Senate Floor Speech
Senator Kay Bailey Hutchison
November 10, 1999 -- Page: S14481

Mrs. HUTCHISON. Mr. President, I offer a second-degree amendment to the pending amendment.

The PRESIDING OFFICER. The clerk will report the amendment.

The assistant legislative clerk read as follows:

The Senator from Texas [Mrs. Hutchison], for herself, Mr. Brownback, and Mr. Graham, proposes an amendment numbered 2778 to amendment No. 2516, as modified.

Strike the period at the end and insert the following: `. The provisions of this section shall not apply to debtors if applicable State law provides by statute that such provisions shall not apply to debtors and shall not take effect in any State before the end of the first regular session of the State legislature following the date of enactment of this Act.'

Mrs. HUTCHISON. Mr. President, if I could take a moment to explain the amendment. We have agreed to 30 minutes equally divided. I would then turn it over to Senator Kohl to explain the underlying amendment.

Basically, Senator Kohl and Senator Sessions are going to try to put a cap on the homestead exemption that would apply uniformly to every State. I think that is a mistake because every State is different. The valuation of property is different in every State. This does not make any allowance for those variations in property.

The Kohl-Sessions amendment has a $100,000 cap in bankruptcy proceedings on homestead exemptions, but the median value of a home in California is over $215,000; in Oklahoma it is $92,500. So right there you can see there are differences in America.

Secondly, 11 homestead exemptions around the country would be immediately overturned if we have a Federal standard for a homestead exemption. The States of Florida, Iowa, Kansas, South Dakota, Texas, Minnesota, Nevada, Oklahoma, California, Massachusetts, and Rhode Island would all have their caps lifted in favor of a Federal rule that would attempt to be one size fits all.

In my home State of Texas, it is actually a constitutional provision; it is not a statute. It does not refer to money at all. It refers to acreage. There is the urban acreage and there is the rural acreage. So I think it is very important that we have the ability to address this by every individual State.

For 130 years in our country, the Federal Government has allowed the States the ability to set its own laws in this area. The homestead exemption does differ State to State. For 130 years, the Federal Government has said the States may do this.

The Kohl-Sessions amendment would overturn the 130 years of precedence and have a national standard, a one-size-fits-all approach. That reminds me of a lot of other Federal Government programs. I am sure it rings true with other Americans because that is the Federal approach: One size fits all. We do not need one size fits all. For 130 years, we have not had it.

In this country the States have done very well in setting their own homestead exemptions--what works for them, what works for the elderly in their States, what works for families in my State of Texas--and they do not want to take homes away from the elderly who are most susceptible to having health crises. That would take away their savings. That might put them into financial difficulty. They do not want to throw the elderly people out of their homes, even if their homestead might be valued at over $100,000, the median value.

Secondly, what if it is a young family where the wage earner gets into financial difficulty? Do we want to put a family out on the streets? This has been sacrosanct in my State and in many other States; that whatever we were doing to try to make people pay their debts--and we do want people to pay their debts--we don't want to make them wards of the State. We want their families to be able to continue to have a roof over their heads while they are working out of their financial difficulties.

I support the concept of this bill. I commend Senator Grassley for working hard to improve the bankruptcy laws in our country. But the amendment that is before us today would take away 130 years of preemption by the States to create their own homestead exemptions, especially rural States where farms may have a bigger valuation. They don't want to make people who are in financial difficulty wards of the State.

Let me show two very important letters from the State leaders of our country. The National Governors' Association, in a letter signed by Governor Jim Hodges and Governor John Rowland, wrote:

We also urge you to resist efforts to impose a uniform nationwide cap on homestead exemptions. The ability to determine their own homestead exemptions has been a long-standing authority of states. Furthermore, the median price of a single family home varies widely from state to state. A one-size-fits-all approach is simply not appropriate when the median home price may be more than two-and-a-half times as high in one state as it is in another.

The second letter is from the National Conference of State Legislatures. It says:

The [National Conference of State Legislatures] is concerned, however, that an amendment may be offered during Senate consideration that would preempt state laws by setting a cap of $100,000 on homestead exemptions, thus forcing debtors with over $100,000 in homestead equity to sell their homes and farms. Recent real estate trends have shown that in all but four states, the median price of a single family home is well over $100,000. While state legislators believe that the bankruptcy code should strongly encourage consumers to pay their debts to the extent possible, my colleagues and I would be equally concerned about the disruption to family life, particularly the harsh impact on the children of debtors that may result by the establishment of such a limit on homestead exemptions.

We have the National Conference of State Legislatures and the National Governors' Association speaking for the State leadership saying this is an area that should be left to the States. It has been left to the States for 130 years. We do not need to overturn 130 years of laws that are working in individual States.

I hope we can pass this bill. I certainly will support the Kohl amendment, if we have the State ability to opt out. That is the key. I think if we can have that kind of accommodation, then it will be a good amendment. Let the States decide for themselves if $100,000 is right for them.

Mr. President, I reserve the remainder of my time.