Barney Frank

Mr. FRANK of Massachusetts

Mr. FRANK of Massachusetts. I yield myself 2 minutes just to say, as has been pointed out, we have been given indications that the Senate does not plan to act on this. Of course, I can recall a number of times when people on both sides have said we are going to go ahead whether they do or don't. I will say this. Much of what we put in this bill can be done even if it doesn't pass. And I regard this as a very important vote that we will have later to strengthen our hand in making sure that Treasury does what we think is necessary, even if it doesn't become law. Almost everything in the bill could be done even without statutory change. This may be one of the few things that requires statutory change. So I would say this to the gentleman from Arizona. If I am correct and this is one of the few pieces that would require statutory change to expand the special IG's authority, we will work together to get a suspension bill through that will do that, that is abstracting from some of the rest of it. Because, again, it's now a given that the second $350 billion will be spent. So I just wanted to give the gentleman that assurance, that while almost everything else in this bill can be done, and we are really insisting they should use authority that they have, to the extent this requires statutory change, I believe we can do a very quick, noncontroversial suspension. I reserve the balance of my time.

Mr. FRANK of Massachusetts. I yield myself 2\1/2\ minutes. Let me inquire of the gentleman from Arizona, is he his remaining speaker?

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

Mr. FRANK of Massachusetts. Mr. Chairman, I note that the author of this amendment is not now on the floor. Could we get unanimous consent to pass over without his forfeiting his chance so he could do it when he comes?

Mr. FRANK of Massachusetts. Parliamentary inquiry.

Mr. FRANK of Massachusetts. Is there any way under the rules to preserve the right of the gentleman from Minnesota who offered this?

Mr. FRANK of Massachusetts. Mr. Chairman, I offer this amendment on behalf of our colleague from Minnesota (Mr. Walz) who has been diligent in trying to see that money allocated under the TARP Program is fully accounted for, and, obviously, many of us feel that has not happened with the first half of the money. Let me make a point that may have escaped some Members. We are not used to this, and so it may be hard for Members to assimilate, but last week the Senate acted decisively. The Senate voted under the bill that we passed last fall and defeated the resolution of disapproval. The procedures adopted that called for the resolution of disapproval to assure Members that there would be no tricks in both Houses ruled out any motion to reconsider. So the Senate defeat of the resolution of disapproval last week is final and it is dispositive. We, under a statute that could have been drafted better, will still vote on that resolution, but the outcome of the vote in the House is irrelevant, because the Senate has legally acted to trigger the second $350 billion. So it's a fact that the $350 billion, the second $350 billion, will be at the disposal of the Obama administration. It isn't even yet there because the Bush administration, at the request of the Obama administration, requested the funds last Monday. I believe they probably won't ripen until a week from yesterday. It's a 15-day period. But as of next week sometime, the Obama administration now has the legal right to deploy the $350 billion. What our colleague from Minnesota (Mr. Walz) has thoughtfully put forward as an amendment will require the Treasury to make available on the Internet all of the reports that are required under the bill. The bill requires reports, but they will now be made immediately available on the Internet. There is a great deal of understandable public dissatisfaction at the failure of this information to be made available. And the gentleman from Minnesota, by insisting that we use the most appropriate contemporary technology, has helped with that problem. I reserve the balance of my time.

Mr. FRANK of Massachusetts. Mr. Chairman, I rise to claim the 5 minutes that goes to someone in opposition.

Mr. FRANK of Massachusetts. Mr. Chairman, as the designee, I now yield the remaining 2\1/2\ minutes to my designator, the author of the amendment, the gentleman from Minnesota.

Mr. FRANK of Massachusetts. Mr. Chairman, I rise to meet the formal requirement that someone rise who is in opposition, although that is not, as you know, highly enforceable.

