Spencer Bachus

Mr. BACHUS

Mr. BACHUS. Mr. Chairman, I would yield the gentleman from New York 30 seconds to answer an inquiry if he would allow me. I would ask the gentleman, this letter that we heard of earlier from Mr. Hoyer to yourself, could you share a copy of that letter with the minority?

Mr. BACHUS. Mr. Chairman, I yield 3 minutes to the gentleman from Texas (Mr. Culberson).

Mr. BACHUS. Could we see it now?

Mr. BACHUS. Mr. Chairman, I would like to inquire as to the remaining time on our side.

Mr. BACHUS

Mr. BACHUS. Madam Chairman, I would like to thank the chairman of the full committee. And I want to make it perfectly clear that this was a grandson, not a son or daughter who was born to Linda and I. So when you said proud addition, I just didn't want a rumor back home that we had had a child. But I also want to acknowledge what you said. There are many important reforms in this bill. In fact, from last year's bill, much of what the chairman has said, I think we have worked together, groups have worked together, and as a result of the subprime crisis we have got an even better bill, and I acknowledge all that. There are many good things about this bill, and I commend him for his knowledge of the subject and his fine work. Thank you.

Mr. BACHUS. Madam Chairman, the Federal Housing Administration, which we today call FHA, was created in 1934; and it is a very important source of support for first-time home buyers and for low- and middle- income borrowers. FHA provides mortgage insurance that protects lenders against losses when homeowners default on their mortgage obligations, as many of them are doing today. It also allows the lenders to offer their customers, American homeowners, low interest rates and low closing costs. Since its inception, the FHA has insured nearly 35 million loans. That makes it the largest insurer of mortgages in the world. FHA's share of the mortgage market, however, has been steadily declining in recent years, falling from almost 20 percent 10 years ago, of the total mortgage market in America, to 5 percent today. This sharp drop in FHA's market share resulted largely from the growing popularity of subprime mortgages, as more borrowers opted for loans featuring zero down payments and introductory teaser rates far lower than what was available from FHA. The difficulties we are experiencing today by many subprime borrowers is as their initial low interest rates reset at a much higher level, it offers FHA an opportunity to reestablish its standing in the marketplace as a safe, low-cost alternative for American homeowners. It is also another reason that we should be here today reforming FHA, to ensure that that happens. For that to happen, Congress does need to pass the reforms that we are considering today. I want to say that right upfront. There are important reforms in this bill. These same reforms were contained in legislation that Ranking Member Biggert of the Housing Committee and myself and others in a bipartisan way introduced in the 109th Congress. In fact, that legislation, Comprehensive FHA Reform, and that is in this bill today, and is very good provisions, passed with over 400 votes on the House floor, only to die in the Senate. I am sorry that happened. Earlier this year, Congresswoman Biggert and I reintroduced legislation identical to that legislation. However, and I am sorry to say that rather than embracing last year's bipartisan approach, the majority has chosen to go in a different direction. I think they do that from honest philosophical reasons. We disagree with those reasons. They have included provisions which we believe will divert surpluses generated by the FHA program to a new affordable housing fund established in separate legislation which this House and our committee passed earlier this year. While a strong bipartisan consensus exists regarding the need for FHA reform, the reforms in this bill, the majority is insistent on linking the enactment of these reforms to the creation of yet a new multi- billion dollar housing fund has caused many of us on this side of the aisle to hesitate from strongly supporting this legislation. I admit, most of our Members are in a quandary. We like the reforms in this bill. We know that those reforms will go a long way towards addressing the crisis that we face today, the Affordable Housing Fund. And we realize at the same time that there is legitimate purpose behind Chairman Frank's Affordable Housing Fund, and one of those is to offer affordable low income rental property for Americans. And we understand that he honestly believes, and we have an honest disagreement as to the need for this. We simply believe that a better approach is to dedicate the FHA surplus to shoring up the financial solvency of the FHA mortgage program, which was only recently removed from GAO's list of government programs at high risk for waste, fraud and abuse. A portion of that surplus could also be returned to beneficiaries of the program. Who are they? They are the many people who have taken out FHA-insured reverse mortgages, many of them senior citizens, and we could do that in the form of lower insurance premiums for all Americans who have FHA mortgages. Madam Chairman, the key reforms included in this legislation, lowering down payment requirements, increasing loan limits and mortgages that FHA is authorized to ensure, giving FHA more pricing flexibility, command broad consensus among Republicans, Democrats, the Bush administration, consumer groups and the industry, the realtors, the home builders and others. Indeed, in announcing several of these initiatives last month designed to contain the damage caused by the problem in subprime, President Bush stressed the critical role that FHA can play in assisting homeowners facing sharply higher mortgage payments and possibly foreclosure in reaffirming the administration's support for the FHA modernization legislation and many of the provisions contained in this bill. However, the administration, as have many on our side of the aisle, also is strongly opposed to using FHA surplus as seed money for an untested, unrelated government housing program, one that is estimated to cost $3 billion or more. Thus, by insisting that this bill carry that controversial provision, we feel like the majority is delaying, if not jeopardizing, the enforcement of important reforms that we need now to provide a lifeline for seeking to refinance out of high cost subprime loans. Madam Chairman, accordingly, I urge my colleagues to support Republicans' amendments to strike the extraneous Affordable Housing Fund provisions opposed by the administration and allow us to move forward quickly with badly needed and long overdue reforms in the FHA program. If we are not successful in those amendments, many of the Members will vote for this underlying legislation, some will not. But, again, I want to acknowledge the sincerity and the good faith that the majority has worked throughout this process with the minority; and, Chairman Waters and Chairman Frank, we very much appreciate that. We appreciate the many fine provisions in this bill.

