Barney Frank

Mr. FRANK of Massachusetts

Mr. FRANK of Massachusetts. Briefly.

Mr. FRANK of Massachusetts. The answer is ``yes'' for a variety of reasons, but I want to make this point. It has nothing to do with this amendment. The gentleman has proven my point. Small businesses don't do IPOs. It is not in the small business area where the decline has happened. So what we see here is small business has been taken hostage by people who never liked Sarbanes-Oxley because the argument the gentleman makes has nothing to do with the specifics of the gentleman's amendment.

Mr. FRANK of Massachusetts. Mr. Chairman, I yield myself such time as I may consume. Again, the gentleman from Florida has made a general assault on Sarbanes-Oxley. He is now attacking Speaker Hastert. The number of people who are in trouble on the Republican side by this group grows and grows and grows. It is the Speaker of the House, the gentleman from Illinois, the former Speaker, who apparently acquiesced, inappropriately, according to the gentleman. Take it up with him, I would say to the gentleman.

Mr. FRANK of Massachusetts. Because I was not the chairman, I do remember discussion of it during the conference report. But reclaiming my time.

Mr. FRANK of Massachusetts. I thank the gentleman for yielding me time. First, as to executive compensation, the gentleman from New Jersey, he finds inconsistencies where none exist. They are kind of like Harvey, his invisible rabbit. On executive compensation, the SEC has said when asked that they do not have the power to do what our bill does. That is very different than Sarbanes-Oxley. With regard to Sarbanes-Oxley, Chris Cox has said I am doing this, so they are quite different. The SEC with executive compensation said we can make them say how much it will be; if you want to go further, we have no power to do that. That is exactly the opposite of what they have said on Sarbanes-Oxley in which they said we are fixing this, and Chris Cox said there is no reason for you to legislate. The gentleman from New Jersey is being unfair to Chairman Cox in caricaturing him as saying ``we don't know.'' What he said when asked what it would cost is very straightforward: ``We don't know yet.'' He said we are in the process of finding out because what the chairman said is we are downsizing Sarbanes-Oxley. We are downsizing it for everybody. We will know better after we see what the new requirements are for larger businesses, how much there will be saved for smaller businesses. The fact is that the gentleman from New Jersey quite graphically misrepresented what the SEC said. The SEC did not say ``we don't know,'' the SEC said ``we will tell you after we have had some experience.''

Mr. FRANK of Massachusetts. It is my time.

Mr. FRANK of Massachusetts. Regular order, Mr. Chairman.

Mr. FRANK of Massachusetts. The fact is that I will not allow my time to be diverted by internecine Republican warfare. You don't like George Bush's bill that he signed. You don't think that Oxley did a very good job. You are upset at your own leadership procedurally. You think Chris Cox doesn't know what he is doing. You disagree with Paulson. Mr. Chairman, they can fight it out. I would like to discuss substance. I'm not here to get even for past grievances that Republicans have with other Republicans. Again, the gentleman from Florida's assault has nothing to do with this amendment, but it is relevant in this sense: It shows that what we have here is the beginning of an attack on Sarbanes-Oxley. The IPOs, small business don't do IPOs. Small business hasn't left America to go to England. That is the clear indication of what is up. Now to get back to the substance, Chairman Cox and the other members of the commission said we agree it went too far in the regulation. We are scaling it back. We are scaling it back first for the big businesses who will be affected by it, and we will learn from that scaling back how much it will help smaller businesses. Again, the gentleman from New Jersey quite unfairly mischaracterized what the commissioners said. The commissioners didn't say ``we don't know,'' period. They said we don't know now because we expect to get experience from the reductions in the scaling back we have already ordered, and that will tell us how that will help small business.