Mr. FRANK of Massachusetts. Mr. Chairman, I think the amendment is a good one. Any doubts I had were assuaged since I listened to the gentlewoman. But I do want to point out a difficulty that Members of this House should contemplate. We run the risk here that this may violate our obligations under the World Trade Organization. As someone who voted against joining, and I say that without any embarrassment, I would say to Members who will be joining, I believe, virtually every Member of this House in supporting the gentlewoman's amendment that perhaps it should lead them to rethink to having so enthusiastically subscribed to the WTO agreement without some changes. It certainly seems to us that while we do know the government is directly involved, spending its own money, you can have a requirement for domesticity. It is unclear what the interpretation will be here. The interpretation be not be purely an American one. It will be in the dispute resolution procedures of the WTO. So as we go forward in this Congress and we are told about the advantages of a multilateral approach to trade, and I agree that, properly done, that is very advantageous, I hope Members who more enthusiastically than I embraced this principle will stop to think about it. Some of us who were worried about the job impact of international economic relations have been derided as the reincarnation of Smoot and Hawley. Well, I guess Smoot and Hawley would have been with us on this one because it says companies who do business in America cannot go overseas for hiring. That's not trade in the old way because they didn't have the option of doing this in the old way with technology. But it is a restraint on international economic activity. It is the government's saying to the market you may not do this because it will have a negative impact on our employment. Now, I think that's legitimate, especially here, since it will only apply to companies that are receiving this assistance. But understand the principle. Those who say it's always a good thing to allow the market to totally run because it will enhance capacity are agreeing that in this case, because we have the hook on which to hang it, we can undercut that. But the fact that we have the hook in the TARP doesn't change what the economics would be. So I welcome what I think is a renewed recognition for some and a belated recognition for others that a regime in which none of these considerations of local employment can be considered is not necessarily in our best interest. I yield back the balance of my time.

Mr. FRANK of Massachusetts. I thank the gentleman from Arizona for his careful legislating. He is a careful legislator. He is exactly right. This amendment does make sure that the inspection IG's oversight purview is equivalent to that of the TARP. There have been concerns about the oversight, which we understand. I wanted to divide this in two as we talk about the oversight. The problem has been that they have not required enough of the--the Treasury hasn't required enough. The oversight mechanisms we put in there haven't seem, to me, to have done some good. The special IG was created. He was held up until the Senate acted. He recently issued an example of his plan to go forward. We have also had very good oversight by the Government Accountability Office. When Members read about the failure of Treasury to require the recipients of the capital infusions to do any re-lending, or at least to tell they were going to do it, that was documented by the Government Accountability Office in a very effective report, which we had a hearing on. And then the panel of appointees by the congressional leadership, which includes the gentleman from Texas, the former Senator from New Hampshire, and three other very energetic citizens, they have also put out good reports. So we have gotten some good oversight that tells us what they did wrong. But oversight, of course, only highlights that. It doesn't correct it. This legislation is in fact informed to some extent by that oversight, and hopes to build on it. The gentleman from Arizona's amendment will make sure that the oversight continues to be equal to the test. I reserve the balance of my time.

Mr. FRANK of Massachusetts

Mr. FRANK of Massachusetts. Madam Speaker, I rise to speak in opposition to the motion to recommit and in defense of George Bush.

