A bill to amend the Marine Mammal Protection Act of 1972 to allow importation of polar bear trophies taken in sport hunts in Canada before the date on which the polar bear was determined to be a threatened species under the Endangered Species Act of 1973.

Madam President, I ask unanimous consent that the order for the quorum call be rescinded.

Madam President, I understand there is a unanimous consent agreement that needs to be propounded, and I yield for that purpose.

Madam President, I am here today to strongly support the Dodd-Shelby substitute to the House bill on credit card reform. Before I proceed with my statement, I wish to say how appreciative I am, and the country will be, for the efforts of Chris Dodd and Senator Shelby. This has been an effort on the part of Senator Dodd which has been ongoing for a long time. It is a very difficult, complex effort that he has taken under his wing and mastered. When we can get this passed--and hopefully we will by the end of May, as the President has requested-- there will be a very strong feeling across this country that, hallelujah, the Congress has finally acted to correct some of the abuses which have cost our consumers so many hundreds of billions of dollars in unfair charges by some credit card companies.

Millions of Americans today are facing the worst economic crisis of their lifetime. Their hardship is being compounded by unfair credit card fees and interest charges. It is long past time for us to do something about it. The Credit Cart Accountability, Responsibility, and Disclosure Act of 2009, which is 414, introduced earlier this year by Senator Dodd, myself, and a number of our colleagues to combat credit card abuses, is the best chance we have to do just that. With this substitute, we are going to be able, I believe, on a bipartisan basis, with hopefully enough support in the Senate, to accomplish our goal.

With home prices falling and unemployment rising, millions of Americans

who are still managing to pay their credit card bills on time have nonetheless been subjected to hiked interest rates. They have been hit with a double whammy--hard economic times and abusive credit card interest rates and fees. It is simply wrong for America's banking giants to try to dig themselves out of the hole they put themselves in by putting American families into a deeper hole with fees and sky-high interest charges that are often retroactively applied. Even as the prime rate of interest has gone down, some credit card companies have hiked interest rates on millions of customers who play by the rules. To add insult to injury, banks that received bailouts are frequently the ones that are punishing the very taxpayers they came to for financial rescue.

Credit card companies have used a host of unfair practices. They unilaterally hike the interest rates of cardholders who pay on time and comply with the credit card agreements they entered into. They impose interest rates as high as 32 percent, and they apply higher interest rates retroactively to existing credit card debt. They pile on excessive fees and then charge interest on those fees, and they engage in a number of other unfair practices that are burying American consumers in a mountain of debt.

I have received thousands of letters from people who have been treated unfairly by their credit card companies and feel they are powerless to do anything about it. The letters come from people from all over the country, from all walks of life; letter after letter, each more poignant than the next.

The President has also heard those voices. He has made clear his support for ending abusive practices which cause so much pain and financial damage to American families, and he has called on Congress to send him a bill by the end of this month.

We can and we should meet that deadline. The House has acted. Their version of this bill passed the House on April 30 by a vote of 357 to 70, garnering support from a majority from both parties. A similar vote in the Senate on the CARD Act will send a strong message that standing up for the American taxpayer and consumer is a bipartisan priority.

Under this bill, card issuers will no longer be able to engage in the abusive business practice of first extending credit at one interest rate, and then unilaterally jacking up the interest rate after the money is owing. Our bill doesn't restrict fair lending; it only affects credit card companies that engage in irresponsible lending practices that bury people unfairly in debt, the sort of debt that the companies often don't even expect to fully recover, but profit from nonetheless, through the extraction of fees and interest.

Some argue that it is the role of regulators, not Congress, to combat unfair lending practices. But for years Federal regulators have not taken up that task. Instead, they stood largely by silently while deceptive and unfair practices became entrenched in the credit card industry. The Federal Reserve, in particular, charged with issuing credit card regulations, failed to take action until congressional hearings and public outrage forced attention on credit card abusers.

Six months ago, the Federal Reserve and other bank regulators finally acted, issuing a regulation last December to stop some of the unfair practices. For example, the new regulation prohibits banks from retroactively raising interest rates on cardholders who meet their obligations, requires banks to mail credit card bills at least 21 days before the payment due date, and forces banks to more fairly apply consumer payments.

But the regulation, regrettably, leaves in place blatantly unfair credit card practices that mire families in debt. It fails to stop, for example, abuses such as charging interest on debt that was paid on time, charging people a fee simply to pay their bills, and hiking interest rates on a credit card because of a misstep on another unrelated debt, a practice known as universal default. It doesn't stop the charging of interest on fees. Legislation is needed not only to end those abusive practices that are not prohibited by the Federal Reserve regulation, but also to provide a statutory foundation for the new credit card regulation so that it cannot be weakened or withdrawn in the future.

The Dodd-Levin bill, as introduced, banned each of these unfair practices that were still allowed by the Federal Reserve rules. The substitute introduced today would not go as far as the Dodd-Levin bill, but offers a good compromise with strong consumer protections that ought to attract widespread support in the Senate. The substitute remains stronger, for example, than both the Federal Reserve credit card regulations and the House credit card bill in a number of ways. For example, it would prohibit retroactive interest hikes for cardholders who pay their bills on time and would allow them only for those who pay more than 60 days late. Even then, if would require banks to restore a lower interest rate for persons who had paid 60 days late but then made 6 months of on-time payments. The bill would also prohibit interest charges for debt that is paid on time, a key consumer protection for which I have been fighting for years. In addition, the bill would put its consumer protections in place 9 months from now instead of the longer regulatory deadline of July 2010 or the 1-year delay in the House bill.

The bill, of course, will not only help protect consumers and ensure their fair treatment, but it will also make certain that credit card companies that are willing to do the right thing are not put at a competitive disadvantage by companies continuing unfair practices.

In 2006, Americans used 700 million credit cards to buy about $2 trillion in goods and services. The average family has five credit cards. Credit cards are being used to pay for groceries, mortgage payments, and even taxes. And they are saddling U.S. consumers, from college students to seniors, with a mountain of debt. The latest figures show that U.S. credit card debt is now approaching a trillion dollars. Credit cardholders are routinely being subjected to unfair practices that squeeze them for ever more money, sinking them further and further into debt.

I strongly commend Senator Dodd, chairman of the Banking Committee, for taking action to move our credit card bill through the committee, despite some opposition. I also commend Senator Shelby for joining him in this substitute. Now is the time for the full Senate to act so that we can then resolve any differences with the House, and send the bill to President Obama, who has said he is ready to sign credit card legislation.

For years now, we have been combating abusive credit card practices on our Permanent Subcommittee on Investigations, which I chair. The subcommittee held two investigative hearings in 2007, exposing those practices. I introduced legislation that same year, S. 1395, the Stop Unfair Credit Practices in Credit Cards Act. I am pleased that at that time we had so many cosponsors, including Senators McCaskill, Leahy, Durbin, Bingaman, Cantwell, Whitehouse, Kohl, Brown, Kennedy, and Sanders. We followed that by introducing the Dodd-Levin bill in this Congress. It incorporated much of the previous Senate bill that I referred to, and it added other important protections as well. The Dodd-Levin bill then provided the foundation for the Dodd-Shelby substitute.

Senator Dodd already outlined most of the important provisions in the CARD Act. I want to highlight three provisions that I believe are critical to delivering relief to American families and returning common sense to the credit card business.

First, the bill will prohibit interest charges on any portion of a credit card debt which the cardholder paid on time during a grace period. Virtually all credit cards provide a grace period, so called, in which a credit card debt can be repaid without incurring interest charges. But what most people don't realize is that the credit card industry restricts this grace period to people who pay off their entire balance in full. If a cardholder repays only part of the balance during the grace period, even though it is more than the minimum amount, the issuer charges interest on the entire balance--even the portion that was repaid on time.

If I charge $5,000 in a month and pay off $2,500 by the due date-- again, an amount far more than the minimum payment required--I will still be charged interest on the full $5,000 balance, starting with the first day of the

billing period. That policy is unfair, counterintuitive, and it is unknown to a vast majority of cardholders who pay the added interest. The CARD Act will return a commonsense interpretation of the grace period and simply prohibit the charging of interest on debt that is paid on time.

Another key provision would limit the circumstances under which a credit card company can hike the interest rate applicable to a cardholder's existing debt. Right now, credit cards are the only type of loan I know of whose terms can be unilaterally changed after the loan is incurred. Even in the toughest market conditions, for example, car companies cannot increase the interest rate on a car loan, even if a borrower pays late. The credit card companies can unilaterally hike a cardholder's interest rate at any time, for just about any reason, or no reason at all. This patently unfair practice violates accepted practice in the lending field outside of credit cards, and the bill will put an end to that. The substitute will ban retroactive rate hikes for existing balances except in limited circumstances, the most important of which is that it would ban such interest hikes for cardholders who pay on time and would allow them only for cardholders who pay more than 60 days late. Even then, it will require banks to restore the prior lower rate if the cardholder follows with 6 months of on-time payments. While our Dodd-Levin bill would have gone even further and banned retroactive rate hikes, period, the substitute offers a reasonable compromise that will provide greater protection in this area than the Federal Reserve regulation, or the House bill, both of which would allow retroactive interest rate hikes if a person paid more than 30 days late.

Finally, while the substitute before us does not go as far as our Dodd-Levin bill did to prohibit universal default, the substitute does place important limits on how card companies can raise rates when cardholders have met their obligations and pay their credit card bills on time. Right now, credit card companies can unilaterally hike a cardholder's interest rate if the company receives information indicating that the cardholder is an increased risk of not paying his or her debts, even if the cardholder has a years-long record of on-time payments and has never paid a bill late to that company. The companies can apply the new higher rate to the cardholder's existing debt, as well as future debt.

The substitute would put an end to that practice as it applies to existing balances. It provides that if a cardholder meets the obligation of the card agreement by paying on time and staying under the credit limit, the credit card company must hold its end of the bargain and honor the terms of the agreement. In other words, it cannot raise the interest rate applicable to the cardholder's existing debt. The substitute would, however, allow the credit card company to increase the interest rate applicable to future debt--meaning debt not yet incurred. In addition, under the substitute, if a card company increased an interest rate on a cardholder because of credit risk, or market condition, the company would be required to review the increase after 6 months and reverse it if conditions warrant. While my preference would be to prohibit unilateral rate increases entirely, the compromise is a significant improvement over current law. It would ban unilateral interest rate hikes on existing debt for consumers who play by the rules.