Mr. FRANK of Massachusetts

Mr. FRANK of Massachusetts. Mr. Chairman, I move to strike the requisite number of words. Mr. Chairman, I agree we should be debating substantively whether or not we have reached perfection in the amount of resources we have put to homeland security, and if Members on the other side think that no additional funding for homeland security is necessary, no additional border guards, no additional funding for immigration, that's their right. If they have so little confidence in Secretary Chertoff and the other appointees of the Bush administration to decide what they need to administer their responsibilities, that's their right. In the Senate, they call it ``a vote of no confidence'' formally. Here the vote of no confidence in Secretary Chertoff will be the constantly repeated phrase, ``those bureaucrats,'' and apparently Members do not have any confidence in the appointees of the Bush administration. That's their right. What they don't have a right to do, it seems to me, is to totally forget history. Now, we are told, and I guess I should express my admiration for so many Republicans who are fighting for the rights of others. In our society, people fight for their own rights, but we genuinely honor people who fight for the rights of others, people who are not themselves victims, but fight to protect others who have been victimized. Well, a number of the Republicans are in that category. They are fighting very hard for the right to vote against earmarks. What's interesting is that many of the Republicans who over these past couple of days have been fighting for the right to vote against earmarks always vote for earmarks, and I don't just mean in overall bills. The gentleman from Arizona (Mr. Flake) took the floor and acknowledged that he had offered 39 amendments in the last Congress to cut out earmarks and he lost 39 times. The overwhelming majority of Republicans voted 39 times against the gentleman from Arizona. So we have Republicans yesterday, and I will have the Record and we'll have the rollcall, we will have people who said you must give me the right to vote against these earmarks who then never voted against a single earmark. And that is admirable. It is admirable when you, yourself, have no intention of voting against earmarks when, in fact, you are 39 for 39 in voting to keep earmarks in the bill. And by the way, one might think the gentleman from Arizona is irrational. I do not. I voted with him on a number of occasions, not the majority, but I voted with him on some. The gentleman from Arizona is a careful Member. He selected the most, to him, outrageous earmarks, and we have Republicans who voted for all 39 outrageous earmarks, according to the gentleman from Arizona. The great majority of the Republican Party voted overwhelmingly to reject the earmarks that, of course, their appropriations colleagues had put in the bill. So, Mr. Chairman, is that not admirable, Members who got up here and said, How dare you not let us vote against earmarks, when they themselves had no intention of doing that? This is the vegetarians rushing forward to defend the slaughter of beef cattle. This is atheists insisting that people be given a religious day of worship. This is a very, very impressive display of concern for the others. These are people who themselves apparently intend to vote for every earmark that comes down the pike. They never met an earmark they didn't like, because if the gentleman from Arizona has done all of his careful research, and he's presented 39 earmarks that he thinks are particularly egregious and Members have voted against him on every one and have voted to keep all 39 earmarks, they've never met an earmark they didn't like. So their insistence on delaying this bill and repeating arguments. I must say I was here all night last night. I walked in and I don't object to dilatory tactics. I object to excruciatingly boring dilatory tactics. I must say, Mr. Chairman, the Members on the other side are the least imaginative filibusterers I've ever seen. They just repeat themselves and repeat themselves, and stuff that was uninteresting and flat in the first place does not improve with age. But whatever their tactics, understand they are employing them on behalf of the right of the others to vote against earmarks because it is clear that the overwhelming majority of Republicans have no intention of voting against earmarks, at least not based on the record. They not only voted for bills with earmarks, the gentlewoman from North Carolina acknowledged that earmarks had increased from 1,500 to 15,000 under Republicans, but then, of the 15,000 earmarks, when one of our most diligent Members, the gentleman from Arizona, proposes to kill 39 of the earmarks, the overwhelming majority of Republicans voted against him 39 times. So, for that dedication to preserving a right that they themselves have no interest in exercising, I give them credit, for very little else, Mr. Chairman.

Mr. FRANK of Massachusetts

Mr. FRANK of Massachusetts. Madam Speaker, I ask unanimous consent that the business in order under the Calendar Wednesday rule be dispensed with on Wednesday next.

Mr. FRANK of Massachusetts

Mr. FRANK of Massachusetts. Mr. Chairman, I move that the Committee do now rise.

