweep under the rug people who have real needs, as the amendments of some of my colleagues--the Senator from Massachusetts and the Senator from Illinois--have tried to address. A reform bill should not contain a trove of treats for some supposed victims of the system, such as banks and credit card companies, but leave others shivering in the cold.

For this reason, the bankruptcy bill before us today does not do the trick. It has many deficiencies and, to my mind, a glaring, gaping hole. While the bill supporters give lipservice to fairness, they have carved out a loophole for those who use violence, for those who seek to use bankruptcy for a purpose it was never intended. It is a loophole that I cannot live with, and, once upon a time, in a different world, the vast majority of Senators agreed with me and voted to close this loophole.

Most of you are already familiar with this provision. After all, most of you have voted for it before. Indeed, this is identical language; there is not a single word change in this amendment, the Schumer-Reid amendment, from the amendment that was added to the bill a few years ago. This identical language was contained in the compromise bill we have heard so much about this past week.

Along with Senator Reid, I am reintroducing the provision that would close this loophole once and for all. I am pleased that Senators LEAHY, FEINSTEIN, and MURRAY are also cosponsors of the amendment.

Put simply, the Schumer-Reid amendment would end the ability of violent extremists to hide behind bankruptcy laws to escape court-imposed debts. The amendment is very simple: If you use violence or the threat of violence to achieve a goal, a political goal, and you are successfully sued--as you should be--by the person or persons you have used violence against, you cannot then go back home to a bankruptcy court and say, protect me. Has anyone who ever envisioned the bankruptcy law felt that it should be used to protect those who use violence or threats of violence? I doubt it.

There is talk by some of ``peaceful protests.'' As I will talk about later, the bill explicitly protects peaceful protests but not violence or the threat of violence. It doesn't matter if you are an extremist in the pro-life movement or the animal rights movement or any other movement; if you believe you are so right that you have the ability to take the law into your own hands and threaten others and do violence to others because your knowledge and feelings are superior to everybody else's, you are wrong. That is not American. Again, you should not be allowed to use the Bankruptcy Code to protect yourself from a rightfully imposed civil remedy.

This amendment could really be called the Schumer-Reid-Hatch amendment because in 2001 Senator Hatch sat down with me and together we worked out this compromise. We worked out this precise language in a bipartisan fashion over 4 years ago. There is only one difference--that since we worked out this compromise, which a large number of colleagues on the other side of the aisle supported, including those who disagree with me on the issue of choice, we have found that a small group in the House has been able to block the bill if it had this amendment in it. There is no reconsideration of the merits of the amendment. There is no argument made against the amendment that hasn't been made before and rejected overwhelmingly by this body. It is simply allowing a small few in the other body to dictate what we are doing here.

If reason and logic prevail, this amendment would be considered among the least controversial and most sensible fixes to the current bill. If bipartisanship and consistency were the order of the day, this provision, which was unceremoniously stripped from the current bill, would pass again overwhelmingly. The bill is intended to curb abuses of the Bankruptcy Code. But why are we curbing abuses when the victim is a credit card company or a bank but not anybody else? Why not also when the victim is a woman pursuing her constitutional rights? Does that woman have any less rights than a bank or credit card company, or a doctor pursuing a living, doing what he believes is right and what is allowed by law, according to the Supreme Court and enshrined in the Constitution, and this doctor tries to prevent people from hounding his children, from threatening them with violence, and then you say, no, we are going to protect the credit card companies and the banks but not that doctor, not that woman; is that fair? Is this bill fair and balanced?

We want to reform bankruptcy; there are abuses. But why are we only reforming the abuses that affect some and not others? Why are we only reforming the abuses that affect some of the most powerful interests and not those who are weaker or more helpless?

In the current climate, I am sad to say that there appears to be an edict from the leadership on the other side to vote down every amendment, no matter what its wisdom for efficacy. That is not what the Senate is about, that is not what America is all about, and that is not what our constituents sent us here to do. It would be a tragedy if that sort of marching-in-lockstep attitude affected the Schumer-Reid amendment.

Let me take a minute to describe the history of this amendment, to refresh the recollection of many of my colleagues who may have forgotten it. Let me tell you what happened. Of course, Roe v. Wade was passed by the Supreme Court in 1973. Many opposed Roe v. Wade; they felt it was against their religious beliefs. I respect those religious beliefs. A large movement of protests developed, the vast majority of which was peaceful. The former bishop in my home of Brooklyn would stand in front of a clinic every week and pray the rosary. That is an American thing to do. That is a peaceful protest. But there were some--an extreme few--who decided that they were so right, that what they heard from God prevailed over what anybody else heard from God, and that they should take the issue into their own hands. Some used the methods of blockade, passive resistance. Others went further. They would put acid on clinics that would render them useless--a destruction of personal and private property, if there ever was. They would threaten doctors. They would follow their children going home from school and harass them. Inhumane. They would even encourage people to kill doctors. We know doctors who were killed.