To understand why these protections are needed, here are some examples of the credit card abuses we uncovered and some of the stories that American consumers shared with us during the course of the inquiries carried out by my Permanent Subcommittee on Investigations.

The first case history we examined illustrates the fact that major credit card issuers today impose a host of fees on their cardholders, including late fees and over-the-limit fees that are not only substantial in themselves but can contribute to years of debt for families unable to immediately pay them.

Wesley Wannemacher of Lima, OH, testified at our March 2007 hearing. In 2001 and 2002, Mr. Wannemacher used a new credit card to pay for expenses mostly related to his wedding. He charged a total of about $3,200, which exceeded the card's credit limit by $200. He spent the next 6 years trying to pay off the debt, averaging payments of about $1,000 per year. As of February 2007, he had paid about $6,300 on his $3,200 debt, but his billing statement showed he still owed $4,400.

How is it possible that a man pays $6,300 on a $3,200 credit card debt, but still owes $4,400? Here's how. On top of the $3,200 debt, Mr. Wannemacher was charged by the credit card issuer about $1,100 in late fees, $1,500 in over-the-limit fees, and about $4,900 in interest. He was hit 47 times with over-limit fees, even though he went over the limit only 3 times and exceeded the limit by only $200. Altogether, these fees and the interest charges added up to $7,500, which, on top of the original $3,200 credit card debt, produced total charges to him of $10,700.

In other words, the interest charges and fees more than tripled the original $3,200 credit card debt, despite payments by the cardholder averaging $1,000 per year. Unfair? Clearly, but our investigation has shown that exhorbitant interest charges and fees are not uncommon in the credit card industry.

The week before our March hearing, his credit card company decided to forgive the remaining debt on the Wannemacher account, and while that was great news for the Wannemacher family, that decision didn't begin to resolve the problem of excessive credit card fees and sky-high interest rates that trap too many hard-working families in a downward spiral of debt.

These high fees are made worse by the industry-wide practice of including fees in a consumer's outstanding balance in a manner that would also incur interest charges. Those interest charges magnify the cost of the fees and can quickly drive a family's credit card debt far beyond the cost of their initial purchases. It is one thing for a bank to charge interest on funds lent to a consumer; charging interest on penalty fees goes too far.

Another troubling case history involves Charles McClune, a 51-year- old Michigan resident who is married with one child. Mr. McClune had a credit card account which he closed in 1998, and has been trying to pay off for more than 10 years. Due to excessive fees and interest rates, and despite paying more than four times his original credit card debt of less than $4,000, Mr. McClune still owes thousands on his credit card, with no end in sight.

Mr. McClune first opened his credit card account while in college, in 1986, through a student-targeted credit promotion at a Michigan bank. After leaving college, the credit limit on his card was increased to $4,000. By 1993, although he had not exceeded the credit limit through purchases, Mr. McClune had missed some payments and was assessed interest and fees that pushed his balance over the $4,000 limit. From 1993 to 1996, he exceeded his limit again, on several occasions, due to interest and fee charges. He stopped making purchases on the credit card in 1995.

In 1996, Mr. McClune's credit card account was purchased by Chase Bank. In 1998, Mr. McClune asked Chase to close the account, and Chase did so. Although he never made a single purchase on his credit card while the account was with Chase, Chase repeatedly increased the interest rate on his account, including after the account was closed. In 2002, for example, his interest rate was about 21 percent; by October 2005, it had climbed to 29.99 percent where it remained for more than two years until March 2008; it then dropped slightly to 29.24 percent. The higher interest rates were applied retroactively to Mr. McClune's closed account balance, increasing the size of his minimum payments and his overall debt.

Chase also assessed Mr. McClune repeated over-the-limit and late fees, which began at $29 and increased over time to $39 per fee. Chase cannot locate statements for Mr. McClune's account prior to February 2001, so there is no record of all the fees he has paid. The records in existence show that, since February 2001, he has paid 64 over-the-limit fees totaling $2,200. Those fees stopped after the March 2007 hearing before my subcommittee, in which Chase promised to stop charging more than three over-the-limit fees for a single violation of a credit card limit. In addition to the 64 over-the-limit fees, since February 2001, Chase has charged Mr. McClune nearly $2,000 in late fees.

The records also show that since 2001, Mr. McClune was contacted on several

occasions by Chase representatives seeking payment on his account. If he agreed to make a payment over the telephone, Chase charged him-- without notifying him at the time--a fee of $12 to $15 per telephone payment. When asked about these fees, Chase told the subcommittee that the fees were imposed, because on each occasion Mr. McClune had spoken with a ``live advisor.'' Since 2001, he has paid a total of $160 in these pay-to-pay fees.

Altogether, since 2001, Mr. McClune has paid nearly $4,400 in fees on a debt of less than $4,000. If the more than 4 years of missing credit card bills were available from 1996 to 2000, this fee total would be even higher. In addition, each fee was added to Mr. McClune's outstanding credit card balance, and Chase charged him interest on the fee amounts, thereby increasing his debt by thousands of additional dollars.

In February 2001, Chase records show that Mr. McClune's credit card debt totaled nearly $5,200. For the next 7 years, although he did not pay every month, Mr. McClune paid nearly $2,000 per year toward his credit card debt, but was unable to pay it off. At one time, he paid $150 every 2 weeks for several weeks. Those payments did not bring his debt under the $4,000 credit limit, or reduce his interest rate.

In January 2007, Mr. McClune received a letter from Chase stating that if he made his next payment on time, he would receive a $50 credit on his debt. Mr. McClune cashed out his IRA and paid $4,000 on his credit card debt. Because he made this payment in February, however, he did not receive the $50 credit for an on-time payment. Instead, he was assessed a $39 late fee, a $39 over-the-limit fee, and a $14.95 payment fee for making the $4,000 payment over the telephone.

Mr. McClune was never offered a payment plan or a reduced interest rate by Chase to help him pay down his debt. His credit card bills show that from February 2001 to June 2008, he paid Chase a total of $15,800. If the 4 years of missing credit card bills from 1996 to 2000 were available, his total payments would likely exceed $20,000. In June 2008, his credit card bill showed he was charged 29 percent interest and a $39 late fee on a balance of $3,300.

How could Mr. McClune pay $15,000 to $20,000 on credit card purchases of less than $4,000, and still owe $3,300? His credit card statements since 2001 show that he was socked with over $9,700 in interest charges, $2,200 in over-the-limit fees, $2,000 in late fees, and $160 in pay-to-pay fees. All of these interest charges and fees were assessed by Chase while the account was closed and without a single purchase having been made since 1995. Despite his lack of purchases and payments totaling $15,800, Chase records show that, from February 2001 until June 2008, Mr. McClune was able to reduce his credit card balance by only about $1,850.

Mr. McClune is not trying to avoid his debt. He has made years of payments on a closed credit card account that he has not used to make a purchase in 13 years. He has paid thousands and thousands of dollars-- four and possibly five times what he originally owed--in an attempt to pay off his credit card account. He is still paying. But his thousands of dollars in payments are not enough for his credit card issuer which is squeezing him for every cent it can, fair or not, for years on end.

Tragically, Mr. McClune and Mr. Wannemacher have a lot of company in their credit card experiences. The many case histories investigated by my subcommittee show that responsible cardholders across the country are being squeezed by unfair credit card lending practices involving excessive fee and interest charges. The current regulatory regime--even with the new Federal Reserve regulation--is insufficient to prevent these ongoing credit card abuses. Legislation is clearly needed.

Another galling practice featured in our hearings involves the fact that credit card debt that is paid on time routinely accrues interest charges, and credit card bills that are paid on time and in full are routinely inflated with what I call ``trailing interest.'' Every single credit card issuer contacted by the Subcommittee engaged in both of these unfair practices which squeeze additional interest charges from responsible cardholders.

Here's how it works. Suppose a consumer who usually pays his account in full, and owes no money on December 1st, makes a lot of purchases in December, and gets a January 1 credit card bill for $5,020. That bill is due January 15. Suppose the consumer pays that bill on time, but pays $5,000 instead of the full amount owed. What do you think the consumer owes on the next bill?

If you thought the bill would be the $20 past due plus interest on the $20, you would be wrong. In fact, under industry practice today, the bill would likely be twice as much. That is because the consumer would have to pay interest, not just on the $20 that wasn't paid on time, but also on the $5,000 that was paid on time. In other words, the consumer would have to pay interest on the entire $5,020 from the first day of the new billing month, January 1, until the day the bill was paid on January 15, compounded daily. So much for a grace period! In addition, the consumer would have to pay the $20 past due, plus interest on the $20 from January 15 to January 31, again compounded daily. In this example, using an interest rate of 17.99 percent, which is the interest rate charged to Mr. Wannamacher, the $20 debt would, in 1 month, rack up $35 in interest charges and balloon into a debt of $55.21.

You might ask--hold on--why does the consumer have to pay any interest at all on the $5,000 that was paid on time? Why does anyone have to pay interest on the portion of a debt that was paid by the date specified in the bill--in other words, on time? The answer is, because that's how the credit card industry has operated for years, and they have gotten away with it.

There is more. You might think that once the consumer gets gouged in February, paying $55.21 on a $20 debt, and pays that bill on time and in full, without making any new purchases, that would be the end of it. But you would be wrong again. It is not over.

Even though, on February 15, the consumer paid the February bill in full and on time--all $55.21--the next bill has an additional interest charge on it, for what we call ``trailing interest.'' In this case, the trailing interest is the interest that accumulated on the $55.21 from February 1 to 15, which is the time period from the day when the bill was sent to the day when it was paid. The total is 38 cents. While some issuers will waive trailing interest if the next month's bill is less than $1, if a consumer makes a new purchase, a common industry practice is to fold the 38 cents into the end-of-month bill reflecting the new purchase.

Now 38 cents isn't much in the big scheme of things. That may be why many consumers don't notice these types of extra interest charges or try to fight them. Even if someone had questions about the amount of interest on a bill, most consumers would be hard pressed to understand how the amount was calculated, much less whether it was incorrect. But by nickel and diming tens of millions of consumer accounts, credit card issuers reap large profits. I think it is indefensible to make consumers pay interest on debt which they pay on time. It is also just plain wrong to charge trailing interest when a bill is paid on time and in full.

