Barney Frank

Mr. FRANK of Massachusetts

Mr. FRANK of Massachusetts. If the gentleman will yield to me, I haven't looked at that part. I was addressing the assertion that it raises taxes in this current year.

Mr. FRANK of Massachusetts. I will give the answer. No. I don't think it does, anymore than the President's does or yours does.

Mr. FRANK of Massachusetts. Well, if the gentleman has me confused with the chairman, I would like to hear from the chairman.

Mr. FRANK of Massachusetts

Mr. FRANK of Massachusetts. Mr. Speaker, a parliamentary inquiry.

Mr. FRANK of Massachusetts. Mr. Speaker, is blatant hypocrisy a violation of the rules of the House?

Mr. FRANK of Massachusetts

Mr. FRANK of Massachusetts. If the bill were to go back to committee and be reported out, would it have to go to the Rules Committee and would other rules that require layovers before the House can act apply?

Mr. FRANK of Massachusetts. Parliamentary inquiry.

Mr. FRANK of Massachusetts. When you say this does not waive any rules, would that include the rule of the House that requires this to go to the Rules Committee with all of the appropriate times? Is that one of the rules that would not be waived?

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

Mr. FRANK of Massachusetts

Mr. FRANK of Massachusetts. I begin, appropriate to this bill, on a note of bipartisanship. My counterpart on the Financial Services Committee said we must reduce spending, and I agree. And we will have a chance this year to reduce the most wasteful drain on our economy imaginable, the war in Iraq, $100 billion a year, far more than the excess in any other program. So I hope the American people this year will heed his view and we will put in place a policy that will save us $1 trillion over the next 10 years if the wishes of some to stay in Iraq are maintained. Secondly, let me reinforce what the chairman said. It was in late November of last year that Speaker Pelosi urged us to begin thinking about the economy and called together a group of economists, labor leaders, and business leaders. And she took the lead and more than anyone else is responsible for the fact that we are confounding the cynics by acting so quickly and responsibly today. Lastly, on the housing piece. What we have is a private housing market that has gotten itself into a terrible jam. And part of this bill is to use public and quasi-public entities, entities created by the Federal Government, to go to the aid of the private market. The private market has stopped making loans for houses above a certain level because of, as my friend from Alabama said, a lack of confidence. What we do today is to empower the Federal agency, the FHA, to help untangle that with a higher loan limit. And those two creations of the Congress, quasi-public/private Fannie Mae and Freddie Mac, we here today send the public sector to the rescue of a mortgage market at the upper end that can't function on its own. But let me say this: there has been an argument that we should not have done that without further structural reform in those two entities. I have agreed to those limits and, in fact, pushed for them being raised now because we're in an economic crisis and we need a short-term response. But I am committed, and I know my friend from Alabama joins me in this, we will not agree to any further extension of those loan limits after the expiration date of December of this year unless we are able to accompany them with structural reform. And let me say, I see my friend nodding, that's our commitment. So we are committed. And the chairman of the Senate Banking Committee and I and Members are now talking about the FHA bill. We will not, and let me give this commitment, we will not bring out of our committee an increase in the time at which the jumbo loans can be paid for until we have comprehensive reform. Given that, we have here a reasonable package. We get money out, thanks to the Speaker's insistence on this bipartisan framework, to precisely the people who will spend it, which is what we need now. And we send the FHA and Fannie and Freddie in a responsible way to the aid of the private market because private sector-public sector cooperation is the foundation of our economy.

Mr. FRANK of Massachusetts

Mr. FRANK of Massachusetts. Mr. Speaker, I now yield 2\1/2\ minutes to the Chair of the Housing Subcommittee of our committee, who has played a very significant role and will be in a major role as we go forward in the necessary next steps after this, the gentlewoman from California (Ms. Waters).

Mr. FRANK of Massachusetts. Madam Speaker, I now yield 1 minute to a member of our committee who has been very active in trying to deal with housing and especially with the area of manufactured housing, which is such an important part of our efforts to meet the housing needs, the gentleman from Indiana (Mr. Donnelly).