Mr. BACHUS

Mr. BACHUS. Madam Speaker, on September 17, 2007, I missed votes because I was traveling to be with my oldest daughter as she gave birth to her first child, my grandchild.

Mr. BACHUS

Mr. BACHUS. Mr. Speaker, I thank the gentleman from Ohio. We have heard words about Paul Gillmor, our friend, and one word we keep hearing over and over is ``caring.'' He really cared. He cared about his family. You would go in his office and you would see the pictures of his family. He cared about his staff. Mark Wellman, his chief of staff; Dave Oxner, great guys. They were sort of a reflection and extension of Paul. They were gentlemen. They really did not care about who got the credit. They were hard workers. I say to Mark and Dave, I know that you are grieving right now. Mr. Obey mentioned that he cared about this institution. He truly did. He cared about every Member. I never heard him insult another Member. I never heard him say something unkind. He talked about issues. He felt strongly about issues. The brownfields legislation was a great example of how he was very tenacious, had very strong feelings. He did that earlier this year on the industrial loan companies when, as a small town banker, mainstream banker, he felt very strongly that small town banks were being disadvantaged. But he never said anything unkind about those who opposed his position. To his credit, I think part of that kindness, that caring, and also his capable leadership, that legislation passed the House 371-16. I think brownfields will be part of his legacy, particularly to the industrial States, the people of Ohio that he loved; as will the industrial loan company legislation, that really will help preserve small town mainstream banking. He was a banker. I had the privilege of appointing Paul as the ranking member of the Financial Institutions Subcommittee. I never regretted that decision. I knew that what Paul cared about was not himself or not the glory, but doing what was right for the American people. He never disappointed me. I will miss him deeply.

