Barney Frank

Mr. FRANK of Massachusetts

Mr. FRANK of Massachusetts. Reclaiming my time, no, that's not what the gentleman is saying. The gentleman is completely contradicting himself. He says it's a grant program. First, he was contradicting the other gentleman from Texas. Now he's contradicting himself. He said it's a grant program. Well, if it's a grant program, why did the gentleman say it was getting people further in debt? The gentleman has been caught in a totally contradictory argument. He did not say it was a grant program. He said it was getting people further in debt.

Mr. FRANK of Massachusetts. I yield to the gentleman from Texas.

Mr. FRANK of Massachusetts. I reserve the balance of my time.

Mr. FRANK of Massachusetts. How much time remains, Madam Chair?

Mr. FRANK of Massachusetts. May I inquire, do we have general leave?

Mr. FRANK of Massachusetts. I yield myself the balance of my time. First of all, the last statement is, of course, totally contradictory from the gentleman from Texas. But when you just want to bash things, you will say anything. You cannot simultaneously say this program is too generous because of its forgiveness and is a predatory loan. The fact is it has very generous forgiveness provisions, which is why it is scored at 84 percent, not 98 percent. So that argument the gentleman just made is, of course, entirely self-contradictory because it can't be both. Secondly, as to agriculture, I did vote for an amendment that would change it, but the gentleman, the spectacle of my Republican colleagues hiding behind Obama is bizarre. You could have done what we have offered, which was to cut the $150 million from going to Brazil and then cut it out of America. But it's not the only item I mentioned. I mentioned the $1.2 billion the gentleman wanted to send to Iraqi security forces, the 400 million to build infrastructure in Kandahar and Kabul, the $250,000 limit the Republicans rejected on individual entities. So, no, there are billions in agriculture and the military. I didn't just mention one item. The gentlemen do understand that they are vulnerable, so they blame Obama. They and Obama are both wrong about sending money to Brazil. But the most important point is this, and I hope in his final time the gentleman from Alabama will address it. In the first place, on two of these programs--the HAMP Program, which we will deal with next week on the floor, and the FHA refi--the money doesn't come from the Treasury. They keep saying it, but they are wrong, and ignoring a fact doesn't make it go away. Those are funds that come from TARP. In the financial reform bill, we reinforced an earlier provision. It says, the FDIC ``is authorized to conduct risk-based assessments on financial companies'' to pay for this, the money that's left in the TARP. We have a mandate to the FDIC so that when the TARP is finished, large financial companies will have to pay this, not the Treasury. So I know that troubles people on the other side. They are solicitous of these large financial companies. But when they talk about it adding to the deficit, they are wrong. It is statutorily required that this will come, over their objection, from the large financial institutions. As to the other two programs, including the one today, we had similar language in our bill to do that. It was rejected by the Republicans because we needed to get 60 votes in the Senate. So, yes, for now, that 840 million will come out of the taxpayer. If we had our way and the Republicans had not been successful in frustrating us, it would have also come from Goldman Sachs and from Morgan Stanley and the other large institutions, and I will give them another chance. So the fact is that the bulk of this money does not come from the Treasury. It is mandated that it will be repaid back to the TARP, and I hope the gentleman from Alabama will address that in his final remarks. Is he for repealing that? Does he believe we should not as we have said we would twice legislatively, including on one bill he voted for, assess the large financial institutions and hedge funds? Does he want to take it off? But of course if he doesn't, it doesn't come from the Treasury. It doesn't add to the deficit. It may reduce the bonuses at some of the large financial firms, it may reduce the dividends at some of the large financial firms, but that's not adding to the deficit in a way that we care about. And as to the other money, the money for the Neighborhood Stabilization Program and for this program, if they will come back with us and join, that also will come from the large financial institutions. So let's drop the phony arguments about the deficit. If you want to protect the large financial institutions, be honest about saying so.

Mr. FRANK of Massachusetts. It will work out as a grant. Again, I am struck by the gentleman from Texas. He is the one who said it was an excessive loan program and a grant program. He has made two entirely inconsistent statements in a very short period of time. Even for a politician, that's a record for self-contradiction. The point is that it is both a grant and a loan. It will be primarily a grant.