This protest movement was largely successful. It shut down about 80 percent of the clinics in America. There were some States and many counties where a woman who was seeking her own right to choose would not get that right, and, as a result, a number of us worked on a law--I was a sponsor in the House, and I believe Senator Boxer was a sponsor in the Senate--that would give the clinics that offered people a way to effect their right to choose some help. The law made it a Federal crime to use violence or the threat of violence against clinics. That was necessary because you had large jurisdictions where the elected sheriff said, I will not enforce the law, taking matters into his own hands.

As we were discussing what to do with this bill, I remember a meeting in New York, and a young woman from one of the defense funds that represent women said: Why don't you include the right to sue, so if the Federal Government is unwilling or slow and cumbersome in protecting this Federal right, the clinic could sue. We put it in the bill as an afterthought, but it really proved to be the hope and the salvation of the clinics because they began to sue those who would blockade them when police forces would not enforce the law.

There was Dobbs Ferry in New York, where they wanted to enforce the law. They had a police force of three, and hundreds of people were protesting violently and blockading--not peacefully--and the police force was overwhelmed. But the right to sue opened up these clinics and, once again, the constitutional right, available voluntarily to women.

No woman is forced to avail herself of this right; it is choice. That is what it is all about--choice. Your beliefs may be different from mine, but I respect yours; I hope you respect mine. I am not imposing mine on you, and you should not impose yours on me, particularly when they are deeply held religious beliefs. That is America.

So the clinics were open again. Many of these violent protesters sort of faded away. They realized the legislatures were going to keep the Roe v. Wade law, that they could not succeed in overturning it. If you believe the polls, over 60 percent of Americans support the right to choose. They had turned to violence and threats of violence, and now the FACE law had stymied them in that decidedly un-American way to enforce your views or effect your views. So we offered an amendment.

I skipped one point. Some of the more militant of these groups--the militant of the militant--came up with a new way to avoid these civil suits that the FACE law allowed. They said: Go back and declare bankruptcy once you are sued, and then they cannot pursue the money judgment used against you. This was made particularly difficult because most of the groups that used violence or threats of violence were not indigenous. They were not from the local community. There were a lot of people against the clinics in the legal community, but they, like most Americans, effected their views peacefully.

But these were sort of roving bands of groups from across the country. They would be sued successfully, and then they would each go back to their home jurisdiction and file for bankruptcy.

It was impossible for these clinics, most of which were small and not terribly well funded, to then file after they won the first suit--a burden enough to them. They should not have had to do it. It should have been the Federal Government or the local government enforcing the law. But they went back home, declared bankruptcy, and the clinics were not able to pursue each of those suits in their home States.

An example is that of the notorious Nuremberg files case that took place in Portland, OR. The defendants created, in that case, a Web site that collected personal information about providers of abortion, clinic staff, law enforcement officials, judges, and even Senators. The site listed the names of those wounded in gray type and for those who had been killed--including Dr. Barnett Slepian in my State who was murdered in front of his family in 1998--they crossed out the names, as if they had achieved something good.

Doctors and their families targeted by this Web site had to wear bulletproof vests, install security systems, and take other precautions. As one witness testified before the Judiciary Committee, speaking of the targeted doctors:

They are not secure in their homes or in their offices. They do not sit by windows in restaurants, and they even refrain from hugging their children in front of open windows.

Can you imagine? Under the FACE law, the victimized doctors sued these violent radicals who would threaten them. Judges and juries sided with the victims and issued verdicts. For example, there was a $109 million verdict against the Nuremberg defendants. In another case, Operation Rescue President Randall Terry ran up $1.6 million in fines on account of his acts of clinic violence. But did these violent extremists pay up? No. They instead filed for bankruptcy to avoid responsibility for their heinous acts. In fact, many of these public defendants publicly bragged about being judgment proof and thumbed their noses at their victims, forcing years of protracted litigation.

Randall Terry, for example, blithely filed for bankruptcy to avoid paying his debts. And the Nuremberg file defendants forced bankruptcy litigation for years in six different jurisdictions to avoid their debts. Some of the extremist groups even recruited people and had as a criteria for admission to the group that you make yourself judgment proof. One radical group, for instance, the American Coalition of Life Activists, drafted its Constitution to state that members of the organization ``must have their assets protected from possible civil lawsuits (judgment proof).''