Mr. BACHUS

Mr. BACHUS. Madam Chairman, the Farm Credit System does fulfill a valuable service to the farmers of America, and we have no argument with that. But we all need to recognize that the Farm Credit System is a government-sponsored entity. It has the benefits and privileges of a government-sponsored entity, and the taxpayers underwrite its operation. Now, traditionally they have made what we call farm loans, agricultural loans. There is much concern in the private lending market, independent bankers, small-town bankers, credit unions and thrifts that this role has been expanding. In fact, over half the loans made by the Farm Credit System are to farmers or corporations valued at over $1 million. Where they were making agricultural loans, agricultural mortgages, now they're lending money to Cargill, ADM, Jack-in-the-Box, and retail businesses. This amendment is simply our way of saying that when you begin to compete with small-town bankers, with thrifts, with credit unions, it is a contact sport. And we need to take a step back and look at it. But at this time, we don't believe that any expansion, in fact, I'd like to submit for the Record a letter by Michael Reyna, who is the immediate past chairman and CEO of the Farm Credit Administration, in which he says that the pressure was always there to make off-farm loans, and he submits this letter in support of our amendment. Statement on the Frank/Bachus Amendement (#10) Submitted By Former Farm Credit Administration (FCA) Chairman and CEO Michael M. Reyna (2000- 2004) Man's best friend, protector, and hunting partner, the dog, holds a special place in the heart of rural America. The Farm Credit System (System) plays a very special role in rural America, too. Congress established the System, the Nation's oldest government sponsored enterprise (GSE), to achieve a very special public policy goal: a dependable source of credit for agriculture and rural America. (21) Typically, GSEs are established, structured, and intended to improve the efficiency and effectiveness of the economic marketplace; a mechanism to free up capital for new loans. And, as their name implies, GSEs are chartered by the government and are given tax breaks and authority to issue government backed debt obligations, among other special advantages, to achieve their public policy goal. Unlike other GSEs, the System--with its special government breaks and authorities--directly competes as a retail lender against its private sector counterparts, namely banks and other financial institutions. Competition is a contact sport, but fair is fair and it's not hard to understand why many private sector lenders bristle when it comes to directly competing against a public sector lender with special tax breaks and a cheaper source of funds. Striking a delicate balance, Congress wrote, and has amended, the Farm Credit Act with an eye towards focusing the public benefits of this GSE by limiting the types of loans that the System can make as well as where and to whom these loans can be made. Unsatisfied with the wisdom of Congress, the System has applied relentless pressure in recent years on its regulator, the Farm Credit Administration (FCA), to grant ever broader lending authority and even to issue ``no action letters'' essentially giving System lenders a ``free pass'' to disobey the law. As the immediate past Chairman of the FCA (2000 to 2004), I have directly experienced the System's pressure to get the FCA to give the System what it wants. ``Private sector lenders are well aware of these efforts, and the System's lending abuses are well-documented. And, notwithstanding the public relations campaign relative to its young, beginning, and small farmer lending efforts, the bulk of the System's public benefit goes to commercial agriculture--those farmers with retail sales in excess of one million dollars annually. This fact alone suggests a thorough review of whether the System is achieving its public policy purpose is in order, particularly given that agricultural concentration has increased as the number of commercially viable farms in America continues to decline. Rather than submitting a ``secret'' wish list of regulatory changes it wants the FCA to make behind closed doors through ``notational votes,'' the System is now seemingly seeking to broaden its lending authority directly from Congress, through the Farm Bill (H.R. 2419). Seemingly, because when it comes to legislation, the devil is in the details. A review of the proposed language raises legitimate concerns about exactly what authorities are being broadened and by how much. Without greater specificity, the ambiguity will leave much to the System's regulator to sort out. Would the three-member FCA Board be a lapdog or a watchdog on these issues? Given its close ties to the System, is there really any doubt how the decisions would turn out? The System's proposed changes to the Farm Credit Act are an outgrowth of its HORIZONS Project, a multi-year effort designed to justify an expansion of the System's off-farm lending powers. And, therein lies its primary flaw--the System's efforts are more about the System's growth and profitability rather than the credit needs of agriculture and rural America. When it comes to commercial agriculture, competition among lenders is healthy and credit is available and affordable. Consequently, there is no public policy rationale to broaden the System's lending authority in this area, let alone expand its lending authority beyond agriculture either. In other words, ``That dog don't hunt.'' Private-sector lenders now provide ample home-mortgage credit in towns with population between 2,500 and 6,000, often by selling those mortgages to the System's fellow GSEs, Fannie Mae and Freddie Mac. Not only is there not a mortgage credit shortage in this population range, but authorizing the System to lend in communities larger than 2,500 will distract it from financing moderately-priced rural housing where it is most needed. Rather than responding to the System's relentless desire to finance corporate agriculture, Congress should undertake a comprehensive examination of the System's future role in financing agriculture and rural America. Only after such a detailed review should the Congress consider any expansion of the System's off-farm lending authority. Therefore, the House of Representatives should drop the HORIZONS provisions now in the Farm Bill by voting for the Frank/Bachus amendment #10.