Mr. FRANK of Massachusetts. Madam Speaker, the argument has been made that this is just a short-term fix, and that is what we hope it will be. We have both a short-term and a long-term problem. A recession is, by definition, a specific incident in the cycle, and what we are trying to do now is to respond to what we believe and hope to be a specific, more short-term weakness. That's why we are able to come together in a bipartisan way. And partisanship is, I believe, a much unfairly maligned concept. Partisanship is essential to a healthy democracy. There has never been a self-governing polity in the history of the world, I believe, of any size where political parties did not emerge, because large numbers of people trying to govern themselves need an organizing principle other than the authority of the leadership. In America today, a division between the two parties reflects serious, thoughtful differences on how the public and private sectors should interact. We're a capitalist Nation and we're all capitalists, but we differ. On the Republican side there is, I think, an unjustified belief in the essential self-sufficiency of the capitalist system. We believe, following many who have done work on the technical ``doctrine of market failure,'' market failure in the economic sense, that the free market is a great generator of wealth, but that to achieve the quality of life we want, there must also be a vigorous public sector that interacts with it. That's partly in expenditures, because there are public goods that all of us want that the private sector does not have the capacity to produce, public safety and transportation, and including some compassion for those among us who will not live minimally decent lives unless the rest of us show some of that compassion. There is also the need for regulation. And the biggest single problem we face today, I believe, is the consequence of too little regulation. It is possible to overregulate, but it is possible to regulate inadequately. Innovation is very important, and innovation does not survive and grow if it doesn't meet a real need in the economy. One of the innovations of recent times was securitization made possible by large pools of money, by great liquidity that came from various places, not from depository funds, because funds that are in depository institutions are regulated. But a lot of money was generated now, not by bank deposits, but in other ways. And we've also got the ability, technically and in other ways, to sell off those loans. The lender-borrower relationship that was at the core 30 years ago of many transactions has been essentially diluted. And it turns out that those who thought they had a way to substitute for that missing lender- borrower relationship were deluded. The relationship was diluted, but they were deluded in thinking that they had these techniques that would allow them to deal with it. We are in a difficult situation today because the innovation and securitization, which has many advantages, was allowed to go forward without adequate regulation, without people knowing, literally, what they were doing and what they were buying and what they were selling, and keeping things off their balance sheets, and not being reserve requirements and not being careful about what loans they bought. We have differences between the parties as to how to deal with those, and we will continue to work on those. We, however, have a short-term, we hope, shortfall that needs to be addressed. And let me talk for a minute for those who say, Well, what makes you think people are going to go out and spend more because of this? The purpose of a short-term stimulus like this is not to get people to spend more; it is to help them not to spend less. We're not talking about the need for a surge over the norm in consumer spending. We are talking about a fiscal crunch that faces many Americans, in response to which they will have to cut back spending. And people are saying, Oh, they're going to buy flat screen TVs, they're going to do this and that. We have, thanks to the leadership of Speaker Pelosi, a bill before us that will send most of the individual money to people who don't have the option of saying, Well, I think I'll buy another flat screen TV, but who need the money. Helping them avoid pain in their lives and damage to the economy is the justification for this very narrow, short-term stimulus.

Mr. FRANK of Massachusetts. Madam Speaker, I'm now going to yield to the Chair of the Financial Institution Subcommittee, who has been a very important part of our effort to try and deal with this crisis, the gentlewoman from New York (Mrs. Maloney) for 1 minute.

Mr. FRANK of Massachusetts. Madam Speaker, I yield now 1 minute to a member of the Financial Services Committee whose expertise in the world of business and finance has been very helpful to us, the gentleman from Florida (Mr. Mahoney).

Mr. FRANK of Massachusetts. Mr. Speaker, I now yield 1 minute to the gentlewoman from Illinois (Ms. Bean), a member of the Financial Services Committee, who has been particularly creative in trying to make sure that there are tax incentives in here that will help the business community play its most productive role.

Mr. FRANK of Massachusetts. Mr. Speaker, as I listened to my friend from California, I was struck as he excoriated the President's program, that in his metaphor he seemed to think the President can't tell one body part from another, which is a troubling thing.

Mr. FRANK of Massachusetts. Mr. Speaker, I yield 1 minute to a member of the committee who has been a hard worker on this, the gentleman from Georgia (Mr. Scott).

Mr. FRANK of Massachusetts. Mr. Speaker, I yield 2 minutes to the gentlewoman from Connecticut (Ms. DeLauro), the member of the leadership who has had a major role in recognizing the need for this package.

Mr. FRANK of Massachusetts. Mr. Speaker, I now yield 2 minutes to the chairman of the Subcommittee on Capital Markets, a man who had a major role in our dealing with the structural issues going forward, the gentleman from Pennsylvania (Mr. Kanjorski).

Mr. FRANK of Massachusetts. Mr. Speaker, I yield 1 minute to our very distinguished majority leader, the gentleman from Maryland (Mr. Hoyer).

Mr. FRANK of Massachusetts. Parliamentary inquiry. Is my understanding correct that, as the Chair of the Financial Services Committee, I will control 20 minutes?

