Barney Frank

Mr. FRANK of Massachusetts

Mr. FRANK of Massachusetts. Mr. Speaker, I yield myself 15 seconds to correct the gentleman. We have not created a consumer bureau under the Federal Reserve. It will be housed in the Federal Reserve. The Federal Reserve will have no ability to interfere. Some on the other side wish it would. But it will be a fully independent consumer bureau. It will get its mail at the Federal Reserve, but nobody there will be able to open it. I now yield 4 minutes to the gentleman from Pennsylvania (Mr. Kanjorski), one of the leaders in putting together this bill in the area specifically of investor protection. (Mr. KANJORSKI asked and was given permission to revise and extend his remarks.)

Mr. FRANK of Massachusetts. I yield 2 minutes to the gentleman from Florida (Mr. Hastings).

Mr. FRANK of Massachusetts. This is a legitimate parliamentary inquiry, probably the first one I have ever made or heard. But there was a lot of confusion. Is it the case apparently that there is no debate on a motion to recommit on a conference report?

Mr. FRANK of Massachusetts. Reclaiming my time, Mr. Speaker, please, let's get this started on the right point. Instruct the gentleman as to the rules. I thought he was going to ask me about what I said. He has consistently read a part of this section, leaving out the part that would help Members understand it. He didn't say what he just said. He said he read these as if they were there in general. The powers he talked about come in the subsets of the section: Funding for Orderly Liquidation. Those powers are just upon the appointment of a receiver. So this is not to keep an institution going. This is not AIG. Yes, he can be critical about the Bush administration on its own, without Congress, with regard to AIG. We repeal in this bill the power under which they acted and with the Federal Reserve's concurrence. By the way, it also says in here that those powers are subject to section 206. Again, I don't know why the gentleman--I guess I do know why they would want to read this, but let me read it because it corrects entirely the wholly inaccurate picture he gave people. The actions that he read can be taken if the corporation determines mandatory terms and conditions for all orderly liquidation actions. AIG was kept alive. This cannot be kept alive. This happens only as the death of the institution comes. He may think the Bush administration picked its friends. I think he is being unfair to Mr. Bernanke. I think he is being unfair to Mr. Paulson and Mr. Geithner. Anyway, here are the rules they would have to follow: First, they would have to determine that such action is necessary for purposes of the financial stability and not for the purpose of preserving the covered company. Two, they would have to ensure that the shareholders do not receive payment until the claims are paid. They would have to ensure that unsecured creditors bear losses in accordance with the priority of claims in section 210. That is the FDIC. They would have to ensure that the management is removed, and they would have to ensure that the members of the board of directors are removed. So it is quite the opposite of what the gentleman talked about. It says that, if an institution has gotten so indebted that it should not be able to pay its debts, we would step in, and we would put it out of business. It is totally different from what happened with AIG. It does then say, yes, in some circumstances, there may be an ability to do these things but only after the institution has been liquidated. The gentleman never mentioned that. The gentleman talks about it and talks about it, and he never mentions that this is only as the institution is being put out of business. It is also very clear elsewhere in here that any funds expended will come from the financial institutions, not from the taxpayers. Now, we had a good piece of legislation that we had adopted in conference in order to try to do that here. Unfortunately, to get the Republican votes necessary in the Senate for an otherwise very good bill, we had to back that down, but it didn't change in here. So, yes, there are provisions that the gentleman read, but unlike the way he presented them, they don't stand by themselves. They come only after it has been determined by the administration in power that the financial stability of the company requires, first, that the company be liquidated and, second, that some attention be given to its debts, but it will be funding out of the other financial institutions, not from the taxpayers. I reserve the balance of my time.

Mr. FRANK of Massachusetts. Parliamentary inquiry, Mr. Speaker.

Mr. FRANK of Massachusetts. Mr. Speaker, pursuant to House Resolution 1490, I call up the conference report on the bill (H.R. 4173) to provide for financial regulatory reform, to protect consumers and investors, to enhance Federal understanding of insurance issues, to regulate the over-the-counter derivatives markets, and for other purposes, and ask for its immediate consideration.