My subcommittee's hearings also focused on another set of unfair credit card practices involving fair interest rate increases. Cardholders who had years-long records of paying their credit card bills on time, staying below their credit limits, and paying at least the minimum amount due, were nevertheless socked with substantial interest rate increases. Some saw their credit card interest rates double or even triple. At the hearing, three consumers described this experience.

Janet Hard of Freeland, MI, had accrued over $8,000 in debt on her Discover card. Although she made payments on time and paid at least the minimum due for over 2 years, Discover increased her interest rate from 18 percent to 24 percent in 2006. At the same time, Discover applied the 24 percent rate retroactively to her existing credit card debt, increasing her minimum payments and increasing the amount that went to finance charges instead of the principal debt. The result was that, despite making steady payments totaling $2,400 in 12 months and keeping her purchases to less than $100 during that same year, Janet Hard's credit card debt went down by only $350. Sky-high interest charges,

inexplicably increased and unfairly applied, ate up most of her payments.

Millard Glasshof of Milwaukee, WI, a retired senior citizen on a fixed income, incurred a debt of about $5,000 on his Chase credit card, closed the account, and faithfully paid down his debt with a regular monthly payment of $119 for years. In December 2006, Chase increased his interest rate from 15 percent to 17 percent and in February 2007, hiked it again to 27 percent. Retroactive application of the 27 percent rate to Mr. Glasshof's existing debt meant that, out of his $119 payment, about $114 went to pay finance charges and only $5 went to reducing his principal debt. Despite his making payments totaling $1,300 over 12 months, Mr. Glasshof found that, due to high interest rates and excessive fees, his credit card debt did not go down at all. Later, after the subcommittee asked about his account, Chase suddenly lowered the interest rate to 6 percent. That meant, over a 1-year period, Chase had applied four different interest rates to his closed credit card account: 15 percent, 17 percent, 27 percent and 6 percent, which shows how arbitrary those rates are.

Then there is Bonnie Rushing of Naples, FL. For years, she had paid her Bank of America credit card on time, providing at least the minimum amount specified on her bills. Despite her record of on-time payments, in 2007, Bank of America nearly tripled her interest rate from 8 to 23 percent. The Bank said that it took this sudden action because Ms. Rushing's credit score had dropped. When we looked into why it had dropped, it was apparently because she had taken out Macy's and J. Jill credit cards to get discounts on purchases. Despite paying both bills on time and in full, the automated credit scoring system run by the Fair Issac Corporation had lowered her credit rating, and Bank of America had followed suit by raising her interest rate by a factor of three. Ms. Rushing closed her account and complained to the Florida attorney general, my Subcommittee, and her card sponsor, the American Automobile Association. Bank of America eventually restored the 8 percent rate on her closed account.

In addition to these three consumers who testified at the hearing, the Subcommittee presented case histories for five other consumers who experienced substantial interest rate increases despite complying with their credit card agreements.

I would also like to note that, in each of these cases, the credit card issuer told our Subcommittee that the cardholder had been given a chance to opt out of the increased interest rate by closing their account and paying off their debt at the prior rate. But each of these cardholders denied receiving an opt-out notice, and when several tried to close their account and pay their debt at the prior rate, they were told they had missed the opt-out deadline and had no choice but to pay the higher rate. Our subcommittee examined copies of the opt-out notices that the companies claimed to have sent, and found that some were filled with legal jargon, were hard to understand, and contained procedures that were hard to follow. When we asked the major credit card issuers what percentage of persons offered an opt-out actually took it, they told the Subcommittee that 90 percent did not opt out of the higher interest rate--a percentage that is contrary to all logic and strong evidence that current opt-out procedures do not provide fair notice.

The case histories presented at our hearings illustrate only a small portion of the abusive credit card practices going on today. Since early 2007, our subcommittee has received letters and emails from thousands of credit cardholders describing sometimes unbelievable credit card practices and asking for help to stop it. These are more complaints than I have received in any other investigation that we have conducted in that subcommittee, or an earlier subcommittee which I chaired, in more than 30 years now in Congress. The complaints stretch across all income levels, all ages, and all areas of the country.

The bottom line is that these abuses have gone on for far too long. In fact, these practices have been around for so many years that they have, in many cases, become the industry norm. Our investigations have shown that many of the practices are too entrenched, too profitable, and too immune to consumer pressures for us to have confidence that the companies will change them on their own. For these reasons, I hope our colleagues will pass the substitute before us. It is time to return common sense, responsibility, and fairness to the credit card industry.

With thanks and gratitude to the leaders in the Banking Committee, Senators Dodd and Shelby, for the initiative they have taken and the courage they are showing in taking on some very difficult and entrenched practices.

With that, I yield the floor.

I suggest the absence of a quorum.

Mr. President, this is the Credit Card Accountability, Responsibility, and Disclosure Act. That is what we are going to talk about over the next few days, about credit cards, about interest rates, penalty fees, and other matters.

Let me call up the amendment.

Amendment No. 1058

(Purpose: In the nature of a substitute)

I ask unanimous consent the reading of the amendment be dispensed with.

For the purpose of my colleagues, this is the substitute amendment that Senator Shelby and I have worked on over the last number of days. I want to begin by expressing, first, my gratitude to the majority leader, Senator Reid, for his leadership and support in the effort to get this matter to the point we are this afternoon. Of course I express my gratitude to Senator Shelby and his staff as well as my own staff, who worked all through the weekend to try to resolve outstanding differences to bring us to the point where we have the bipartisan proposal to offer reform of the credit card laws in our country that most Americans do not need much of a speech about. Many times we are involved in a discussion and we are informing the public for the first time about a problem, or at least a very limited number of people are aware of it. In this case, the public is probably more aware than many about problems with interest rates and fees and penalties and the like. Every single day people go through this. This afternoon I want to talk about this bill. I want to tell my colleagues what is in this credit card reform bill.

I thank the Presiding Officer, a member of the Banking Committee, along with other members of the committee who worked with us over the last number of weeks to try to complete a product here that can enjoy, I hope, as we go through this over the next day or two, broad bipartisan support.

Let me take, if I can, the next few minutes and talk about the bill specifically, what the provisions are and why we have worked so hard to pull this bill together.

This is not a new issue for me. I have been at credit card reform issues for actually more than 20 years. In the past I have not succeeded, candidly, reforming the credit card laws of our Nation. But in light of what has occurred over the last number of months and years, I think there is a greater indication of the need to step up and create

some real changes, given the conditions our constituents are living with, the number of people unemployed, the obvious problem of foreclosure rates, and the like.

This issue is finding a tipping point. I believe we have a wonderful opportunity to create some meaningful reforms, and nothing would please me more than to have that kind of strong bipartisan support for these changes.

I rise in strong support of the Credit Card Accountability, Responsibility, and Disclosure Act of 2009. The substitute amendment, I have offered on behalf of myself and Senator Shelby of Alabama, the former chairman of the Banking Committee. I thank him and his staff, and, of course, my own staff, who worked very hard on this issue--I will make specific reference to them during the debate--and who have done a terrific job in bringing this together in this bipartisan fashion.

The bill before us addresses an issue of critical importance to millions of American consumers and their families and to the stability of our financial system; that is, the need to reform the practices of our Nation's credit card companies and provide a comprehensive regime of tough new protections for consumers.

I begin by thanking Senator Shelby for his diligence throughout this process. I also acknowledge the hard work his staff has put in negotiating this important bill, along with my own staff who have worked very hard as well.

Americans know they have a responsibility to live within their means and to pay what they owe. But they also have a right not to be deceived, misled, or ripped off by unfair and arbitrary practices that have become all too common within the credit card industry. Banning these practices is especially critical today.

Since the recession began in December of 2007, 5.1 million jobs have been lost in our Nation, with almost two-thirds of those losses occurring in the last 5 months alone. It is clear the financial crisis is hitting American families very hard indeed. But precisely at a time when our economy is in crisis and consumers are struggling to live within their means, credit card companies too often are gouging them with hidden fees and sudden interest rate hikes that for many make the task nearly impossible.

With the average outstanding credit card debt for households with a credit card now nearly $10,700, credit card companies are making an already difficult economic downturn suffocating for far too many millions of our American citizens.

The range of abusive practices is as long as it is appalling: retroactive rate increases on existing balances; double-cycle billing that charges interest on balances the consumers have already paid; deceptive marketing to young people; changing the terms of the credit card agreement at any time, for any reason, on any balance; skyrocketing penalty interest rates, some as high as 32 percent.

My colleague from New York, Senator Schumer, has called this ``trip- wire pricing,'' saying the whole business model of the credit card industry is not designed to extend credit but to induce mistakes and trap consumers into debt. I think he is absolutely right, unfortunately. This is an industry that has been thriving on misleading its consumers and its customers.

If you need any evidence of that, just look at how they even hike interest rates on consumers who pay on time and consistently meet the terms of their credit card agreements. Take Phil Sherwood of my State, who always paid his bills on time, who had a credit score in the 700s. He is an upstanding member of his community; in fact, a city councilman in New Britain, CT. One day recently he received a notice from his credit card company informing him that his interest rate was nearly doubling, and the associated fees on his account were going up as well. He had done nothing wrong, not been late, no changes whatsoever, just an arbitrary increase.

A recent survey of the country's 12 largest credit card issuers by the Pew Charitable Trust found that Phil Sherwood was not alone. Pew reported that 93 percent of surveyed cards allowed the issuer to raise interest rates at any time, for any reason.

Between March of 2007 and February of 2008, credit card companies raised interest rates on nearly one out of every four accounts, nearly 70 million cardholders who were charged $10 billion in extra interest rates. That is within an 11-month period.

That $10 billion is not paying for college tuition; it is not paying for groceries or for safe, affordable shelter in the midst of a housing crisis. It is going straight into the pockets of credit card companies; and they are doing it for one reason--because they can.

Little wonder that we have seen a tenfold increase in the penalty fees customers have been charged in the last decade alone. Even the Federal financial regulators who dropped the ball terribly, in my view, during the subprime mortgage crisis have recognized the harm these sinister practices pose not only to consumers but also to our economy as a whole.

