Spencer Bachus

Mr. BACHUS

Mr. BACHUS. Mr. Speaker, at this time I yield 2 minutes to the gentleman from Texas (Mr. Paul). (Mr. PAUL asked and was given permission to revise and extend his remarks.)

Mr. BACHUS. Mr. Speaker, I reserve the balance of my time.

Mr. BACHUS. Mr. Speaker, I reserve the balance of my time.

Mr. BACHUS. Mr. Speaker, I rise in opposition to this legislation and recognize myself for such time as I may consume. Mr. Speaker, I do rise in opposition and I do so reluctantly because I acknowledge that we are faced with a crisis, and because there are provisions in this bill that I strongly support. The bill strengthens GSE capital requirements, it enhances the government's receivership authority if they get in trouble. These are significant improvements over the current regime. Even more importantly, the legislation contains a measure I introduced over a year ago to create a comprehensive system for licensing and registration of mortgage originators. This provision will do more to protect consumers and prevent many of the abuses that caused the subprime crisis in the first place than just about any other reform we can make. The problem, Mr. Speaker, is that, rather than bringing up a clean bill to the floor to improve GSE regulation, to modernize the FHA and to crack down on rogue elements in the mortgage industry, the majority has brought us something else entirely, and they prohibited any amendments, it's a ``take it or leave it.'' The bill before us today includes provisions that actually would undermine GSE safety and soundness and fiscal discipline by diverting billions of dollars from Fannie Mae and Freddie Mac and from homeowners and taxpayers to pay for three big new government programs. It does so at a time when we should instead be doing everything within our power to stabilize the GSEs and our housing markets and avoid the need for an even bigger taxpayer bailout down the road. Mr. Speaker, the most troubling aspect of this legislation remains the affordable housing fund, which would siphon $9 million from the GSEs over a 10-year period to fund State and local initiatives. One of the primary beneficiaries of these funds will be political advocacy groups across the country that claim as some part of their mission the promotion of affordable housing. When the affordable housing fund was first introduced in GSE reform legislation that the House considered in May of last year, I cautioned that this would be an additional cost on the GSEs; I said that on the floor of this House. At that time, their combined capitalization was roughly $106 billion. Today, their market capitalization is roughly $20 billion. One year and $86 billion in lost market capitalization later, a plan now to divert billions of dollars from the GSEs to fund another expensive government housing program is not only just bad policy, it's irresponsible. Also, I believe unwise are provisions of this bill authorizing--and let me say this: The chairman of the full committee said that I have referred to this as a ``$300 billion program.'' I do that again today without apology. Mr. Speaker, this bill authorizes $300 billion in new FHA loan guarantees. Now, the chairman said that I said it would cost that in my letter to the Members. But, in fact, I said the $300 billion program would do little to help struggling homeowners. I said a $300 billion program. I didn't say that would be the ultimate cost. In fact, it authorizes $300 billion in guarantee. If anybody doubts that, 412 of the bill, line 19, it says, ``The aggregate original principal obligation of all mortgages insured under this section may not exceed $300 billion.'' At no time have I said that the ultimate cost would be $300 billion. In fact, in another letter to the Members I quoted the Washington Post and what they said about the cost. And that cost will be in excess of $1 billion in all likelihood. So they are three new programs, all of them costing more than $1 billion. And as I said, this new FHA loan guarantee program would have the effect of bailing out lenders and investors seeking to offload their riskiest loans on an FHA already close to being overwhelmed by the larger role that it's being asked to play in the mortgage market. Many of us on this side of the aisle have questioned the fairness of asking 110 million Americans who are paying their mortgages on time, renting or owning their homes outright to subsidize those who make different choices. The version of this legislation that the House approved last May at least had the virtue of being upfront. It required taxpayers to foot the bill directly for this ill-conceived Federal program. The version we are considering today purports to protect taxpayers by changing and shifting those costs over on the GSEs--the same GSEs are asked to pick up this cost, but at the same time we authorize the taxpayer to lend them money--by imposing these costs of the bailout on the GSEs through the affordable housing fund. But as we found in the last couple of days, as I said, that's the same thing as asking the taxpayers to foot the bill no matter how circuitous you do it. On this point you don't take my word for it. Look at the editorial of the Washington Post, not a conservative newspaper. Here's what they said: ``The bill would fund the bailout through a fee on Fannie and Freddie, possibly $531 million in 2009. This is rather circuitous, given that government backing subsidizes Fannie and Freddie indirectly (and that they may soon be borrowing directly from the Treasury)''--and they will when this bill passes, or could. ``And it contradicts the purposes of the mortgage bailout, which is to shore