Mr. FRANK of Massachusetts

Mr. FRANK of Massachusetts. I just want to correct the wholly- inaccurate-because-of-being-incomplete history of the gentleman from California. He blames the Senate Democrats for not passing a bill. I didn't hear him infer, maybe I missed it, that the House was then in control of the Republicans, and the House didn't pass that bill either. The gentleman from California had an amendment that he liked. He was repudiated by his own party, overwhelmingly. Now, I am sorry he wasn't more persuasive with the Republicans. I am sorry that the chairman of the committee and the current leadership of the House and the then leadership of the House voted against him, but you can't blame that on the Democrats. And, in fact, what the Senate Republicans offered was the House Republican bill.

Mr. FRANK of Massachusetts. If the gentleman would yield to me, I agree. As the gentleman knows, our bill does give the SEC the power we expect them to use to impose greater fiduciary responsibilities on these people. The consumer protection bureau will be a very powerful one. It will be dealing with financial products in the lending area and elsewhere. It was not intended to duplicate existing regulation. So, in fact, as the gentleman knows, we enhance the regulatory authority of those entities he mentioned, and there is no intention whatsoever, nor is there language, I believe, that would lead to duplicate supervision by the consumer protection bureau.

Mr. FRANK of Massachusetts

Mr. FRANK of Massachusetts. Madam Speaker, I was very proud in the 70's to show my support for appropriate bipartisanship by supporting and working closely with Senator Ed Brooke, who was twice elected to the Senate as a Republican and was a staunch fighter against discrimination, for strong support for rental housing for low-income people, and in general for fiscal responsibility within the context of social concerns. I was therefore very pleased, but not at all surprised, to read in the Boston Globe on June 22, 2010 a strong expression of support for repeal of the ``don't ask, don't tell'' policy, which has discriminated against so many patriotic Americans seeking to serve their country. Senator Brooke notes that he himself was the victim of discriminatory policies when he served in a segregated U.S. Army in World War II, and as an African American, was treated unfairly. He does affirm that there are differences in the effect of the policies and the impact they have between racial segregation and ``don't ask, don't tell,'' but as he says after discussing the experience of racial segregation, ``The point is that the ban (on gay and lesbian members in the military) is a weapon and expression of prejudice--no more excusable than any other discriminatory law.'' Consistent with his lifelong record of fighting for fairness in America, Senator Brooke closes the article by saying, ``If I was still in the Senate, I would vote to show my respect for the sacrifices of all soldiers--gay and straight. Congress should repeal this legislation and score another victory of progress over prejudice.'' Madam Speaker, I was proud to stand with Ed Brooke in the 70's and I am very proud that he is standing with those of us who are fighting for fairness today.

Mr. FRANK of Massachusetts

Mr. FRANK of Massachusetts. Madam Speaker, I move that the House do now adjourn.

Mr. FRANK of Massachusetts

Mr. FRANK of Massachusetts. The gentlewoman is right. What our friends on the other side have, for political reasons, is a severe case of TARP separation envy. It's going away. They haven't had their President tell us to do it. They are going to miss it, but we're not going to deal with that in this bill and kill the bill. I hope the recommittal is defeated.

Mr. FRANK of Massachusetts. I rise to oppose the motion.

Mr. FRANK of Massachusetts. Mr. Speaker, let's be very clear. This is just a preliminary chance to vote ``no.'' For reasons that I don't understand, my Republican colleagues are opposed to a program in which voluntarily the Federal Government makes funds available to community banks so that, if they want to participate, they can lend it to small businesses. Maybe it is the fear that it might succeed and diminish their issues that leads them to oppose it. They have been unable to oppose it outright on its merits, so here's what they want to do. They want to say it's really the TARP program, and in fact, the gentleman from Texas said that. He said, if you're going to create a second TARP program, put the TARP inspector in charge. That's true. If you're going to fly to the Moon, pack a big lunch. If shmif. The fact is that we don't create a TARP program. This is classic bootstrapping. It's not a TARP program. It's very different than the TARP program in a number of ways. The community banks want to participate in it. They don't want to participate in another TARP program. So, to kill it, they are inaccurately characterizing it TARP and then talking about another Inspector General from SIGTARP. This is not the problem of what the Secretary's being asked to say. It is to try desperately to get a little TARP rubbed off on it so they can defeat, by that way, something they can't defeat on the merits. Let me now yield to the gentleman from Kansas (Mr. Moore) who is the chair of the oversight subcommittee of our committee and a man with a great reputation for integrity in enforcing taxpayer rights.