Mr. FRANK of Massachusetts

Mr. FRANK of Massachusetts. No, I will not yield, Mr. Speaker. I will not be part of self-ambush. I will say to the gentleman from Virginia, offer an amendment when you have the right to offer an amendment, and we will debate the amendment at length as we debated many of these amendments. But to play this kind of ambush game, do not expect cooperation. The gentleman may say, well, it is unfair. We got the last word. That was his choice. The gentleman could have offered the amendment in a fashion that would have allowed a broad debate on it. But they chose to have the benefit of the ambush, but not pay the price of it. This kills the affordable housing fund. What it says is none of this money goes for rental housing. By the way, they list a lot of the States. They say ``including.'' It can go to any State; so does the bill as it now stands. The bill as it now stands allows the money to be spent in any State. And the key is this: This amendment, if you take it at face value, I would advise that, but if you do, it kills rental housing. Now, homeownership is a good thing, but as we have seen from the subprime problem, if you ignore people who should be renting, if you try to shoehorn everybody into homeownership and don't build a single unit of affordable rental housing, and that is what this amendment says, this amendment says none of the funds go to build rental housing, it is all homeownership. Homeownership is useful, but it is not the exclusive answer and we have a problem of people being pushed into it. Then this says ``promptly.'' Promptly means maybe not, as we know in parliamentary language. We got some explanation why it couldn't be ``forthwith.'' There are some people who don't like this bill. They don't have the votes to kill it. They have tried every which way to do that.

Mr. FRANK of Massachusetts. Mr. Speaker, will you instruct the gentleman? When it becomes clear that I am not going to yield, this becomes, it seems to me, somewhat unparliamentary.

Mr. FRANK of Massachusetts. Thank you, Mr. Speaker. Mr. Speaker, we debated a long time on Thursday. I had to have my cast rewrapped because I was waving my arm so much. I did become unwrapped, I will tell the House. But the point is this: We had ample opportunity to debate this with give-and-take. But you cannot, Mr. Speaker, it seems to me, expect to come in at the last minute with a very tough amendment that kills the housing fund that we have already voted on 10 times because it says no rental housing can be built at all under this, says ``promptly'' rather than ``forthwith'' for no good reason except they don't like the bill and don't have the votes to kill it, and then says you wouldn't give me a chance to go back and forth. Yes, the rule did. The rule said that this amendment, if it was a thoughtful attempt to amend the bill, could have been offered as an amendment. Instead, it is held back. No one gets to see it until literally a minute before the debate starts. It is a 3-page amendment. It kills the affordable housing in a very limited debate. To put this forward under a procedure which Members know limits debate to 5 minutes and 5 minutes, and then to complain that there isn't enough back and forth, Mr. Speaker, that is the equivalent of accusing the Three Stooges of being silly, and I hope the recommital is defeated.

Mr. FRANK of Massachusetts. No, I will not yield, and I will explain why. We had an open rule. Any amendment that they wanted to offer could have been offered as long as it met the deadline, which was a very long deadline. Now we have ambush legislation again. There have been 10 tries at this. Mr. Speaker, if they really wanted this to be debated thoughtfully, it would have been an amendment. It wouldn't have been held back for 5 and 5 with us having only a chance to read it now. It is just one more attempt to kill the bill.

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

Mr. FRANK of Massachusetts. Mr. Speaker, I congratulate the minority for its persistence and tenacity, if nothing else. This will be the 11th time the House has been asked to vote to kill the Affordable Housing Fund since last Thursday. They have, as I have said, taken as their model apparently the TV pitchmen of yore. They have got a machine that slices and dices and cuts and shreds and chops and whatever. They have offered 10 amendments to kill the Affordable Housing Fund. This is number 11.

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

Mr. FRANK of Massachusetts

Mr. FRANK of Massachusetts. If the gentleman would yield to me, let me say, and I want to pay tribute to members of the staffs on both sides, Mr. Paese and Mr. Yi on my side here, who did a lot of negotiating. There are a lot of regulators involved here, the FDIC as the primary regulator, but the Federal Reserve and the Securities and Exchange Commission, the Comptroller, and we did the best we could to try and not have this be a means of changing existing relationships. So I can assure the gentleman from Alabama that he has precisely stated our intent. When we grandfathered these firms in this bill, it was our purpose and is our purpose to let them continue to operate the existing industrial banks under the limitations of the bill and under the supervision of each grandfathered firm's appropriate supervisory agency. So I hope that would respond to the question. It is our intention essentially to ratify the existing arrangements by law, which would, of course, preclude the need for a waiver if the law is clear about what it does.

Mr. FRANK of Massachusetts. If the gentleman would yield. With some encouragement.

