Spencer Bachus

Mr. BACHUS

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

Mr. BACHUS. I thank the gentleman from California. Mr. Chairman, I said earlier in the debate, we do not need another housing program. If we determine that the 90 some-odd housing programs are not being effective in addressing the needs of low-income and middle-income Americans, then we need to first reform those programs. But, in passing legislation to strengthen the financial stability of our GSEs, we do not need at the same time to impose a $3 billion cost on them. Those are opposing actions. If we are to do it, we certainly don't need to do what we are doing in this bill, and that's impose it on those who depend on Freddie and Fannie. Those are low- and middle-income American homeowners. In fact, regrettably, that's what we do in this fund. While we do a lot of great things, we do that.

Mr. BACHUS. I thank the gentleman from Georgia and I thank the chairman. I would like to briefly respond to two things that the chairman said. But before I do, I would like to acknowledge and thank the chairman. He said, in voting against this bill 2 years ago, I was not promoting and voting for it, I was not promoting socialism. Let me also acknowledge that 2 years ago, when the chairman voted for this bill, he was not opposing socialism. So, I think we both acknowledge that I was not promoting socialism, and you certainly weren't opposing socialism, nor are you today. Now, the chairman has said that this isn't going to cost anything. It's out of the profits. It's not going to come from homeowners, it's not going to come from Fannie Mae, it's not going to come from Freddie Mac.

Mr. BACHUS. Mr. Chairman, I yield myself such time as I may consume. Let me close by acknowledging the many positive aspects of this bill and just reiterate that had it not been for the creation of our new Affordable Housing Fund, a new government program, we would have had consensus here. But that should not distract from the fact that we do need a strong independent regulator, as the gentleman from Pennsylvania said. Mr. Chairman, with that I yield the balance of my time to the gentleman from Texas (Mr. Hensarling).

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. BACHUS. The gentleman keeps saying this is a government entity. This actually is a government-sponsored entity. And what we do in this bill is we try to separate and say that there is no implied guarantee by the government for this entity; it needs to generate its own profits. And it does that from homeowners whose mortgages they purchase or back.

Mr. BACHUS. I appreciate the gentleman from Texas. Let me say this to the gentleman from Georgia. He said that my amendment guts the bill because, as he sees it, the bill is this pressing need for affordable housing, when I say this bill is all about establishing an independent world class regulator for Fannie and Freddie. So I think that is true. I think you're acknowledging that what we're doing is establishing a strong regulator. What y'all are doing is establishing an affordable housing fund.

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

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

Mr. BACHUS

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

Mr. BACHUS. Mr. Chairman, I move to strike the requisite number of words. What we've said on both sides of the aisle tonight, one thing we ought to be able to agree on is that last year we took $185 billion from the Social Security surplus, including everything that we've paid in and all the interest earned last year, and we spent it. This year, Republicans, Democrats, we passed a budget earlier today that takes $190 billion, every bit of it, every bit of the FICA taxes paid in by all of us, citizens, young and old, we spent it. We spent the interest owed from previous years on the surplus. We spent every dime of it. Next year we're going to do $200 billion. And we can play the blame game. But I don't think the American people are interested in how much the majority is at fault, how much the minority is at fault. I think what the American people want is they want it to stop. It's, you can call it borrowing, that's a nice word. You can call it raiding. You can call it taking. But the long and short of it is we're taking money every day that the American people, the people we represent, are paying into Social Security, and they're expecting, upon their retirement, to start drawing that money out. And we all know it's not going to be there unless we change our behavior. Not you, not us, we. In 2017, 10 years from now, 10 years from now, we're going to start having to reduce our benefits on Social Security.

Mr. BACHUS. I will yield.

Mr. BACHUS

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

Mr. BACHUS. And that this was a nonbinding resolution. But I believe this actually is not a nonbinding resolution.

Mr. BACHUS. Let me clarify something. I believe, in addressing the Speaker, and I respect the chairman, you have allowed debate on this, you have been very gracious. But I believe that in addressing the Speaker, you mentioned that we passed nonbinding resolutions all the time.

