Barney Frank

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. 1427 and to insert extraneous material thereon.

Mr. FRANK of Massachusetts

Mr. FRANK of Massachusetts. I just yielded. I said I yield.

Mr. FRANK of Massachusetts. I apologize. I would ask the gentlelady to yield.

Mr. FRANK of Massachusetts. Please yield.

Mr. FRANK of Massachusetts. I do. I hope the Chair is happy.

Mr. FRANK of Massachusetts. I apologize. The gentlelady has yielded.

Mr. FRANK of Massachusetts. I thank the gentlewoman. That is not what I said. I said reducing the profitability. I would ask the gentlewoman not to yield any further. We are not going to get an answer. I apologize for starting the whole thing.

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

Mr. FRANK of Massachusetts. People keep talking about $3 billion for Katrina. There was no housing construction fund in the hurricane bill. If that is meant to be construction, it is simply not the case. We put vouchers into the hurricane bill, but there was not $3 billion in any housing construction in the Katrina bill.

Mr. FRANK of Massachusetts. I thank the gentleman for yielding. There has literally been no Member of the House who has been more dedicated to helping those who are in trouble than the gentleman from Texas. He represents a community that is a model community: Houston. We don't always show neighborliness in reaching out to others. The city of Houston, its mayor, its congressional delegation, its citizens, its police department, has known an extraordinary degree of compassion for fellow human beings in trouble. There are few examples in this country's history of one community reaching out as generously as the people of Houston have to the people who were forced to evacuate the gulf, particularly Louisiana. The gentlewoman from California and I listened to the gentleman from Texas, and we put some language into the bill that we did last time on the hurricane. On this one, at this point I would ask the gentleman to withdraw his amendment. We appreciate what has gone on. The destruction was greater in Mississippi and Louisiana. There are still unmet needs in Texas. We appreciate that. We have done something, and I acknowledge we have not done enough. I promise the gentleman, we will continue to work with him to that end, but we have commitments in terms of the physical reconstruction to go to these two States. There will be further years in this bill. Texas continues, particularly Houston, to have a big claim on us, and we will continue to try to work with the gentleman to try to resolve it, but we hope not to do it in a kind of zero-sum situation.

Mr. FRANK of Massachusetts. Mr. Chairman, I move to strike the last word just to acknowledge the graciousness of the gentleman from Texas. We will continue to work with him. Houston is entitled to more help and it will get it. The only thing, I want to be partially modest. He said I have the least, the last and the lost. I have tried hard tonight to help the least and the last. But in my debates with the other side, I haven't been able to make much of an impression on the lost. Announcement by the Acting Chairman

Mr. FRANK of Massachusetts. What steps would be needed for us to have the gentleman get unanimous consent to modify his amendment by striking section A?

Mr. FRANK of Massachusetts. If it's only one paragraph, we probably don't have to call it A. It can just be the paragraph.

Mr. FRANK of Massachusetts. Mr. Chairman, I move to strike the last word. Mr. Chairman, this is not an entitlement. It isn't close to one. It cannot get out of control. The only money that can come from this is very clearly limited to 1.2 basis points on the mortgage portfolio of Fannie Mae and Freddie Mac. The gentleman misstates the problem of entitlements if he thinks this is a problem. An entitlement is when the Federal Government, without necessarily a funding source, says if you are X, if you have these characteristics, you are entitled to this amount of money. That is Social Security and that is Medicare. That is not this bill. This bill does not entitle anybody to an affordable housing fund. It does not say if the population grows at a certain rate, then there is the demand for spending. It defines the spending source, a nontax spending source. It says 1.2 basis points of the mortgage portfolio. It doesn't entitle anyone to housing. Social Security and Medicare, he mentioned. Those are entitlements. That means if you are a certain age and have a certain characteristic, you are entitled to receive the funding. No one is entitled under this bill to receive housing funding. This is an authorization of spending, but it is not an entitlement to receive it. Secondly, there is nothing secret here. It says it will be transferred if there is enacted a provision of Federal law establishing the Affordable Housing Trust Fund. That means it only becomes operational if this Congress decides in open session, with another 47 duplicate amendments from the Republican side, to deal with it. We will have a dozen roll calls to make sure that it happens. I should also point this out. Why do we do it this way? To make sure we meet the PAYGO issue. This bill creates a fund out of Fannie Mae and Freddie Mac profits. We have not yet got any consensus on how best to spend it after the first year when it goes to Louisiana and Mississippi. So we say to meet budgetary requirements, we don't want to be in a situation where we create a pot of money in one bill and then in the second bill decide how to spend it. This means that when we get to the collective decision in open session about how to spend it, whether it goes through the States, whether it is goes through HUD, whatever method we choose, we will not be charged with a source of funding. We will simply take the source of funding and hold it in limbo after Mississippi and Alabama and it will catch up if this Congress decides to do it with the method of distribution. That is not an entitlement. An entitlement is when you as an individual are legally entitled to receive money from the Federal Government because of your status. No one is entitled under this bill. No one gets the right to say I'm such and such, build me a house, rent me an apartment. This says a fixed sum will go at a limited rate, a percentage of the mortgage portfolio, and Congress will decide how it will be distributed.

