Barney Frank

Mr. FRANK of Massachusetts

Mr. FRANK of Massachusetts. Mr. Chairman, I yield myself 10 seconds. The gentleman from Georgia asked about what other contracts. This is precisely the bill to make this like other contracts. Everything else can be declared void in bankruptcy. So the gentleman has it absolutely backwards. This doesn't create an exception to general contract law. It amends one and makes this on the same footing as, quoting the gentleman, all other contracts.

Mr. FRANK of Massachusetts. I will yield myself such time as I may consume because the gentleman from California wants to talk about the history and who pressured people into doing this. Yes, it's true, there is a governmental role here: it is a refusal to regulate subprime loans. In 1994--and party is relevant--the last time before the previous Congress that the Democrats were in the majority, this Congress passed a law directing the Federal Reserve to regulate home loans in the subprime category that were issued by everybody. Bank loans were regulated, nonbanks were not. Alan Greenspan, the Chairman of the Federal Reserve, refused to use the authority and acknowledged in testimony before the Committee on Government Reform late last year that he had refused to use it and that he was mistaken. So, part of the problem was, yes, there was a lowering of standards because the Federal Reserve refused to impose them. And then, let me quote Mark Zandi, who had been an adviser to John McCain, is now an economist of great repute--he was then, too, obviously--who notes in his book on this crisis that in 2004, the Bush administration decided, as part of its strategy of expanding homeownership, to push for an increase here, including, in 2004, the Bush administration ordered Fannie Mae and Freddie Mac to increase the number of loans they gave to people below the median income. And I will put into the Record my quotation at the time from an article put out by Bloomberg in which I objected to that. Secretary Jackson made them increase by 10 percent the number of loans they had to give to people below the median. And I said I thought that would be bad for Fannie and Freddie and bad for the borrowers because helping people borrow money they can't repay does them no good. And there was then an effort to try to get legislation passed to do what the Federal Reserve refused to do under Mr. Greenspan, regulate subprime loans. But the Republican leadership of the House at the time said we don't want to do this. There was also concern about Fannie Mae and Freddie Mac. And in 2005, I, as the ranking minority member of the Committee on Financial Services, joined the chairman, a former colleague, Mr. Oxley, in supporting a bill out of our committee to tighten the regulation of Fannie Mae and Freddie Mac. I later was opposed to what was done in the Rules Committee to weaken a housing provision, but I wanted the bill to go forward. And, in fact, that bill went to the Senate with a large majority. I opposed it on the housing ground, but I was for the regulatory part. The Bush administration rejected it. Then Secretary of the Treasury Snow said he thought the President was wrong. Mr. Oxley said he was very disappointed that the administration wouldn't go forward. In any case, the Republican-controlled Senate refused to take the bill up. So from 1995 until 2006, under Republican control of the Congress, no bill was passed to regulate Fannie Mae and Freddie Mac better, and nothing was done to restrain inappropriate subprime mortgages. In 2007, the Democrats returned to the majority. Within 4 months, the Committee on Financial Services had reported on exactly the bill that the Bush administration wanted under Secretary Paulson to tight the regulation of Fannie Mae and Freddie Mac. There was an organization called FM Watch that existed to try to tighten regulation of Fannie Mae and Freddie Mac, and they have been quoted as saying, after the House acted, ``Well, we finally got what we wanted.'' That was in 2007. So, yes, I regret the fact that in 2005 there was an intra-Republican split between Mr. Oxley and the President, with the Secretary of Treasury on Mr. Oxley's side and Senator Shelby on the President's side, and we got no bill. We got it through the House in 2007. It was then delayed in the Senate, unfortunately. In 2008, I asked the Secretary of the Treasury to put it into the stimulus, the tough regulation of Fannie Mae and Freddie Mac. He couldn't do that at the time. We got it, but we got it too late. But we got it too late because 12 years of Republican rule went by and no bill became law. Then we had subprime. When we were unable to pass a subprime bill in 2005 because the Republican leadership