As one can imagine, with these tactics, it took years to enforce the judgments against these violent radicals, and victimized doctors, families, and clinics could not get the justice they deserved. We all know that the wheels of justice are sometimes too slow, but tactics such as this made a mockery of our system.

So when the bankruptcy bill came before the Senate back in 1999, I offered an amendment to stop this awful abuse of the system. It made sense. It was not adding a new issue to the bill. The bill was supposed to deal with abuses of bankruptcy, and if there was ever an abuse of bankruptcy, what these violent extremists did was an abuse of the bankruptcy law. No one, when they wrote the bankruptcy law, thought the Randall Terrys of the world deserved protection.

When I offered the amendment, Senator Hatch and others--some pro-choice, some pro-life--came to me and said: Why are we singling out pro-life activists who engage in violence and take the law into their own hands? What about other extremists who abuse the Bankruptcy Code by using violence or the threat of violence?

They were right. So we sat down. We had a fruitful discussion. From this, Senator Hatch and I worked out a compromise with which everyone could live. We hammered out an amendment that was not particular to the issue of the clinics but dealt with anybody who would use violence or the threat of violence in the same way--blockades, arson, whatever. They, too, if they had a judgment against them, could not go to bankruptcy court and successfully ask for protection.

The amendment we have does not mention the word ``abortion'' or ``choice.'' It simply talks about anyone who uses violence. It would be applied with equal force and vigor to animal rights activists, to the environmental extremists in the ELF movement. It only affects, frankly, those on the far right or the far left who believe they are so morally superior to all of us that they can avoid this constitutional democracy and, with violence, take actions into their own hands. Anyone who violently or misguidedly blocks access to services, whether in the name of the pro-life movement, the animal rights movement, the environmental movement, or any other movement, would lose the ability to hide behind the Bankruptcy Code.

It would apply equally. It did apply equally to pro-life extremists and ecoterrorists, one on the far right and one on the far left. Indeed, if militants in the pro-choice movement should block a facility that was pushing abstinence, it would apply to them, too. If violent atheists blocked access or burned down a church, it would apply to them. It applies to anybody who uses violence and then seeks protection of the Bankruptcy Code.

This amendment is not about abortion, as its critics attack it. It did have its origins there because that is where violence was used, but now, after the Schumer-Hatch compromise, it is an amendment simply about the rule of law, something everyone of any political party, of any political belief who is an American--when you swear your loyalty to the Constitution of the United States, you are basically swearing loyalty to the rule of law.

Let me underscore this: It does no harm, none, not 2-percent harm, not 1-percent harm, not .1-percent harm; it does zero harm to legitimate protesters who do not engage in violence or threats of violence. The amendment expressly states that ``nothing in this provision shall be construed to affect any expressive conduct, including peaceful picketing or peaceful demonstration, protected from legal prohibition by the first amendment to the Constitution of the United States.'' If you protest peacefully, you are protected. If you use violence or the threat of violence, you are not. That is the American way, and we made it clear.

People who are against this amendment say it stands in the way of peaceful protests. I ask them to cite me a single example where that has happened. It has not.

This was a fair amendment. It applied to anyone who used violence to effect their means and, in overwhelming numbers, Democrats and Republicans supported it. Virtually all of my Republican colleagues now on the Judiciary Committee, including some leading pro-life Senators, supported it--Senators HATCH, GRASSLEY, KYL, and SESSIONS. I take off my hat to them. They were being fair. I am sure they received a little pressure: Don't do this. Maybe there were some winks: Hey, maybe this violence is OK because we feel so passionately about an issue. But they stood up. To their credit, these Senators, even though they are staunchly pro-life, were reasonable and sensible about the issue.

Then on March 15, 2001, a bankruptcy bill, largely identical to the one before us today, except that it had the Schumer-Reid-Hatch language in it, passed in the Senate by a vote of 83 to 15. Only two Republicans voted against it, and that was for reasons other than this amendment.

Then, of course, the bill was sent to the House. It looked like as if would pass. I supported the bill with this amendment in it. I have always said I will be for the bill with this amendment because I think this amendment is so important, even though I am not happy with other provisions in the bill. I am, frankly, less happy today with the other provisions in the bill.

The bill was sent to the other body, and a fight ensued within the Republican caucus. A large number, probably a majority of the Republican caucus, wanted to support the bill, but a small number who were the most fervent in their pro-life beliefs said no bill. The Republican leadership in the House said since this divides our caucus, even though a vast majority of the House would have supported the legislation, in my judgment, they pulled the bill.