Mr. BACHUS

Mr. BACHUS. Madam Chairman, the activities of Planned Parenthood are a concern for many of us. In Alabama, there was an unsuccessful abortion at a Planned Parenthood clinic, and the baby was born with severe injuries including a hole in her heart. Planned Parenthood has always been a glaring exception to the long-standing policy in the House of not allowing taxpayer money to be used to provide abortions. It claims that Title Ten money is not being used for abortions. The reality is that any Federal dollar that goes to a clinic where abortions are being performed, ends up facilitating an abortion. The Pence Amendment is a simple way to clear up whether Federal tax dollars are being used properly. Title Ten money should not go to any organization that provides abortions. This is an issue of being accountable to taxpayers and consistent with the Hyde Amendment that we have passed on a bipartisan basis for 31 consecutive years. Therefore, I urge support for the Pence Amendment.

Mr. BACHUS

Mr. BACHUS. Mr. Chairman, I move that the Committee do now rise.

Mr. BACHUS. Mr. Chairman, I move to strike the last word. Mr. Chairman, I have a question I think the American people would like answered. It is a question that has not been asked tonight. We know Chairman Obey, and we know he has taken a position that he is not going to publish or disclose these earmarks. He has expressed his opinion. What we don't know, Mr. Chairman, is, the Speaker is not sitting in the Chair and we don't know where the Speaker stands on this whole procedure. We do know that the majority leader said that all earmarks would be published, there would be complete transparency. We know that he said in committee they would be debated. We know that the Speaker on a number of occasions, I think we have all seen those quotes, we have heard a few tonight, the Speaker make it clear during the campaign and after the campaign that all earmarks would be disclosed prior to any vote on the House floor. So, Mr. Chairman, I believe it is incumbent on the Speaker to come before this body and address the body and tell the body whether or not the procedure that we are witnessing, whether it is chairman of the Appropriations Committee has taken this on himself, whether he is doing it on his own accord, whether he has polled the Democrat Members to see where they stand. But more important, we want to know where the Speaker stands. We want to know whether the Speaker consulted with the chairman, whether she has blessed this. We know what she said in USA Today. We know what she said in the Christian Science Monitor and what she said in a news conference just last month. We know that in a press conference on March 13, 2007, she specifically said that all earmarks would be made public before a vote on the House floor. We know that, so it is a mystery to us why we are going through this process. Now, the chairman of the full committee said back in 1999 there was a bill, one bill, that the Republican majority did not publish the earmarks before the vote on the floor. We know that is part of his reason for doing this. But we also know that the Speaker of the House told the American people that this would never happen as long as she was Speaker. And she, as a late as a month ago, said there would be no votes on the House floor on an appropriations bill where earmarks were not published. In fact, the gentleman from Illinois, the majority whip, says, if possible, we are going to put them on the Internet weeks before we vote on them on the House floor. They are not on the Internet. We don't know how many earmarks there will be, what earmarks are under consideration, the total amount of those earmarks. But more importantly, we do know one thing, Mr. Chairman, we know that the Speaker of this House, the Speaker of this House said that this wouldn't happen. She said it many times on many occasions, both during the campaign when she asked the American people to turn the Republicans out and put the Democrats in. And we know that from exit polls that many people went to the polls on election day with that promise in mind; and they voted for Democrats who now serve in this body under the assurance that this wouldn't happen, and it is happening. Now, we know that the chairman of the full committee, we know his position. He said we just have to do. He talks about what we have done and what they have done. The important thing is the American people. In fact, earlier tonight on one of the news network, it was not Fox, they asked: Where does Speaker Pelosi stand on this? The American people are asking, where does the leadership of the majority stand on this issue? That is my question, Mr. Chairman. I would ask that before we proceed in this body, that the Speaker of this House come before this body and not tell, I don't care if she tells Republicans, I don't care if she further explains to Democrats, I want her to tell the American people why, only 3 weeks after promising that earmarks would be fully disclosed both in committee and on the floor of this House, that we backed away from this.

