Scott Garrett

Mr. GARRETT of New Jersey

Mr. GARRETT of New Jersey. Madam Speaker, yesterday, people of all ages, of all races, of all religions and walks of life joined together in Montclair, New Jersey for the Northern New Jersey Walk Now for Autism. Many of those who walked deal with autism on a daily basis in their homes. They walked for their sons and daughters, grandchildren, and brothers and sisters. They are remarkable for their strength and their spirit, and I commend each and every one of them for their efforts. Each year, more and more children are diagnosed with autism spectrum disorders, yet each year we seem to learn more and more about how little we know about autism and how to help those who must deal with it every day. But, what we do know is that it can be a lonely world for many children with autism. It can be an equally lonely world for those who care for autistic children. What makes these walks so phenomenal is not just the awareness that they raise amongst the general public or the money they raise, but the community spirit that they generate. No parent or grandparent, sister or brother need feel alone. There is a whole family of people who know what you go through and are there to lend all the support that you need. Because of the can-do spirit of autism families, today, we have new schools and new teaching methods to serve autistic children; we have new research to bring us closer to an understanding of autism spectrum disorders; and we have a fresh recognition of how bright and special children with autism are. I commend these families for taking on autism head-on, and I am certain that with the spirit they bring to this fight, they will change the future for all who struggle with autism.

Mr. GARRETT of New Jersey

Mr. GARRETT of New Jersey. Madam Speaker, I rise today to honor four public servants from Bergen County, New Jersey--four school nurses in Bergen County public schools. Throughout their respected careers they've acted as medical experts and comforting friends to countless students. And, as they retire in a ceremony tonight, they leave with fond memories of all the children on whose lives they've left an indelible mark of kindness. The days when school nurses tended to skinned knees and the unexpected onset of flu are long gone. For many children today, school nurses are their first real medical relationship. They catch diabetes early when children can still make important behavioral changes. And, far too often, they catch violence in the home while there's still time to save children's lives. They give children the chance to learn trust and to develop healthy living and to mend. And, quite simply, they give children the chance to learn because healthy minds are minds that can absorb all there is around them. Only days after we celebrated the healing power of nurses with National Nurses Week and National School Nurses Day, it is an honor to commend these women for their service to the parents, children, and teachers of Bergen County: Catherine Anne Thabit--Westwood Regional Public Schools, Mary Ellen Miller--Bergenfield Public Schools, Janice Loschiavo--Glen Ridge Public Schools, and Meta Pitrelli--Bergenfield Public Schools.

Mr. GARRETT of New Jersey

Mr. GARRETT of New Jersey. Madam Speaker, I rise today in honor of the opening of the latest addition to the Bergen County Jewish Home Family, the Kaplen Family Senior Residence in River Vale, New Jersey. The local Jewish community has worked hard to plan and prepare for this home for more than a decade, and its doors are being opened to great exuberance. Assisted living homes have become a very popular option for senior living. More and more families are working to care for young children and aging parents simultaneously. Assisted living facilities offer a loving and supportive environment for seniors. Families can rest easy that their parents are being cared for in a homestyle environment. And, seniors can have the independence they desire, knowing all the while they have access to quality medical and life services that they may need. What sets this assisted living home apart from others is that it is the first to offer a kosher environment. I commend Bill and Maggie Kaplen and the Kaplen Foundation for taking the initiative to meet this community need and to make this dream a reality. I've worked for years with the Jewish Home community in Bergen County. With each visit to the Jewish Home in Rockleigh, I have encountered friendly, thoughtful staff and happy, content residents. I am certain that this newest facility will offer the same caring environment and neighborly feel.

Mr. GARRETT of New Jersey

Mr. GARRETT of New Jersey. Madam Speaker, I rise today to pay tribute to the tremendous public service of Fred Winkler of Hillsdale, New Jersey. At 80 years old, he is the longest-serving volunteer in the Hillsdale Fired Department and he shows no signs of slowing down. Fred Winkler joined the fire department about 60 years ago when he returned from his service in the Navy Air Corps during World War II. He helped to start their ambulance corps and served as the fire department's chief in 1956 and president in 1958. His extraordinary dedication to the Hillsdale Fire Department earned him the Firefighter of the Year award in 1982. In addition to the time he devotes to the fire department, Fred Winkler is also committed to his role in other parts of his community. He helped to start a fishing program for young people through his involvement with Friends of the Pascack Brook. He is active with the veterans' community through his local American Legion. And, Fred Winkler spent 10 years helping to renovate the landmark Hillsdale Railroad Station. About 10 years ago, the borough of Hillsdale honored Fred Winkler for his true sense of service to his community by naming a street after him. This coming Sunday, the Hillsdale Fire Department will honor him with a firehouse open house. It is a great privilege to join his proud neighbors in honoring the shining example of public service that is the life of Fred Winkler and I commend him for his dedication to his community.