Mr. FRANK of Massachusetts. I reclaim my time to say, the gentleman from Texas began with a great, surprising revelation. A bureaucrat, the Inspector General of TARP, wants to expand his authority. I'm surprised that there were not gasps of wonderment in the House. We have an Inspector General here. They can do it, and the SIGTARP Inspector General, because that program is about to go out of existence, decided to expand his authority. However, it goes beyond in one sense. It says that the Secretary must certify that he is acting solely on the basis of economic fundamentals and not because of any political consideration. So here's the offer I make, with the support of the majority leader. Within a few days, we will bring a suspension to the floor that will require the Secretary to so certify under oath--we'll go you one better in this effort--and the Secretary will be required to certify under oath to the Inspector General of the Treasury, and if Members want, we can have them certify under oath to the Government Accountability Office, and if there are other people you want them to certify to, we'll be glad to do that. But the sole purpose of invoking the Inspector General of TARP here, with his collaboration, so he will continue to have a job, is to discredit the program. If you want this program to go forward, you vote against this. We will come forward with further reinforcement of the oath taking--we'll even make it oath taking, but please, if you want to vote ``no,'' vote ``no'' I would say to the Members, Mr. Speaker, but don't fall for this name game. This is an effort to call it TARP. It's your TARP; no, it's not. It's the Peewee Herman school of legislating; let's call each other names without dealing with the substance. Let's not, when we're dealing with a serious issue of trying to get money to community banks to help our smaller businesses, fall for that nonsense.

Mr. FRANK of Massachusetts. I yield to the gentlewoman.

Mr. FRANK of Massachusetts

Mr. FRANK of Massachusetts. Madam Speaker, the Mayor's Professional Mariners Award is sponsored by the City of New Bedford, Professional Mariner Magazine and Commercial Marine Expo. This award honors an individual or organization who has made a significant contribution to the marine industry. This year's award recipients are Harriet Didriksen, Martin S. Manley and Howard W. Nickerson. Mayor's Professional Mariners Awards Harriet Didriksen Harriet Didriksen is constantly fighting for fishing families, the fishing way of life, and the American dream. She steadfastly attends New England Fisheries Management Council meetings from Connecticut to Maine, and never misses a gathering where she can help fishermen oppose government bureaucrats' undue interference. She is a regular at hearings in Washington--which she attends at her own expense--and is a tireless advocate. Harriet owns the F/V Settler. She owned the F/V Bagatell, which is now an educational vessel at Stony Brook University. She is owner and operator of New Bedford Ship Supply, one of the oldest ship chandleries on the East Coast. Mrs. Didriksen's father dragged in the winter and scalloped in the summer. He emigrated from Norway to Brooklyn and moved to New Bedford to be closer to George's Bank. Her uncles were also fishermen. Her brother is a shore-side business and vessel owner. She is the mother of two. New England fishermen are fortunate to have her on their side. Martin S. Manley The late Capt. Martin ``Marty'' Manley was a commercial fisherman for 38 years, and at the age of just 19, was one of the youngest skippers out of the Port of New Bedford. Captain Manley was a tireless advocate for the commercial scallop fishing industry. He was recognized as an industry leader and received numerous awards and accolades, including Helmsman of the Year from the Port of Gloucester. He was a member and former President of the Offshore Mariners Association. During his career, he owned and operated several scallopers along the eastern seaboard, the last being the F/V Mary Anne, which he designed, built, and operated with great pride. He served as the director of the City of New Bedford Harbor Development Commission, and later served as manager of the Popes Island Marina until his retirement in 2007. The building of that marina was one of his life's accomplishments. He served as a member of the New Bedford Redevelopment Authority and the Economic Development Commission. Howard W. Nickerson The late Howard Nickerson watched over the New Bedford waterfront for 65 years. He began his career as a young man, tub trawling in a sailing vessel, moving to commercial fishing on George's Bank as vessel engineer. Through the decades, Mr. Nickerson participated in the industry from every angle, as a fisherman, representing fishermen, seafood dealers, seafood workers, boat owners and directing state and municipal agencies, always fighting for fairer regulations. He served as head of the Harbor Development Commission, the State Pier, the Seafood Dealers Association, the Seafood Workers Health-Pension Fund, the New England Fisheries Steering Committee and the Offshore Mariners Association. A strong advocate of seafood marketing, Mr. Nickerson was involved in organizing the New Bedford Seafood Council and the New Bedford Scallop Festival in the 1950s and '60s, which helped build the market demand that allowed the scallop to become the port's cash leader.

