Barney Frank

Mr. FRANK of Massachusetts

Mr. FRANK of Massachusetts. Mr. Speaker, I yield myself 1 minute. I welcome the evolution in the gentleman's thinking. A week ago he sent me a letter saying we should not do the FHA modernization, so he has apparently expanded that, and I appreciate that. There is one other myth, though, that I forgot to refute that he trotted out, namely, that this is going to force the FHA to take bad loans. That could not be further from the truth. This bill explicitly leaves the FHA in complete control of the decision to guarantee a loan or not. Nothing in this bill coerces the FHA. The lenders, to be eligible, would have to write down the loan by a significant percentage. An independent decision is then made by the FHA as to whether or not they want to guarantee it. I now yield 3 minutes to the gentlewoman from California, a major author of important parts of this bill.

Mr. FRANK of Massachusetts. Would the gentleman yield?

Mr. FRANK of Massachusetts. I now recognize the Chair of the Financial Institutions Subcommittee, the gentleman from Pennsylvania, for 1\1/2\ minutes.

Mr. FRANK of Massachusetts. The gentleman from Georgia has been a diligent advocate for a sensible public policy, and I admire both his diligence and his grasp of the issue. He is correct. Nothing in this title changes existing Federal law with respect to the authority of the Office of Thrift Supervision and the Office of the Comptroller of the Currency's preemptive authority, and their right to regulate and oversee a depository institution's products and services marketing and distribution system, and they do obviously have definitional authority under this legislation.

Mr. FRANK of Massachusetts. Mr. Speaker, I yield myself 45 seconds to say that the gentleman from Alabama suggested that I was misrepresenting his letter. Here is the last paragraph: There is need for expedited legislation, and that action is a basic GSE reform bill that can be drafted, and taken to the floor with minimal preparation, since we have had hearings, not FHA modernization and not a tap standby authority. That's what he asked for a week ago, only GSE reform and not anything else. Secondly, the minority leader has understated the administration's position. I'm sure that he wants to be accurate. They are not simply saying the President would sign the bill, the statement of administration policy urges the House to pass it expeditiously. So they are not simply going to sign it, they want us to pass it expeditiously. I know the minority leader wouldn't want to understate the position of the administration. I now yield 2 minutes to the gentleman from Georgia (Mr. Marshall).

Mr. FRANK of Massachusetts. Mr. Speaker, I am glad now to yield to my neighbor, the gentleman from Rhode Island (Mr. Langevin), 1 minute. (Mr. LANGEVIN asked and was given permission to revise and extend his remarks.)

Mr. FRANK of Massachusetts. Mr. Speaker, I yield to the gentleman from California (Mr. Baca), and there is language in the bill dealing with in-person counseling of which he is the main author, and I yield to him now for a unanimous consent request. (Mr. BACA asked and was given permission to revise and extend his remarks.)