said no, we, in 2007, brought out a subprime bill. It passed this House. It was a bill to restrict inappropriate subprime loans. It was attacked by the Wall Street Journal--I'll put the editorial in there--it said it was ``Sarbanes- Oxley for housing,'' that we would be depriving people of the chance to buy homes--yeah, people who shouldn't have had that chance. Once again, that was held up in the Senate. But to his credit, Chairman Bernanke, a Bush appointee, used precisely the authority that Alan Greenspan refused to use from 1994, from that statute, and imposed strict restrictions on bad subprime loans. I think we will go further. And I expect the Committee on Financial Services once again to bring out the bill to restrict inappropriate subprime loans. And I will look for that energy that I've heard from time to time expressed by some of my Republican colleagues about keeping people from being put into homes they shouldn't have. Because last time it was a more partisan fight than it should have been, although the ranking member, who has a very good history of being concerned about this, did join us in voting for the bill. The only other thing I would say is this--and I would agree that voluntary modification is a good thing. But with the servicer-investor conundrum and with second mortgages, even almost entirely voluntary agreements to modify cannot go forward without bankruptcy. Fannie, Freddie To Suffer Under New Rule, Frank Says (By James Tyson) June 17 (Bloomberg)--Fannie Mae and Freddie Mac would suffer financially under a Bush administration requirement that they channel more mortgage financing to people with low incomes, said the senior Democrat on a congressional panel that sets regulations for the companies. The new rule compels the companies to put 57 percent of their mortgage financing by 2008 toward homes for people with incomes no greater than area median income. Fannie Mae and Freddie, the two largest U.S. mortgage finance companies, must currently meet a 50 percent threshold. The White House ``could do some harm if you don't refine the goals,'' said Representative Barney Frank, a member from Massachusetts on the House Financial Services Committee. Frank's comments echo concerns of executives at the government-chartered companies that the new goals will undermine profits and put new homeowners into dwellings they can't afford. ``At their outer edges they become counterproductive--there are not loans to make that will get repaid,'' Freddie Mac Chief Executive Richard Syron said Monday in an interview, referring to the new financing rule. Frank said the administration is aiming to reduce the role of the two companies in mortgage financing, and has seized on the higher goals ``as a useful stick by which to beat Fannie arid Freddie.'' HUD Defends Rule Alphonso Jackson, secretary of Housing and Urban Development, said the Bush administration has no hidden motives in seeking to raise the percentage of financing for low-income homeowners. ``There is no administration more supportive of Fannie and Freddie than we are,'' Jackson said today in interview. ``We are just actualizing what should have been done years ago.'' An agency within HUD, the Office of Federal Housing Enterprise Oversight, regulates Fannie Mae and Freddie Mac, which own or guarantee about half the $7.3 trillion U.S. mortgage market. The housing guidelines, subject to a public comment period that ends on July 2, would become law Jan. 1. Referring to both the White House plans and the coming presidential election, Frank said, ``nothing can stop them except a change in November.'' He spoke at a news conference sponsored by the presidential campaign of Senator John Kerry of Massachusetts. Frank and housing industry representatives such as Jerry Howard, chief executive of the National Association of Homebuilders, say the White House rules fail to focus financing on multifamily housing and other market segments. The regulations also don't address a decline in refinancing and other market changes, they said. ``We don't see how these goals in any way put Fannie Mae and Freddie Mac into specific types of affordable housing,'' Howard said. The association, which represents Centex Corp., Toll Brothers Inc. and about 215,000 other companies in the housing industry, plans to ask for a 60-day extension of the public comment period, Howard said. Referring to the housing goals and the two companies, Frank said, we want to push them further, but it doesn't make sense to push them in an undifferentiated way.'' Jackson said his critics should withhold judgment until after Jan. 1. ``I don't see how people can say something is not going to work when we have not had a chance to implement it.''