Mr. FRANK of Massachusetts. I would have thought my Republican colleagues would have waited a little bit more than 28 hours to so thoroughly repudiate George Bush. What this motion says is that George Bush used the authority to deploy $350 billion ``so badly''--direct quotes--``so hastily, so haphazardly, so without a plan, that nothing will fix it.'' Basically, we are told that President Bush drove the car so recklessly that we have to junk it. That because President Bush so misused these tools, we have to deny them to a new President. Let's be very clear. The TARP has taken on in the minds of some of my colleagues on the other side an odd shape. It has become alive. It's sort of a horror movie in their minds. The TARP is this thing that has its own will. No, the TARP is not something with its own will. It's a set of policies. George Bush's administration used them badly. Not, I think, as badly as my Republican colleagues say. That is why I think I am defending them. He didn't permanently destroy this. There are a number of things that the past President did that I don't like. I was not a great fan of the Bush foreign policy. But I don't think we should repeal the State Department. I think Obama should have a chance to have a good foreign policy. So that is the first part of this. The criticisms made of the Bush administration, wholly irrelevant to what the Obama administration will do. As to the timing, the Bush administration acceded to the wish of the Obama administration to release the funds. Apparently, the Bush administration agreed with the Obama administration that delay would be a serious problem. Had the Bush administration not waited, we might have had more time. The President, to his credit, President Bush, accommodated President Obama, unlike my colleagues who now want to cut him off at the knees early on. I have another problem, Mr. Chairman. This motion today is a motion to end the program. Guess what we will vote on tomorrow? A motion to end the program. Having wasted the House's time with a blatantly nongermane rule, recommittal, they now come up with a blatantly unnecessary one because the exact vote we are having today, we will have tomorrow. And so why do they do this? Why would they ask for the same vote? They have a dilemma. Let's be very clear. Responsibility, which comes with it sometimes making decisions that can be in the short term difficult, in the minds of some--responsibility sits uneasily on the shoulders of many of my Republican colleagues, particularly the most conservative. When they had a President they were supposed to support, they had to do things that made them uncomfortable. Not all of them, but their leadership and many of them voted for the TARP. They couldn't wait for George Bush to leave town so they can throw off the shackles of responsible public policy. Now they can simply revel in their negativism. They can vote to kill the program today and tomorrow to show George Bush how much they don't like him. And what particularly is their problem? Well, one of the things many of us on this side think was the greatest single problem of the Bush administration was not doing foreclosure mitigation. The Obama administration has committed that if they get this second $350 billion, which the Senate vote means they will get, they will do foreclosure mitigation. But here is the problem of this conservative dominated Republican Party: The most recent paper from the Heritage Foundation says, don't do foreclosure mitigation; it is a waste of time and money. The Wall Street Journal editorial board, another source of great guidance for my colleagues over there, says, don't do foreclosure mitigation. They are torn. They have to put in the recommit that they can find some reason to vote for because they don't want to have to choose between the demand of a large number of Americans for foreclosure mitigation and the arguments of the Heritage Foundation and the Wall Street Journal that they shouldn't do this. So what do they do? They advance the disapproval vote from tomorrow to today because they don't want to do this. By the way, the Wall Street Journal and the Heritage Foundation also are critical of other things. The Wall Street Journal says, how dare we try to give money to community banks; how dare we talk about auto industry help or auto dealers, or loans to others in America. The Bush administration--and I give the gentleman from South Carolina, it was better that we passed it than that we didn't. But the Bush administration made several errors: They didn't put any real controls on how the money that they infused was spent; they did too little on compensation; they didn't do anything about foreclosure. President Bush agreed with President Obama that there was still a need for the money. We here want to pass a bill that instructs them to use it better. I do not think that your desire to dissociate from George Bush should lead you to cripple the Obama administration. [From the Heritage Foundation's Web Memo, Jan. 14, 2009] TARP: Frank's Bill Underscores Weaknesses of This Bailout Program (By David C. John) More is not better. Efforts by Chairman Barney Frank (D-MA) of the House Financial Services Committee to ``improve'' the Treasury's Troubled Asset Relief Program (TARP) in the TARP Reform and Accountability Act of 2009 (H.R. 384) would unfortunately just make the program worse. Among other policy mistakes, it would explicitly approve the use of TARP to bail out the auto manufacturers as well as expanding the program into several other new areas. Frank hopes that with his legislation, Congress will see fit to approve TARP'S second $350 billion for use by the incoming Obama Administration. However, there is no good reason to approve the request for additional TARP funding under any foreseeable circumstances, and Frank's bill only adds more reasons for the additional funding request to be denied. H.R. 384 is a compilation of responses to congressional criticisms of the TARP program, fixes to previous attempts to address housing foreclosures, attempts to revive housing sales, and various other miscellaneous provisions. A few of those provisions are good policy moves, such as making permanent the temporary increase in FDIC and NCUA deposit insurance coverage to $250,000. Unfortunately, most of the other provisions would only make matters worse. Policy Errors in the Frank Legislation Increased Interference in Corporate Decisions: H.R. 384 authorizes the government to have an ``observer'' in the board meetings of financial institutions that have accepted TARP funds. This is a far step from pledges that any government investments through TARP funds would be passive, and it opens the way for additional political takeovers of financial institutions. Expansion of TARP into New Areas: Frank's bill not only retroactively approves the highly questionable use of TARP into bailing out GM and Chrysler; it also expands the program into consumer loans, student loans, commercial real estate, and municipal securities. The language makes it clear that TARP will be held accountable for ensuring that these types of loans are made available. This is a further step toward government micro-management of lending decisions. Even worse, the Fed has already addressed some of these problems, and there is no evidence that the situation will be improved by additional TARP programs. New Foreclosure Programs: Congress has already passed a wildly unsuccessful program to help homeowners who are facing foreclosure, and H.R. 384 attempts to both fix the earlier program and to set up another one. Last year's Hope for Homeowners program initially promised to help almost 2 million homeowners, but in operation, it has helped fewer than 500. The bill both tinkers with the existing program and promises at least $40 billion for a new one to be managed by the FDIC. Unfortunately, both proposals still face the same problems, namely the diverse ownership of mortgages caused by securitizing them into mortgage-backed securities. The Frank bill lists several options for this program in the hopes that the new Treasury secretary can come up with a more effective approach, but all of them face such severe logistical obstacles that the provision is more wishful thinking than anything else. Use the Fed for Future Crises. The financial market dangers that led to the TARP program, however, are far from over and could yet require additional governmental action. U.S. and international credit markets are still undergoing a wrenching restructuring and repricing of financial assets as markets adapt to the ending of excessive and risky borrowing. It is possible for another short-term crisis to once again cause financial markets to seize up. However, the first line of defense against these dangers should be the Federal Reserve Board under its wide, existing powers--not TARP. While some of the Fed's actions in recent months have been disconcerting, it is still the most appropriate institution to address short-term dislocation in the financial system. The Fed is also insulated from the political and lobbying pressures that have caused TARP to range far and wide from its original purpose. As the Frank legislation demonstrates, TARP is seen as almost a slush fund that is available both to respond to real crises and to address politically sensitive areas. However, the Fed has the ability to only focus on real situations that require its intervention while also avoiding political pressure. Rather than adding still more money to this increasingly untargeted TARP, Congress should just rely on the Fed to address any future emergencies. Time to End TARP. Regardless of valid criticisms about its day-to-day management and many specific efforts, TARP did achieve its short term purpose of heading off a financial catastrophe. However, as the Frank legislation shows, its future use will be as an increasingly unfocused and under- supervised fund to help politically active constituencies. It is time to lay TARP to rest and to move onto other more urgent priorities.