Recently, in fact, the Federal Reserve, the Office of Thrift Supervision, and the National Credit Union Administration finalized rules aimed at curbing some of these practices. These rules are a good first step. I want to commend them for it. They deserve commendation for having stepped up and proposed these regulations. These rules made a difference already.

But with our economy hanging in the balance, layoffs mounting, and consumers struggling to pay for basic necessities, I think the moment is right for more comprehensive reform, despite the good first step of the Federal Reserve and others.

I first began waging this fight to reform credit card company practices more than 20 years ago. Back then it was difficult to get anyone to pay much attention to what was clearly becoming a slippery slope toward more abusive and deceptive practices by these card issuers. It was a lonely fight in those days.

But today we have an American President, President Obama, on our side. He recognizes that credit card reform is not incidental to our economic recovery. As he has stated over and over again, it is essential to it. He has pledged to get credit card reform ``done in short order'' to quote him exactly, and said this weekend that he wants us to send him a bill by Memorial Day.

I intend to do everything I can, and I am sure my colleagues will, to ensure we meet that challenge--not for the President, not for the White House, but for the consumers and customers out there who are waiting to see whether we will step up on this side of the ledger and do something on their behalf.

We have spent a lot of time in this body, a lot of time over the past weeks and months, to help the financial institutions, to stabilize them, to get them on their feet, to get credit flowing again. I believe those decisions, by and large, we have made have been the right ones, although clearly we could have started earlier.

But now it is time to do something for the other side of that ledger; that is, for consumers out there who deserve a break, particularly with practices, as I mentioned: 70 million accounts having their rates raised in the last year alone, and people such as Phil Sherwood having them raised for no reason whatsoever, solely because the issuer can do so.

So it is time we do this--not for the President, not for the White House, not because the President would like it but, more importantly, because the American consumers deserve it in these times to get the help they need in this area.

So today as the Senate takes up the credit card legislation, we stand up for the people in this country who want no more of these practices, no more tricking customers into taking on more debt than they agreed to, no more taking advantage of financially responsible credit card users, and no more abuse of consumers that goes unpunished.

The time has come to insist on consumer protections that are strong and reliable, rules that are transparent and fair, and statements that are clear and informative. Those principles are the very essence of the Credit Card Act.

Allow me to take, if I can, just a few minutes to explain how the provisions of this bill will work. First and foremost, this legislation prevents unfair and arbitrary increases in interest rates and changes in the terms of credit card contracts.

Why is this so important? I recently met Kristina Jorgensen, a graphic designer from Southbury, CT. She transferred her student loans to a credit card to take advantage of the low ``fixed rate'' offer, only to have the interest rates on that debt increase from 5 percent to 24 percent.

Her monthly payments increased by $260. She had to cash in her retirement IRAs to pay off the credit card debt, all because she paid 1 day late by phone. Let me repeat that: never in trouble before, saw an opportunity to pay off her student loans, she sent out, with that 5- percent rate she had because of her good record over the years, and all of a sudden, because she is 2 days late--one of them a Sunday, by the way, because she paid by phone, not through the mail--her rates went from 5 percent to 24 percent, thereby crippling her ability, draining off that IRA. She did not graduate from college a year or two ago. I will tell you she is far closer to my age than a high school senior or a college graduate's normal age.

So here she is at a point of retirement in her life where her IRA, her individual retirement account, now has been drained of a good part of its value because her rates went from 5 to 24 percent.

What happened to Ms. Jorgensen is wrong. Having one's retirement security wiped out is frightening under any circumstances. But it is positively terrifying in a recession.

Samantha Moore and her husband, a small business operator--Samantha is a paralegal from Guilford, CT--experienced a similar situation. She had her credit card interest rate raised from 12 percent to 27 percent. Why? Because she was 3 days late on a credit card payment for the first time in 18 years. She and her husband, who own a small business, saw their credit card limit drop from $31,000 to just over $4,000--the credit limits from $31,000 to just over $4,000, a small business, 3 days late, first time in 18 years, and they watched the rate jump to 27 percent, and their credit limits plummet to a point which pushes that business into jeopardy.

So I would ask my colleagues: What is a family in this economy supposed to do if they are counting on that credit card to help them through a medical crisis. That one patently unfair decision could mean the difference between scraping by during a recession and a financial catastrophe.

The legislation Senator Shelby and I have put together prevents credit card companies from unjustifiable ``anytime, any reason'' rate increases on existing balances for people such as Samantha and Kristina.

Our bill also prohibits credit card issuers from increasing rates on a cardholder in the first year after a credit card account is opened and requires promotional rates to last at least 6 months.

Our bill prohibits issuers from changing the terms governing the repayment of an outstanding balance. For the first time ever we put provisions in place that ensure that risk-based pricing will not always work against the consumer and drive up rates.

This legislation says, if your issuer has raised your rate since the beginning of the year, they have to review your account within 6 months and bring the rate back down if the review warrants it, thus putting an end to the kind of risk-based pricing that always costs the consumer more and never less.

Secondly, our bill puts an end to the exorbitant and unnecessary fees that drive families further into debt. Not that long ago, if you were over your credit card limit, your card was declined at the store. I am old enough to remember when that could happen--it happened to me--that awkward moment when you have gone to purchase something, and you are standing in line, and all of a sudden that clerk says, ``I am sorry, but you have been rejected.''

That is always an awkward moment, particularly if people are standing behind you in that line, and you take your purchases and sheepishly walk away and put them back on the shelf because you went over your limit.

It was not comfortable, but it protected you against going over the limit. In those days you did not have to ask for it, it happened automatically. Well, that has all changed, of course, in recent days. In fact, the issuers enjoy that moment because when you walk up and purchase something, despite the fact that you may want a fixed limit, at that point you go over, of course, then the penalty fees and other charges pour in. Of course, that becomes a bonanza on additional penalties collected.

Now, I am not suggesting the consumer does not bear a responsibility. But in the past there was a responsibility exercised on both sides of that equation, a borrower and lender. Here lately, of course, that equation has been disrupted. Today we have repeatedly heard about cardholders being charged enormous fees for unknowingly going a few dollars over their credit limit.

Our bill prohibits issuers from charging hidden over-the-limit fees. It says if cardholders want to go over their card limit, they have to ``opt in'' with their issuer, putting the choice of going over the credit card limit and paying extra fees squarely in the hands of consumers, not the banks.

Our bill also requires penalty fees to be reasonable and proportional to the violation. Further, our bill prevents companies from charging fees for customers making payments by mail, telephone, or electronically, and strengthens protections against excessive fees on low-credit, high-fee credit cards. The days of issuers unreasonably jacking up these fees to unreasonably high levels to make money on the backs of consumers will be over.

Third, our bill protects the rights of financially responsible credit card users. Say last month, for instance, you had a credit card debt of $1,000, and since then you have paid $900 of that debt off. It is not uncommon for some credit card companies to keep charging interest not on the remaining $100 of debt but on the full previous $1,000 of debt. Our bill puts an end to this so-called ``double-cycle billing,'' and says if the credit card company delayed crediting your payment, you will not be charged for their mistake.

Our bill also requires the credit card statement to be mailed 21 days before the bill is due rather than the current 14. The bill also encourages transparency in credit card pricing, requiring the Government Accountability Office to study the effect that interchange fees have on our merchants and consumers.

I thank a number of my colleagues who expressed a strong interest in that subject matter. There will be a study done on this issue. It is a complicated area, the interchange fees, but a lot of retail stores are deeply concerned about these fees, the excessive charges they believe exist. They would like to see some changes.

I have promised my colleagues who expressed an interest that we will take this up. I believe it is Senator Corker of Tennessee who has written a stronger study provision than the one we had originally crafted. I thank him. I know he has a strong interest in this subject, as do other Members. We will get to the interchange fees at a later date. Certainly, a study would give us a better framework in which to consider legislation.

Fourth, our bill provides far better disclosure of card terms and conditions. One member of the credit card industry recently told Time magazine, ``The American people cannot manage their credit.'' Well, it is not hard to understand why. A quarter of a century ago, a typical credit card contract was about a page in length. Today, it is 30 times as long and 100 times more incomprehensible. You practically need a microscope to read what it says and a law degree to understand what it means. If this financial crisis has taught us anything, it is that consumers can only make responsible decisions if they have all the necessary information. The American consumer should not have to live in fear that a clause buried in the fine print of their credit card contract might someday be their financial undoing.

Our legislation also requires credit card issuers to provide far better disclosure of terms and conditions. The bill says cardholders must be given 45 days' notice of an interest rate increase. The bill mandates that issuers disclose to consumers when the card terms have changed, and it forces issuers to disclose how long it will take to pay off a card balance if you only make minimum payments, something our colleague from Hawaii, Senator

Dan Akaka, has led the fight for over many years.

The bill also requires the Federal Reserve Board to post consumer credit card agreements on its Web site.

Fifth, our bill insists on a fair allocation of payments. Many cardholders hold multiple credit card balances with multiple interest rates. If you send an extra thousand dollars along, for example, with your minimum payment, that amount should be credited to the account with the highest interest rate first. Our legislation ensures that it will be.

Our bill also prohibits issuers from setting early-morning deadlines for credit card payments. We all understand that we have to pay our credit card bills on a specific date, but what too many card companies don't tell you is that it isn't just the date the payment is due but often a specific time in the day. In too many cases, it is in the morning rather than at the end of business for that day. So, for example, if you pay your bill--call the company or make an online payment--before the close of business on the due date, sometimes you will get penalized for a late payment because the credit card deadline, unbeknownst to the cardholder, was at 10 a.m. that morning on the due date. This legislation puts a stop to that as well.

I should add that for the very first time the Federal Government will provide new protections for recipients of gift cards, and we thank our colleague from New York, Senator Schumer, for his leadership on this issue. This legislation will make it easier for recipients of gift cards to cash them in. Under the Schumer provision, if you receive a gift card, your balance won't disappear before you have a chance to spend it.