Mr. FRANK of Massachusetts. I yield myself such time as I may consume. I hope Members will be careful walking on the floor right now, especially on the Republican side of the aisle, because I wouldn't want anyone to fall into the enormous gap that has just been created between the gentleman's comments and his voting record. Mr. Chairman, we heard a great argument about the need to cut the budget deficit and stop spending. During the recent debate on the budget, an amendment was offered to limit entitlement spending to farmers to $250,000 per entity. The amendment said no agricultural entity, no individual, could get more than $250,000 per year. It was defeated by the Republican Party. The majority of Democrats voted for it. It will cost $1 billion over 10 years--at least. We had the Brazilian cotton farmers, but my friends on the other side hate for me to mention that because unpleasant reality is always bothersome. You know, over a 4-year period, we're going to spend more money subsidizing American and Brazilian cotton farmers than we are on this program. The gentleman from Alabama said yesterday that it was Obama who made him do it. Rather implausibly, he argued that he was compelled to follow this recommendation of the Obama administration to send $150 million a year to Brazilian cotton farmers for 4 years because the President told him to do it. Well, that's a very selective invocation of the President, I must say--no more persuasive than Flip Wilson having invoked the devil as having made him do it, and of course there are sometimes analogies in the way in which they refer to the President. One hundred fifty million dollars. Now, the argument, by the way, was that we have to send $150 million to Brazilian cotton farmers. The gentleman voted for it because otherwise we would be in trouble with the World Trade Organization. But we could have saved that $150 million to the Brazilians by not sending $150 million to the American cotton farmers. By the way, that would include American cotton farmers who could get more than $250,000 a year. So we're not debating whether or not we should reduce the deficit. It is how. Do you exempt agriculture, as many of my friends do, because they represent agricultural districts? As for conservatism and the free market, it has got no application to the growth of cotton or grain or of many of these other programs that receive so much money. Beyond that, we have the military. Now, we're talking here about trying to stop a serious economic problem in American cities. Well, we can't afford that, but $400 million was voted to be spent on infrastructure in Afghanistan. I do not think that that $400 million will be very well spent. I understand there are some national security needs, but I think that that war has gone on too long. And the notion of sending $400 million to build up the cities in Afghanistan and to deny helping America makes no sense. We are also being told that we can send $1.2 billion for Iraqi security forces over and above what we spend on the American military. We are sending $1.2 billion. I voted against that. Members on the other side voted for it. The whole war in Iraq has been an enormous waste, in my judgment, of American money at the cost of American lives. Brave, young Americans went to war when they were asked to by their country, but it was a mistake for them to be sent there. The war in Iraq has so dwarfed any domestic expenditures in this area that I do not understand how Members can, on the one hand, talk seriously about cutting the deficit and then have voted for more and more and hundreds and hundreds and hundreds of billions of dollars for that war in Iraq. Now we have another point that should be made. It is true this $1 billion that we are asking for--and by the way, according to the CBO, it will cost $840 million, not 98 percent in total expenditure, but 84 percent. It's still a high number, but $140 million is still $140 million. So this will cost $840 million, according to the CBO, if it is fully run. It is going to come out of the Treasury right now, but let's be clear: The reason it will come out of the Treasury as we try to deal with this--by the way, here is what the program is: It says to Americans who took out mortgages and became unemployed that we will help them pay their mortgages because you can't afford mortgage payments out of unemployment compensation. That's the lavishness of this program. We're taking people who are in trouble and facing losing their homes and having more foreclosures, which have negative effects not just on the individual foreclosed, but on the neighborhood, on the city, on the whole economy. So this has a macroeconomic impact, but we are going to come to their assistance. In the financial reform bill passed last summer, we, in the conference committee, voted to take this money from an assessment on the largest financial institutions. We voted that financial institutions with $50 billion or more in assets and hedge funds with $10 billion or more in assets would have to pay for this. And our logic was that it was the activity of these institutions that caused the crisis that led to the unemployment and led to the foreclosures. Many of them profited from it. And we then had the TARP--and this is money that we voted in the TARP in another set of programs--and we said, you benefited from intervention. We didn't do it because we loved you. We did it because we had to save the economy from going upside down. I know Members like to rail about bailouts, but let's be very clear: every activity in the United States--known as a bailout recently--was at the initiative of the George Bush administration or Mr. Paulsen and Mr. Bernanke. And they were bipartisanly supported, and I agree that we had to do them. We had to do them because of failures in past regulatory policy. But the fact is that in the bill we passed last summer, this money wouldn't have come from the Treasury. It wouldn't have added to the deficit. It would have been recouped from an assessment on large financial institutions. The Republican Party blocked it--not here, they didn't have the votes here, as we don't often have the votes today, but in the Senate. So I will make this announcement: I plan to reintroduce next week the provision of the financial reform bill that would have taken the money for this program and other programs to alleviate the impact of foreclosure--the Neighborhood Stabilization Program that helps get foreclosed property back into productive use, aid to the homeowners who are unemployed--and pay for it, as we tried to do last July but Republican opposition stopped us, not from the taxpayer, but from the large institutions. And I don't mean to demonize, but I think Goldman Sachs and Wells Fargo and the Bank of America and Citicorp and Morgan Stanley and the large hedge funds, I think they can pay for this. That's what we would have done. So I agree, this should not come from the taxpayer. By the way, with regard to the bill we debated yesterday--and I regret not pointing this