Mr. BACHUS. I thank the Chairman, and let me attempt to answer the question. The question is really not whether the gentleman from North Carolina objects to an earmark. It's not whether the gentleman from New York is for an earmark. Really, this is the people's House, and it's really up to the people to make the final judgment on each and every one of these earmarks, and the people simply don't know what these earmarks are. This is the people's House, and we've been told there are earmarks in this bill, there will be earmarks added in conference. We're told that the professionals on the Appropriations Committee are reviewing these earmarks. They're making a determination. That's what it's about. I grew up in Birmingham, and there was a Scripps Howard newspaper in Birmingham, and it had a searchlight on the front page. I'm sure some of you had a Scripps Howard newspaper in your community, and that was the truth going out, the light. The gentleman from North Carolina says he doesn't know anything about these earmarks. I don't know anything about these earmarks. The gentleman from New York may know all about them. The chairman of the committee may know about them. But really, the truth is that who ought to know, and who has a right to know and a right to make that judgment in each and every case is the people we represent, the people of the United States. It's their money. It's not our money. And that's what's so wrong with this process tonight. We are arguing among ourselves that this Member doesn't have the right, or this Member knows more than this Member, when the truth is it's the American people that have the right to know. They have the right to disclosure. This is their House. This is their money. And they have the right to make decisions about each and every one of these earmarks that some of us know about and some of us don't know about. Now, I would say this. The American people don't know how many earmarks are in this bill or how many earmarks will be in this bill. We're going to be asked to pass, we represent, we each represent, 6-, 700,000 citizens, and we're going to be asked tomorrow or the next day to vote on this bill, to vote ``yes'' or ``no.'' We've already been told there will be earmarks added to the appropriation bill, but it won't be until all the bills are passed that they'll go to conference, and a few select Members, representing probably 10 percent of the American people, they will add the earmarks. The American people will not ever know what these earmarks are until they're passed into law. Now, you know, I will tell the gentleman from New York, I don't care if you tell me about the earmarks. Announcement By the Chairman

Mr. BACHUS. I care about the American people. They have a right to know. They have a right to disclosure.

Mr. BACHUS. Mr. Chairman, will the gentleman yield?

Mr. BACHUS. Would the gentleman yield?

Mr. BACHUS

Mr. BACHUS. Mr. Speaker, I rise in support of this legislation. I really believe that we do need enhanced regulatory supervisions over the ILCs, and this legislation does that. The Federal Reserve and other Federal regulators have urged us to enhance the regulation, and that is what this does. It also does two things; and every year that we wait to pass this, it becomes a bigger problem. But we grandfather the existing ILCs. If we had done this bill 2 or 3 years ago, we would have had much fewer of these and we wouldn't have the problems that we have today, talking about, well, this commercial firm has one, this commercial doesn't. But it was through no fault of the chairman of the full committee. Mr. Frank, when he was ranking member, pushed this very hard as a solution to this problem, as did the subcommittee chairman, Mr. Gillmor, and I want to commend both of them for their hard work over the past several years. I also want to particularly commend the chairman of the committee, Mr. Frank. He has really made this a collaborative effort. It has been a bipartisan effort; and I hope the bill, because of that, is a better bill. I think we are going to have a good vote here. I do think, because it is a bipartisan effort and it is a compromise, that we will have, hopefully, better success in not only passing this bill out of the House but seeing it ultimately enacted into law. These ILCs, and they are ILCs, industrial loan companies, now they are industrial bank holding. This is the Industrial Bank Holding Company Act, because they really have evolved into bank holding companies; and what these started out primarily as is just a small loan company where industrial employees were able to borrow money. It is very similar to a credit union. The only difference is they didn't join as members. They just borrowed money, because they really didn't have access to a commercial bank at that time, and that was the whole reason for these. As the chairman said and as the subcommittee Chair said, all of these exist in six States. The vast majority of the assets of ILCs are chartered in Utah; California and Nevada being the other States that have significant numbers of them. As the subcommittee Chair has said, these things have grown 3,500 percent just since we started focusing on this. It is really growing out of control. And what it does, we made a policy decision several years ago in this Congress that we would not allow commercial firms to operate banks, and this will really enforce that policy decision that we made. As they have grown in size and nature and complexity, several not only regulatory but policy issues have been presented, not only to the Congress, but to the regulators. One of the concerns, as the subcommittee Chair and the chairman have both referred to, is a concern over mixing banking and commerce, which is really not what the American financial system is all about. Japan and other systems have allowed a mixing of commerce and banking, and we are evolving, but they have run into problems. We would like to avoid those problems. An exemption in the current law permits any type of company, including a commercial firm, to acquire an ILC in six States. We want to close that loophole. We want to stop that. Let me conclude by saying I do have one concern, and I am going to have a colloquy with the chairman in a moment. But I am concerned that this bill, and it is not intended and I know the chairman has said previously we hope to address this in the Senate or in conference, but I am concerned that it may discriminate against our domestic automobile manufacturing dealers. The reason I say that is most automobile companies today, including the large foreign automobile manufacturers, have set up ILCs. General Motors has set up an ILC. But Chrysler and Ford do not have ILCs. And, as drafted today, the bill would allow the foreign automobile manufacturers as well as GM, and I am going to clarify that in the colloquy, to continue their ILCs. However, Ford and Chrysler, or DaimlerChrysler, which may end up to be Chrysler, does not have an ILC. I am concerned not only that that is a disadvantage to the automobile companies but to the Nation's dealers that sell Ford and Chrysler products. People are going into this every day, they are thinking ILCs give them a competitive advantage, and I don't want to see Chrysler and Ford shut out of having an opportunity to have this advantage. As the process moves forward, I would like to work with both the chairman and the ranking member to ensure the legislation does not create an unlevel playing field that harms our domestic automobile industry. At this time, I would like to pose a question to the chairman. Under the committee reported bill, Chairman Frank, a number of firms that already controlled industrial banks before January 29, 2007, are grandfathered from the new prohibition on control of industrial banks by commercial firms. The grandfathered firms that control a particular industrial bank are subject to a disposition agreement with the FDIC that is affected by the outcome of this legislation. Under the agreement, the FDIC has the power to waive the disposition requirement, depending on the state of the law, in 2008. My question is whether it is the committee's intention that the decision to grandfather these firms supercedes this particular prior agreement and makes a waiver unnecessary, provided the grandfathered firms abide by all of the limitations imposed on grandfathered firms and operate under the supervision of the appropriate Federal supervisory agency.