Mr. FRANK of Massachusetts. Mr. Chairman, this bill is a joint product of two committees: the Committee on the Judiciary and the Committee on Financial Services. I very much appreciate the fully cooperative relationship that the gentleman from Michigan and I and the members of the committee staffs have had. Working with him has been a pleasure as he has taken the lead in the more controversial parts of this bill. I say controversial not in denigration but in support. I think the bankruptcy provisions--which are the product of the Judiciary Committee, not the committee I chair--are essential. I was particularly struck--and I will enter into the Record letters from the National Council of Life Insurers specifically approving the bankruptcy provision, and from the National Association of Realtors also approving the bill. Obviously, there are people entitled to a variety of opinions, but I think it's relevant to note that two important groups, one involved in housing--the Realtors--and another very, very much involved in finance--the Life Insurance Council--support the bill including the bankruptcy provision. There is another reason why bankruptcy is relevant to some of the things in the jurisdiction of our committee. Even where there are people willing to modify mortgages, there are some legal tangles. We have this form of a servicer. A servicer is an entity which has been given control or authority over packages of mortgage securities. Even in cases where the servicer has been willing, in some cases, to do a modification, that entity is facing lawsuits from investors who say you can't do it. There are also second mortgages, that is, even in cases where there are a lot of willing parties to this on both the lender and the borrower's side, the fact that there is such a tangle of legal rights has been an obstacle. Bankruptcy is the only way to cut through that. And given the moderate way in which bankruptcy has been put into this bill, that adds to--let me put it this way, people are saying let's have voluntary modification. But some modifications that are supported by almost everybody cannot go forward because of this. Beyond that, this bill has some things that are widely supported. For instance, the increase in the insurance deposit limits is supported by the community banks and the National Federation of Independent Business and almost every other group. It does provide to the servicers to whom I just alluded a protection that was a bipartisan production of the gentleman from Delaware (Mr. Castle) and the gentleman from Pennsylvania (Mr. Kanjorski) to say that if you as the servicer modify a loan that you hold on behalf of an investor in ways that will minimize the loss to the investor, you could not be successfully sued because you will have carried out your obligation. It authorizes the payment of a fee of up to a thousand dollars to servicers for modifications because this is a job that many of them did not expect. It also improves the HOPE for Homeowners program which, when we passed it in July, had some hopes and they weren't realized; and I will acknowledge that we didn't do that well. We were at the time responding to pressures that said don't be too generous. As a result, particularly after the Senate got through with it, it became unworkable. The impetus for change came in part from the Bush administration. The FHA, under the Bush administration, Secretary Preston and Commissioner Montgomery, said you've made this unworkable. So we have amendments that would make it workable. And what we hope coming together is this: no one ought to be encouraged to go bankrupt or think bankruptcy is an easy path. We do prefer voluntary modifications. What we have is a package, along with the very good proposals enunciated last week by the President, worked on by Secretary Geithner and Secretary Donovan, who did an excellent job on it, we have a menu of ways using all the powers of the Federal Government, including authority, by the way, that we first gave the administration, the Bush administration, in the TARP bill, which they sadly refused to use. But this administration is using authorities that were given to the Bush administration through Fannie Mae and Freddie Mac, through the TARP, through other ways, through the FDIC and other bank regulators. This enhances the authority to do modifications. So the result--and this is why it's a package. We strengthen the community banks, in particular, with this increase in the deposit insurance; we provide a set of options other than bankruptcy to modify; and we remove legal obstacles, to the extent we can constitutionally do so, to such voluntary modifications. But we then believe that in some cases, you will still need to go to bankruptcy to deal with these tangles that I mentioned, and we also believe that the fact that there is a bankruptcy looming will be an encouragement to negotiations. On both the lender's and the borrower's side, we've heard complaints that they have tried to communicate with the other. Some people say, ``I wrote to my lender. He didn't answer.'' Some lenders say, ``I wrote to the borrower. She didn't respond.'' One of the things that the Judiciary Committee did very well--and I think they did an excellent drafting job on this bill--is to say that if you want to go bankrupt, you have to notify your lender and then there is a waiting period. So this will promote exactly the kind of communication between lenders and borrowers that we hoped would go forward. National Association of Realtors, Washington, DC, February 24, 2009. Dear Representative: When people lose homes to foreclosure, our communities, the housing market and our economy all suffer. The National Association of REALTORS' believes H.R. 1106, the ``Helping Families Save Their Homes Act,'' includes provisions to minimize foreclosures, stabilize home values and move the country closer to an economic recovery. The bill provides a safe harbor for mortgage servicers who conduct loan modifications in good faith. Currently few loan modifications are occurring because servicers face the threat of investor lawsuits. This provision will relieve servicers from liability, and allow more loans to be modified. The bill also reforms the Hope for Homeowners program, allowing more borrowers to refinance into safe, affordable mortgages. Despite being well-intentioned, the Hope for Homeowners program has enjoyed very limited success. The program's constraints have made it very difficult for lenders and servicers to participate. H.R. 1106 eases current restrictions and makes the program more useable, while still preserving the benefits to homeowners and limiting risks to the FHA fund and the American taxpayer. The bill strengthens oversight of FHA-approved lenders. FHA is experiencing unprecedented volume during this mortgage liquidity crisis. More and more lenders want to become involved with FHA. To ensure that predatory lenders are unable to participate, the bill provides a number of safeguards to protect the FHA fund and taxpayers from fraud and abuse. As progress continues on the bankruptcy provisions within this bill, NAR would support reasonable and equitable requirements for judicial review of loan terms for homeowners who are forced into bankruptcy because they are unable to qualify for or obtain foreclosure prevention assistance. The National Association of REALTORS' believes H.R. 1106 will help millions of homeowners who are at risk of losing their homes. It will also help neighborhoods avoid the ramifications of foreclosures and will help our economy on the road to recovery. We ask you to support this important bill. Sincerely, Charles McMillan, 2009 President.