Mr. BACHUS. Mr. Speaker, I take this opportunity on the rule to simply clarify what we're debating here today. Now, we are not debating executive compensation, because the Congress does not set executive compensation. There have been many examples just in the past month or two of what we would judge to be outrageous CEO pay packages. There have been many occasions when our constituents have said to us, isn't that $200 million going to some executive, isn't that outrageous? People hear about these pay packages which, quite frankly, I'm not here to defend. One thing they say is, you know, are the shareholders being taken advantage of? Are the rank and file being taken advantage of? And in many cases, the answer is probably ``yes.'' There is no justification for many of these pay packages, these executive pay packages. Sometimes they are based on performance and value added to the corporation and to the shareholders and to the employees, but many times they're not. Many times they're not linked to performance. Now, having said that, why would I have said that and then come down and oppose this legislation? Because, in fact, this is a mandate. This is Congress beginning to intrude on corporations. Now, many of my colleagues on the other side would say, this is a nonbinding resolution. But it is a mandated resolution. If we pass this resolution, every publicly traded corporation, both large and small, the shareholders in those corporations must take a position on corporate executive pay for every top executive. In every case, every shareholder must vote on every executive and say your compensation is adequate or it's not. It's not justified. How many times has this Congress substituted its judgment for the American people? For people in business? And that is again what we're doing by telling shareholders you must have this vote. This is a mandate. Now, there is another reason that we ought to oppose this. Congress should never rush in and begin to change the free enterprise system, our system of competition between companies. What we have required through the SEC in the last year and we just now mandated this and to come back now with something more intrusive until we see that it works is our instruction and the SEC's instruction to public corporations that you must publish the pay, the salary, the compensation, the perks, the benefits that you give your top corporate executives. And the reason we did that is, once that's published and shareholders know exactly what these top executives are doing, shareholders have the right today. And today they can bring a motion before the corporation, and if the majority of shareholders agree, they can take a position on executive compensation. Now, that is not something we oppose, and in many cases these corporations are doing it. Morgan Stanley, just last week, the shareholders came forward with a proposal the shareholders took to do exactly what this resolution wants to do. And guess what? The shareholders at Morgan Stanley said ``no''; the majority of shareholders said ``no,'' we are not going to get involved in something that might affect the excellent performance of this company, of this corporation. We have had a system of corporate governance that is second to none in the world. It has made us the leader in the free world. It has evolved over centuries. It has involved over decades. It is part of our statutes. Let me say this. The gentleman from Mississippi, the gentlelady from Florida, you have come up and you have said, look at some of these outrageous pay packages. I agree with you, I agree with you. I have picked up the paper. I have said, what is going on here. But let me say, on many occasions I have picked up the paper a month later and seen where shareholders acted to address these issues. But let me say this, how many times have we been approached by constituents and we have said, well, when that law was passed, we didn't intend to do this, it wasn't our intention to do this. Unintended consequences. Let me tell you something. When Congress becomes a second-guesser and a judge of executive pay for every corporation in America, every public corporation, ladies and gentlemen, we are getting on a slippery slope.

Mr. BACHUS

Mr. BACHUS. Mr. Chairman, as has been said during this debate, this legislation amends the 1934 Securities and Exchange Act, and it seeks to amend section 16. Section 16 covers reports by officers, directors and owners of 10 percent or more of the equity of a corporation and requires them to disclose certain equity positions. Section 14 of that act, on the other hand, deals with proxy statements and shareholder votes. Quite simply, this legislation requires a corporation, the shareholders of a corporation, to take a vote on the executive compensation of the top five or six executives, and therefore this legislation more appropriately ought to be placed under section 14. I want to thank Chairman Frank. I noted that it was more appropriately placed in section 14. He offered an identical amendment moving it to section 14 also, and has allowed me the courtesy of actually offering my amendment, as opposed to his amendment, which I think is just further evidence during the committee hearing on this issue and in the floor debate of his willingness and openness to fully discuss, fully debate and allow the minority to have participation in this debate. So I commend him for doing that. Mr. Chairman, I would simply move that we reorder this legislation and place it more properly in section 14 of the act. The SEC supports my amendment, and I urge its adoption.

Mr. BACHUS. Mr. Chairman, I offer an amendment.