Sixth, this legislation includes robust protections for young people and students. Recently, my 7-year-old daughter received a credit card solicitation in the mail. We laughed it off, but it brings up a serious point. Young people--and ultimately their parents--are faced with an onslaught of credit card offers, often years before they turn 18, usually as soon as they set one foot on a college campus. Just as we saw in the mortgage crisis with lenders and borrowers, too often issuers offer cards to young people without verifying any ability to repay whatsoever. This is particularly true for students. According to Sallie Mae, college students graduate with an average credit card debt of more than $4,000. That is up from $2,900 just 4 years ago. Nearly 20 percent of college students have credit card balances of over $7,000.

Our bill requires issuers soliciting anyone under the age of 21 to obtain the signature of a parent or guardian or someone else who will take responsibility for the debt or proof that the applicant, as many are capable of doing under the age of 21, has some independent means of repayment. It prohibits increases in credit card limits unless that person who is a cosponsor or is jointly liable approves of the increase in writing. Our bill limits the kinds of prescreened offers that get so many young people into trouble.

I thank our colleague from New Jersey, Senator Menendez, for his leadership on this issue. It is time to insist that credit card companies take into account a young person's ability to repay before allowing them to take on what is all too often a lifetime worth of debt. Very little we do in our legislation will be more important than these provisions. Many of my colleagues on the Banking Committee expressed a strong interest in these provisions. I don't have the statistics in front of me, but a significantly high percentage of students drop out of school because of the debt they have incurred. A lot of it is credit card debt, not just the student loans but the credit card debt.

That is also why the final component of our bill is so critical as well. That involves tougher penalties and enforcement. Credit card companies need to understand that if they violate the terms of an agreement with a cardholder, there will be serious consequences.

With this legislation, if your credit card company wrongly raises your rate, the company could pay as much as $5,000 per violation--even higher if the company is found to engage in a pattern or practice of violations. Our goal is not to be punitive, although I can understand why someone might want to be, given some of the practices that have gone on over the last number of years. Rather, we need to put in place strong incentives that will encourage these companies to act more responsibly in the first place.

Every one of these provisions I have mentioned is rooted in simple common sense; no more tricks, no more strings attached. Over and over, we have heard that consumers should act responsibly when it comes to credit cards. I agree completely. We all need to act more responsibly. But it is time the credit card companies were held to that same standard, and with this legislation they will be.

I thank Senators Schumer, Akaka, Menendez, Tester, and Kohl on the committee, who have strongly supported the fight to protect consumers against predatory credit card practices. Senator Carl Levin of Michigan has been a champion of credit card protections for many years as well and generated some important ideas that are included in the bill Senator Shelby and I are offering. For decades, their efforts have fallen on deaf ears but not this time.

Today, with practices so brazen and widespread, as our economy quite literally hangs in the balance, one thing is clear: This is the moment for credit card reform. Our economy will not recover if we allow practices such as those I am talking about today that drive so many families deeper and deeper into debt. Americans do not deserve and cannot afford to be pushed down this economic ladder by credit card issuers any longer. This is a once-in-a-generation opportunity. In my view, we will never have a better opportunity to protect consumers than we do today with what we propose.

This legislation has been worked on extensively over the last number of weeks. We listened to a lot of people, including the issuers, to make sure what we are doing is fair and balanced and gets to the heart of the matter; that is, to cut out these excessive increases, without warrant, in rates and fees and penalties that I have mentioned.

Forty-six years ago, President John Kennedy delivered his special message to Congress on protecting consumer interest. In that speech, he established four very simple rights: the right to safety, the right to be informed, the right to choose, and, above all, the right to be heard, to be assured that consumer interests would receive full and sympathetic consideration in the formulation of Government policy. I cannot think of a single issue or moment where the need to act on principles articulated nearly half a century ago--and embraced by our current President and many in this Chamber of both political parties-- was clearer or more urgently needed than those articulated by President Kennedy more than four decades ago.

I urge my colleagues to support this legislation, to stand up for American families who are already facing tremendous difficulties on a daily basis, with rising costs in energy and health care, the difficulty of holding on to their homes. All of these issues are confronting them. At the very least, having spent as much time as we have on dealing with stabilizing financial institutions, to take out a few days in all of the debate and stabilize American families by reducing outrageous and egregious practices that have added so many financial burdens to them is long overdue.

Senator Shelby and I are proud of this substitute. We thank our colleagues who helped us work on it. We look forward to the debate on amendments that may be offered. Some may strengthen what we have suggested. Others may try to undo it. But we need to have a full and open debate. Then my hope is that, by an overwhelming vote, my colleagues will support this legislation.

The House has already acted--I commend them--under the leadership of Barney Frank and others on the Financial Services Committee in that Chamber. Our intention is to follow with this legislation. Congresswoman Carolyn Maloney deserves credit, having authored the legislation in the House.

We think we have a good bill, a strong bill. We think we have made some improvements on what the House recommended. I look forward to the debate that is forthcoming.

Amy Friend and Lynsey Graham, who are sitting here next to me, did a

remarkable job in negotiating, working with other Members, with outside interests, including the issuers and consumer groups, on putting this bill together. Charles Yi, as well, worked on this, and Colin McGinnis. A lot of people worked on this. But these three--Charles Yi, Lynsey Graham, and Amy Friend--did a great job.

Our staffs do so much hard work and don't get the credit they deserve for the work they do. I am deeply grateful to them for their tremendous leadership as well.

I suggest the absence of a quorum.

Madam President, I object.

Madam President, as a counter to that proposal, I ask unanimous consent that the Senate proceed to the immediate consideration of Calendar No. 49, H.R. 131, the Reagan Commission bill; that a Feingold amendment, which is at the desk--the text of S. 564, the Wartime Treaty Study Act--be agreed to; the bill, as amended, be read a third time and passed; and the motions to reconsider be laid upon the table with no intervening action or debate.

Madam President, I would note that the objection I registered was on behalf of Senator Feingold, and I wish the Record to reflect that.

Mr. President, I am pleased today to join my friend and colleague Senator Dodd in reintroducing comprehensive legislation to combat credit card abuses that have been hurting American consumers for far too long. Our bill, which is supported and cosponsored by other Senate colleagues as well, is called the Credit Card Accountability Responsibility and Disclosure Act, or CARD Act of 2009. With the economic hardships facing Americans today, from falling home prices to rising unemployment, it is more important than ever for Congress to act now to stop credit card abuses and protect American families and businesses from unfair credit card practices.

Every day the taxpayer is being asked to foot the bill for our biggest banks' irresponsible lending decisions. America's banking giants can't be allowed to dig themselves out of the hole they are in by loading up American families with unfair fees and interest charges. Even as the prime rate has plummeted, some credit card companies are hiking interest rates on millions of customers who play by the rules. In other words, the banks are punishing the very taxpayers that they have come to, hat in hand, for financial rescue. It can't be allowed to continue.

Credit card companies regularly use a host of unfair practices. They hike the interest rates of cardholders who pay on time and comply with their credit card agreements. They impose interest rates as high as 32 percent, charge interest for debt that was paid on time, and, in some cases, apply higher interest rates retroactively to existing credit card debt. They pile on excessive fees and then charge interest on those fees. And they engage in a number of other unfair practices that are burying American consumers in a mountain of debt. It's long past time to enact legislation to protect American consumers.

In December, the Federal Reserve and other bank regulators finally issued a regulation to stop some of the most egregiously unfair practices. For example, the new credit card regulation stops banks from retroactively raising interest rates on cardholders who meet their obligations, requires banks to mail credit card bills at least 21 days before the payment due date, and forces banks to more fairly apply consumer payments. It is a good first step, and long overdue. But the regulation regrettably leaves in place many blatantly unfair credit card practices that mire families in debt. It fails to stop, for example, abuses such as charging interest on debt that was paid on time, charging folks a fee simply to pay their bills, and hiking interest rates on a credit card because of a misstep on another, unrelated debt, a practice known as universal default. Legislation is needed not only to end those abusive practices--which are not prohibited by the Federal Reserve regulation--but also to provide a statutory foundation for that new regulation so that it cannot be weakened in the future.

The bill we are introducing today will not only help protect consumers and ensure their fair treatment, but it will also make certain that credit card companies willing to do the right thing are not put at a competitive disadvantage by companies continuing unfair practices.

Some argue that Congress doesn't need to ban unfair credit card practices; they contend that improved disclosure alone will empower consumers to seek out better deals. Sunlight can be a powerful disinfectant, but credit cards have become such complex financial products that even improved disclosure will frequently not be enough to curb the abuses. Some practices are so confusing that consumers can't easily understand them. Additionally, better disclosure does not always lead to greater market competition, especially when essentially an entire industry is using and benefiting from practices that unfairly hurt consumers.

In 2006, Americans used 700 million credit cards to buy about $2 trillion in

goods and services. The average family now has 5 credit cards. Credit cards are being used to pay for groceries, mortgage payments, even taxes. And they are saddling U.S. consumers, from college students to seniors, with a mountain of debt. The latest figures show that U.S. credit card debt is now approaching $1 trillion. These consumers are routinely being subjected to unfair practices that squeeze them for ever more money, sinking them further and further into debt.

Congress acted boldly and quickly to bail out the banks; now is time to do something for the consumer. Too many American families are being hurt by too many unfair credit card practices to delay action any longer. I commend Senator Dodd, Chairman of the Senate Banking Committee, for tackling credit card reform, and look forward to Congress promptly and urgently taking the steps needed to ban unfair practices that are causing so much pain and financial damage to American families.

Abusive credit card practices are a concern that I have been tracking over the past several years through the Permanent Subcommittee on Investigations, which I chair. The Subcommittee held two investigative hearings in 2007, exposing those practices, and based on those hearings, I introduced legislation--the Stop Unfair Practices in Credit Cards Act, S. 1395--to ban the outrageous credit card abuses we documented. I am pleased that Senators McCaskill, Leahy, Durbin, Bingaman, Cantwell, Whitehouse, Kohl, Brown, Kennedy, and Sanders joined as cosponsors. The Dodd-Levin bill we are introducing today incorporates almost all of S. 1395, and adds other important protections as well. It is the strongest credit card bill yet.

The Dodd-Levin bill includes, for example, the following provisions that also appeared in the bill I introduced with Senator McCaskill and others. It would:

No Interest on Debt Paid on Time. Prohibit interest charges on any portion of a credit card debt which the card holder paid on time during a grace period.