Mr. FRANK of Massachusetts. I yield 1\1/2\ minutes to the gentleman from Oregon (Mr. Blumenauer).

Mr. FRANK of Massachusetts. Mr. Chairman, I yield the balance of my time to one of the leaders in the effort to preserve homeownership for deserving people in America and the fight against abuses, the gentlewoman from California (Ms. Waters).

Mr. FRANK of Massachusetts

Mr. FRANK of Massachusetts. Madam Speaker, while I very much enjoyed attending the Democratic Retreat and found it very valuable, it did have one downside for me: It meant that I had to miss the ceremony held at the Public Library in New Bedford on Saturday, February 7th, recognizing Lee V. Charlton for the great work he has performed on behalf of equality for all in Southeastern Massachusetts, and indeed for all that he has done in a wide variety of ways to improve the quality of life in the Greater New Bedford area. In recognition of his leadership role, including his longtime presidency of the New Bedford branch of the NAACP, his work in the YMCA, his efforts on behalf of United Front Housing, the leadership he has shown in our community action agency, People Acting in Community Endeavors, and many other areas, he was presented with the Martin Luther King Jr. Distinguished Service Award by Bridgewater State College at this year's Martin Luther King Breakfast. I very much regret the fact that the Inauguration of our new President also kept me from attending that event, because I would very much have liked to have been there to pay a very well-deserved tribute to Lee Charlton. As a Member of Congress representing New Bedford since 1993, I have benefitted enormously from Lee Charlton's commitment, wisdom and thoughtful approach to public policy. Madam Speaker, as a dedicated public servant, serving as plant engineer at New Bedford High School and the Greater New Bedford Regional Vocational Technical High School, and as a citizen activist, Lee Charlton has been a source of strength on whom others have relied. It is entirely fitting that he was given the Martin Luther King Award, and that the people of his home city of New Bedford honored him on February 7th. Lee Charlton is an example of the kind of citizenship we should be promoting and I ask that the information about Mr. Charlton and the award he won be printed here. The Martin Luther King Jr. Distinguished Service Award Mr. Lee V. Charlton Mr. Charlton has been president of the New Bedford branch of the National Association for the Advancement of Colored People (NAACP) since 1983, He has also held office on the regional level, representing 20 NAACP branches in Massachusetts, New Hampshire, Maine, Rhode Island and Vermont. His affiliations are numerous as he has served on boards of directors for the Greater New Bedford YMCA, the Salvation Army of New Bedford, United Front Housing, South Shore Minority Business Circle, People Acting in Community Endeavors, New Bedford Historical Society, South Center Community Development Corp. and New Bedford Economic Development Council, among many others. Prior to his retirement, he was plant engineer at both New Bedford High School and later at Greater New Bedford Regional Vocational Technical High School. Previously, he was employed with IBM and at the Job Corps Center of New Bedford. He served for eight years in the United States Air Force in civil engineering in the field of steam engineering, HVAC and plumbing. He has earned numerous professional and community awards in recognition and appreciation of his service and contributions, especially in the arena of social justice. A native of West Virginia, he is the husband of Francisca (Britto) Charlton. They have two children, Kenneth L. Charlton, and Karen L. Charlton, and a great-grandchild, Lee V. Charlton II. Mr. Charlton is a graduate of Huntington High School in Huntington, WVa, the Steam Engineering/Utilitiesman School of the United States Air Force and the United States Navy in Oxnard, CA; Customer Engineering School at IBM in Boston; and the Refrigeration/Air Conditioning Services Engineers in Boston.

Mr. FRANK of Massachusetts

Mr. FRANK of Massachusetts. Madam Speaker, I rise today to recognize the 75th anniversary of the United States Export-Import Bank, chartered by Congress in 1934 with the mission of financing U.S. exports in support of U.S. jobs. The Ex-Im Bank has been an important tool in our effort to preserve and expand American jobs in an era of international competition. In an ideal world, there wouldn't be an Ex-Im Bank. But given the fact that other countries aggressively provide public financing to make their exports more competitive, it would amount to unilateral disarmament not to have a strong and active U.S. Export- Import Bank. Ex-Im Bank has played an important role in trade finance as a lender of last resort, allowing exports to go forward for projects that would otherwise not get support from private lenders. In support of this mission in recent years, the Bank has launched efforts to support small business exporters, women and minority-owned exporters, and exports in support of development projects in Sub-Saharan Africa. In the midst of the credit and economic crisis we are now working so hard to resolve, it's particularly important that we have the Ex-Im Bank in place. With consumers in the U.S. pulling back, exports will need to play a leading role in economic recovery. Unfortunately, as in all other areas of private credit, trade financing coming from the private sector has fallen, and as a result, otherwise viable U.S. exports are not able to proceed due to the lack of credit. Ex-Im Bank can and should step in to address this financing gap, just as it did at the time of its Depression-era founding, during the Mexican debt crisis of the early 1980s, and during the Asian crisis of the 1990s. I look forward to working with the Bank to ensure that exporters are adequately financed during this current crisis. Ex-Im Bank has been able to serve its public mission during times of crisis and in support of underserved areas of trade finance while remaining a good steward of taxpayers' dollars. In its 75 years, the Bank has financed over $400 billion in U.S. exports with a loss rate of under 2 percent. This is a track record that should be noted and I am pleased to do so today.