Mr. FRANK of Massachusetts. Mr. Speaker, I yield myself 3 minutes. Mr. Speaker, what's in this stimulus package is, A, good; B, not enough. But I believe it is important to move it. I say ``not enough'' because the Committee on Financial Services has been dealing particularly with the subprime crisis and the troubles that's generated. We have in this stimulus package, by agreement between both sides here and the administration, some things that would be very helpful. There are further things that are important that are not in this package. No one should think that because they're not in this package we are not going to go and deal with them. As soon as this is done today, the staff of the Committee on Financial Services will be working closely, we've been in consultation with the Senate and others, on a broader set of measures that will both diminish the economic problems that the subprime crisis causes and also try to deal with the distress that results. But let me talk today about what we do. We increase in this bill loan limits for the FHA and for Fannie Mae and Freddie Mac. We made a mistake at some point in public policy by setting as a limit for those three agencies, which deal with housing finance and facilitate housing finance, one flat nationwide dollar limit. In fact, nothing in our economy varies in the pricing area as much as house prices, because houses are immobile. Automobile prices, clothing prices, food prices, there are some regional variations; but they tend to be closer. House prices have a very great variation, for obvious reasons; and, in fact, the limits that have been set which were intended to prevent luxury housing from benefiting from these public or public/private programs in much of the country excludes not just luxury housing but housing for people of moderate and middle incomes. Now, that's always been a problem to many of us, but recently it's become part of an economic problem. The mortgage market, we understand, has been suffering at the lower end, at the subprime end, because people with weaker credit were charged too much with, we should always note, a racial and ethnic discriminatory factor; but, in general, there was a problem there. What we now face, and have for some time, is a problem at the higher end. Because of the uncertainty in the mortgage market, people are unwilling to invest. People are unwilling to buy the mortgages. We have come to be dependent, unhealthily so it seems to me, on the secondary market in which the originators have to sell their loans. People will not now invest in buying loans that are above the levels at which the FHA, Fannie Mae, and Freddie Mac can provide assurance. Those levels are too low. So what we do in this stimulus bill is to raise the levels of Fannie Mae, Freddie Mac and the FHA, not uniformly but sensibly, as a percentage of median income with a cap. And that's a very important piece in trying to unlock the mortgage market and getting money flowing again. Mr. Speaker, I reserve the balance of my time.

Mr. FRANK of Massachusetts

Mr. FRANK of Massachusetts. Mr. Speaker, I move to suspend the rules and pass the bill (H.R. 3959) to amend the National Flood Insurance Act of 1968 to provide for the phase-in of actuarial rates for certain pre- FIRM properties, as amended.

Mr. FRANK of Massachusetts

Mr. FRANK of Massachusetts. Mr. Speaker, I appreciate the leadership that my colleague and neighbor from New Hampshire has shown on this bill, and I appreciate, also, the work on the other side. Let me begin with a very important point: People in this country, I think, and our friends in the media misunderstand the true and legitimate meaning of partisanship. Partisanship has a very essential role to play in democracy. The Founding Fathers simultaneously launched this Nation, denounced parties, and formed them, because it does seem inevitable when large numbers of people are going to govern themselves that some forms of organization come forward. Partisanship is not only not a bad thing, it's a necessary thing in a self-governing polity. Partisanship becomes a problem if the legitimate differences that define the parties spill over angrily and make it impossible to work on issues where those differences should not exist. I think the Committee on Financial Services, under my predecessor as chairman, Mr. Oxley of Ohio, and I hope under my own chairmanship, have shown that that is not necessary to be the case, that it is possible from time to time to have legitimate strong differences on an ideological or partisan basis without that in any way interfering with our ability to come together on areas where we should agree. This bill, obviously, today is an example of the latter. We have a bill that has been brought forward in a totally bipartisan manner to improve the efficiency with which assistance goes for rural housing. That's the second point I wanted to make. Much of what we do is, in fact, to improve the efficiency with which programs work, and the committee has had a chance to bring several bills to the floor that do that. We will be doing more. The gentleman from New Hampshire mentioned one of the conflicts we are trying to resolve here is between the rules that apply when you were trying to use tax credits for low-income housing and those that apply when you were talking about the programmatic legislation. We do something about that here. Under the leadership of the chairman of the Committee on Ways and Means, the gentleman from New York (Mr. Rangel), and the Financial Services Committee, we are working out legislation that will do that kind of reconciliation for all housing programs. And we will shortly have on the floor of this House a bill that will greatly increase the efficiency with which all housing programs can be merged, tax-based ones and appropriations-based ones, increasing the amount of housing we can build at no further increase to the taxpayer. And the third point I would note is that this is rural housing. Too often when people think about Federal housing programs they think only about the urban areas. Urban areas are important, but so are rural areas. And I am very proud that this committee has given equal attention, or let me say appropriate attention, to both. Obviously, the need is often greater in the more heavily populated areas, but we have given fully proportionate attention to the rural areas. So, I am very proud we have a bill today that shows how you can be bipartisan, even while there are legitimate partisan differences, that aims at increasing the efficiency with which Federal funds are spent and which recognizes that people in the rural areas have a need for housing assistance, to some extent, just as do people in the urban areas. I thank the gentleman from New Hampshire for the leadership he has shown. I appreciate the gentlewoman from West Virginia, who has become the ranking member of the Housing Subcommittee and with whom we have very good relationships. And I hope the bill is passed.