Prohibition on Universal Default. Prohibit credit card issuers from increasing interest rates on cardholders in good standing for reasons unrelated to the cardholder's behavior with respect to that card.

Apply Interest Rate Increases Only to Future Debt. Require increased interest rates to apply only to future credit card debt, and not to debt incurred prior to the increase.

No Interest on Fees. Prohibit the charging of interest on credit card transaction fees, such as late fees and over-the-limit fees.

Restrictions on Over-Limit Fees. Prohibit the charging of repeated over-limit fees for a single instance of exceeding a credit card limit.

Prompt and Fair Crediting of Card Holder Payments. Require payments to be applied first to the credit card balance with the highest rate of interest, and to minimize finance charges.

Fixed Credit Limits. Require card issuers to offer consumers the option of operating under a fixed credit limit that cannot be exceeded.

No Pay-to-Pay Fees. Prohibit charging a fee to allow a credit card holder to make a payment on a credit card debt, whether payment is by mail, telephone, electronic transfer, or otherwise.

The Dodd-Levin bill also includes important additional protections. It would:

Require issuers to lower penalty rates that have been imposed on a cardholder after 6 months if the cardholder commits no further violations.

Enhance protection against unfair and deceptive practices by giving each federal banking agency the authority to prescribe regulations governing unfair or deceptive practices by banks or savings and loan institutions.

Improve disclosure requirements by, for example, requiring issuers to provide individual consumer account information and to disclose the period of time and total interest it will take to pay off the card balance if only minimum monthly payments are made.

Protect young consumers from credit card solicitations.

To understand why these protections are needed, I would like to provide a brief overview of some of the most prevalent credit card abuses we uncovered and some of the stories that American consumers shared with us during the course of the inquiries carried out by my Permanent Subcommittee on Investigations.

The first case history we examined illustrates the fact that major credit card issuers today impose a host of fees on their cardholders, including late fees and over-the-limit fees that are not only substantial in themselves but can contribute to years of debt for families unable to immediately pay them.

Wesley Wannemacher of Lima, Ohio, testified at our March 2007 hearing. In 2001 and 2002, Mr. Wannemacher used a new credit card to pay for expenses mostly related to his wedding. He charged a total of about $3,200, which exceeded the card's credit limit by $200. He spent the next six years trying to pay off the debt, averaging payments of about $1,000 per year. As of February 2007, he'd paid about $6,300 on his $3,200 debt, but his billing statement showed he still owed $4,400.

How is it possible that a man pays $6,300 on a $3,200 credit card debt, but still owes $4,400? Here's how. On top of the $3,200 debt, Mr. Wannemacher was charged by the credit card issuer about $4,900 in interest, $1,100 in late fees, and $1,500 in over-the-limit fees. He was hit 47 times with over-limit fees, even though he went over the limit only 3 times and exceeded the limit by only $200. Altogether, these fees and the interest charges added up to $7,500, which, on top of the original $3,200 credit card debt, produced total charges to him of $10,700.

In other words, the interest charges and fees more than tripled the original $3,200 credit card debt, despite payments by the cardholder averaging $1,000 per year. Unfair? Clearly, but our investigation has shown that sky-high interest charges and fees are not uncommon in the credit card industry. While the Wannemacher account happened to be at Chase, penalty interest rates and fees are also employed by other major credit card issuers.

The week before our March hearing, Chase decided to forgive the remaining debt on the Wannemacher account, and while that was great news for the Wannemacher family, that decision didn't begin to resolve the problem of excessive credit card fees and sky-high interest rates that trap too many hard-working families in a downward spiral of debt.

These high fees are made worse by the industry-wide practice of including all fees in a consumer's outstanding balance so that they also incur interest charges. Those interest charges magnify the cost of the fees and can quickly drive a family's credit card debt far beyond the cost of their initial purchases. It is one thing for a bank to charge interest on funds lent to a consumer; charging interest on penalty fees goes too far.

A second troubling case history involves Charles McClune, a 51-year- old Michigan resident who is married with one child. Mr. McClune has a credit card account which he closed in 1998, and has been trying to pay off for more than 10 years. Due to excessive fees and interest rates, and despite paying more than four times his original credit card debt of less than $4,000, Mr. McClune still owes thousands on his credit card, with no end in sight.

Mr. McClune first opened his credit card account while in college, in 1986, at Michigan National Bank through a student-targeted credit promotion. After leaving college, the credit limit on his card was increased to $4,000. By 1993, although he had not exceeded the credit limit through purchases, Mr. McClune had missed some payments and was assessed interest and fees that pushed his balance over the $4,000 limit. From 1993 to 1996, he exceeded his limit again, on several occasions, due to interest and fee charges. He stopped making purchases on the credit card in 1995.

In 1996, Mr. McClune's credit card account was purchased by Chase Bank. In 1998, Mr. McClune asked Chase to close the account, and Chase did so. Although he never made a single purchase on his credit card while the account was with Chase, Chase repeatedly increased the interest rate on his account, including after the account was closed. In 2002, for example, his interest rate was about 21 percent; by October 2005, it had climbed to 29.99 percent where it remained for more than two years until March 2008; it then

dropped slightly to 29.24 percent. The higher interest rates were applied retroactively to Mr. McClune's closed account balance, increasing the size of his minimum payments and his overall debt.

Chase also assessed Mr. McClune repeated over-the-limit and late fees, which began at $29 and increased over time to $39 per fee. Chase cannot locate statements for Mr. McClune's account prior to February 2001, so there is no record of all the fees he has paid. The records in existence show that, since February 2001, he has paid 64 over-the-limit fees totaling $2,200. Those fees stopped after the March 2007 hearing before my Subcommittee, in which Chase promised to stop charging more than three over-the-limit fees for a single violation of a credit card limit. In addition to the 64 over-the-limit fees, since February 2001, Chase has charged Mr. McClune nearly $2,000 in late fees.

The records also show that since 2001, Mr. McClune was contacted by telephone on several occasions by Chase representatives seeking payment on his account. If he agreed to make a payment over the telephone, Chase charged him--without notifying him at the time--a fee of $12 to $15 per telephone payment. When asked about these fees, Chase told the Subcommittee that the fees were imposed, because on each occasion Mr. McClune had spoken with a ``live advisor.'' Since 2001, he has paid a total of $160 in these pay-to-pay fees.

Altogether, since 2001, Mr. McClune has paid nearly $4,400 in fees on a debt of less than $4,000. If the more than four years of missing credit card bills were available from 1996 to 2000, this fee total would be even higher. In addition, each fee was added to Mr. McClune's outstanding credit card balance, and Chase charged him interest on the fee amounts, thereby increasing his debt by thousands of additional dollars.

In February 2001, Chase records show that Mr. McClune's credit card debt totaled nearly $5,200. For the next 7 years, although he did not pay every month, Mr. McClune paid nearly $2,000 per year toward his credit card debt, but was unable to pay it off. At one time, he paid $150 every two weeks for several weeks. Those payments did not bring his debt under the $4,000 credit limit, or reduce his interest rate.

In January 2007, Mr. McClune received a letter from Chase stating that if he made his next payment on time, he would receive a $50 credit on his debt. Mr. McClune cashed out his IRA and paid $4,000 on his credit card debt. Because he made this payment in February, however, he did not receive the $50 credit for an on-time payment. Instead, he was assessed a $39 late fee, a $39 over-the-limit fee, and a $14.95 payment fee for making the $4,000 payment over the telephone.

Mr. McClune was never offered a payment plan or a reduced interest rate by Chase to help him pay down his debt. His credit card bills show that from February 2001 to June 2008, he paid Chase a total of $15,800. If the four years of missing credit card bills from 1996 to 2000 were available, his total payments would likely exceed $20,000. In June 2008, his credit card bill showed he was charged 29 percent interest and a $39 late fee on a balance of $3,300.

How could Mr. McClune pay $15,000 to $20,000 on credit card purchases of less than $4,000, and still owe $3,300? His credit card statements since 2001 show that he was socked with over $9,700 in interest charges, $2,200 in over-the-limit fees, $2,000 in late fees, and $160 in pay-to-pay fees. All of these interest charges and fees were assessed by Chase while the account was closed and without a single purchase having been made since 1995. Despite his lack of purchases and payments totaling $15,800, Chase records show that, from February 2001 until June 2008, Mr. McClune was able to reduce his credit card balance by only about $1,850.

Mr. McClune is not trying to avoid his debt. He has made years of payments on a closed credit card account that he has not used to make a purchase in 13 years. He has paid thousands and thousands of dollars-- four and possibly five times what he originally owed--in an attempt to pay off his credit card account. He is still paying. But his thousands of dollars in payments are not enough for his credit card issuer which is squeezing him for every cent it can, fair or not, for years on end.

Tragically, Mr. McClune and Mr. Wannemacher have a lot of company in their credit card experiences. The many case histories investigated by the Subcommittee show that responsible cardholders across the country are being squeezed by unfair credit card lending practices involving excessive fee and interest charges. The current regulatory regime--even with the new Federal Reserve regulation--is insufficient to prevent these ongoing credit card abuses. Legislation is badly needed.

Another galling practice featured in our March hearing involves the fact that credit card debt that is paid on time routinely accrues interest charges, and credit card bills that are paid on time and in full are routinely inflated with what I call ``trailing interest.'' Every single credit card issuer contacted by the Subcommittee engaged in both of these unfair practices which squeeze additional interest charges from responsible cardholders.

Here's how it works. Suppose a consumer who usually pays his account in full, and owes no money on December 1st, makes a lot of purchases in December, and gets a January 1 credit card bill for $5,020. That bill is due January 15. Suppose the consumer pays that bill on time, but pays $5,000 instead of the full amount owed. What do you think the consumer owes on the next bill?

If you thought the bill would be the $20 past due plus interest on the $20, you would be wrong. In fact, under industry practice today, the bill would likely be twice as much. That's because the consumer would have to pay interest, not just on the $20 that wasn't paid on time, but also on the $5,000 that was paid on time. In other words, the consumer would have to pay interest on the entire $5,020 from the first day of the new billing month, January 1, until the day the bill was paid on January 15, compounded daily. So much for a grace period! In addition, the consumer would have to pay the $20 past due, plus interest on the $20 from January 15 to January 31, again compounded daily. In this example, using an interest rate of 17.99 percent (which is the interest rate charged to Mr. Wannamacher), the $20 debt would, in one month, rack up $35 in interest charges and balloon into a debt of $55.21.

