Barney Frank

Mr. FRANK of Massachusetts

Mr. FRANK of Massachusetts. I yield myself my remaining time to enter into a colloquy with my colleague from Alabama. Mr. Chairman, the gentleman from Alabama, this has been a collaborative effort in many ways. We have had some disagreements, but there has been a lot of agreement. And the gentleman from Alabama in particular took the lead in the language that went into the bill in committee and is being refined here dealing with nationwide registration requirements, a prerequisite for any kind of enforcement. Now, I appreciated the work he did and the committee benefited from it. Community banks are obviously very important in this. And, indeed, if only community banks had made loans for mortgages, we wouldn't have a crisis. But we don't want to interfere with their ability to help going forward. I would just yield to the gentleman in a minute to have him give his interpretation. My view is, and I defer to him as the spokesperson for the committee on this, because we are here talking about language which he developed and which we incorporated. We do have some regulatory requirements here that would affect not just the brokers but community banks. And I assume my colleague from Alabama, in drafting this, certainly intended and we meant to do this in the language, that the regulatory agencies would be able to show some flexibility in terms of the impact of these requirements on our community banks. I would yield to my friend from Alabama on that point.

Mr. FRANK of Massachusetts. Mr. Chairman, I offer an amendment.

Mr. FRANK of Massachusetts. I thank the gentleman. In my closing seconds, let me just reiterate an important point. Attorneys General have been concerned about their ability to prosecute and defend against certain abuses. Thanks to the gentleman from North Carolina (Mr. Watt), the effective date of this bill and all of its provisions will be the date of enactment. What that means is that any transaction that occurred before the bill becomes law, any loan that was made, will not be subject to the preemption. So we do want to reassure any law enforcement official out there that their rights to go against people who have been abusive will in no way, up until new loans are made, be in any way diminished.

Mr. FRANK of Massachusetts. Mr. Chairman, will the gentleman yield?

Mr. FRANK of Massachusetts. I thank the gentleman for yielding. The gentleman from California and the gentleman from North Carolina, who is a prime sponsor of this, have been in conversations.

Mr. FRANK of Massachusetts. The gentleman has been very tough on this issue, appropriately, and he is right. Some people can read ambiguity into 2 plus 2, and we will deal with that. We are lawyers. We are into redundancy. So in the colloquy I will be having with the gentleman from North Carolina (Mr. Miller) we will reaffirm the point that the gentleman from Connecticut is making. I guarantee that by the time this bill comes out of conference, no one will be able to raise any doubt about the prohibition on anybody being compensated for costing the consumer more.

Mr. FRANK of Massachusetts. Mr. Chairman, I yield myself such time as I may consume. We are dealing with legislation today that seeks to prevent a repetition of events that caused one of the most serious financial crises in recent times. We understand today that we are in a worldwide problem economically, with a terrible shortage of credit, with some institutions threatened. There is no debate about what is the largest single cause of that. Innovations in the mortgage industry, in themselves good and useful, but conducted in such a completely unregulated manner as to have led to this crisis, I know people have said, well, we may be exaggerating it. Here's what we recently heard from the head of the Blackstone operation: ``The mortgage black hole is, I think, worse than anyone saw. Deeper, darker, scarier. The banks are now looking at new reserves and my sense . . . is they don't have a clear picture of how this will play out.'' That's from one of the leading private sector entities. What we have today is a bill that cannot undo what happened but makes it much less likely that it will happen in the future. The fundamental principle of the bill, and many people have lost sight of this, is not to put remedies into place to deal with these problems when they recur, but to stop them from occurring in the first place. We have had two groups of mortgage originators recently. We have had banks subject to the regulation of the bank regulators, and they've made mortgage loans. And then we have had mortgage loans made by brokers who were subject to no regulation, who had access to pools of money that were not regulated and could sell it to an unregulated secondary market. It is not the case that the brokers are morally inferior to the bankers. In both cases we are talking about people overwhelmingly who are decent and well-intentioned. The difference is the absence of regulation so that pressures to do things that were irresponsible were checked by regulation in the banking area and were left unchecked elsewhere. Essentially what this bill does in its most important form is to try to conceptualize the rules that bank regulators used to prevent loans from being made that should not have been made and apply them to all loan originators. Again, the goal is not to give more remedies when people face foreclosure when there have been abuses, but to prevent the abuses in the first place. One question has been raised from some in the Attorney General field and elsewhere who say, what about our current efforts to deal with the people who were abused? Thanks to a very explicit amendment by the gentleman from North Carolina (Mr. Watt) who, along with the gentleman from North Carolina (Mr. Miller), is one of the main authors of this bill, this bill will be entirely prospective in its effect, and people should understand no cause of action, no legal complaint, no remedy sought against anybody who up until now and until this bill is signed many months in the future, none of those causes of action will be abrogated. Every remedy being pursued against past abuses and even abuses that may yet to have occurred, although we hope they won't, until this bill becomes law will not be stopped. There is some controversy about preemption. The bill takes a balanced position which has made a lot of people on all sides a little bit unhappy. We do not preempt the right of States to decide how to deal with mortgage originators, with lenders, with any of those. We do say that with regard to the secondary market, we are going to put some liability on those who are the active packagers, and that's in some ways controversial; but we believe the unregulated secondary market was a large part of this problem. We do believe that you need to have some uniform rules if you are going to have a functioning secondary market. And we believe the secondary market has been on the whole useful but, having been unregulated, has caused some problems. So there is a limited preemption to that extent. We are continuing to talk with people about ways to, frankly, improve this bill. There will be some amendments adopted today that will do this. It is a subject of great complexity with a lot of interlocking parts and some legitimate competing interests. We have arrived today, we think, at a reasonable balance. We do not believe that this is the way the bill absolutely will look in the end, but it is clear progress. And I want to stress the key point here is not in remedying past abuses. This bill allows all existing remedies for past abuses to stay in effect. This bill tries hard to prevent this pattern of loans being made that should not have been made for a variety of reasons from recurring and causing that great damage. Mr. Chairman, I reserve the balance of my time.