Mr. FRANK of Massachusetts

Mr. FRANK of Massachusetts. Madam Speaker, pursuant to clause 2 of rule XI of the Rules of the House of Representatives, the Committee on Financial Services in open session on January 27, 2009, adopted the following rules by voice vote, a quorum being present:

Mr. FRANK of Massachusetts

Mr. FRANK of Massachusetts. Madam Speaker, on Sunday, January 18th, the Foxborough, Massachusetts High School Jazz Ensemble was given the great--and fully deserved--honor of playing at the Kennedy Center as part of the event that was entitled ``Swing Into Freedom.'' The ensemble accompanied Wynton Marsalis and I am very proud that high school students in the district I am privileged to represent were selected for this important part of the Inauguration festivities and performed in a manner that fully justified the invitation to them. Madam Speaker, I want to congratulate the members of the Foxborough High School Jazz Ensemble and also those planning this program who had the foresight to include this excellent group of young musicians in this important set of events in the nation's history.

Mr. FRANK of Massachusetts

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

Mr. FRANK of Massachusetts. I yield myself 15 seconds to say to the gentlewoman, just as she wouldn't yield to me, I will now yield to the gentlewoman from Illinois. The gentlewoman from Illinois is recognized for 2 minutes.

Mr. FRANK of Massachusetts. I am sure, to the approbation of Members, I am prepared to announce that I am our last speaker. So I will withhold, and when the other side is through, we can get out of here.

Mr. FRANK of Massachusetts. Mr. Speaker, how much time remains on each side?

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

Mr. FRANK of Massachusetts. How much time do I have remaining?

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

Mr. FRANK of Massachusetts. Mr. Speaker, I yield myself such time as I may consume. I will be discussing the substance of this later, but I want to explain what is a somewhat complicated legal and parliamentary situation. First, I do want to note that it is a refutation of the skeptics that this process is going forward. In September, we were asked by the Bush administration's top economic appointees to pass a bill giving them the authority to deploy $700 billion to repair the credit markets, without any hindrance. I agreed with them that action had to be taken, and, in fact, even if you did not think the action was necessary, when at a time of economic trouble the two chief economic advisers to the President of the United States tell us that if you don't do something there will be problems, there are going to be problems. I don't think they self-created this. I don't think it was a self-fulfilling prophecy. But it was a self-reinforcing one. So we felt we had to act. But we were able in the negotiations to get one major concession, namely, to say that we would vote the ultimate authority for $700 billion but that after the first $350 billion had been deployed, and I don't want to say ``spent'' because most of it has been lent or invested in ways that it will come back, but we said that at that point if the administration wanted to spend the second 350, and I just misspoke when I said ``spent''--deploy it--they would have to notify Congress. Fifteen days would then be a waiting period during which the money was not available and during which time Congress would get to vote on resolutions to cancel the program. And to reassure Members that they would have a chance for those votes, procedures were drafted by the appropriate Rules Committees in both branches so that neither the House Rules Committee nor the Senate-extended debate could have interfered with this. Now, we did have one drafting error because for this to work, it would have had to have been passed by both Houses and either signed by the President or have a veto overridden. The two Chambers that drafted this, the leadership, the rules groups, did a very good job of protecting Members to make sure the bills could come to the floor. That's why we're here. But they did them in isolation. So there's a certain futility to what we are doing today because the Senate has already defeated the Senate version of this; so no matter what happens in the House today, the program goes forward. People should understand President Bush, at the request of President Obama, asked for the second $350 billion a week ago Monday. That means, I believe, next Tuesday this will be available to the Obama administration because the Senate voted down the resolution of disapproval. The House will still vote, and there will be some indication of what Members think about going forward, but it will not have binding effect. And I think that was a drafting error. It should have been that if one House defeated it, it didn't come up in the other House. But here we are. There is one other distinction to be drawn. Yesterday, the House passed a bill by a fairly large vote that said that if the second $350 billion is deployed, it should be done with the following conditions: significant money for foreclosure relief; restrictions on the money being used for acquisitions by a receiving bank of another bank; a requirement that there would be an agreement in which banks would specify what they were going to do with the money before they got it; greater restrictions on compensation; a request that the administration do some things to come to the relief of cities, other entities, small businesses; a requirement that this funding be distributed in a way that was equitable to smaller banks. We voted on that yesterday. Now, my Republican colleagues in particular had a dilemma there. A number of the things that we had in the bill yesterday are popular and indeed many of them agree with. They, I think, were reluctant to have to vote on this because on the other side, you had some of the leading conservative journals of opinion, the Wall Street Journal editorialist, a major paper from the Heritage Foundation, denouncing the notion of helping reduce foreclosures, criticizing the effort to put in community banks. And so my Republican colleagues offered a recommittal motion yesterday which would have, if it had succeeded, in essence wiped out the conditions we are seeking to impose and made yesterday's vote simply on whether or not to repeal the 350. The problem with that is that they did it in a way that really meant to avoid taking a stand on these conditions. Now, the recommittal motion was defeated. And my conviction that the recommittal motion had, as one of its goals, avoiding a vote on whether or not to be for foreclosure relief and community banks is reinforcement of the fact that unusually in a bill that many of them had criticized, when the voice vote was called in favor, they did not ask for a roll call. We had a roll call yesterday because I asked for one because I wanted to have a large majority of Members on record so that when we talk to the Obama administration, we have a large majority of Members saying do foreclosure relief, lend to community banks, go to the aid of municipalities. The Republicans wanted to avoid that vote. They didn't want to take it because they didn't want to choose between foreclosure and the Wall Street Journal or foreclosure mitigation and the Heritage Foundation. That's why they offered the recommit. I say that for this reason. There were people who voted against the recommittal motion yesterday because they did not want to dilute the impact of our insistence that this be used for foreclosure relief, for aid for smaller banks and for other important purposes, and that there be a restriction on the ability of banks to take the money and then do whatever they wanted with it. That recommittal motion was defeated, so the House did go on record by a large majority in favor of those conditions, and that will be very important as we make the Obama administration understand that. Today is a separate vote. Today we have a vote in which Members will express their opinion on whether or not the $350 billion should go forward. It is simply an expression of opinion. It's kind of a big public opinion poll for the House, because the Senate has already defeated the bill. But they are two separate issues. The vote on yesterday's recommittal motion was, in my judgment, a rejection of an effort to keep the House from speaking out strongly on the question of foreclosure relief and smaller banks. We have now spoken, as the House of Representatives, by a significant majority and said to this administration, since this is going forward now that the Senate has voted against a disapproval motion, here is what we want. Today Members simply express their opinion on whether or not they want to disapprove it. I will close by saying for me, the argument that because the Bush administration misused this means that the Obama administration should not be given the chance to do it better, proves too much. If I believed that every instrumentality of government misused by the Bush administration should be denied to the Obama administration, we would have a lot of empty, vacant office space in Washington. We could rent out the Justice Department, the State Department, EPA, HUD and a number of other agencies, because I believe that they misused many of them. TARP has no independent will. It is a set of policy choices. George Bush used them, in my judgment unwisely, although I think we were better off having even that than nothing, but that has zero to do with whether or not the Obama administration ought to have the right to do it going forward. I reserve the balance of my time.