Mr. BACHUS. Mr. Chairman, I thank the gentleman from Illinois for yielding. The gentleman on the other side from Kansas City said that he had a problem with excessive executive compensation. And let me say this: I don't think there is a Member of this body in the majority or the minority who hasn't been outraged by what we judge by looking in the paper is a lavish, uncalled-for executive pay compensation. Some of them are indefensible. I would never try to defend them; nor should they be defended. And that is not what we are doing today. At the start of this debate some 3 hours ago, I said, this debate is not about excessive executive compensation because by its very term, ``excessive executive compensation'' is excessive. The gentleman from Georgia said it. The gentleman from Kansas City said it. Our constituents are upset about it. And, in fact, last year, this Congress responded to concerns of shareholders, investors and our constituents and voters. And working with the SEC, the Securities and Exchange Commission, we said, you are going to have to disclose these salary compensations. You are going to have to put them out for public scrutiny. And those regulations are just now going into effect. And many of us look at it, and we are dismayed. Now, we all have a problem with excessive executive compensation. But I think most of my constituents and I think most Americans also have a problem with something else. They have a problem with the Congress micromanaging or mandating what private corporations do. This debate is not about excessive executive compensation, which we all condemn. This bill is not about income inequities, which we all are concerned about. This legislation is about this Congress beginning to tinker and mandate and obligate corporate governance with a vote, not a vote that we say they can take, because today they can take such a vote. A shareholder can ask for such a vote on executive compensation. What this legislation does is it mandates, it requires, it obligates every publicly held corporation in this country to take a vote on their top executives, not just the CEO but the CFO and on down the line. Each shareholder, if this legislation passes, will each year vote on the compensation of all these executives. And as so often happens in this body, when Congress begins to substitute its judgment for someone else's judgment, we have all kinds of problems that are created. I will predict today one of the problems will be that more companies will become privately held or closely held corporations. I will predict that hedge funds will grow, and they are already doing that, but this will just be gas on the fire. Publicly held corporations will be taken private by hedge funds. We will have private equity offerings. And all of a sudden, we don't have shareholders. We don't have a right to vote on compensation. We don't even have a right to own the assets of most American corporations. Now, today I have all kinds of rights. One of the rights that the gentleman from California mentioned, and I have done this, I have owned stock in companies, and I have seen those companies, those boards of directors and those CEOs, capture most of the profits of those companies. I have seen them award excessive option awards. And what I have done is I have sold my stock, and I have gone on and owned another company where that didn't happen. I voted with my feet. Now, the most successful corporations across this world are not in Australia. They are not in England. They are right here in America. And for over 100 years, we have allowed shareholders to bring proxies and ask for votes when they wanted to and by a certain majority get those votes. We have allowed that if the board of directors vote for excessive compensation today, shareholders have a right to put that board of directors on the road, and they have done that on cases. They have rescinded compensation packages. But whatever else you may disagree or agree with me, certainly you ought to be skeptical of the Congress of the United States, a Congress which does not allow the voters or our constituents to set our pay. They don't set our pay, but all of a sudden, we want the shareholders of corporations to actually vote on the pay of every executive. And we are mandating it. We are not just simply making it possible. It is possible today. It is more government intrusion. And, unfortunately, every time the government overreaches, the consequences don't come back to us in Congress. We will continue to earn a salary. We will continue to be up here. The consequences will be in these corporations, which are the drivers of our economy. So, in closing, let's not confuse this as a debate on excessive executive compensation. Let's just all agree we don't like it. Let's all agree that we have given the SEC the right, and they publish these salaries. And as we have seen so often, there is criticism in the papers, criticism by shareholders and boards of directors taking action. But let's not substitute our decision, and let's not second guess. Let's not interject the Congress and have the Congress start telling shareholders that they have to, have to pass judgment on the salaries of all top management in every public corporation.

Mr. BACHUS

Mr. BACHUS. Mr. Speaker, I yield myself such time as I may consume. Let me say that I appreciate Congresswoman Hirono's discussing the bill and the different components of the bill and also Congressman Abercrombie. And let me say that I do acknowledge that low-income Native Hawaiians living on the Hawaiian homelands, that they are under some restraints in building homes and financing those homes; and, because of that, there is support on my side of the aisle for some of these programs, and there are some differences of opinion. So I do acknowledge that for them, because it is on Native Hawaiian lands, it is almost impossible for them to get private financing; and that is at least the basis for some of these programs. And I do believe and I am hopeful that some of the discussions we have heard tonight will enlighten Members on both sides. It is not the intent of the minority to obstruct the passage of this legislation. Mr. Speaker, I reserve the balance of my time.