up housing prices: Fannie and Freddie will pass the fees along to their customers, thus decreasing housing liquidity and depressing the residential real estate market.'' Despite that, despite liberal newspapers agreeing with conservatives, it's in the bill, and we won't have an opportunity to get it out. The editorial concludes by asking the question, and I asked the same question: ``Wouldn't it be simpler and safer to let a new regulator address the GSEs' capital needs before plunging them even deeper into the housing quagmire?'' Mr. Speaker, I couldn't agree more. In addition to asking taxpayers to bail out the GSEs and lenders and investors seeking to rid their portfolios of their most toxic mortgages, this bill goes a step further. It establishes yet a third government program, this one a $4 billion grant program--paid for by the taxpayers--to fund the purchase of foreclosed properties by States and local governments. This is nothing more than a bailout of investors and real estate speculators who made risky investments but who will now be able to dump their foreclosed properties on State and local governments. This approach invites more, not fewer, foreclosures by providing incentives to lenders to foreclose on properties rather than attempt to work with struggling homeowners to keep their houses or property. Besides, setting the government up as a landlord is not my idea of a wise use of taxpayer dollars or an answer to the housing crisis. What in the world it is doing in a bill purportedly designed to avert foreclosures and assist troubled homeowners is anyone's guess. This legislation unfortunately contains yet another--despite all that--irresponsible, in my opinion, provision from the Senate-passed bill, one that establishes a moratorium on the FHA's authority to engage in risk-based pricing. At a time when we're asking the FHA to play a greater role in assisting troubled homeowners seeking to refinance, barring the agency from pricing its product according to risk is a serious mistake. Not only will this moratorium prevent the FHA from serving more homeowners, it will lead to higher mortgage costs for everyone as the FHA is forced to raise its upfront and annual premiums to compensate for its inability to charge premiums based on risk. If we've learned anything in the last 2 or 3 years it's that there's risk out there, and we ought to price for that risk. We don't do that in this bill; in fact, we establish a moratorium to stop that. This legislation--the entire legislation--presents us with extremely tough choices. It includes long-needed reforms, as I said, but it also adds costly and unnecessary programs that make it impossible for many of us to support. It takes money from the GSEs when they're already in trouble. It creates two big new government housing programs even though there's an abundance of housing programs already existing. If they are not doing the job, let's reform the ones we have. And it places a moratorium on risk-based pricing. If that weren't enough, the bill now includes a proposal to support the GSEs by direct government investment of taxpayer dollars in the common stock of these privately held companies. When the Treasury proposals were announced last week, we were told it was essential to avoid a catastrophic failure of Fannie and Freddie and the turmoil in global capital markets. We were told we needed to pass it within 48 hours. Confusingly, at the same time we were told that the Treasury needed blank check authority, we were assured that it would never be used. We were told it must be voted on immediately, even though we were told at the same time the Federal Reserve had agreed to provide liquidity in the event of an emergency if there was one. Those assurances notwithstanding, giving unlimited authority to a government agency for unprecedented action is a serious matter in a system that's based on checks and balances. Deciding this issue without hearings and within a 1-week span with virtually no deliberation and no opportunity to amend is a surrender of congressional responsibility. Congress did not do that with Chrysler, Lockheed or Conrail, which all were extensively studied and debated before action taken. It is likely that the concept of ``If you build it, they will come'' applies here; if we give them this authority, it will be used, and I believe not only to provide liquidity, but to purchase an equity stake in these private, stockholder-owned companies. Even a small government investment in Fannie and Freddie is incremental nationalization, let's be honest, a path our government should not go down without serious consideration of the consequences. One is crowding out the private mortgage market as we give them ever larger sources of cheap money. How do private lenders compete? They don't. Not fairly. We should hesitate to saddle taxpayers with losses in tough times that should be absorbed by those who took the risks and reaped the billions in profits when times were good. By raising concerns, those of us who questioned a rush to judgment on a blank check request were able to delay the consideration last week and to make some beneficial changes in the bill. As a result, even Senators Dodd and Shelby have now acknowledged--and I think Senator Shelby has thought all along--that the blank check needs to be examined very carefully. Mr. Speaker, we can do better than this bill. Given the high stakes, we must do better. We should reject this legislation and immediately substitute it with a clean bill that reforms the GSEs, modernizes FHA, and increases the Treasury lending authority by a set amount. Mr. Speaker, I reserve the balance of my time.