Mr. FRANK of Massachusetts. Mr. Speaker, I recognize myself for such time as I may consume. Let me concur with the remarks of the gentleman from Louisiana. I don't like everything in this bill either. It is inconceivable to me that anybody would like everything in this bill, because it is the product of a very significant set of compromises. To some extent, frankly, the challenges the Congress faced and the administration faced in dealing with the housing crisis--remember, we are here in substantial part because of a terrible housing crisis that has affected the economy of the U.S. and the world. We are dealing with the consequences of bad decisions and inaction and malfeasance from years before. Obviously it requires a joint effort. To some extent, this is a test of our ability as a self-governing people to govern. Because if everybody held off and said I am only going to support a bill with which I am in complete agreement, we would not be able effectively to respond to this crisis. So I appreciate the President's policy statement saying I don't like everything in this bill, but I'm going to sign it and you should pass it quickly. I think that's true of all of us who have looked at this. Now I do want to refute some of the myths. One, we heard reference to a $300 billion program. My colleague, the ranking member, sent out a Dear Colleague letter that said the part of the bill that tries to avoid mortgage foreclosure is a $300 billion program. In fact, it's a $1.7 billion program, according to CBO. Yes, it's $300 billion, $300 billion is the total amount of mortgages that could be insured. It would cost $300 billion only if no one who had one of those mortgages ever made a payment of a penny and the houses were worth nothing. Obviously it's not a $300 billion program. That's why CBO said our version was $1.7 billion. We also heard from some of the Republicans that it is a $5 trillion program. What they call a $5 trillion program, the stand-by authority that the President has asked us to give the Secretary of the Treasury, the Congressional Budget Office says is a $25 billion program but probably won't be spent. So I think we need to understand conservative Republican arithmetic. It is the most inflationary arithmetic I ever heard. $1.7 billion of CBO becomes $300 billion. $25 billion from CBO becomes $5 trillion. I hope it will be very clear to people that these numbers that are being thrown around are simply inaccurate and misleading. I also want to talk now to some of my friends on the left and others who have, I think, been misrepresenting what we are doing with regard to Fannie Mae and Freddie Mac giving stand-by authority, saying this is bailing out the corporations, that this is welfare for the rich. Let me read the list of people, organizations, who have specifically endorsed what this bill does with regard to stand-by authority to keep Fannie Mae and Freddie Mac from collapsing: The Consumer Federation of America, the Lawyers' Committee for Civil Rights Under Law, the Leadership Conference on Legal Rights, the League of United Latin American Citizens, the Mexican American Legal Defense Fund, the National Association of Consumer Advocates, the National Council of La Raza, the National Urban League, the National Fair Housing Alliance, the National Low Income Housing Coalition. Mr. Speaker, apparently there has been some infiltration. Apparently the corporate welfare advocates have taken over all the liberal organizations in America. We will probably have to investigate that, because all of the organizations with which I have worked for 28 years, who are the effective advocates for low-income housing, say pass this bill, please, and please specifically help Fannie Mae and Freddie Mac. So the amount of misinformation here is enormous. Finally, I want to address the question of procedure. Everything in this bill, with the exception of the emergency request from the President for stand-by authority for Fannie Mae and Freddie Mac, has been fully debated in the Financial Services Committee and voted on and debated on the floor of this House. We are repackaging a number of things. Sometimes it takes our friends in the Senate two, three and four tries to get something done, so we keep serving the ball to them. Everything in this bill, with the exception of the emergency stand-by authority, has been thoroughly debated and voted on the floor of the House, and no part of it got less than 260 votes. So we're hardly rushing through things for the first time. July 17, 2008. Statement on Recent Federal Action To Provide Stand-by Support to Fannie Mae and Freddie Mac The undersigned consumer, civil rights and fair housing organizations commend U.S. Treasury Secretary Paulson, Federal Reserve Board Chairman Bernanke and leaders of the Senate Banking and House Financial Services Committees, for acting quickly to provide for stand-by support to Fannie Mae and Freddie Mac, the two government sponsored housing enterprises (or GSEs). This support reaffirms the importance of the two companies in providing liquidity and stability to the housing market during this tumultuous period. The U.S. economy has a deep stake in the success of Fannie Mae and Freddie Mac as companies with an essential public mission. As history has shown, both GSEs are vital to the long-term health and success of our nation's housing finance system. Furthermore, their public mission activities have been and must continue to be instrumental in expanding opportunities for homeownership and affordable rental housing for consumers. The establishment of a strong independent regulator, as provided for by the housing measure pending before Congress, will serve to maintain public confidence that Fannie Mae and Freddie Mac remain safe and sound and thus able to continue to carry-out their vital public mission. Immediate action on GSE regulatory reform signals that Fannie Mae and Freddie Mac functions are essential to the housing market and to consumers. Center for Responsible Lending Consumer Action Consumer Federation of America Consumers Union Lawyers' Committee for Civil Rights Under Law Leadership Conference on Civil Rights League of United Latin American Citizens (LULAC) Mexican American Legal Defense Fund (MALDEF) National Association of Consumer Advocates National Association of Neighborhoods National Community Reinvestment Coalition National Consumer Law Center (on behalf of its low-income clients) National Council of La Raza National Fair Housing Alliance National Low Income Housing Coalition National Urban League Opportunity Finance Network Mr. Speaker, I reserve the balance of my time.

Mr. FRANK of Massachusetts. Mr. Speaker, I offer the motion at the desk.

Mr. FRANK of Massachusetts. I yield the gentlewoman an additional 30 seconds.