So now we are back to where we are today. We have basically the same compromise as last year but without the Schumer-Hatch compromise. All I am doing today is adding that compromise word for word. Again, not a comma, jot, or tittle has been changed in the bill.

I have watched while amendment after amendment offered by Democratic Senators to end abuses and close loopholes has been beaten back because of an edict that this ``negotiated compromise''--not negotiated certainly with many of us on this side--should be delivered pristine to the House.

Republicans defeated an amendment to protect veterans because it was not part of the compromise. That was offered by the Senator from Illinois, Mr. Durbin. For example, a National Guard man or woman, a reservist sent overseas does not make the same money they made before, and maybe they have to go into bankruptcy. Do we want to come down like a hammer on these people the same as we would come down on somebody who squandered whatever money they had in Las Vegas gambling? Absolutely not. But the amendment was defeated.

There was an amendment that was defeated to protect victims of identity theft. I believe that was done by my colleague from Florida, Senator Nelson, because it was not part of the compromise.

Senator Kennedy has eloquently spoken of those who have to go into bankruptcy because they do not have adequate health insurance or any health insurance, and they are putting their every last nickel to save their husband or their wife or their mother or their father or their child. Again, no protection.

An amendment I offered which said millionaires could not abuse the code by setting up a trust and putting all their assets in this trust and then declaring bankruptcy and shedding themselves of debt also was not allowed because of the compromise.

Mr. President, do you know what was part of the original compromise? The Schumer-Reid amendment or, more correctly, the Schumer-Reid-Hatch amendment. Yet this provision was stripped from the current bankruptcy bill.

If Senator Hatch continues to suggest we should honor the grand compromise from last time and not change it, then let's do it for everybody. Let's not just take out this provision.

What, I ask, has changed since the bill of this language passed by a vote of 85 to 13? Absolutely nothing. It was a good law then, it is a good law now. On what basis can my colleagues now oppose the Schumer-Reid amendment because it targets, among others, those who take the law into their own hands to oppose a woman's right to choose? That is nonsense. Senator Reid is the lead cosponsor of the amendment, and he is pro-life. And as I have said, the language is not particular to abortion.

Let me ask my Republican colleagues a question. I hope they are listening: Would my Republican colleagues oppose a broadly worded murder statute because, among other things, prosecutors could bring charges against someone who killed a doctor who would provide abortion services? Would they oppose a neutrally drafted arson statute because men and women who burn down health clinics might come under its ambit?

There is no moral reason, no legal reason, no logical reason, for Senators who once overwhelmingly supported this language to now oppose the Schumer-Reid amendment. Some of my colleagues have said they are still in favor of this amendment but do not want the entire bankruptcy bill to be held up because of it. My purpose is not to hold up the bankruptcy bill, and I think my colleagues on the other side who worked with me over the years on this bill understand that. My purpose is to preserve the rights of those who seek to do constitutionally protected acts in the face of violence.

So I ask my colleagues to please think about what they are doing. If they vote against this amendment, they are voting against the rule of law. If they vote against this amendment, they are voting against the fundamental way we do things in America. If they vote against this amendment, many of my colleagues are voting exactly the opposite of what they did a few years ago. I ask my colleagues not to change their vote because of political expediency. If my colleagues turn their back on this amendment now, it will be a turnaround, an about-face, on fairness, on reform, and on bipartisanship.

As I have said, this is not pro-choice or pro-life. It is pro rule of law and it is antiviolence. No matter how strongly people feel--and I respect people's passions; I respect their passions whether they come from religion or politics or anything else--the greatest danger our Republic faces is apathy, so people who feel passionately are good. Because someone feels passionately, they should not be allowed to take the law into their own hands and then hide like a coward behind the bankruptcy law.

Just as we are trying to end the abuses of the bankruptcy law when it affects banks, we should also end abuses of that law when it affects victims of violence. It is vital that we make the law perfectly clear that debts incurred by violent extremists who take the law into their own hands are nondischargeable, and that is all this amendment does, no more or no less. If we do not, individuals and organizations seeking to shut down public facilities, whether they be clinics, powerplants or animal laboratories, will continue to force victims of clinics and other violence into a world of perpetual litigation by using the Bankruptcy Code as it was never intended.

I ask my colleagues to support this amendment. Most of them did once and they should do so again.

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Mr. SCHUMER. Mr. President, I would like to ask my colleague a question, but, first, I will make a couple of points.