Mr. FRANK of Massachusetts. And I believe it is possible to achieve both objectives, that is, flexibility as to mode but the full substantive protection. And so going forward, as this bill moves on and ultimately we get to conference, I do think we can provide flexibility as to method while preserving the full substantive protections. And there will be conversations between the Miller brothers on that subject.

Mr. FRANK of Massachusetts. Mr. Chairman, I now yield to a man who is going to have a lot of free time after today because much of his life in the last year has been helping put this bill together in a very masterful way, the gentleman from North Carolina (Mr. Miller), for 4 minutes.

Mr. FRANK of Massachusetts. I now yield to another member of the subcommittee who has been very much involved, particularly in the area of manufactured housing, as well as others, the gentleman from Indiana (Mr. Donnelly).

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

Mr. FRANK of Massachusetts

Mr. FRANK of Massachusetts. Mr. Speaker, will the gentleman yield?

Mr. FRANK of Massachusetts. Mr. Speaker, will the gentleman yield?

Mr. FRANK of Massachusetts

Mr. FRANK of Massachusetts. I appreciate the gentlewoman coming forward. She has on this and other occasions played a very constructive role in helping us work things out. We have already done this for the Veterans Administration, Department of Veterans Affairs. Yes, in fact, it is our hope to get more people into the FHA program as an alternative to subprime. One of the things we've done, and the Senate is now doing it, is to extend the FHA's reach to people with subprime; although I do want to remind my friends in the Senate, I feel very strongly that when we do that, it would be terrible social policy to make people with weaker credit who are faithfully making their payments pay more than other people, and we will deal with that as we work out the two bills. But for purposes of this bill, the gentlewoman is absolutely correct. So I intend to support her amendment. And that leaves me with some extra time, so I would now yield 2 minutes to the gentleman from California, a member of the committee. (Mr. BACA asked and was given permission to revise and extend his remarks.)

Mr. FRANK of Massachusetts. I will say on this, as on a number of other issues, I will say very sincerely that the gentleman from North Carolina has persuaded me. I think he has clearly identified an issue that needs some further work. And as we go forward, ultimately to get this bill done, I would hope that we can work together on this.

Mr. FRANK of Massachusetts. Mr. Chairman, I yield my remaining time to the gentleman from Oregon.

Mr. FRANK of Massachusetts. Mr. Speaker, I rise in opposition to the motion to recommit.

Mr. FRANK of Massachusetts. Mr. Chairman, will the gentlewoman yield?