Mr. FRANK of Massachusetts. Mr. Speaker, I yield 3 minutes to the gentleman from Oregon (Mr. Blumenauer).

Mr. FRANK of Massachusetts. I yield myself the balance of my time. Mr. Speaker, first, I want to address this basic issue again about what the Senate is likely to do. Technically, there is no likelihood that this bill will be taken up in the Senate because it is the expedited procedure of resolution that has been killed in the Senate. The Senate could pass a bill rescinding the TARP. Having voted by 52- 42 not to pass the disapproval resolution, it seems unlikely that 42 will become 60 in the near term, but there is that possibility. But I would say this to the gentlewoman. When she said that both bills, the one we passed yesterday and this one, are as likely to be taken up, in some sense, that is true. But that makes our point. I didn't say don't do the bill yesterday. When I talked about this bill being already killed in the Senate, I wasn't saying don't do it. I welcome this debate. I was refuting the arguments from my Republican colleagues that yesterday was a waste of time. I agree that it is a good thing for us to give our views today and yesterday. I did notice in today's Washington Post that they note that the passage by a large majority in the House yesterday, we got a larger majority for this bill than the partisan breakdown. It was largely a partisan vote, but not entirely. And more Republicans supported the bill than Democrats opposed it, I think because of the power of the desire to help minimize foreclosure and get money to community banks. But my argument, she's now embracing. The fact that the Senate may or may not be able to pass a bill is no reason for us not to do something. Now I want to address an important aspect of this, and I am talking now to people in the Obama administration, to the people in the Bush administration, to the people in the financial community. We have in this country, obviously, as you have in any country, a certain degree of stratification along various lines. There are people who are at the top of the ladder in terms of economic power, in terms of influence. There's an element that would think of themselves as elite opinion. It's not a value term here, but opinion of a fairly small number of people with a great deal of power. Then there is the opinion of the great majority of Americans. I want to address now the people at the top of the economic ladder, the people in the financial institutions, and I think here I am speaking, to some extent, for almost every Member of this House. There is a dangerous and deeper split between the views of the economic elite on what should be done in the current crisis and those of the average American than I have ever seen. We heard some Members there say--the gentleman from South Carolina (Mr. Barrett) say, and I appreciated his saying it--that the passage of the TARP last fall helped. The Republican leader said that. I think it did. My criticism is that I don't think it helped nearly as much. But I have two criticisms. I think it helped avoid something worse. And one of the things we know as elected officials is this. Some of the hardest jobs we do are to prevent bad things from happening, and we can expect to get no credit for it. Disaster averted is nobody's political platform. That helps in economic analysis, but you can't go before your voters with what economists call the counterfactual and explain to them how things would have been worse if you hadn't acted and expect cheers if they're still pretty bad. And that is appropriate. The public should have that high demand to make of us. But while I and, I think, most people who are at that higher level of the economic ladder, economists, while most of them think it was a good thing that we passed the bill last year and that $350 billion was deployed, the American people overwhelmingly think it wasn't. And that is one of my criticisms of the Bush administration and of Secretary Paulson, a man whom I admire, with whom I am proud to have worked, with whom we accomplished a great deal in the areas of financial regulation and housing, et cetera. But here was the mistake: By not listening to public concern about the $350 billion, by refusing to follow the congressional mandate to do something about foreclosures, by indulging the arrogance of some of the banks who said, ``We will take that money and we won't tell you what we do,'' they have discredited the notion of intervention of that sort. And I think that is a mistake, because I think we are at a point where some of that intervention is still needed. Now, there are philosophical views that say the other, but there is a division. And, again, the gentleman from South Carolina (Mr. Barrett) very thoughtfully said, ``We averted a greater disaster by passing this.'' The Republican leader said he is glad he voted for it. I think they are both right, and I think it is important that we acknowledge that. I have two criticisms to make of the way in which the administration carried it out. One, they didn't do some of the good they could have done. And I do think they made a fundamental macro-economic mistake by not diminishing foreclosure. I believe, until you begin to diminish foreclosure, you not only deny some people some relief, but probably, more importantly, you don't get the country out of the bind that it is in, because the continued rapid deterioration in those assets is at the root of a large part of the problem. But what we also had was a degree of alienation on the part of the average American who saw banks getting money, in one case apparently using them for an acquisition of a smaller bank that was very important to the community where it existed, in Ohio. We saw bankers saying, ``I got the