Grassley described his effort during a bicameral hearing to consider bankruptcy reform. The House/Senate hearing convened by Grassley and Rep. George Gekas of Pennsylvania was the first joint review of the federal bankruptcy code since 1932.
"My goal is common-sense reform that secures a safety net to protect those who deserve a fresh start, while closing the loopholes that too many now exploit to walk away from debt they can repay," Grassley said.
Grassley said his proposal will reflect two years of debate on Capitol Hill on how best to respond to an alarming trend. In 1999, the number of bankruptcy filings is expected to reach an all- time high for the fourth year in a row, despite record low unemployment and continued economic expansion. The number of bankruptcies filed last year totaled 1.4 million.
Grassley said there's plenty of blame to go around for this negative trend, including the fact that the stigma of declaring bankruptcy has lessened and that Congress set a bad example with 30 years of deficit spending.
To the extent that the bankruptcy code itself is contributing to the trend, Grassley said that changes to the law are needed. "Real reform should address a number of factors such as irresponsible consumerism, lax bankruptcy laws and lawyer-run bankruptcy mills," he said.
Last fall, the Senate voted 97 to 1 in favor of Grassley's bipartisan plan to overhaul the federal bankruptcy code. The Senate bill was modified during negotiations with the House of Representatives. And in the final days of the 105th Congress, the House gave the conference report overwhelming bipartisan support. However, in the Senate, the measure was prevented from ever coming to a vote before the end of the session.
"Last year's effort provides a productive starting point for a renewed bipartisan effort to update the federal bankruptcy code," Grassley said.