Mr. FRANK of Massachusetts. We have, from time to time, debated the issue as to whether or not we could make sure that no one who is not a legal resident or a citizen could qualify, but that's not what we're debating today. Let me read from page 2. There are four kinds of identification that you must show. By the way, the mortgage industry and the real estate industry will not like the further paperwork here, but listen to this, lines 14 and 15, ``You must show a passport issued by the United States or a foreign government.'' Now, what makes anyone think that people who are in the United States with a foreign passport are here legally? They have foreign passports from other countries. I think the problem is some on the other side have taken the word ``alien'' too literally, that is, they think an alien is someone who's not from the Earth. Because someone who is in America illegally who is from the Earth might have an Iranian passport or a Venezuelan passport or a Burmese passport. So understand, what I think is happening is this. I've been seeing these a lot. I do a lot of recommits; it's a heck of a way to spend your life, but that's my job. This foreign government passport is new. I think what happened was this. I think the real estate industry, this is literally my speculation, the real estate industry said to the Republicans, Hey, wait a minute, we make a lot of money selling houses to foreigners. Don't cut out the foreigners. But you forgot to say legal foreigners. This is what this bill says. So you may have some Americans who don't have all this ID, who don't have a passport, who don't live in a REAL ID State. They may not have this. They may have a driver's license that they can use and it's not a REAL ID State. An American in a REAL ID State who doesn't have a passport can't make it. But an Iranian with an Iranian passport, Welcome to my home. Here's your mortgage. Now, I understand the impulse to prevent illegal aliens from getting predatory mortgages. That's a very kind thing that the Republicans want to do for them. But they don't do it competently. Read the bill. It says if you have a foreign passport, you qualify. You vote for this and you will be favoring people from other countries who are here illegally over Americans who don't have a passport and don't live in a REAL ID State. Now, that's irrefutable. In your desire to further the profitability of the real estate industry, and a lot of them are my friends and I have nothing against their profitability, but why would we want to vote for a recommit that elevates a foreigner who has no legal right to be in the United States and say they can qualify under this recommit, but an American who doesn't have a passport and doesn't live in a REAL ID State, has a driver's license and therefore didn't think they needed something, they wouldn't qualify. So we say to Americans, if you happen to be American, you had better get a passport and, now, it could be a Venezuelan passport, could be a Canadian passport, we don't care where it's from, just get a passport. I am baffled by this and I just think somebody didn't think this one through. The point is that this recommit says nothing about restricting the mortgage process to people who are here only legally, because if you really think that people who are here illegally don't have a foreign passport, then you don't understand the situation. So I say let's reject this effort to elevate foreign passports from people who may be here illegally over Americans who happen to not live in a REAL ID State and reject this recommit. Mr. Speaker, I yield back the balance of my time.

Mr. FRANK of Massachusetts. I thank the gentleman from Maryland. This is a very complicated subject. It involves a number of moving parts. At every stage, and we said this from the beginning, at every stage in this bill, from the bill's introduction to the hearing to the markup to now, it has been improved. No one really knew enough. We are in a somewhat unknown area. I would also say ultimately, I think, if we're going to get any legislation here, as I said before, we are going to get a bill that no single Member of this House likes in every particular because we are going to have to work together. The gentleman from Maryland has identified one more area where we believe improvement can go forward. It is a subject that has to be refined some. This is the end of the session. We are getting legislation drafted. It can't always be done as carefully as we would like. I appreciate the gentleman calling this to our attention; and in the bipartisanship spirit we have had, I believe we can continue to work on this, and by the time this bill is finally ready to be signed, we can include the thrust of what the gentleman is trying to accomplish.

Mr. FRANK of Massachusetts

Mr. FRANK of Massachusetts. Mr. Speaker, I ask unanimous consent that, during consideration of H.R. 3915 pursuant to House Resolution 825, the Chair may reduce to 2 minutes the minimum time for electronic voting under clause 6 of rule XVIII and clauses 8 and 9 of rule XX.

Mr. FRANK of Massachusetts

Mr. FRANK of Massachusetts. Mr. Speaker, I ask unanimous consent that the Clerk be authorized to make technical corrections in the engrossment of H.R. 3915, to include corrections in spelling, punctuation, references to line numbers, section numbering, and cross- referencing, and the insertion of appropriate headings.

Mr. FRANK of Massachusetts

Mr. FRANK of Massachusetts. Mr. Speaker, I ask unanimous consent that all Members may have 5 legislative days within which to revise and extend their remarks on H.R. 3915 and to insert extraneous material.

Mr. FRANK of Massachusetts

Mr. FRANK of Massachusetts. Mr. Speaker, I send to the desk a privileged concurrent resolution (H. Con. Res. 259) and ask for its immediate consideration.

Mr. FRANK of Massachusetts

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