John Sarbanes: “That is right. First of all, let me make very clear, the number of institutions engaged in these kinds of practices is…”

“That is right. First of all, let me make very clear, the number of institutions engaged in these kinds of practices is limited. They are the worst of the bunch. The responsible people in the industry do not want these people engaged in these kinds of practices. But, unfortunately, there are people who are really engaged in essentially what is a ripoff. And there are some existing protections against some practices that are provided in the law, in the Truth in Lending Act at the Federal level and in State fraud statutes, so that the victims can bring suit and obtain a remedy with respect to the way they have been exploited by a loan. All this amendment says if those kinds of business enterprises which have engaged in this practice declare bankruptcy, they then cannot use the bankruptcy proceeding to, in effect, erase those claims--in other words, take what is a dirty asset, or a dirty loan, into bankruptcy and bring it out on the other side as a clean loan where you then say to the consumer: It's too bad, you just can't get any recourse because this loan has gone through the bankruptcy process. So this would maintain the consumer's rights that he had going into the bankruptcy on the other side. It does not add to those rights. Those rights are defined by existing law--Federal and State--so it would not substantively expand the recourse, but procedurally it would maintain the existing remedies.”