out, but, you know, you can only correct so much error in a limited amount of time. I talk fast, but error outpaces me when we get into these debates. We were talking yesterday about money that was going to be spent in another program, the FHA refi. And people talked about $8 billion. Yes, $8 billion--it won't cost $8 billion--but $8 billion that was set aside, if necessary, from the TARP. And people said that TARP money was promised to go back to the taxpayers. It was, and here's how--Members may have forgotten this, having voted for it; but in the TARP legislation we added a provision that said in 2013, when the TARP is concluded, the President at that time is mandated to send to the Congress a bill that would recoup the funds that had not been returned to the Treasury from those large financial institutions. And we reiterated that in the financial reform bill over the Republicans' objections. So the point is this: the TARP money that will be spent--if it is on the refinancing--and the TARP money that will be spent on the HAMP program will not come out of the Treasury. It will be reimbursed to the Treasury--if my colleagues on the other side go along with what we voted for--from the large financial institutions. So let's be very clear, whether we are talking about the programs in the financial reform bill or the programs in the TARP, they are a package of programs to deal with the consequences of foreclosure. I must say, I saw a draft of my Republican colleagues' budget views, and they said--astonishingly--that spending TARP money to deal with foreclosures was inappropriate because those were unrelated to the financial crisis. Foreclosures unrelated to the financial crisis? That is an illogic that I am surprised at. Ideology drives you to certain ridiculous conclusions, but that one goes further into that than I would have thought. So let's again be very clear. Our proposals are that the large financial institutions--assets of $50 billion or more, hedge funds of $10 billion or more, most of which would direct beneficiaries of our activity in dealing with the financial crisis that many of them helped cause--that's how we will fund these programs. So with regard to the HAMP, with regard to the FHA refinance, no, that will not come out of the Treasury. That will be reimbursed ultimately, yes. The TARP money goes back and the law calls for that to be assessed. And so, yes, I understand my Republican colleagues, they don't want Goldman Sachs or Citicorp or any of the large financial institutions or any of the large hedge funds to have to pay the cost. But that's what the debate is, not the Treasury and the average taxpayer versus alleviation of foreclosure, the large financial institutions. And, yes, they did succeed, temporarily, I hope, in changing that. They knocked out of our bill a requirement that the large financial institutions would help us mitigate foreclosures and help us have cities buy up property that is rotting and causing trouble; and, unfortunately, temporarily, that's not the case. But I will file the bill next week. And given their concern for the taxpayer and the deficit, they will have a choice: do you add the cost of these programs to the deficit, because they're not going to become law, these repealers. The President is going to veto them. The Senate won't pass them even for him to do that. Are you then going to say that it will come out of the deficit, or will you join us in taking it from Goldman Sachs and Morgan Stanley and the Bank of America and those unreasonable institutions that do a lot of good work, but they can afford this $1 billion. Their bonuses alone would pay for these programs. So let's be clear what the choice is. First of all, we have people who are prepared to send money to Brazilian cotton farmers so they can send money to American cotton farmers. They will not limit entitlements to agricultural individuals to $250,000 a year. They'll send billions to Afghanistan and Iraq that will be wasted, not for our defense, but to build up their infrastructure and their security. And then, when it does come to the relatively small amount that we will be spending on some of these programs, like $840 million here--and that's small compared to what they spend elsewhere, for instance, in their wars-- they would rather have it come out of the taxpayer. They would rather not spend it at all; but if they have a second choice, it comes out of the taxpayer and not out of the large financial institutions. So let's frame the debate appropriately. The large financial institutions, because of inappropriate regulation and improper regulation during the Bush years--fairly, the Clinton years as well, but mostly the Bush years--provoked a financial crisis. We began to deal with it in 2008 in the last months of the Bush administration in a bipartisan way. We did it. We provided some funding in the first instance to those very financial institutions, not out of love for them, but because we thought that was needed to stabilize. The requirement is that any money spent under the TARP will ultimately be recouped by an assessment on the large financial institutions. Apparently, the Republicans want to forget that one. They want to act as if it's the Treasury, apparently because they can't bear the thought of telling the large financial institutions, who were a large part of the cause of the financial crisis and benefited from our efforts to correct it, that they should have to pay. And we do know that when we said this program and programs to give money to municipalities--which they very much want--to buy up property that would otherwise fester because there would be nobody to make them take care of it, that they prefer that to be paid for by the taxpayer than by the large financial institutions. We'll give them a chance to correct that mistake. So I hope this bill is defeated. And next week we will have legislation that I hope our committee will be having hearings on and act on which will reinstate the provision that says all of the four programs we're dealing with this week and next week will be dealt with in one of two ways: it will be financed by the TARP, and that money will be recovered when the program is over by an assessment on the large financial institutions; and the smaller amounts that will go to this program, that money will also be recouped from the large financial institutions. And those institutions which received hundreds of billions--they have repaid it and it has been useful--but they were great beneficiaries of it. They caused some of the problem in general. They will be the ones that will bear the cost. So that's the choice. We have a choice of doing nothing to alleviate the impact of foreclosures on the overall economy, on municipalities, and on families, or of doing something and recouping that money from the large financial institutions. I hope that we will, in the end, decide that we were right to say that the large financial institutions can appropriately be asked to bear part of that burden. I reserve the balance of my time.