You might ask--hold on--why does the consumer have to pay any interest at all on the $5,000 that was paid on time? Why does anyone have to pay interest on the portion of a debt that was paid by the date specified in the bill--in other words, on time? The answer is, because that's how the credit card industry has operated for years, and they have gotten away with it.

There's more. You might think that once the consumer gets gouged in February, paying $55.21 on a $20 debt, and pays that bill on time and in full, without making any new purchases, that would be the end of it. But you would be wrong again. It's not over.

Even though, on February 15, the consumer paid the February bill in full and on time--all $55.21--the next bill has an additional interest charge on it, for what we call ``trailing interest.'' In this case, the trailing interest is the interest that accumulated on the $55.21 from February 1 to 15, which is the time period from the day when the bill was sent to the day when it was paid. The total is 38 cents. While some issuers will waive trailing interest if the next month's bill is less than $1, if a consumer makes a new purchase, a common industry practice is to fold the 38 cents into the end-of-month bill reflecting the new purchase.

Now 38 cents isn't much in the big scheme of things. That may be why many consumers don't notice these types of extra interest charges or try to fight them. Even if someone had questions about the amount of interest on a bill, most consumers would be hard pressed to understand how the amount was calculated, much less whether it was incorrect. But by nickel and diming tens of millions of consumer accounts, credit card issuers reap large profits. I think it is indefensible to make consumers pay interest on debt which they pay on time. It is also just plain wrong to charge trailing interest when a bill is paid on time and in full.

My Subcommittee's second hearing focused on another set of unfair credit card practices involving unfair interest

rate increases. Cardholders who had years-long records of paying their credit card bills on time, staying below their credit limits, and paying at least the minimum amount due, were nevertheless socked with substantial interest rate increases. Some saw their credit card interest rates double or even triple. At the hearing, three consumers described this experience.

Janet Hard of Freeland, Michigan, had accrued over $8,000 in debt on her Discover card. Although she made payments on time and paid at least the minimum due for over two years, Discover increased her interest rate from 18 percent to 24 percent in 2006. At the same time, Discover applied the 24 percent rate retroactively to her existing credit card debt, increasing her minimum payments and increasing the amount that went to finance charges instead of the principal debt. The result was that, despite making steady payments totaling $2,400 in twelve months and keeping her purchases to less than $100 during that same year, Janet Hard's credit card debt went down by only $350. Sky-high interest charges, inexplicably increased and unfairly applied, ate up most of her payments.

Millard Glasshof of Milwaukee, Wisconsin, a retired senior citizen on a fixed income, incurred a debt of about $5,000 on his Chase credit card, closed the account, and faithfully paid down his debt with a regular monthly payment of $119 for years. In December 2006, Chase increased his interest rate from 15 percent to 17 percent, and in February 2007, hiked it again to 27 percent. Retroactive application of the 27 percent rate to Mr. Glasshof's existing debt meant that, out of his $119 payment, about $114 went to pay finance charges and only $5 went to reducing his principal debt. Despite his making payments totaling $1,300 over twelve months, Mr. Glasshof found that, due to high interest rates and excessive fees, his credit card debt did not go down at all. Later, after the Subcommittee asked about his account, Chase suddenly lowered the interest rate to 6 percent. That meant, over a one year period, Chase had applied four different interest rates to his closed credit card account: 15 percent, 17 percent, 27 percent, and 6 percent, which shows how arbitrary those rates are.

Then there is Bonnie Rushing of Naples, Florida. For years, she had paid her Bank of America credit card on time, providing at least the minimum amount specified on her bills. Despite her record of on-time payments, in 2007, Bank of America nearly tripled her interest rate from 8 to 23 percent. The Bank said that it took this sudden action because Ms. Rushing's FICO credit score had dropped. When we looked into why it had dropped, it was apparently because she had opened Macy's and J. Jill credit cards to get discounts on purchases. Despite paying both bills on time and in full, the automated FICO system had lowered her credit rating, and Bank of America had followed suit by raising her interest rate by a factor of three. Ms. Rushing closed her account and complained to the Florida Attorney General, my Subcommittee, and her card sponsor, the American Automobile Association. Bank of America eventually restored the 8 percent rate on her closed account.

In addition to these three consumers who testified at the hearing, the Subcommittee presented case histories for five other consumers who experienced substantial interest rate increases despite complying with their credit card agreements.

I'd also like to note that, in each of these cases, the credit card issuer told our Subcommittee that the cardholder had been given a chance to opt out of the increased interest rate by closing their account and paying off their debt at the prior rate. But each of these cardholders denied receiving an opt-out notice, and when several tried to close their account and pay their debt at the prior rate, they were told they had missed the opt-out deadline and had no choice but to pay the higher rate. Our Subcommittee examined copies of the opt-out notices and found that some were filled with legal jargon, were hard to understand, and contained procedures that were hard to follow. When we asked the major credit card issuers what percentage of persons offered an opt-out actually took it, they told the Subcommittee that 90 percent did not opt out of the higher interest rate--a percentage that is contrary to all logic and strong evidence that current opt-out procedures don't work.

The case histories presented at our hearings illustrate only a small portion of the abusive credit card practices going on today. Since early 2007, the Subcommittee has received letters and emails from thousands of credit card cardholders describing unfair credit card practices and asking for help to stop them, more complaints than I have received in any investigation I've conducted in more than 25 years in Congress. The complaints stretch across all income levels, all ages, and all areas of the country. The bottom line is that these abuses have gone on for too long. In fact, these practices have been around for so many years that they have in many cases become the industry norm, and our investigation has shown that many of the practices are too entrenched, too profitable, and too immune to consumer pressure for the companies to change them on their own.

For these reasons, I urge my colleagues to support enactment of the Dodd-Levin Credit CARD Act this year. Congress has already gone to bat for the banks that engage in abusive credit card practices; it's time we go to bat for the American family.

Mr. President, I am proud to join Senators Leahy, Specter, and Kennedy in introducing the State Secrets Protection Act of 2009. This bill establishes uniform procedures for courts to use when evaluating governmental assertions of the state secrets privilege in civil litigation. It takes an important step toward restoring the rule of law by ensuring that the privilege will be used only to protect true state secrets, and not as a means for the Government to avoid accountability for its actions.

In a democracy, the public should have the right to know what its government is doing. That should be the rule, and secrecy should be the rare exception, reserved for the very few cases in which the national security is truly at stake. Unfortunately, the Bush administration stood that presumption on its head, cloaking its actions in secrecy whenever possible and grudgingly submitting to public scrutiny only when it couldn't be avoided. The ``state secrets'' privilege was a favorite weapon in that administration's arsenal of secrecy.

None of us disputes that information may properly be withheld as a ``state secret'' when disclosing the information would cause grave damage to national security. The problem arises when the privilege is abused and invoked to shield Government wrongdoing. Indeed, that is exactly what happened the first time the Supreme Court recognized the privilege in 1953, in the case of United States v. Reynolds. The Government had been sued after a military aircraft crash killed nine people, and it invoked the ``state secrets'' privilege to shield an internal investigative report. Decades later, when the report was declassified, it revealed nothing that could fairly be characterized as a ``state secret'' but it did reveal faulty maintenance of the aircraft.

Abuses like these can be prevented, but only if the courts fulfill their responsibility to carefully review claims

of privilege. In the Reynolds case, no court actually looked at the supposedly privileged report. That simple step would have prevented the miscarriage of justice that ensued. Yet, despite the fact that courts have the acknowledged authority to order in camera review of the evidence, fewer than one third of courts have actually exercised that option when the Government has asserted the ``state secrets'' privilege. And a host of other tools available to the courts to evaluate and respond to claims of privilege have been employed inconsistently at best, resulting in a confused body of case law that preserves accountability in some cases while granting the government a ``get out of jail free'' card in others.

In the last Congress, Senators Kennedy, Specter, and Leahy introduced the State Secrets Protection Act to standardize the procedures courts use in cases where the Government asserts the ``state secrets'' privilege and to ensure adequate scrutiny of such claims. The bill was reported by the Judiciary Committee last April after extensive debate. Much of the credit for this legislation goes to Senator Kennedy, whose unfailing commitment to the rule of law inspired both the concept and the particulars of this bill. I had the honor of working with him to develop this legislation, and it is a pleasure now to cosponsor its reintroduction, with Senator Leahy as the lead sponsor.

The bill makes use of existing tools that are available to the courts when handling national security information. Perhaps the most fundamental of these is in camera review of the allegedly privileged evidence, which the bill requires. The idea here is simple: Determining what information the evidence contains is the threshold step in determining whether that evidence is privileged. This step is far too important to be left to a party with a built-in conflict of interest. Just as a court would never accept a private litigant's description of his or her evidence in lieu of the evidence itself, the court should not rely solely on the Government's description of the evidence when the Government has a clear interest in the outcome of the case.

That courts may examine sensitive national security information in camera is beyond any serious dispute. Since 1974, the Freedom of Information Act has allowed courts to engage in in camera review of any records that the Government claims are exempt from disclosure under the Act. Courts have also reviewed the most sensitive national security information in criminal cases, pursuant to the Classified Information Procedures Act. In fact, courts handle highly classified information on a regular basis. There is no legitimate justification for skipping this crucial step.

The bill also requires courts to hold in camera hearings on the question of whether the evidence is privileged. Based on the court's previous review of the evidence, the court may conduct the hearing ex parte i.e., without any participation by the plaintiff or the plaintiff's lawyers but only if the court finds that national security cannot adequately be protected through other means. For example, the court may limit attendance at the hearing to attorneys with the requisite clearances, or the court may appoint a guardian ad litem to represent the plaintiff's interests at the hearing. The bill thus preserves the adversarial process to the maximum extent consistent with protecting national security.

That's important, for at least two reasons. First, our justice system is premised on the notion of fairness, and that principle of fairness is undermined any time a party to litigation is excluded from the proceedings. But fairness isn't the only principle at stake. For all its complications and occasional inefficiencies, the adversarial process remains the best system for getting to the truth. If only one party is present at the hearing, the court is more likely to reach the wrong result it's as simple as that.