Mr. FRANK of Massachusetts. Madam Speaker, I demand a recorded vote.

Mr. FRANK of Massachusetts

Mr. FRANK of Massachusetts. Madam Speaker, I ask unanimous consent that the Clerk be authorized to make technical corrections in the engrossment of H.R. 384, to include corrections in spelling, punctuation, section numbering and cross-referencing, and the insertion of appropriate headings. We would not want inappropriate headings in our bill, Madam Speaker.

Mr. FRANK of Massachusetts

Mr. FRANK of Massachusetts. Madam Speaker, Saturday, January 17, is the 250th birthday of Paul Cuffe. He is not well known, but he should be. I was not myself familiar with his important role in our history and as one of those who fought against the terrible racist pattern that mars our early history until it was called to my attention by a constituent, Brock N. Cordeiro of the Town of Dartmouth. Mr. Cordeiro wrote to me and called my attention to Mr. Cuffe's role. As Mr. Cordeiro notes, in 1781 ``Paul Cuffe sought the franchise or relief from taxation without representation'' and he played a major role in the fact that this happened in Massachusetts in 1783. Many years later, in 1864, as the Town of Dartmouth, Massachusetts, celebrated its centennial, people noted that ``it was his determined and manly efforts, and his refusal to pay the taxes assessed upon him, on the grounds that he had no voice or vote with his neighbors, that finally secured from the Legislature of Massachusetts equal rights of suffrage for the colored man with the white man.'' Madam Speaker, I am very proud as an American of the role that America has played as the first vibrant self-governed Nation, but the racism that marked our early years is the source of trouble which we are still fighting to overcome. It is therefore entirely appropriate to recognize as his 250th birthday approaches the pioneering work of Paul Cuffe. It is very difficult to imagine from our safe haven today what moral and physical courage it took for Mr. Cuffe to defy the racist consensus which confronted him, and his example should be widely hailed. I am grateful to Brock Cordeiro for calling this to my attention. Mr. Cordeiro noted in his letter to me that he came to this through his academic studies, and because of his own history in the need to confront our racist past and to mark the progress we have made in overcoming it, he wrote a master's thesis on Mr. Cuffe. Madam Speaker, as you know, and as I advised Mr. Cordeiro, we do not issue proclamations on people's birthdays, but given the great historical example that Paul Cuffe has given, I am very proud to insert this tribute to him on his 250th birthday into this Record.