Mr. FRANK of Massachusetts. I just want to respond to my good friend from Utah. He made an interesting point which is, well, if these are terrible, why don't you abolish them? That, of course, becomes a Catch- 22. I guarantee you that if we had proposed in fact to abolish or severely restrict existing ones, he would have been justifiably a lot less happy than he is today. Congress made a decision. We don't always make the best decisions when we look back; we often make good decisions, but not perfect ones. We believe it would be unfair to undo what was originally done by law. I would note again that even in the State of Utah, which has become the primary focal point for the industrial loan corporations, 93 percent of the entities functioning as industrial loan corporations in Utah would be unaffected by this bill. They would be able to expand because they meet the 85 percent financial test. As to the others, we believe that it is those who have finally figured out the potential of the industrial loan corporation going forward who are trying to change things. People have said to us, well, there's been no problem. Why are you doing this? Well, for once, maybe not once, let's not be too self-denigratory, we're doing this to get ahead of the problem. Yes, that's precisely the case. The ILCs have not caused problems. It is the, I believe, overwhelming view of people here and people who have watched the banking business and who believe in the separation of banking and commerce that if we don't act, we will see some problems. So that is what we are doing here. And I hope that this bill passes with a large margin, and we can pretty soon engage with our colleagues in the Senate about putting a final product on the desk of the President. Mr. Speaker, I yield back the balance of my time.

Mr. FRANK of Massachusetts. Mr. Speaker, on that I demand the yeas and nays.

Mr. FRANK of Massachusetts. Mr. Speaker, at the outset, I ask that all Members have 5 legislative days to revise and extend their remarks on this legislation and to include in the Record extraneous material thereon.