Mr. FRANK of Massachusetts. Mr. Speaker, pursuant to House Resolution 1363, I call up the bill (H.R. 3221) to provide needed housing reform, and for other purposes, with the Senate amendment to the House amendments to the Senate amendment with an amendment thereto, and ask for its immediate consideration in the House.

Mr. FRANK of Massachusetts. I now yield to an alumnus of our committee, the gentleman from New Jersey (Mr. Sires), 1 minute.

Mr. FRANK of Massachusetts. I believe you can get unanimous consent, but if the gentleman's time has expired it would then be within the prerogative of the gentleman from Alabama to yield him another minute.

Mr. FRANK of Massachusetts. That's very generous of my friend. If he wishes to give another minute, I certainly would want to facilitate that.

Mr. FRANK of Massachusetts. I now yield 1\1/2\ minutes to the Chair of the Small Business Committee and a member of our committee, the gentlewoman from New York (Ms. Velazquez).

Mr. FRANK of Massachusetts. No. I ask the gentleman to stop harassing me. He had his time. I would like to conclude. We had equal time here. The $5 trillion means that--in the first place, nothing in this bill assumes any responsibility for any of those mortgages. Zero. It is stand-by authority to the Secretary of the Treasury to make the loans. As the gentleman from New Jersey acknowledged, the CBO said this might cost $25 billion. It will probably cost nothing. It might cost $25 billion. How did $25 billion become $5 trillion? By fantasy. In fact, what you have is if every single mortgage held by Fannie Mae and Freddie Mac were to pay zero, then you would have a $5 trillion problem, but it wouldn't be ours. Mr. Speaker, this bill is not to the liking of any single individual in all of its aspects, but it shows our ability to govern, because every single organization that has been advocating for low-income housing, all of the organizations that are in the business of building and selling housing, the organizations concerned with the financial health of this country, and the mayors and the Governors all support the bill, the Financial Services Roundtable, the American Bankers Association, the Mortgage Bankers Association, the National Association of Realtors, the National Association of Home Builders, the United States Conference of Mayors, the National Governors Association, and all the advocacy groups, the National Association of Consumer Advocates, National Community Reinvestment Coalition, National Consumer Law Center, National Fair Housing Alliance, National Low Income Housing Coalition. The point is this. If we had a bill that was perfect for any one of these groups, you wouldn't have this coalition. These are people who, unlike my conservative colleagues who think that their administration has suddenly lost all of its moorings and they think that the Realtors and the home builders and the Financial Services Roundtable and the Low Income Housing Coalition and the home builders, all of these people don't understand. That's because they know the difference between a $5 trillion fantasy and a $25 billion stand-by authority to prevent terrible economic damage. Here is the final point. No solution to a problem could be more elegant than the problem. We are in this problem because of excessive deregulation that led to the subprime explosion. The gentleman from Alabama and I and other members of the committee, my two colleagues from North Carolina, tried several years ago to prevent it. I acknowledge that we worked together. We were overruled by higher political authority at the time under the Republican-controlled Congress. We are suffering from the results of the subprime. As to Fannie and Freddie, yes. That's a hybrid form that none of us here created that we should look at, and we will look at. But to deny a emergency response until we do that would be inviting disaster.

Mr. FRANK of Massachusetts. Mr. Speaker, I yield 1 minute to my colleague from Massachusetts (Mr. Lynch), a valued member of our committee.

Mr. FRANK of Massachusetts. Mr. Speaker, I yield 1 minute to the majority leader.

Mr. FRANK of Massachusetts. I want to now yield to the chairman of the Budget Committee who has been a very important factor in our being able to pull this together, the gentleman from South Carolina (Mr. Spratt), 2\1/2\ minutes.

Mr. FRANK of Massachusetts. Let me inquire of my colleague, I understand he only had one more speaker?

Mr. FRANK of Massachusetts. I yield 1 minute to another member of the committee, the gentleman from Indiana (Mr. Carson).

Mr. FRANK of Massachusetts. Mr. Speaker, I yield for the purpose of making a unanimous consent request to the gentleman from Connecticut (Mr. Shays). (Mr. SHAYS asked and was given permission to revise and extend his remarks.)