Mr. GARRETT of New Jersey

Mr. GARRETT of New Jersey. Mr. Chairman, reclaiming my time, I yield to Mr. Roskam.

Mr. GARRETT of New Jersey. Mr. Chairman, I offer an amendment.

Mr. GARRETT of New Jersey. Mr. Chairman, this amendment seeks to refocus the GSEs on what is their congressionally mandated responsibility, and that is, providing for and promoting affordable housing. The amendment would direct the new regulator to require the enterprises to only hold mortgages and mortgage-backed securities that exclusively support affordable housing. That is, those mortgages that are extended to households falling below the area's median income in their retained portfolios. Mr. Chairman, the GSEs were created by Congress to do a couple of things. First of all, to create liquidity in the secondary market, and, very importantly here, to provide affordable housing for low and moderate families. Now, to effect this worthy goal, Congress granted these enterprises a number of advantages over private firms, including exemptions from State and local taxation, and also the ability to borrow at lower rates. In fact, Mr. Chairman, Fannie and Freddie used these advantages to borrow at interest rates barely above the Treasury rate. They then buy mortgages from originators and do one of two things; either they package these securities into MBSs, that's mortgage-backed securities, and securitize them, or they retain the purchased mortgages on their own portfolio. Interesting, the combined GSE portfolios have increased from $130 billion in the early 1990s, today it is over $1.5 trillion. The current practice of the GSEs buying derivatives to hedge against the interest rate risks created by these huge portfolios creates an enormous risk for us. And there should be some commensurate level of return on that risk to the taxpayer in the form of lower housing prices for low and moderate homeowners. Federal Reserve studies, however, and those conducted by other organizations, have concluded, and this is important, that consumers receive no direct benefit from the GSE's expansive portfolio holding. Although GSEs as business enterprises should return a profit to their investors, they really can't lose sight of the purpose for which they were created and the additional people to whom they answer, given their special status. They are not simply another business entity. Currently, GSE shareholders receive all of the benefits for the portfolios and none of the risk. In contrast, low and moderate income families bear all the risk and receive few of the benefits. By buying mortgages from banks that are part of the CRA requirement or holding more low income mortgages on their portfolios that might be difficult to securitize, this amendment will help the low and middle income American buyer buy their home and give low and middle income homeowners the benefits comparable to the risk. Let me just end with this quote. Federal Reserve Chairman Bernanke, ``Tying portfolios to a purpose that provides measurable benefits to the public would help ensure that society in general, and not just the shareholders, receive a meaningful return in exchange for accepting the risk inherent in the portfolios. Moreover, defining the scope and purpose of the portfolios in this way would reduce the potential for unbridled growth in those portfolios, while avoiding the imposition of arbitrary caps.'' Mr. Chairman, this is a commonsense, good government amendment that will provide the taxpayers, particularly low and middle income taxpayers, more benefits for the risks they bear by helping Fannie and Freddie refocus their job, which is affordable housing. I ask my colleagues on both sides of the aisle to support this commonsense amendment.

Mr. GARRETT of New Jersey. Will the gentleman yield?

Mr. GARRETT of New Jersey. As many Members have said when they have come to this microphone in the past, that when you come to the floor, we can all have our own opinion on these matters, but we can't have all our own facts. To use the gentleman from Georgia and also Florida, too, I think said when it comes to the expression of squeezing all the juice out, that's maybe an appropriate expression, but then the question is where did that juice go to and what should it be used for? Well, my suggestion is that the juice should not necessarily always be used for the benefit of the stockholders, but the juice should be basically used for, what was the intent here, to provide for affordable housing for low and moderate income. And as the gentleman from Louisiana just indicated, as we've heard from all the testimony in the committees, the GSEs have not been doing the job that we wanted them to do. And one of the reasons I believe that we now see a bill before us to put on this new housing fund is in part because they have not been doing their job. Had they been doing their job as Congress directed them to some time ago, we may not have come to this position today where we have to be debating the issue of the housing fund, which is a separate issue. The point, though, as far as where the juice goes to and what the real facts are, we also heard testimony of Chairman Bernanke when he came to the floor, and there are also GAO studies that have looked at this as well, and what do they say? Where does the juice really go to when the portfolios expand to this level? And they include not just the low and moderate income, but the higher ones, since the low moderate income is so small. Where does the juice go to now? The juice goes to the stockholders. That is not what I am interested in making sure happens. I am interested in making sure that the juice ends up with affordable housing.