First of all, nothing has changed since we all supported the Schumer-Reid-Hatch amendment of a few years ago. The basic purpose then was not to make sure that cases in bankruptcy court did not come out on the side of those who were victims of violence. It was just impossible to pursue the claims of bankruptcy.

My good friend from Utah cites Maria Vullo. She is a successful lawyer in New York who donated her own time which she estimated at one of our hearings to be worth over $1 million. She believed passionately that those who used violence should be stopped. Not every clinic has it. And, of course, if you go through the bankruptcy proceedings, you will win. Clinics don't have the ability to do that; first, to fight in court on the issue of violence and then to go back to the bankruptcy court.

I say in all due respect to my good friend from Utah, he knew that then, and he knows it now. It is the same issue. The very issue that he says we don't need this law was brought up in 2000 and 2001. My good colleague was then good enough to admit we did need the law even though we couldn't find cases, and even though there were no cases in bankruptcy court where the Randall Terrys of the world prevailed. You would never have the successful suit.

That is why these fanatical groups are insisting that bankruptcy be used.

I make another point to my colleague. If the amendment is unnecessary now, why wasn't it unnecessary then?

I make this point to my colleagues: The merits have not changed. Exactly the situation that prevailed in 2000 and 2001 prevails in 2005.

What has happened is people have done a 180-degree about-face because of a small group in the House who do not represent the mainstream views of the House or of even the Republican Party in the House but who have insisted on not going forward with a bill with this worthy amendment in it. An amendment that was praised, a compromise that was hailed a few years ago is every bit as valid today as it was then.

I know it is difficult and awkward for people to say, well, never mind, but we cannot let this issue just die. The rule of law is too important. Fairness is too important. What is good and beautiful about America is too important.

We will ask our colleagues to stick with their convictions that they have had over the last few years and not do an about-face simply because a small group of industry leaders says we must have this bill no matter what.

Senator Hatch spoke for a long period of time. I wanted to rebut him. He did not want to do it on his time.

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Mr. SCHUMER. Mr. President, in conclusion, I would like to rebut some of the comments of my colleague from Utah who said this amendment was not necessary, and he talked about Maria Vullo, the lawyer who represented the clinic in the Nuremberg files case.

Here is the major point. She did not collect any money in that case. Despite spending $1 million of her own money, pro bono, despite relitigating in six bankruptcy courts, she was unable to collect any dollars. This is the point we are making. Perhaps at the end of the day you will get a nominal victory if you go all around the country chasing these fanatics in bankruptcy court, but you cannot collect. That is why the American Coalition of Life Activists, a violent fringe anti-choice group, actually requires its leaders to be judgment proof.

Here is the bottom line: This amendment, which was supported by so many on the other side, is being dropped, not because it is wrong but for expediency, so there will not have to be a bloody battle in the House between those who are on the Republican side, between those who are more probusiness and those who are vehemently opposed to this amendment. I will not denigrate the pro-life movement by labeling them that way because the pro-life movement cannot be for these violent groups.

This amendment is for the rule of law. This amendment says you cannot use violence against any group to achieve a political end and then, when you are sued civilly, use the bankruptcy courts for protection. That has never been what the bankruptcy courts were intended to be. It is neutral on terms of what issue. Yes, it might be extremists who are against abortion. It also might be extremists on the left side, on the environmental side who burn buildings or houses or cars. Are we going to, as a society, condone that type of activity?

I will tell you, if we defeat this amendment, that is what we are doing. Make no mistake about it, make no mistake about any of the subterfuges. To me, this amendment and the rule of law and the American way of life that this amendment stands for are more important than the rest of the bankruptcy bill.

The bankruptcy bill, whether you are for it or not, twists the dials a little bit with regard to the balance between creditors and debtors. I assure you that was not on the Founding Fathers' minds when they wrote the Constitution and created the Republic.

What this amendment does goes right to the heart of what America is all about. It says those who use violence to achieve their political goals cannot get a benefit, in this case bankruptcy. It, in my judgment, as I said, is more important than the rest of the bill.

So I ask my colleagues on the other side to rise to the occasion. Do not let arguments of expediency persuade you. That is the slow road to oblivion. That is the tortured path to undoing step by step, bit by bit, as the river creates a canyon, the way of life that we love. No matter how strongly one feels about something, their job is to persuade others to their viewpoint, not to take the law into their own hands and use violence. And if they do, they should not be allowed to use the Bankruptcy Code or anything else to prevent just civil or criminal action against them.

I ask my colleagues to look into their hearts, to examine what this amendment does, and to have the same courage--courage of conviction and courage of a fair compromise--that we showed a few years ago. I urge support of this amendment.

I yield the floor.

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