Mr. BACHUS. Yes, and I appreciate that encouragement; and I know they do, too. At this time, I again commend the chairman. I think this is a very good bill that deserves the support of all the membership.

Mr. BACHUS. Chairman, your response does indeed clarify the situation, and I thank you for doing that. And I again thank you and the gentleman from Ohio (Mr. Gillmor) for their work on this important bill. I would also like to join with you. You have both praised Chairman Bair, and I think she has done an exceptional job of trying to sort through this difficult situation. And I would also like to commend the OTS and the Federal Reserve for working a compromise on some of the supervisory questions that were presented by this bill. Late last week, they came to an agreement between themselves.

Mr. BACHUS

Mr. BACHUS. Mr. Chairman, I thank the gentleman from Pennsylvania for his sincerity, and I yield 2 minutes to the gentleman from California (Mr. Gary G. Miller).

Mr. BACHUS. Yes.

Mr. BACHUS. Oh, it would come from shareholders.

Mr. BACHUS. Let me say this, the shareholders, that's the profits of the company, and the profits have to be generated somewhere. This idea that it doesn't cost anybody anything, and there is not a cost to the customers of the corporations, who are homeowners, it would be, indeed, a historic moment in this body if we passed legislation that cost billions of dollars, but it didn't cost anybody anything. It would probably be the first time in the history of this universe. And if it does happen, we should pause, because we will have figured out basically how to defy the principles of mathematics and economics. Third, the chairman mentioned Katrina, and I mentioned Katrina earlier in this debate, and let me point out, and I think this is probably conclusive evidence of why we do not need to pass a $3 billion additional housing fund. The chairman correctly said that we passed this bill before, and I voted for it and it had money in there for Katrina. Well, this bill creates $3 billion, much of which will go to Katrina. Well, it was only 2 months ago that we appropriated $3 billion for Katrina. That is the 3 billion that we voted for; and there is no reason to pass legislation, which actually passed this body, went to the President and passed appropriating $3 billion, and here we come appropriating another $3 billion. So I will continue to say we determined we needed $3 billion when I voted for this bill before, and I stand by that. We didn't need $6 billion, we needed $3 billion. That is why we voted for $3 billion. That is why 2 months ago we said this is what it will cost.

Mr. BACHUS. Mr. Chairman, I yield to the gentleman from California (Mr. Royce).

Mr. BACHUS

Mr. BACHUS. Mr. Chairman, I demand a recorded vote.