Mr. FRANK of Massachusetts. Mr. Speaker, the House today revisits the subject of the industrial loan corporation. Industrial loan corporations were created early in the last century as a kind of a niche at a time when it was felt that banks did not adequately serve working people, people of lower incomes. When Congress dealt with the situation of banking reform in the 1980s, Congress decided to limit this form to six States, which now have the right to issue industrial loan charters, and recognize that the general business of banking was now being carried out in a way that did not require these niche banks, which Congress did not want to at that time wipe out banks that had been appropriately established under existing law. But it's clear that they were regarded as a somewhat nonconforming use. There are people today who talk about what a good thing the industrial loan corporations are. None of them, however, seem to me to have shown the courage of their convictions, because those who believe that the industrial loan corporation should continue to flourish and grow, as will happen if we don't pass the bill, ought to be abolishing that restriction that says only six States can issue those charters. I cannot think of any other financial instrument of which we have general approval where only six States are allowed to charter them. People who genuinely believe in the ILCs are the ones who ought to be pushing legislation. They do not. They implicitly accept the fact that they are an exception to a general principle. The particular general principle to which they are an exception is the one which we have affirmed recently when we did the Gramm-Leach- Bliley bill, namely that banking and commerce should be separate. Now, let me be very clear. If an entity that is in the manufacturing business or the retail business or any other business wants to get into financing its purchases, or even wants to lend money to people, they wouldn't be affected by this as long as they were willing to forgo deposit insurance. We are here because if you become an official bank, as ILCs can be to this extent, you get various benefits from the Federal Government, including deposit insurance. So this is not the Federal Government intruding on purely private business decisions, it is the Federal Government saying, look, we have set up the system of deposit insurance. We have set up other things that apply to banks. We want to restrict those services to entities which are only in the banking business. We do not want people who have as their primary business a manufacturer or wholesale or retail sales also dealing with banking. We think that is an unwise mixture. We think that the decisions that are made that we want to insure through the depository insurance system ought to be made purely on the banking aspects of this and not because the bank will make money on the side from where the purchase goes. Now, people have asked, why this legislation now? The answer is that for a variety of reasons, I am not fully aware of why, this situation changed drastically in the last few years. ILCs, as they exist today, are not a problem. No one is talking about abolishing them. In the State of Utah, where they are most important, and where there continues to be strong support for them, there is opposition to them even in some of the other States that have the right to charter them, the estimate we received from the Utah bank supervisor was that 93 percent of the assets of ILCs meet the test that we would apply here in this bill to everybody. That test, by the way, is the one that we took out of Gramm-Leach- Bliley; namely, that to be in the banking business, you have to be at least 85 percent a financial institution, though we do recognize there will be some incidentals. Ninety-three percent of the Utah ILCs meet this. The problem is over the last few years, a number of large manufacturing and commercial entities have decided that they would like to get into the ILC business. So people have said to us, why are you upsetting the status quo? We are not. Here, to be honest, we are preserving, we think, the status quo, which is the principle of the separation of banking, commerce, a banking system which exists under that rubric and a small niche for some banks which, for historical reasons, were allowed not necessarily to follow this. What's changing the status quo is the application from a number of large entities, Wal-Mart, Home Depot, many others, to get into the ILC business. We believe that does not really reflect what Congress intended in the 1980s. It's not illegal under current law, but we think that Congress did not anticipate then that large commercial and manufacturing entities would seek substantially to broaden the ILC approach. There were people who disagreed with us that we should preserve the distinction between banking and commerce. I asked them, where is that bill? Again, those who would support by not changing the law a broad expansion of the ILCs are the ones who are seeking drastic change in our banking laws. They are, in effect, saying, you know, this distinction between banking and commerce you make is arbitrary, it has been outdated, let's get rid of it. Well, the way to get rid of that is for people to bring forward a bill. I can promise them as chairman of the Financial Services Committee, we will have a hearing, we will consider it. But let them bring forward a bill, and let's do that as a conscious decision of the Congress of the United States. I will oppose it, I think most Members will, which is probably why they don't want to bring it forward. But let's not do it in a kind of a back-door way by the expansion of what had been intended to be a residual niche kind of banking. This bill today would say that going forward, it doesn't wipe out existing entities, but going forward, ILC charters will only be granted to those that are at least 85 percent financial. I want to give my thanks to the Chair of the Federal Deposit Insurance Commission, Chairman Bair. They have been put in a tough situation, because the law theoretically allows them to create an infinite number of new ILCs with no respect whatsoever for the banking and commerce distinction. Once this House passed a bill on the subject, although it did not pass the Senate, a phrase one often hears, the FDIC at our request has imposed a moratorium on new ILC charters. But the FDIC is a law-abiding organization. Chairwoman Bair has an appropriate understanding of the role of the regulatory body in a democratic system. She will not forever maintain a moratorium, nor should she. What she did was, quite appropriately, give Congress the chance to legislate. We are beginning that process today. I hope that we will pass the bill, that it will go to the Senate and they will pass something, and we will be able to work out legislation which will essentially preserve the distinction between banking and commerce. The necessity for us to act now is that if we do not act, the status quo will be greatly transformed, and the distinction we have long maintained in our law between banking and commerce, instead of admitting a fairly small exception where six States can do it, and where even in the State where it is most prominent only 7 percent of the assets under this form are the exception, we will then see a general erosion. Erosion may understate it; a general abolition of the line between banking and commerce. We do not think that is appropriate, and passing this bill is the way to stop it. Mr. Speaker, I reserve the balance of my time.

Mr. FRANK of Massachusetts

Mr. FRANK of Massachusetts. Madam Speaker, I rise today with Ranking Member Bachus to recognize L. Carter Cornick III for his dedicated service at the United States Department of Housing and Urban Development. After serving nearly 5 years, an era of sorts, Mr. Cornick, the General Deputy Assistant Secretary for Congressional and Intergovernmental Relations, will return to the United States Senate as Chief of Staff to Senator John Warner. In his new role, he will once again be working for the people of the Commonwealth of Virginia, the state he loves and ever-so-proudly calls home. During his tenure, we have had the pleasure of working closely with Mr. Cornick on many issues involving housing policy. We have relied on him to help turn some of the Committee's ideas into realities at HUD. Mr. Cornick has been helpful on several issues where it was important for us to work together. In addition to his work as the Department's primary advocate before Congress, Mr. Cornick should also be recognized for the deep admiration he has earned within the halls of HUD. He has taken the time to learn and understand HUD's many complex programs, and has worked with and relied upon the career experts for their advice and historical knowledge of the issues. We commend Carter Cornick for all of his tireless efforts in representing HUD before Congress, and congratulate him on his latest endeavor in public service. He will be missed.