Taken together, the requirements of in camera review of the evidence and an in camera hearing ensure that the Government's claim of privilege is evaluated fairly and thoroughly. A fair, thorough review is necessary, because the bill makes absolutely clear that once evidence is found to be privileged, it cannot be disclosed, however great the plaintiff's need for the evidence may be. The interest of national security, once the court determines that interest is truly at stake, is given absolute protection.

That may mean the end of the lawsuit but it may not. As Congress recognized when it passed the Classified Information Procedures Act, courts have many tools at their disposal to move litigation forward even when some of the evidence cannot be disclosed. For example, courts can require the Government to submit non-privileged substitutes for the privileged evidence, such as summaries of the evidence, redacted versions, or admissions of certain facts. Under the bill, where the court finds that it would be feasible for the Government to craft a non-privileged substitute for privileged evidence, it may order the Government to do so. Again, however, the court can never compel the production of privileged evidence. If the Government refuses to craft a non-privileged substitute, the remedy is the same one that exists in the CIPA: the court may resolve the relevant issue of fact or law against the Government.

The bill does not allow courts to dismiss lawsuits at the pleadings stage based on a claim of ``subject matter privilege.'' As the Fourth Circuit has explained, ``subject matter privilege'' applies if the case is so pervaded with state secrets, it would be impossible to conduct the lawsuit without revealing them. Such cases undoubtedly exist. But until all of the relevant evidence is identified and the privilege determinations are made, any conclusion that a case will be pervaded with state secrets is simply a prediction. Only by proceeding through discovery and pre-trial hearings can that prediction be replaced with certainty. And this can be done without revealing a single state secret, since the bill allows privilege determinations to be made in camera and ex parte.

The bill does not change the ordinary rules of summary judgment. If a court determines, after discovery and pre-trial hearings are completed, that the key evidence is privileged and the plaintiff cannot prove his or her case using non-privileged evidence, then the Government may move for summary judgment and prevail. The bill thus retains the concept of ``subject matter privilege'' it simply requires a more thorough testing of the claim.

Nor does the bill ever put the Government to the ``Hobson's choice'' of either revealing privileged evidence or conceding the lawsuit. Under the bill, even if the plaintiff has made out a prima facie case, the court can and must dismiss the lawsuit if the Government would need to disclose privileged evidence in order to present a valid defense. The Government's interests, as well as the national security, are thus scrupulously protected.

Finally, the bill facilitates congressional oversight by requiring the executive branch to share with the Judiciary and Intelligence Committees the documents it makes available to the courts: the Government affidavit explaining why the evidence is privileged, the index of privileged evidence, and, where requested, the evidence itself. This information will help Congress monitor the Government's use of the privilege and assess the need for any further legislation.

Perhaps even more important, it will provide a means of accountability in those cases where the privilege prevents a court from ruling on allegations of Government wrongdoing. The idea of simply letting such allegations go unaddressed should be profoundly troubling to anyone who respects the rule of law yet for eight years, the response of the Bush administration was little more than a shrug. This bill rejects such a cavalier attitude toward the rule of law. The citizens of this country should never again be told that there is simply no remedy for wrongs their Government has committed. In cases where the courts cannot provide that remedy, then Congress should step in and providing the necessary information to the relevant committees of Congress will enable that to happen.

I am pleased that both the new Attorney General, Eric Holder, and the nominee for Associate Attorney General, Thomas Perrelli, have indicated a willingness to review this bill and work with us on it. I hope that it will be possible to fashion legislation that the Administration can support. The public

deserves to have confidence that the state secrets privilege is not going to be used to cover up Government misconduct. This bill provides the courts a system for resolving claims of privilege that will inspire that confidence.

A country where the Government need not answer to allegations of wrongdoing is a country that has strayed dangerously far from the rule of law. We must ensure that the ``state secrets'' privilege does not become a license for the Government to evade the laws that we pass. This bill accomplishes that goal, while simultaneously providing the strongest of protections to those items of evidence that truly qualify as state secrets. I urge all of my colleagues to support the rule of law by supporting this legislation.

Mr. President, I am pleased to join with my friend from California, Senator Feinstein, in introducing the Cluster Munitions Civilian Protection Act of 2009. This is a slightly revised version of a bill of the same name which we introduced in 2007.

Since December 3, 2008, when the Convention on Cluster Munitions opened for signature in Dublin, 96 countries have signed the treaty including Great Britain, Germany, Canada, Norway, Australia and other allies of the United States.

The treaty is the culmination of a year of negotiations, launched by Norway, among 107 governments that came together to prohibit the use of cluster munitions that cause unacceptable harm to civilians.

The Bush administration did not participate in the negotiations, which I believe was a mistake. As the Nation with the world's most powerful military we should not be on the sidelines while others are trying to protect the

lives and limbs of civilians who comprise the vast majority of war casualties today.

The Pentagon continues to insist that cluster munitions have military utility, and that the U.S. should retain the ability to use millions of cluster munitions in its arsenal which have estimated failure rates of 5 to 20 percent.

Of course, any weapon, whether cluster munitions, landmines, or even poison gas, has some military utility. But anyone who has seen the indiscriminate devastation cluster munitions cause over a wide area understands the unacceptable threat they can pose to civilians. These are not the laser guided weapons the Pentagon showed destroying their targets during the invasion of Baghdad.

There is the insidious problem of cluster munitions that fail to explode as designed and remain as active duds, like landmines, until they are triggered by whoever comes into contact with them. Often it is an unsuspecting child, or a farmer. We saw that recently in Lebanon, and in Laos people are still being killed and maimed by U.S. cluster munitions left from the Vietnam War.

Current law prohibits U.S. sales, exports and transfers of cluster munitions that have a failure rate exceeding 1 percent. That law also requires any sale, export or transfer agreement to include a requirement that the cluster munitions will be used only against military targets and not in areas where civilians are known to be present.

Last year, the Pentagon announced that it would meet the failure rate requirement for U.S. use of cluster munitions in 2018. While a step forward, I do not believe we can justify continuing to use weapons that so often fail, so often kill and injure civilians, and which many of our allies have renounced. That is not the kind of leadership the world needs and expects from the United States.

Senator Feinstein's and my bill would apply similar restrictions to the use of cluster munitions beginning immediately on the date of enactment. However, the bill does permit the President to waive the 1 percent requirement if he certifies that it is vital to protect the security of the United States. I urge the Pentagon to work with us by supporting this reasonable step.

I want to express my appreciation to all nations that have signed the treaty, and urge the Obama administration to review its policy on cluster munitions with a view toward putting the U.S. on a path to join the treaty as soon as possible. In the meantime, our legislation would go a long way toward putting the United States on that path.

There are some who dismissed the Cluster Munitions Convention as a pointless exercise, since it does not yet have the support of the United States and other major powers such as Russia, China, Pakistan, India, and Israel. These are some of the same critics of the Ottawa treaty banning antipersonnel landmines, which the U.S. and the other countries I named have also refused to sign. But that treaty has dramatically reduced the number of landmines produced, used, sold and stockpiled, and the number of mine victims has fallen sharply. Any government that contemplates using landmines today does so knowing that it will be condemned by the international community. I suspect it is only a matter of time before the same is true for cluster munitions.

It is important to note that the U.S. today has the technological ability to produce cluster munitions that would not be prohibited by the treaty. What is lacking is the political will to expend the necessary resources. There is no other excuse for continuing to use cluster munitions that cause unacceptable harm to civilians. I am committed to working in the Defense Appropriations Subcommittee to help secure the resources needed to make this new technology available.

I want to commend Senator Feinstein who has shown real passion and persistence in raising this issue and seeking every opportunity to protect civilians from these indiscriminate weapons.

Mr. President, today, I am introducing the bipartisan State Secrets Protection Act. I am pleased that Senator Kennedy, who had so much to do with developing this proposal last Congress is an original cosponsor of the bill along with Senators Specter, Feingold, Whitehouse and McCaskill. After a lengthy debate, this bill was reported by the Judiciary Committee last April.

The State secrets privilege is a common law doctrine that the Government can claim in court to prevent evidence that could harm national security from being publicly revealed. During the Bush administration, the State secrets privilege was used to avoid judicial review and skirt accountability by ending cases without consideration of the merits. It was used to stymie litigation at its very inception in cases alleging egregious Government misconduct, such as extraordinary rendition and warrantless eavesdropping on the communications of Americans.

The 2006 case of Khaled El-Masri, who was kidnapped and transported against his will to Afghanistan, where he was detained and tortured as part of the Bush administration's extraordinary rendition program, is one such example. He sued the government alleging unlawful detention and treatment. A district court judge dismissed the entire lawsuit after the Government invoked the State secrets privilege, solely on the basis of an ex parte declaration from the Director of the Central Intelligence Agency, and despite the fact that the Government had admitted that the rendition program exists. Mr. El-Masri has no other remedy. Our justice system is off limits to him, and no judge ever reviewed any of the actual evidence.

The State secrets privilege serves important goals where properly invoked. But there are serious consequences for litigants and for the American public when the privilege is used to terminate litigation alleging serious Government misconduct. For the aggrieved parties, it means that the courthouse doors are closed forever regardless of the severity of their injury. They will never have their day in court. For the American public, it means less accountability, because there will be no judicial scrutiny of improper actions of the executive, and no check or balance.

The State Secrets Protection Act will help guide the courts to balance the Government's interests in secrecy with accountability and the rights of citizens to seek judicial redress. The bill does not restrict the Government's ability to assert the privilege in appropriate cases. Rather, the bill would allow judges to look at the actual evidence the Government submits so that they, neutral judges, rather than self-interested executive branch officials, would render the ultimate decision whether the State secrets privilege should apply. This is consistent with the procedure for other privileges recognized in our courts.

We held a Committee hearing on this issue last year, and the appropriate use of this privilege remains an area of concern for me and for the cosponsors of this bill. In light of the pending cases where this privilege has been invoked, involving issues including torture, rendition and warrantless wiretapping, we can ill-afford to delay consideration of this important legislation. I hope all Senators will join us in supporting this bill.

Mr. President, I ask unanimous consent that the text of the bill be printed in the Record.