Barney Frank

Mr. FRANK of Massachusetts

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

Mr. FRANK of Massachusetts. Mr. Chairman, I yield 1\1/2\ minutes to the gentleman from Florida (Mr. Feeney).

Mr. FRANK of Massachusetts. Mr. Chairman, I yield 2 minutes to the gentleman from Indiana (Mr. Donnelly).

Mr. FRANK of Massachusetts. I thank the gentleman. I really appreciate his offering this amendment. As I said, I understand there will be some philosophical differences over the existence of the fund, but it certainly is incumbent upon us to make sure that that's all we're debating, not whether it would be misused or abused. We tried to deal with that. You never anticipate everything, and the gentleman's amendment is a very good addition of the kind of safeguards we want so that we can be debating the real issue and not other things, and so I am grateful that you're offering it.

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

Mr. FRANK of Massachusetts. Mr. Chairman, first I yield myself 30 seconds to thank the gentleman from Arkansas. There are actually four amendments trying to achieve the same purpose. I must say I thought his did it in the best possible way, leaving flexibility. There may be legislation adopted. I am hoping this may save us some time later, but I do want to say we completely agree. Let's be clear now, with the adoption of this amendment, no one will be able to benefit from the Affordable Housing Fund who cannot demonstrate that he or she is legally in this country. I think that was very helpful. I'm glad that it's going to go through unanimously, and I thank the gentleman from Arkansas for the straightforward way in which he did it. Mr. Chairman, I believe there are no Members left on our side who need to be recognized, so I reserve the balance of my time.

Mr. FRANK of Massachusetts. Mr. Chairman, I yield 2 minutes to one of the authors, the gentlewoman from Texas (Ms. Eddie Bernice Johnson).

Mr. FRANK of Massachusetts. Mr. Chairman, as the designee of the Members I am about to name, I ask unanimous consent that the following amendments be considered en bloc: No. 2 from Ms. Eddie Bernice Johnson of Texas with a modification which is at the desk; No. 3 from Mr. Boozman; No. 6 from Mr. Terry; No. 7 from Mr. Donnelly; No. 11 from Mr. Blunt; No. 20 from Mr. McCaul of Texas; and No. 31 from Mr. Baker. I ask further that the debate on the amendment en bloc and any amendment thereto be limited to 20 minutes, equally divided and controlled by the majority and minority. I am proud to report that I am the designee of all these people. I have rarely been so popular.

Mr. FRANK of Massachusetts. Let me say, I appreciate that. The Treasury has chosen well in having you do it. I just want to give you my commitment that we will continue to work on this issue.

Mr. FRANK of Massachusetts. I yield to the gentleman from Louisiana.

Mr. FRANK of Massachusetts. Mr. Chairman, I move to strike the last word. As I was saying, Secretary Paulson and Under Secretary Steel made it possible for us to come to agreement. I would like to say to Mr. Baker, as he looks and as I look at who has come there, and I think some statements were made that shouldn't have been made that made people nervous. I want to give my friend from Louisiana and others the assurance, Mr. Chairman, that assuming this wins, and it looks likely to, I don't consider it to be the last word on the subject. I think the concerns he has talked about are legitimate. We are going to have a bill from the other body, and we will get to a conference. I want to promise that I plan to continue to work with the gentleman from Louisiana, as well as the ranking members on the other side, the Secretary of the Treasury. We win here and we are going there. Maybe we have to move back a little bit. I understand where this comes from. I agree with him that I don't think there is a point now in trying to fight it here, but I do want to acknowledge that I don't consider it a solely settled issue, and I am hoping that we will find some way to accommodate the very legitimate concerns that he has as we go further.

Mr. FRANK of Massachusetts. The gentleman from Louisiana has consistently been one of the most constructive Members in this regard. Some of us were not as tuned in as we should have been earlier, and I appreciate that. I differ with him somewhat in emphasis here because I do think if there were to be any of the threats that he very lucidly and cogently outlines, they would have to involve a threat to the safety and soundness of Freddie and Fannie. That is, I have a metaphor problem. I don't see Freddie and Fannie as pulling down the temple without getting a couple of rocks in their own head. But I do understand it is a matter of concern. Let me also add, I have some uneasiness because I have worked very closely, and all of us here have been the beneficiary of the very thoughtful approach of Secretary of the Treasury Paulson and Under Secretary Steel. We have come to some agreements.

Mr. FRANK of Massachusetts. Thank you, Mr. Chairman. Not elegant, but effective. I hope the amendment is adopted.

Mr. FRANK of Massachusetts. Mr. Chairman, I am impressed with the precision and exactitude of my friend from Texas. I am actually used to Texans talking slower. I appreciate my friend getting to the point so quickly, and I apologize for my not being there. It is a very good amendment and I think has been agreed to by both sides. The gentleman from Texas has been a strong proponent of housing counseling. We all agree that if we had had more of that earlier, we might have less of a problem than we have today. He has been very strong on the questions of literacy. So I very much appreciate this amendment and hope it is adopted.

Mr. FRANK of Massachusetts. I'm sorry for trying to answer the question.