Mr. FRANK of Massachusetts. I yield 4 minutes to the gentleman from North Carolina (Mr. Watt).

Mr. FRANK of Massachusetts. I yield the gentleman 1 additional minute.

Mr. FRANK of Massachusetts. I reserve the balance of my time.

Mr. FRANK of Massachusetts. I yield myself 15 seconds to note that I am not surprised at that, because there are people on the other side who think it's unfair to pay the unemployed anything, like unemployment compensation. So, no, I don't think it's unfair to say to people who are unemployed in this economy that they will get some economic help. And that's what this is about. I yield 3\3/4\ minutes to the gentlewoman from New York (Mrs. Maloney).

Mr. FRANK of Massachusetts. I yield 3 minutes to the gentleman from Texas (Mr. Al Green).

Mr. FRANK of Massachusetts. Will the gentleman yield?

Mr. FRANK of Massachusetts. There were two ways we could have dealt with it, yes. The gentleman and the Obama administration on one side. I disagree with the President. We could have avoided that by reducing American cotton subsidies to the same amount as we did with Brazil. So we could have either saved 300 million or not.

Mr. FRANK of Massachusetts. First, let me address the wholly contradictory argument of the gentleman from Texas (Mr. Neugebauer). We have heard on the other side, through the eagerness to just say negative things, two entirely contradictory things: one, that this is too lavish a subsidy to the homeowner and, two, that it will further indebt the homeowner. Members do understand that they cannot possibly both be true. In fact, there is a significant element of subsidy here, and those who take this money and who pay off their mortgages will get a subsidy so they will not be further in debt. The argument just made by the gentleman from Texas (Mr. Neugebauer) is wholly without basis. The argument that it is a more generous subsidy is a more accurate one. By the way, even if they were to pay it back, avoiding late fees and interest helps them out.

Mr. FRANK of Massachusetts. Will the gentleman yield?

Mr. FRANK of Massachusetts. Would the gentleman tell us from what party the Governors of Pennsylvania have come during this period?

Mr. FRANK of Massachusetts. I yield to the gentleman from Texas.

Mr. FRANK of Massachusetts. I move to strike the last word.

Barney Frank

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