Mr. BACHUS. I would ask unanimous consent, Mr. Speaker, that the total time be extended 1 minute.

Mr. BACHUS. I would ask unanimous consent that the total time be extended 1 minute and the gentleman from Rhode Island be given that time.

Mr. BACHUS. I would ask unanimous consent to give the gentleman from Rhode Island another 1 minute.

Mr. BACHUS. Mr. Speaker, at this time, I would like to introduce my letter of July 14 and let the Members themselves determine whether the correct characterization would be made on my statement. House of Representatives, Committee on Financial Services, Washington, DC, July 14, 2008. Hon. Barney Frank, Committee on Financial Services, House of Representatives, Washington, DC. Dear Mr. Chairman: It is unquestionably true that the financial stability of Fannie Mae and Freddie Mac is critically important to the housing market and in turn to the overall economy. It is also quite apparent that as a result of a weak economy, short seller activities and a declining housing market, Fannie and Freddie are facing substantial financial challenges. Having said that, the sweeping changes contemplated in the proposal made by the Treasury Department over the weekend represent a far-reaching overhaul of the financial regulatory structure of our housing market. Making such broad changes in a precipitous manner without adequate study and analysis is unprecedented and, perhaps, unnecessary. The problem immediately at hand seems to have been addressed yesterday by the decision of the Federal Reserve to open the discount window to Fannie and Freddie. It also appears this intervention by the Federal Reserve will be sufficient to provide adequate liquidity for these enterprises to meet any obligations for the near future. With this Federal Reserve liquidity facility in place, a more long-term structure can be given the careful analysis that is necessary to avoid the all too common problem of unintended consequences when the regular legislative order is bypassed. Please consider a process which will allow all sides of this issue to be given the careful consideration they so clearly deserve. I do believe there is need for expedited legislation and that action is a basic GSE reform bill. This legislation could be drafted and taken to the floor with minimal preparation since its provisions were carefully vetted in hearings and markup. Sincerely, Spencer Bachus, Ranking Member. At this time, I will recognize the gentlelady from Illinois, the subcommittee Chair, Mrs. Biggert, for 5 minutes.

Mr. BACHUS. Mr. Speaker, at this time I yield 2 minutes to the capable gentleman from Indiana (Mr. Pence). (Mr. PENCE asked and was given permission to revise and extend his remarks.)

Mr. BACHUS. I continue to reserve my time, Mr. Speaker.

Mr. BACHUS. Mr. Speaker, at this time I recognize the deputy ranking member of the full committee, Mr. Neugebauer from Texas, for 3 minutes.

Mr. BACHUS. Yes, that is correct.

Mr. BACHUS. Mr. Speaker, I yield the balance of my time to the gentleman from New Jersey (Mr. Garrett).

Mr. BACHUS. Mr. Speaker, I object to the vote on the ground that a quorum is not present and make the point of order that a quorum is not present.

Mr. BACHUS. Mr. Speaker, at this time, I yield 3 minutes to the gentleman from Texas (Mr. Hensarling).

Mr. BACHUS. Mr. Speaker, I'd like to inquire into the time remaining on each side.

Mr. BACHUS. Mr. Speaker, due to the imbalance, I'd reserve the balance.

Mr. BACHUS. Mr. Speaker, I reserve the balance of our time.

Mr. BACHUS. Mr. Speaker, at this time I yield to the gentleman from North Carolina, a member of the committee, Mr. McHenry, 2 minutes.

Mr. BACHUS. Mr. Speaker, I continue to reserve my time.

Mr. BACHUS. Mr. Speaker, at this time I would like to recognize the gentleman from Illinois (Mr. Roskam), a very capable, bright member of our committee for 2 minutes.