Mr. FRANK of Massachusetts

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

Mr. FRANK of Massachusetts. If I could make a point of order. Apparently we were given a misprinted copy of the rule. So I apologize. The copy of the rule we got was misprinted, and the order was reversed on the copy we got.

Mr. FRANK of Massachusetts

Mr. FRANK of Massachusetts. If the gentlewoman would yield.

Mr. FRANK of Massachusetts. Mr. Chairman, I first yield myself 1 minute to say that I appreciate the intellectual honesty of the gentleman from Texas (Mr. Hensarling). He opposes one of the major thrusts of this bill and one of the major criticisms many of us had of the Bush administration, namely, the foreclosure relief. And the gentleman opposed these efforts. I must say that I am encouraged by the Bush appointee, Secretary of HUD, Mr. Preston, the Bush appointee as head of the FDIC, Ms. Bair, both of whom believe that we can do foreclosure protection with the tools in this bill, and that it can be done effectively. But I appreciate this is a genuine difference between us and I appreciate the gentleman articulating it. In 2007, this House passed a bill to restrict subprime lending of an inappropriate sort aimed at both borrowers and lenders. It would have made it impossible for people to borrow inappropriately, as well as to lend. The gentleman, I believe, opposed that. Many others, the gentleman from New Jersey did. There were some important philosophical differences. The Wall Street Journal, which today denounces us for trying to do foreclosure relief, denounced us at the time. They said when we passed the bill to restrict subprime lending, it was an undue interference in the market, and we're going to keep people from owning homes.

Mr. FRANK of Massachusetts. I yield myself an additional 30 seconds. So just to be clear, whether or not there should be Federal programs as advocated by FDIC Chair Bair, Secretary of HUD Preston and many others, whether or not there should be Federal programs to reduce foreclosure, is a very defining difference between most of us on this side and most on the other side; although there are many on the Republican side who do agree with us that we should try to abate foreclosures, not just as a matter of compassion, but as central to solving our economic problem. I now yield 2 minutes to the gentlewoman 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. The gentleman has transformed my correcting his error into distancing myself from President Obama. I said when I got up that it was done by President Bush at the request of President Obama.

Mr. FRANK of Massachusetts. If the gentleman will yield, as he knows, because he was a strong supporter, the Committee on Financial Services, once we became the majority, in fact put through this House a bill that was even tougher in some ways than what the Federal Reserve did, and I think was the spur to the Federal Reserve acting. Unfortunately, it wasn't acted on in the Senate, but I thought it was good that we passed it. I know there are Members who say if we can't know the Senate is going to pass something, we shouldn't even try. We have rejected that. We did pass that bill. The gentlewoman from New York (Mrs. Maloney) has been a leader here. She will be bringing that bill up again, and we want to apply those principles not just to TARP recipients, but to all credit card companies. We expect to do it quickly. The gentleman is absolutely right. We should not wait until 2010. I hope that we will have this bill on the floor by March, and we will be able, and the gentleman's input has been very helpful to us, to pass this bill that will become law very soon.

Mr. FRANK of Massachusetts. Mr. Chairman, I first yield myself 30 seconds to correct the gentleman from New Jersey. The gentleman from New Jersey said that President Obama was requesting these funds. In fact, President Bush requested the funds. He did it after President-elect Obama asked him to, but I think it ought to be clear on the record, this is a continuation of the Bush policy and it was President Bush who in fact requested the funds. President Obama could not request them until next week. The President did it at the request of the President-elect, but it was President Bush who did it. I now yield 2 minutes to the gentleman from Rhode Island (Mr. Kennedy). (Mr. KENNEDY asked and was given permission to revise and extend his remarks.)