money. It's none of your business what we do with it.'' We saw bonuses given that shouldn't be given. I am confident that the Obama administration has learned from that. But I go beyond that. There is in this country today a very sharp divide on a number of issues, not just whether or not you intervene. Here is the problem with intervention. When you have a financial system that is in such difficulty, I think it is important to try to keep these institutions from collapsing en masse, not that we are at that point, but from not collapsing. But remember, as an institution's assets deteriorate, its capacity legally to lend, if it is a bank, deteriorates. We want to reverse that cycle. Let's not overstate it. But I think we need to intervene in this way. The public says no, because the immediate beneficiary of these interventions are people they don't like, are people who in fact made some mistakes. Now, it turns out that you can't help the whole economy in some cases without some help--you know, we talk about sort of incidental victims. These are incidental beneficiaries. This is kind of, not casualties, civilian casualties, but civilian beneficiaries. You can't get from here to there without helping some of these people. But it ought to be done in a way that reassures the average American. Part of it has to do, I believe, with the weakness of the social safety net. People who lose their health care because they lose their jobs will react particularly angrily when a financial institution is benefited. So I make this plea now to the people in the financial institutions, to people at the upper levels of economic decision-making, and they should understand that this Congress representing the people is under enormous pressure to deny them some of the things they think are necessary. By the way, not just here; in trade, in international trade. This is not a Congress that is ready to go forward with that. We had an amendment yesterday offered by the gentlewoman from North Carolina (Mrs. Myrick) that said none of the recipients of TARP funds can do customer service outsourcing. I believe that most people who are CEOs of corporations, most economists, or many economists, many of the people at the top levels of the administrations, Bush and Obama, and go on back now, probably think that is unwise economic policy, but we didn't have a roll call on it, because that is a totally irresistible impulse here. It may put us in some trouble with the WTO. We will have to deal with that. People who don't like the Myrick amendment--and I supported it. People who don't like the Myrick amendment had better understand that amendments like that will proliferate until they join us in giving the average American a better sense that he or she will benefit from this prosperity. Now, that is part of where we are today. Look, the Senate has already killed this resolution. Why are we still voting on it? Because there is a degree of anger in the American public at what they think is a very unfair system that gives benefits, unduly and disproportionately, to some of those who caused the problem, while denying health care and unemployment compensation and decent higher education for working class people. I mean, Mr. Speaker, to caution the people who are deeply involved in running this financial system in this country, work with us to alleviate this. As long as the average American thinks that a small group is getting help when they are not getting anything, then that small group pretty soon won't be getting the help. And there may be some cases when, as I said, benefiting that group is the only way to get broader benefits. That is why we did the bill yesterday, because we think it is a very important way of getting the Obama administration-- and I believe, by the way, many in the Obama administration do agree with that understanding. They will be running into pressures from the other side of the people they are dealing with in the financial community. But it is a broader political point. For those of us who think, and there are some who philosophically don't want any government intervention in the market whatsoever. They don't want a minimum wage and they don't want an injection of capital to a failing financial institution. I disagree with that as a matter of economic philosophy. I respect its intellectual integrity. That makes sense. What I disagree with is the view that says it is okay to help AIG and not worry about their wages, but criticize the wages of auto workers. It is the view of too many in the financial community that they need some direct help because that is the only way to help the economy, and I think that is often the case, but, no, you don't have unions; no, you don't have health care. As I said, there is a consistent and honorable philosophical view that says ``no'' to all of that. What I am addressing now are those in the sector that would be designated as the elite, who understand the need for an intervention of which they are the direct beneficiaries because that is the only way to help the whole economy, but then resist some of these other things. One of the things that gives me optimism about the next 2 years, Mr. Speaker, is that I believe we have in place a President and majorities in the House and the Senate who understand that there has got to be some consistency in this approach. And let me just say in closing, and I hope this resolution is defeated, because I do not think that the Obama administration should be denied the right to use tools simply because the Bush administration misused them. And that is the only issue here today, if this were to have binding effect. But we are here today because of that anger that must be alleviated, because it must be recognized as based in reality.