Mr. FRANK of Massachusetts. Mr. Chairman, I very much resent the gentleman from Texas simply doubting my words so blatantly. You do not create an entitlement by accident. Secondly, of course, he misstates the word ``entitlement.'' An entitlement means that you as an individual are entitled to receive the money. That has never been contemplated here. Nothing I ever suggested says it. I repudiated the notion. The gentleman says, yeah, but who knows what he is thinking? I really do not believe the gentleman has any basis for impugning these kinds of motives to me. I am simply repeating what the gentleman said. Well, he says it is not an entitlement but how can we be sure? Because the committee which I chair where I have talked frequently with all the members, including certainly the majority, I know what we intend. It is not to create anything remotely like an entitlement. An entitlement means that individuals will be able to say give me housing, I am entitled to it legally. What we are saying is we will set up a housing fund. We will debate how it is distributed, but it will never be close to an entitlement. No one has ever suggested that any individual would have the right to demand, as you do on Social Security and Medicare, which makes then entitlements, the funding. I said no to PAYGO because I rejected the assumption that it was necessary. This meets PAYGO. It totally meets PAYGO. Has scored this as revenue neutral. We asked them from the standpoint of the Federal Government, and it is revenue neutral. You don't need PAYGO with something that is revenue neutral. What it says is that the Congress, not me personally or a small cabal, will decide that we are going to create an entitlement when no one is looking. It says that having reserved this money in a revenue-neutral way, we will then decide as a Congress how best to distribute it but to distribute it as a housing fund, not as an entitlement. There has never been any suggestion that it would be an entitlement. It is not remotely going to be like Social Security and Medicare, and it cannot be a runaway fund. It is limited to 1.2 basis points of the mortgage portfolio of Fannie Mae. That is an entirely different funding mechanism than an entitlement funding mechanism. I thank the gentleman for yielding.

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

Mr. FRANK of Massachusetts. Excuse me, I am taking back my time to apologize for apparently not being clear in my question. I wasn't talking about cross-subsidization. Here is the point. I would have thought it was clearer, and I apologize for my inarticulateness. The argument was that by taking $500 million from profits, 1.2 basis points on the portfolio, we would be reducing profitability and inducing the enterprises to raise prices and therefore that would be a mortgage tax. The gentleman's amendment would reduce the profitability by far more than $500 million a year. It would be a far greater levy on them than 1.2 basis points. Now, the mechanism by which they claim that the fund is a mortgage tax is that as you reduce their profitability, they are driven to raise prices and that will cost more. Now, it has nothing to do with cross-subsidy. Why does an amendment which would substantially reduce the profitability not have an even greater effect in terms of the middle class, who would not be benefiting from the portfolio, in raising what they have to pay?

Mr. FRANK of Massachusetts. Mr. Chairman, I thank the gentlewoman, and I will yield to my friend from New Jersey after I have propounded a question. My position consistently today has been that it is not possible with absolute specificity to say an enterprise is paying for this out of this pot or that pot or the other pot. I do believe most of this will come from the shareholders. But people on the other side argue no, reducing the profitability by $500 million a year for both enterprises, levying 1.2 basis points on the portfolio, was going to raise the mortgage rates for the middle class. For people who believe that, I want them to explain to me how reducing the portfolio so substantially would not cost even more to the middle class? Again, Members said taking $500 million in profit, 1.2 basis points on the portfolio, would raise the rates on the middle class. I assume it doesn't do it specifically. It does it by reducing the profitability and inducing them to raise prices. Since it would reduce profitability by many multiples of the housing fund, why would it not have a much greater effect? I yield to the gentleman.