Mr. BACHUS. Mr. Speaker, at this time I would like to yield 2 minutes to the secretary of the Republican Conference, the gentleman from Texas (Mr. Carter).

Mr. BACHUS

Mr. BACHUS. Madam Speaker, on June 19, 2008, I was unavoidably delayed and missed the vote on House amendment No. 1 to H.R. 2642, the Supplemental Appropriations Act. Had I been present, I would have voted ``yea'' on rollcall 431.

Mr. BACHUS

Mr. BACHUS. Madam Speaker, on Memorial Day 2008, let us take time to reflect on the courage and indomitable will of a special group of World War II veterans: the survivors of the Berga POW camp. Wallace Carden of Vestavia Hills in Alabama's Sixth District was one of the soldiers imprisoned in a cruel camp that simultaneously showed the worst of man's inhumanity--and the transcendent ability of the human spirit to endure and ultimately triumph. Berga was a German concentration camp. Three hundred and fifty American soldiers were sent there after being captured during the Battle of the Bulge. Some were exiled there because they were Jewish. Wallace Carden, then just 19 years old, was detained simply because Nazi officers thought he looked Jewish. The soldiers were ill-fed, heavily worked, and badly beaten; some were even killed. By day, they were forced to dig underground tunnels for weapons factories; by night, they shivered in squalid conditions, emaciated from hunger. But confronted with such inhumanity, these American soldiers persevered. They gave each other support, equally shared what little food they had, held faith in their country and God, and never allowed their spirit to be consumed by the evil and hate surrounding them. Though physically separated from their brothers on the battlefield, the Berga soldiers honored America with their determination and will to survive. In the decades since, Wallace Carden and his fellow soldiers have provided important personal testimonials about Nazi brutality and prejudice, so that succeeding generations never forget the Holocaust and fully appreciate what it took for freedom to triumph during World War II. Congressional Resolution H. Res. 883 rightly recognizes the service and sacrifice of the U.S. soldiers imprisoned at Berga, and I am a proud cosponsor. Their story is an integral part of the history of World War II, and their conduct under the most extreme and trying conditions an enormous credit to themselves and their country. For my part, I want to thank Wallace Carden for his service to his community and country. Alabama is proud of him, and it is appropriate that on this Memorial Day recognition is being bestowed on Mr. Carden as well as an entire group of American soldiers whose soaring spirit should continue to inspire all of us.

Mr. BACHUS

Mr. BACHUS. Mr. Speaker, I rise to support H. Res. 1026, a resolution recognizing the 100th Anniversary of the founding of the Congressional Club. From its very start, the Congressional Club has helped the spouses of Members to come together on a nonpartisan basis to form friendships and perform public service. The role of the Congressional Club is as essential now as it was when the club was formed in 1908. Back then, Members and spouses often had to spend a long time travelling to Washington. Once here, spouses in particular faced the challenge of developing acquaintances and friendships in a new city and finding ways to share their talents to benefit the community and their country. The club provided a refreshing nonpolitical atmosphere for friendships and charitable activities, a hallmark that continues to this day. Its headquarters at New Hampshire Avenue and U Street is listed on the National Registry of Historic Places and serves as an architectural anchor for the neighborhood. Today, the Congressional Club continues to be a haven of civility and culture where the spouses of Members can meet outside of a political world that sometimes can be all-consuming and far too partisan. It is a testament to the positive things that happen in this town when creative and talented people get together for the sole purpose of serving the public good. The Congressional Club has provided charitable support to literacy programs, domestic shelters, child care and seniors citizens, the White House library and United National Indian Tribal Youth. It brightens the holidays every December by delivering cookies to our local police and fire departments and hosting luncheons for nursing home residents and neighborhood children. One of its best-known events is the First Ladies luncheon, which funds charitable activities. My wife Linda was chair of the First Ladies luncheon in 2007, so I well appreciate the tremendous amount of planning and organization that goes into making this such an anticipated and successful event. The vital role that the Congressional Club plays in the life of the Capitol Hill community and this city at large is evident by the fact that it is the only club in the Nation founded by an act of Congress. With its tradition of civility and service, the Congressional Club remains as important to the life of the U.S. Congress as it was when it was founded 100 years ago. I extend my sincere commendations to all of its members, past and present, and wish the club all the best on this memorable centennial.