Mr. FRANK of Massachusetts. Well, in the first place, the universe is not exhausted by the borrowers and the shareholders. There are banks involved. There are many other people in the transaction. And yes, I think there will be various distributions, of course, and it will differ at different times and different economic circumstances, depending on the competitive situation. I believe that it is possible in some circumstances a very small percentage of the 5 percent might go on to the mortgages. It is likely to be de minimis. And the answer is it doesn't come just from the shareholders, it comes from the banks, from the mortgage brokers----

Mr. FRANK of Massachusetts. I thank the gentleman, and I understand that. And that's clearly what's involved here. And we will hear four or five different ways to do it. Let me just say this; this has now become a late night TV commercial, it might be a late night debate. It will slice, it will dice, it will cut. We are going to see the magic nine cut knife as a way to kill the Affordable Housing Program. And we will have everybody but a TV pitchman demonstrating it. And maybe he will throw in a few Ginsu knives as well to knock off a couple other programs, but this is simply one more assault out of many that we will hear today on affordable housing.

Mr. FRANK of Massachusetts. I'm sorry, I didn't hear what you said.

Mr. FRANK of Massachusetts. Not yet. I understand people who don't like it. And by the way, I would note again, not the gentleman from Texas, but 209 Republicans in October 2005 voted for legislation that included exactly this sort of fund. Some of us voted against it because of a provision that is not now in this bill that would have kept the Catholic Church and others in the religious field from building housing. But I don't understand why, if it's so terrible today, it wasn't then. Mr. Chairman, now I will yield to the gentleman.

Mr. FRANK of Massachusetts. Mr. Chairman, I move to strike the last word. Mr. Chairman, this is another effort to try to kill the fund, this time by obfuscation. We have tried to work out some agreement. There are about 11 different amendments that try to do the same thing. Members should just be ready to be here all night and maybe until Tuesday or come back on Tuesday. I understand the objections to the fund. What I don't understand is why Members wouldn't be willing to accept two, maybe three chances to defeat it. Now, with regard to the economics, first of all, there is this myth that we have said it's not coming from anywhere. We do believe that it will come primarily from the shareholders. By the way, in earlier debates on this, some of the opponents of the bill said the same thing. If you go back and look at the transcripts of our committee, although I can't understand why anybody would want to do that, you will find people saying we were unfairly levying on the shareholders. That didn't work. There are people who do not believe that the Federal Government should be encouraging the construction of affordable housing, and understand that however we propose to do it, they will object to it. If we try to do it through appropriations, that will be a problem because of the deficit. Here we try to do it by taking, we believe, essentially from the profits of Fannie Mae and Freddie Mac. Now, as to the legitimacy of their concern, I will repeat, and the gentleman from New Jersey seemed annoyed when I mentioned it, he has an amendment that, by making restrictions on the portfolio of Fannie Mae and Freddie Mac, their main profit generators, would hit their profits far more than anything you could conceivably attribute to this amendment. So it would have, if you believe that this is going to hurt the borrowers, a much more negative effect. I heard the gentleman from Texas say this is a government-sanctioned duopoly. At one point it might have been. In fact, today, the securitization market is far more competitive. It's not atomistic, but there are states, economic states, between duopoly and atomic, and this is where we are here. There are significant private competitors to Fannie Mae and Freddie Mac. You will know that because some Members, Mr. Chairman, have heard from them who don't like what we are doing here. And we believe that the primary burden here will come from the shareholders. The notion that Fannie Mae and Freddie Mac can raise prices at will does not seem to me to reflect economic reality. Now, the gentleman from New Jersey said why don't you pass a statute saying that? That is the naivete of economics. You can't pass a law that says economic reality shall be X or Y or Z. There is an interplay among various forces. We do believe that the great bulk of this will come from the shareholders. By the way, it amounts to 5 percent of the profit. Other amendments would restrict the profit by far more. And if people legitimately believe that any restriction on the profit was going to hurt the mortgage borrowers, then they wouldn't be offering those other amendments. There is a common thread here. They don't think the Federal Government should help build affordable housing. We strongly disagree with that. We believe that the Federal Government should. The calculation that is being asked to be made here is a very difficult one to make. The gentleman prides himself on his economic expertise that he learned some time ago. I don't know where he learned that you could easily make this kind of calculation. There will be legitimate debate. And by the way, what he does say here is that if at any point it turns out that there is an impact, you know, things can happen slow, the competitive situation can be more or less, a lot of factors will affect this. If at any point it happens, then the fund is permanently shut down. You will note that he strikes the word ``temporarily.'' This is an effort, once again, to kill the fund.

Mr. FRANK of Massachusetts. Mr. Chairman, I thank the gentleman for yielding. I want to express my support for this. We have talked to Members on the other side. My understanding, this is one of nine that was going to be agreed to. The gentleman from Pennsylvania has been one of the leading Members of the House in insisting on the public functioning of this board and the members, and this is another chapter in the book he is writing about how to protect the input here from citizens. So I strongly hope that the amendment is adopted. It is my understanding that it was acceptable on the Republican side as well.

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

Mr. FRANK of Massachusetts. I am disappointed in the gentleman's naive economics. No, you cannot by statute affect this economic question. My point is that is a measure of where the pricing power is, and it is impossible to sort out where it comes from when you are talking about profits. A corporation will maximize profit. One of the restraints on that will be competition. My belief is that there is sufficient competition in this field so their ability to put all the costs on the customers and not have much on the company shareholders is far less than the gentleman from New Jersey thinks. That is not something you do by statute, as in every other context he would recognize.

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

Mr. FRANK of Massachusetts. I wouldn't accept such an amendment because it would be impossible to enforce the economics of what's involved, to the extent that an entity has pricing power, monopoly pricing power or duopoly that can pass along the costs. I would just note that the gentleman from New Jersey has an amendment that would have a far more significant negative impact on the profitability of these institutions than this bill.