Mr. BACHUS. Mr. Speaker, I yield myself such time as I may consume. And the first thing I would like to acknowledge is both my respect and friendship with my colleague from Hawaii, Mr. Abercrombie. I have enjoyed a long friendship with him, have the utmost respect for him, and I associate myself with the remarks he made. I believe his remarks were fair and accurate. Not to parrot the Fox News network, but also fair and accurate. He has, I think, correctly pointed out, colleagues on my side of the aisle, some are supportive of this legislation. Others have concerns about the legislation. And it is for that reason that we have asked for time on the floor just to express some of those concerns. At the same time, as the gentleman from Hawaii has said, we have some Members that strongly support this legislation. He mentioned the gentleman from Arizona (Mr. Renzi), also the gentleman, Don Young, from Alaska, is a strong supporter of this legislation. And a number of my colleagues also voted for the legislation. Others of my colleagues are concerned about some of the statements made in the Rice v. Cayetano case, that some of these benefits, and there are some 160 benefits that go to Native Hawaiians. And some of these benefits actually date back to statehood and, I think, the founding of the State of Hawaii. So there is some historical basis for these. But, as I have said, some of my colleagues are concerned about that. Some of them have pointed out the words of Justice Kennedy in that decision where he said this: ``America is a melting pot of cultures from around the world.'' And he said, ``As the State of Hawaii attempts to address these realities, it must, as always, seek the political consensus that begins with a shared purpose. One of the necessary beginning points is this principle: The Constitution of the United States too has become the heritage of all the citizens of Hawaii.'' And that Constitution, as we know, in almost all cases is opposed to racial set-asides. So this disturbs many of my colleagues on my side of the aisle. At the same time, as I said, there is some historical context for these, and I think probably utmost is that I think most people in Hawaii, several Republicans, officeholders as well as both members of the present Hawaii delegation, support these programs and believe they greatly have benefited the people of Hawaii. Let me simply close by saying we had hoped to come united together in supporting this legislation. Mr. Campbell in committee had offered an amendment, and in closing I will read that amendment. Had this amendment been accepted, we would have been prepared, I think, to almost unanimously to have supported this bill. Mr. Campbell's amendment said: ``Nothing in this title shall be construed to confer a constitutionally special political or legal relationship based on Native Hawaiian race or ancestry between the United States and the Native Hawaiian people for purposes of establishing a government-to-government relationship. With that, Mr. Speaker, as I said, with great respect for Congressman Abercrombie and also Congresswoman Hirono, I appreciate the civility and the spirit of cooperation in which we come here tonight. Mr. Speaker, I reserve the balance of my time.

Mr. BACHUS. Mr. Speaker, I reserve 5 minutes of my time, and I yield back the balance of my time, also.

Mr. BACHUS

Mr. BACHUS. Mr. Chairman, I thank the gentleman for yielding. Mr. Chairman, let me start by saying that the minority is not opposed to a debate on section 8 vouchers for evacuees. We understand, and we have said on this floor that they have left New Orleans, they are in other cities, and there is a temporary need. We don't know how long that temporary need is. There is a temporary need for housing. Some of them will drop off in eligibility, and we are hearing that may be 8 percent. But this is a 10-year permanent program. One of my concerns is they won't want to return to New Orleans with this section 302 housing that we are creating, a more or less permanent program where they can stay in Houston or they can move from Houston to Dallas. Now, yesterday we talked about what I consider is a rush to go back and take some of these dilapidated units, units that weren't habitable even before the hurricane, and fix them up. We say we need to do that because we needed to get everybody back to New Orleans as soon as we could. What we said yesterday, we talked about East Lake in Atlanta, where they took a large public housing project which was, as I said, 56th out of 56. It was the most dangerous precinct in the city of Atlanta. Seventy percent of the youth in some of these public housing projects ended up in the State penitentiary. There was an article in the New York Times about that in New York. We wanted to replace that with mixed-income units. That is going to take time. For that to happen, we will have to have some people stay in other cities. But we don't think that we can determine right now what we need 10 years from now and commit to spending $735 million. At the same time, if we are going to do that, why do we go back and replace all these units? These people are either going to come back, or they are not. They are not going to do both. But it seems as if we are creating public housing for everyone in New Orleans that has a potential of coming back, and, at the same time, we are creating a program over here where everybody can stay away from New Orleans. The end result is, I think, a lack of planning. I think we ought to, instead of replacing the failed public housing in New Orleans that we all agree was a disaster, we ought to replace it with something where people have a safer home, a better community, more quality of life. While we do that, we determine how long that is going to take and fashion this program around what we think is a better day for people in New Orleans, a better public housing system there. Instead, I think we are creating two stand-alone programs, both designed for the same group of evacuees. It simply is going to create a disincentive to come back. At the same time, we are creating housing in New Orleans that is really not suitable for anyone, replacing units that need to be torn down and replaced with better units. As I have said, this is the greatest natural catastrophe this Nation has faced. That, if anything, ought to lead us to do this right, and not just throw money at it, but to spend it wisely. This amendment by Mr. Neugebauer is a way to do that. Section 302 is a duplication of effort, and I think it is ill conceived. I will close with this: Yesterday, if I heard it once, I heard it a hundred times. And we agree, we want people to come back to New Orleans as long as there is suitable housing there and to do so as soon as possible. This section 302, which the gentleman from Texas would strike, is a disincentive to New Orleans recovering as soon as possible.