Mr. FRANK of Massachusetts. Mr. Speaker, I now yield 3 minutes to the gentlelady from Texas (Ms. Jackson-Lee). (Ms. JACKSON-LEE of Texas asked and was given permission to revise and extend her remarks.)

Mr. FRANK of Massachusetts. I would yield myself 30 seconds to say that the decision that triggered TARP came from the Bush administration at the request of the Obama administration. So that was simply not something within our control. And I would point out the gentlewoman had said that we hadn't had the oversight hearings, that we've had them. It's true. The Bush administration in those hearings didn't give us the answers we wanted. But oversight doesn't mean you can make people say things they don't want to say. You can expose their failure to say them and act accordingly. Mr. Speaker, I reserve the balance of my time.

Mr. FRANK of Massachusetts. I will yield myself 30 seconds to point out that the gentlewoman from North Carolina was incorrect. She said this bill would be alive in the Senate. That is wrong. This bill is the expedited procedures proposal. Its Senate counterpart has been killed. If this bill passes or fails, it makes no difference. Now it is true, the Senate has the right under the Constitution to pass a brand new bill. But if it did, it would have to come over here to be passed. This expedited procedure resolution would not meet the bicameral test. So the point is that when she talks about this bill, it has no effect. If the Senate passes a bill, as they would have a right to do under the normal rules subject to filibuster, it would then come over here and be subject to normal rules----

Mr. FRANK of Massachusetts. Mr. Speaker, I yield myself 2 minutes to respond, in part. One, I got more credit than I deserve for writing the legislation; we had the Senate participating. I did succeed in getting some constraints written in. The problem, however, was not with the legislation, it was the way in which it was administered. By the way, I do want to make one point. There were complaints yesterday--and I have heard complaints from the Republicans--that they had no chance for input into this legislation. That is, of course, patently untrue. If Members will remember, a large number of Republicans voted against this Bush request the first time. A number switched, still less than a majority, but a large number of Republicans switched because they achieved a major amendment. The fact is that there was added to the President's proposal a plan for an insurance operation which was written by the Republican leadership and put into the bill at the request of the Republicans. Now, the problem was that the Secretary of the Treasury under George Bush thought it was silly and had no intention of using it. And I think the Republicans knew that, and maybe there was a little self-delusion there, but the fact is that there was a major amendment of that bill entirely generated in the Republican Party. They had a chance to put other things in there. Now, I will concede I was disappointed. The gentleman said we wrote the bill. I tell you what I take some pride in; we wrote in there specific instructions to them to use some of the money to reduce foreclosure. They refused to use it. And under the American system of government, it is virtually impossible to force an executive branch to carry out the legal authority they are given, just as Alan Greenspan refused years ago, until fairly recently, to use the authority Congress had given him to stop bad subprime mortgages. So, yes, there was that flaw. And if, in fact, we still had the Bush administration, no legislation, in my judgment, would succeed. But given the commitment of the Obama administration--the gentleman said there is no plan. In fact, there are very specific plans, including some from Sheila Bair, the head of the FDIC, and some approved by the outgoing Secretary of HUD, Mr. Preston, to reduce foreclosure. Now, the gentleman has said leave it to the Fed.

Mr. FRANK of Massachusetts. Mr. Speaker, pursuant to section 2 of House Resolution 62 and as the designee of the majority leader, I have a motion at the desk.

Mr. FRANK of Massachusetts. Mr. Speaker, I think I may be my final speaker, so I will reserve the balance of my time.