Mr. FRANK of Massachusetts. Regular order, Mr. Chairman. I yielded to the gentleman. I have said that I do not think it is my intent or anybody else's intent that will override the economics of the situation. I do not think we can legislate that it comes either out of this or out of that. The money is fungible. My view is that in the competitive situation in which they find themselves, much of this will come out of shareholders' profits. Some may come out of the banks and others they deal with. The point I am making is this: The gentleman and others on the Republican side argue, they were arguing before about a mortgage tax increase. They kept saying we are going to raise the cost of mortgages, not by anything we did directly. Their argument was that when you reduce the profitability of these entities, they will be driven to raise their prices and that will cost other people more. I believe they are far more constrained in their ability to raise prices. I don't think they are holding prices down now out of love. I think they are getting them up as high as they can now in the competitive situation. But if you believe that reducing their profits will cause them to increase their prices and thus hurt other people, in this amendment that has a much greater impact of that kind than the housing fund, because this restriction on the portfolio will cause a far greater reduction in the profit than 1.2 basis points. And it again emphasizes to me that what we have are people who don't like the Affordable Housing Fund, because they have had various contradictory ways of trying to get rid of it. Now, the gentleman from Louisiana is correct, they haven't done enough to help low income people. One of the things we do in this bill is to greatly increase the goals. We impose goals on Fannie Mae and Freddie Mac which also reduce their profitability. We tell them to do more of this kind of thing and we increase the enforcement mechanism for doing it. So we do try to increase the goals in the enforcement mechanism and we create the Affordable Housing Fund. I would say this: Maybe they shouldn't have created these hybrids in the first place. They are part profit making and part with the public enterprise. It is hard to run them that way, I understand that. That is why many of us decided that we will try to get them in the direction of helping low income people, but given the pull of profit, some of what we should do is to take a piece of the profit and put it directly into affordable housing. That is why we have a hybrid solution dealing with a hybrid. That is why I hope the amendment is defeated.

Mr. FRANK of Massachusetts

Mr. FRANK of Massachusetts. Mr. Speaker, on October 26, 2005, the House passed the GSE bill that came out of the committee chaired by Mr. Oxley that had a housing trust fund virtually identical to this one. This one is financed a little differently at the request of the Treasury Department, but it's essentially the same thing. The vote was 331-90. Republicans voted in favor of this bill containing this housing tax 209-15, and among those who joined in the majority, the gentleman from Texas (Mr. Sessions). So I appreciate his concern for this. It did not appear to be evident in October of 2005 when he joined 208 of his Republican colleagues in voting for essentially this same fund.

Mr. FRANK of Massachusetts. Well, I again would repeat that the gentleman said last year I supported this Housing trust fund. So did almost all the Republicans, but the basic point here is that he misstated the nature of the hurricane bill. In the hurricane bill, and the gentlewoman from California who was its main author is here and will speak shortly, we did not provide any additional funds for the construction of affordable housing to replace what was lost. That was mostly with vouchers. We did have some project- based vouchers in the amount of a couple of thousand, but if the gentleman will go back to that bill, he will note frequently in the debate we alluded in that debate to this bill. That is, much of the rental housing in New Orleans was destroyed. The rental housing was destroyed in much of the gulf. This was always a two-bill approach, and the gentleman is simply wrong to state that in the hurricane bill we provided funds for additional affordable housing. We stated at the time, we set some rules about vouchers. We talked about public housing, but we were always clear it would be this bill that would provide the funds. So the point that we already did this could not be more incorrect.

