As members of Congress try to make it more difficult for individuals to erase their debts, they've run into an obstacle: Sen. Paul Wellstone.
In 1998, Wellstone was the only senator to vote against a bill that called for an overhaul of the bankruptcy system. Now, the Minnesota Democrat is using parliamentary tactics to stall another bankruptcy bill that has strong bipartisan support.
He called the bill "unjust," saying it would impose harsh penalties on families that file for bankruptcy in good faith.
While Wellstone's move is frustrating Democratic and Republican leaders alike, consumer advocates are thrilled.
"This is the most anticonsumer piece of legislation that the Congress is considering," said Edmund Mierzwinski, consumer program director for the U.S. Public Interest Research Group in Washington, D.C. "Without Paul Wellstone, it may have already passed."
As the fight over the bankruptcy bill enters its final stages, Wellstone isn't the only Minnesotan gaining attention on Capitol Hill.
In its latest report on lobbying efforts behind the bill, the watchdog group Common Cause said that Sen. Rod Grams, R-Minn., received $76,359 in political action committee contributions from the consumer-credit industry in 1999, more than any other U.S. senator.
But Grams, a member of the Senate Banking, Housing and Urban Affairs committees, was topped by four House members who received contributions ranging from $85,000 to $94,000: Reps. John LaFalce, D-N.Y.; Bill McCollum, R-Fla.; Richard Baker, R-La., and Rick Lazio, R-N.Y.
The consumer-credit industry includes commercial banks, credit-card companies, consumer-finance companies, credit unions and savings and loan institutions.
Steve Behm, a Grams spokesman, declined to comment on the report. He said that Grams believes the bill is "a good balance between the rights of debtors and their responsibility to pay their debts."
On Tuesday, Wellstone to appear at a news conference on Capitol Hill, where he will join with leaders of unions, consumer groups and civil-rights organizations to denounce the bill.
"While punishing the most financially vulnerable citizens of this country, this bankruptcy bill does virtually nothing to hold lenders and credit-card companies accountable for their own irresponsible practices," Wellstone said.
He said the bill purports to address a "crisis" that he said is taking care of itself. He said there were 112,000 fewer bankruptcies in 1999 than there were in 1998, a decline of nearly 10 percent.
If Congress passes the bill, Wellstone said, "the message is clear: Make risky loans, discourage savings, promote excess and Congress will reward your behavior by letting you be more coercive in your collections."
The bill, which the House approved last year, passed the Senate 83 to 14 in February.
Bill supporters say it's one of the most important attempts in decades to change bankruptcy law. They contend that the current law allows too many debtors to escape their obligations.
"Bankruptcy has become so commonplace that more than one in a hundred households will file for bankruptcy this year," said Sen. Dianne Feinstein, D-Calif., who voted for the bill. She said that bankruptcy should be "a last-resort legal option and not a vehicle for avoiding personal responsibility."
Another Democrat who voted for the bill, Sen. Robert Byrd of West Virginia, said that Americans are abusing the bankruptcy code. He said that "there is no longer a stigma attached" to filing for bankruptcy.
Loss of pensions
Opponents say the bill, which they've dubbed "The Creditors' Bill of Rights," goes too far in pleasing lenders. They're particularly irked by a provision that would allow the seizure of pensions and retirement benefits from those who file for bankruptcy.
"The bottom line is these credit-card [companies] and other lenders will have the borrower waive his right to protect his pension during bankruptcy proceedings," said Jim Farrell, a Wellstone spokesman. "You can't do that today. . . . It gives you an indication of who wrote this bill, who this bill works for and whose values it reflects, certainly not working people."
The pension issue has aroused the interest of the American Association of Retired Persons (AARP), a lobbying group that represents more than 32 million older and middle-aged Americans. Although AARP hasn't taken a position on the overall bill, a spokesman said that it welcomed Wellstone's delaying tactics.
"We like the fact that he's forcing people to address these concerns," said Roy Green, AARP's legislative representative for housing and financial services.
Senate leaders from both sides of the political aisle are pushing the bill, which has been in limbo for more than a month. That's when Wellstone first held up the proposal by objecting to a request for "unanimous consent," which would have sent the issue to a conference committee for final negotiations.
Senate Majority Leader Trent Lott, R-Miss., said that "it would be a terrible mistake" for Congress not to go forward with the bankruptcy bill.
Siding with Lott, Senate Minority Leader Tom Daschle, D-S.D., said there is "overwhelming support" for the bill. He said that he ultimately expects the bill to pass.
"I say ultimately," he said. "I would hope I could say that it would be sooner rather than later. I can't say that today. Senator Wellstone feels strongly about this and it's his right to object. He's doing it. But we will find other innovative ways to address the problem if we have to."
For his part, Mierzwinski said members of Congress have been "influenced not by the facts, but by one of the most sophisticated lobbying campaigns I've ever seen . . . .
"It's obviously a bipartisan rush to take away the rights of people who in many cases have to commit bankruptcy because of some medical or other family emergency. . . . This industry is papering the Congress with campaign contributions and, most importantly, it is papering the parties with soft money. And they're expecting a return for their dollar."
© Copyright 2000 Star Tribune