Mr. FRANK of Massachusetts. I yield 1 minute to a very active member of the committee, the gentleman from Florida, Mr. Klein.

Mr. FRANK of Massachusetts

Mr. FRANK of Massachusetts. I thank the gentlewoman. Mr. Speaker, we confront here one of those moments in which there is a certain degree of confusion, and we are here, in substantial part, today at the urgent request of the Bush administration. This package has several pieces. Three of them, in fact, are urgent requests of the Bush administration, and indeed, the Bush administration does have a criticism to make of the pace with which we are doing this. They think it is too slow. Well, Members on the other side, some of them have complained that we're moving too rapidly. The Secretary of the Treasury has been a little frustrated that we were moving so slowly. Clearly, we have here an example of the classic situation in which the right hand does not know what the far right hand is doing. We are dealing today with legislation that has, with one exception, already passed this House. As to the ability to amend and debate, one of the high priorities of this administration has been significantly increasing the regulatory structure for Fannie Mae, Freddie Mac, and the Federal home loan banks. This House passed it last April of 2007. It was very much debated in committee, and it came to the floor of the House with many amendments. Well, that piece has already been debated on the floor of the House and amended, subject to a fairly open rule, not totally open. We have the modernization of the Federal Housing Administration, another high priority of the Bush administration. Several months ago, the head of the FHA, the Bush appointee, Mr. Montgomery, the head of the FHA lamented the fact that we hadn't acted. Despite that, the senior Republican on the Financial Services Committee sent me a letter last week saying don't act on it. So we have the head of the FHA a couple of months ago complaining that we had not acted on this urgent administration priority, and then I get a letter from the senior Republican of this committee saying don't do that piece, leave that piece out. He talks about doing only 1 piece, that one's left out. So we have the administration's request for GSE reform, already voted on and debated last year; FHA modernization, already voted on and debated by the House. This is a re-passage to accommodate, frankly, some of the problems we've had with the Senate. We did have the FHA rescue plan that was voted on on the floor of the House, and that one was not amendable, and I acknowledge that. All of the things I've talked about, by the way, these three pieces that have already been voted on, all passed the House by very large majorities. All had significant Republican support. All were fully debated in committee and amendments offered. This is a repackaging. Now, the gentleman who preceded me said what are we afraid of. I guess I do have a certain fear of being caught in this Republican crossfire, with the administration telling us move more quickly and the Republican members of the committee saying how dare you move so quickly; and the Secretary of the Treasury saying we'll have confidence undermined in the market, and the Republicans saying we didn't have enough time to read the bill. Again, almost everything in here has previously been debated in committee and voted on on the floor of the House. There's one new element, and I agree that did not go to committee. We didn't have a public hearing on it. The Secretary of the Treasury asked us not to have a public hearing, said he thought it would be damaging to the market if we had a public hearing. We have had a week and a half to talk about it, to discuss it, including in informal ways, and I've been open to discuss it with anyone who wanted to. But the Secretary of the Treasury did say that he thought the hearing would be a problem. So what are we afraid of? Well, I had a certain fear of rebuffing the Secretary of the Treasury, President Bush's appointee, on the matter that he thought was so important as to how we handled it. So that's why we are here. This is a balanced bill that includes a significant increase in the reform of Fannie Mae and Freddie Mac. It does give to the administration the ability to make some loans to them or maybe buy shares with an instruction that they protect the taxpayer with various mechanisms and with a requirement that the compensation of the CEOs and the top officials of those agencies be strictly regulated. But it doesn't do that in isolation. It does it only as part of a bill which significantly tightens the increase, that tightens and increases the regulatory structure.

Mr. FRANK of Massachusetts. So just to summarize, this bill again responds to an urgent request by the Bush administration that we enacted in April, we passed it in the House in April. We tried to put it in the stimulus. The administration said not yet. That's already been voted on and debated. It has the FHA modernization that's been voted on and debated. It has the FHA rescue plan, voted on and debated. All of those have already been in the bill, and three of these pieces in this bill are urgent requests of the Bush administration. It does do some things for affordable housing, and I understand that many on the other side are ideologically opposed to that. But they were ideologically opposed to it when we debated it on the floor. And on the affordable housing trust fund, we have already voted about 10 times on the floor of the House.