Mr. FRANK of Massachusetts. Mr. Speaker, first I ask the indulgence of the House for the fact that I am dressed a little less spiffily than is my norm, but I have a cast on my arm and this is all that would go over it. Mr. Speaker, I have rarely heard anyone repudiate as much of his party's past as I just heard from the gentleman from Texas. First he said this is a restrictive rule. Why, because we said anyone who wanted to file an amendment could file an amendment. There would be no rejection of any amendments by the Rules Committee, and the deadline for that was the day before the bill was to come to the floor. Now we didn't know when that was. And, in fact, what happened was there was a possibility that there would have been an extra day. So the gentleman apparently objects to the possibility of an extra day. I was also struck that he had two objections to deadlines. One was the fact that a rule had a deadline; and one was the fact that a rule didn't have a deadline. He objected to the fact that there was a deadline on the defense bill. He objects to the fact that there isn't a deadline on this bill. Mr. Speaker, let's be very clear: The gentleman objects to the being in the minority. When you object to a deadline and the absence of a deadline, you have pretty much exhausted the logical possibilities of argument, and the gentleman has done that. Then we talk about this being restrictive. This bill, a very similar bill, was reported out of the committee under Republican rule in the previous Congress. Nine amendments were allowed by the Rules Committee; 36 amendments are pending to this bill. So because we only had four times as many amendments to this bill as when they were in power, we have become restrictive. The gentleman says we have upset a long-standing tradition. He is right. During their rule, the long-standing tradition was amendments they didn't like and were afraid might pass couldn't be offered. We have upset that. Every amendment that anyone wanted to offer is before us. In fact, the last time this bill came before us, and apparently the gentleman voted for the rule, the bill came out of committee. In the Rules Committee, a self-executing rule was adopted that was very controversial limiting much of what could be done with housing funds, and the Rules Committee then refused to allow a vote on that self- executing rule. So here are the comparisons as the gentleman from Texas laments: Our lack of openness. When he was in power, the Rules Committee took a bill that came out of the committee by a bipartisan majority, inserted its own amendment and insulated that amendment from being voted on. We instead said here is the bill, offer any amendment you want. This is pretty topsy-turvy. I understand the demands of partisanship, but shouldn't logic put some limits on what people would say just to make a partisan point? The fact is this bill came out of committee in the last Congress with an amendment that the Rules Committee put in and wouldn't allow us to vote on, and we have done exactly the opposite. Then he talks about the housing funds, and once again, we have the zeal of a convert. He finds this housing fund a terrible thing, Mr. Speaker. It is a tax on people. It was in the bill that the Republicans brought to the floor. It was in the bill that received more than 300 votes, many of the ``no'' votes, my own included, were from Democrats who objected to the unfair restrictions on the fund that the self-executing rule imposed. So when the Republicans were in power, this housing fund was not so bad. This housing fund came out of committee by a bipartisan majority, came to the floor, and was voted on in a final bill by over 300 Members. This same housing fund, exactly the same principle, it is financed a little differently, but with all of the same effects, when did it become so terrible? What turns a fund to build affordable housing for lower-income people from a thing to be proud of into a terrible tax? An election. When the Republicans were in the majority, this was apparently a good thing. It was overwhelmingly passed. But now that the Democrats are in the majority, this same housing fund becomes something that is awful. It is a housing fund that is supported by the realtors, by the home builders, by everybody in the housing business because it does not have the effects the gentleman talks about. Here is the inconsistency which lies at the root of many of my colleague's arguments. The purpose of this bill is to put some checks on Fannie Mae and Freddie Mac. People have said Fannie Mae and Freddie Mac get certain assistance from the Federal Government that allows them to borrow money more cheaply from the market, and too little of that goes to public benefit and too much goes to the stockholders. So this bill, as did the last bill from the Republicans, headed by Chairman Oxley, and poor Chairman Oxley, he did Sarbanes-Oxley, he did this bill. I always thought well of Mike Oxley. I guess I have to defend him against his former colleagues who now are apparently ready to tear down everything the poor man did. Mike Oxley deserves better of you than for you to repudiate all of the good work that he did, and I speak out. I know you are not supposed to address people who are not here, Mr. Speaker, so let me say that I want Mike Oxley to know that there are many of us, and I think a few on his own side, too, who do respect his work on the housing fund and who respect his work on other things. But what we said to Fannie Mae and Freddie Mac was we are going to have you make a contribution. You should not keep all of the money for yourself and for your shareholders. We are going to take some of it for affordable housing. By the way, this is an affordable housing fund that a great majority of Republicans voted for 2 years ago. It became terrible because we won the election. Well, wisdom comes in various ways, and I suppose it came late to some of my colleagues over there, but better late than never by their standards. But the fact is this: In this bill, there will be amendments proposed that would impose far greater restrictions on Fannie Mae and Freddie Mac than the housing fund. There is an amendment that I assume many of them are going to vote for, that would severely restrict what they could put in the portfolio. Now they make a lot of money off their portfolio, Fannie Mae and Freddie Mac, and that is part of the money that goes to help them keep down housing costs. An amendment will be offered that would severely restrict, that would say only low-income- type mortgages can go in the portfolio. That would have a far greater financial impact in reducing funds available to Fannie Mae and Freddie Mac than the housing fund. The problem is that the housing fund would help State governments and others build affordable housing, and apparently there is this ideological opposition to doing that. By the way, where is this housing fund going to go in the first year, this terrible tax? It is going to go to Mississippi and Louisiana. It is going to go to a place where there was terrible devastation of affordable housing in Louisiana and Mississippi, 75 percent to Louisiana and 25 percent to Mississippi. In future years, the money won't be spent until this House and the Senate and the President pass a subsequent bill deciding how to spend it. This bill sets it aside, but it leaves to a later bill the collective decision about how to spend it. So we have a rule that allows 36 amendments. Last year they did nine. We have a rule where the Rules Committee does not add substance. Last year they did and wouldn't allow us to vote on it. We do have one thing in common in the bill last Congress and this Congress: An affordable housing fund. The difference is that the affordable housing fund which my Republican friends took credit for 2 years ago has transmogrified into a terrible beast solely because the Democrats are now in power. That doesn't make any sense.

Mr. FRANK of Massachusetts

Mr. FRANK of Massachusetts. Madam Speaker, I ask unanimous consent that when the House adjourns today, it adjourn to meet at 10:30 a.m. on Monday next for morning-hour debate.

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. Madam Speaker, I move that the House do now adjourn.