Mr. FRANK of Massachusetts

Mr. FRANK of Massachusetts. Mr. Speaker, I have the right to close. I reserve the balance of my time.

Mr. FRANK of Massachusetts. I yield 2 minutes to the gentleman from California (Mr. Sherman).

Mr. FRANK of Massachusetts. I yield myself 3 minutes. Mr. Chairman, there were several aspects of the debate over housing during the period that led up to the crisis. Part of it was over Fannie Mae and Freddie Mac, but an even bigger part--because it involved Fannie Mae and Freddie Mac--was over sub-prime loans being made largely, although not entirely, on the unregulated banking system, and there were those who defended that. There were those who opposed efforts to rein it in. In fact, with regard to Fannie Mae and Freddie Mac, I changed my own position with regard to them when in 2004 the administration, without congressional input, ordered Fannie Mae and Freddie Mac to buy more loans from people below the median income. We tried, many of us, during the period of 2004, 2005, and 2006 to get legislation adopted to ban sub-prime loans being granted imprudently. We had, the Congress, given the Federal Reserve the authority to do that in 1994, but Mr. Greenspan refused to do that. He since has apologized for that error. So the question was not whether or not there was a general lack of discipline but whether there was a particular lack of discipline in containing sub-prime mortgages. The relevance of that is that the FHA doesn't do that. In fact, at a time of general ideological opposition of regulation of the mortgage market outside the banking system, there was very little regulation of sub-prime mortgages being granted to people who couldn't afford them, who made no down payment, who didn't have to document their income. Because of all that, we ran into these problems, and the FHA's percentage went down. That's a major reason why the FHA went down. The FHA has never been guilty of that laxity of practice. So, part of the reason for the increase in the FHA share is that we have been able finally to cut back on the sub-prime mortgages being granted imprudently, and the FHA has much stricter standards. Yet, I want to stress--and this is a major cause of the Fannie and Freddie problem is that they were pushed into buying sub- prime mortgages that never should have been given in the first place. That's not the FHA. It's also the case that the FHA has stepped up in recent years, probably at congressional urging. The down payment has gone up. The up- front fee has gone up. The FHA has power now to go up to a 10 percent and has done this, a 10 percent down payment for people with a weak credit score. That's already part of the FHA's proposal. The gentlewoman from Illinois' amendment just adopted makes it clear they can do even more, but to go beyond that, to the degree the gentleman from New Jersey wants to do, would undercut the ability of people who are capable of paying their mortgages from getting mortgage loans. That's why we have an unusual coalition opposing this amendment. It actually included a majority of the Republicans on the Committee on Financial Services who voted against this amendment, but it includes people on all sides of the housing market.

Mr. FRANK of Massachusetts. Mr. Chairman, I yield myself the balance of my time. First, I do note a certain irony. I am glad to see my colleagues, the gentleman from New Jersey, the gentleman from Georgia, praise the gentlewoman from West Virginia for a bill which they apparently found severely lacking. I do note the gentlewoman from West Virginia voted against the prior amendment from the gentleman from New Jersey. I don't know where she is on this one, but it wasn't in the bill that I think she introduced, and for very good reason: A 10 percent cap is wholly arbitrary. Now, the gentleman says it's going to crowd out the private market, but the leading participants in the private housing market oppose this amendment, including the Mortgage Bankers, as well as Realtors and Home Builders, as well as all consumer groups. Beyond that, the reason the FHA went down so far from 2001 to 2007-- interesting group of years; guess what was happening during that time?--was that there was a resistance to regulation of the subprime market. The Federal Reserve was ignoring legislation Congress gave it in 1994 to regulate subprime lending. The Bush administration, in 2004, ordered Fannie Mae and Freddie Mac to increase the subprime loans they bought, which is one reason why I changed my position on the need to be tougher in the regulatory field. And the FHA lost out because these imprudent mortgages were being given without regulation. The FHA doesn't do the kind of mortgages that led to problems. Beyond that, in recent years, towards the end of the Bush administration and with even greater force during the Obama administration, the FHA has been improving. The FHA has on its own said, if you've got a 580 credit score or below, it's a 10 percent downpayment. We mandated that they go from 3 to 3.5 percent downpayment and increase the upfront fees. In this bill--and the gentlewoman from West Virginia deserves a great deal of credit, along with our colleague, the gentlewoman from California--the FHA is given credit to require lenders who get loans placed with the FHA in violation of the guidelines to take back those loans. So it wouldn't be the taxpayer that would be on the hook for those loans that shouldn't have been granted and that violated the good guidelines of the FHA; it will be the lender. It also gives them the power to debar people who have a bad record, which is something they haven't had before. So we are not talking about the old FHA; we are talking about an improved one. And we are talking about an FHA that stands in great contrast to the unregulated subprime market. Finally, the gentleman says, ``Well, it doesn't take effect until 2012.'' Neither he nor I knows what the housing market will look like in 2012. And if there's a reason not to do it now, that might also be there in 2012. No one can predict whether the housing--and maybe in 2015 it will be back again into trouble. The housing market we don't believe is going to crash like it did before, but the basic point is this: The FHA has been the alternative to the kind of unregulated, irresponsible subprime mortgages that many of my friends on the other side protected, the kind of mortgages which they prevented us from regulating until 2007 when we were able to pass a bill in the House, over the objection of many of those who have spoken already, to regulate subprime mortgages. And because we did that, the Federal Reserve finally used its authority. I hope the amendment is defeated.

Mr. FRANK of Massachusetts. First, Mr. Chairman, let me be clear, the FHA has gone beyond the gentleman from New Jersey with regard to borrowers who are risky. For borrowers with a 580 or below credit score, the FHA has already used the authority we have given them to raise the downpayment to 10 percent, so we are talking about people above the 580 credit score. Secondly, there was a total misreading of history with Fannie Mae and Freddie Mac. Yes, some of us thought earlier there wasn't a problem. After it was in order by the Bush administration in 2004 for them to get to more than 50 percent of purchases or mortgages for people below the median income, many of us changed our position and pushed for reform of Fannie Mae and Freddie Mac. Unfortunately, that didn't happen, because of a dispute between the Republican House and the Republican Senate, until 2007, when this House took the lead and finally got it done in 2008. But the problem was that throughout that, we had ideological opposition from the deregulators against restricting subprime loans of the sort that led to trouble, and the FHA doesn't do that. Mr. Speaker, I would submit for the Record letters from the Mortgage Bankers Association, National Association of Home Builders, National Association of REALTORS, Centers for Responsible Lending, the National Association of Consumer Advocates, the National Council of La Raza, Consumer Federation of America who point out not that we don't need restriction but that the FHA already has them. Again, to confuse this with the situation in which ideological opposition to sensible regulation allowed subprime loans to predominate outside the FHA is a confusion of the reality. June 9, 2010. Hon. Barney Frank, Chair, House Committee on Financial Services, Rayburn House Office Building, Washington, DC. Dear Congressman Frank: The Federal Housing Administration's mortgage insurance program has never been more important to our housing markets than it is today. During this period of prolonged stress in our markets, Congress should avoid making any program changes that would further harm consumers and stall our economic recovery. The organizations listed below strongly oppose amendments to H.R. 5072, the FHA Reform Act, which would increase FHA's downpayment requirement, decrease FHA's loan limits, or otherwise limit FHA's ability to insure loans. Raising FHA's downpayment requirement will do little to strengthen FHA's capital reserve ratio. Rather, it will put homeownership out of reach for many families and for others could deplete their cash reserves for home and other emergencies. Increasing FHA's downpayment could disenfranchise more than 300,000 responsible homeowners. We strongly oppose this amendment offered by Rep. Garrett (R-

Mr. FRANK of Massachusetts. Mr. Chairman, may I inquire how much time remains?

Mr. FRANK of Massachusetts. I don't know yet.

Mr. FRANK of Massachusetts. Well, I was disappointed that my colleague on the Financial Services Committee wouldn't observe the tradition that we have of yielding to each other. If he had, I could have saved the Members a lot of time because I am going to urge people to vote for it. I will say that it might need a word or two of improvement. If it had, in fact, been offered at the Financial Services Committee, either provision, we could have accepted it then, but then Members wouldn't have had a chance to make dramatic speeches on the floor, so I suppose that explains why we had to go through this. I urge adoption of the amendment of the recommittal motion, and I yield back the balance of my time.

Mr. FRANK of Massachusetts. I rise to speak on the motion.