Mr. GARRETT of New Jersey. Will the gentleman yield?

Mr. GARRETT of New Jersey. Will the gentleman yield now?

Mr. GARRETT of New Jersey. I appreciate that argument. But your argument before, if I heard you correctly, when we had a little dialogue before, was that it is your intent with the overall housing fund and where the money would come from is not from the homeowners. Your intention, if I understood correctly, was from the stockholders, from the investors. My bill would do the exact same thing and say that it would not be coming from the homeowner or the investor as far as any burden on them.

Mr. GARRETT of New Jersey. I only stated it once. How can it be four times?

Mr. GARRETT of New Jersey. Mr. Chairman, I thank the gentleman. To the point of the chairman, I am a little bit confused. He said that I have repeated his position four times differently. I have only been on the microphone three times now. But I am also confused on his position as to whether or not there really is an MTI, a mortgage tax increase, because initially he said it is going to be on the homeowners and it is not going to be on the stockholders. Now he says that money is fungible so it really can come from either place. So, at the end of the day, I guess my original assertion was that there is an MTI, there is a mortgage tax increase, because they can come from the homeowners. From the gentleman from Georgia, when he says there is a cross- subsidization from the larger portfolio, I would like to see the evidence of that. The evidence that we heard in committee on that point was from Chairman Bernanke and from the studies was there was not that cross-subsidization, and that in fact all the benefit comes not to the homeowners, the benefit comes to who? It comes to the shareholders. In fact, under Chairman Bernanke's testimony, it would be better if the portfolios would be limited to this. Why? Because then they would do better than what the gentleman from Louisiana said, there is a fractional amount of work they are doing as far as helping the low income homeowners, and instead they would be holding those in their portfolios, those mortgages, as he said ``difficult to securitize.'' That would help out. That is giving real juice to the low and moderate income homeowner.

Mr. GARRETT of New Jersey. Well, it is a good question, but it was a question that was essentially raised during the committee and answered by Chairman Bernanke at the time. If Chairman Bernanke said, yes, there was with regard to the portfolios held by the GSEs a cross-subsidization of the market and therefore a benefit to the low and moderate income mortgages that they have, then the chairman's argument would be a correct one. But Chairman Bernanke did not say that.

Mr. GARRETT of New Jersey. The gentleman, first of all, misstates the actual language of the underlying bill when he says that the housing fund is a tax on profits of the GSEs. It is not a tax simply on the profits of the GSEs. It is a tax of the overall activity.

Mr. GARRETT of New Jersey. Just one final point, and I do believe that the gentleman was saying that it was a tax on the profits of the GSEs as opposed to that. But be that as it may, remember, to the point the gentleman from Georgia made, the GSEs, even with this amendment, would still be allowed to securitize those larger loans. This doesn't preclude them from doing that. It simply says that they should not be holding them in their portfolios, whereas the gentleman from Texas reiterated the point of Chairman Bernanke, that raises the overall risk to the overall functioning of the GSEs. Finally, since they are able to continue to issue those large loans and therefore securitize those loans, the overall market of the GSEs is not hurt in one sense, and the profitability at the end of the day, as far as the money going to the low and moderate incomes, is not impacted. Low and moderate income families are benefited by this bill. Taxpayers are benefited by this bill inasmuch as we reduce the risk of the GSEs on the one hand and we address and make sure that the GSEs return to their basic function of providing liquidity to the marketplace and providing access for low and moderate income housing in this country.

Mr. GARRETT of New Jersey. I thank the gentleman from Florida and the gentleman from Mississippi, although I cringe when Members on the other side of the aisle characterize what our motivation is and our interest in these things. I wonder whether the gentleman from Mississippi heard the gentleman from Louisiana speak about the dismal job that the GSEs have done so far with regard to what I believe both of us agree should be their intention which is to provide for low and moderate-income housing, such as the gentleman from Mississippi was talking about. A dismal job. Part of the reason they do that dismal job, their explanation is, these loans, some of these loans are difficult to securitize. If you can't securitize the loans, they are not going to take them. That is their record. The numbers were given before that they hold in their portfolio. A very small percentage of these type of loans, which is the type of loans that the gentleman from Mississippi was talking about holding. All this amendment does is this. It says GSEs, you are supposed to be doing everything the gentleman from Mississippi says we should be doing, and that is providing for housing for low and moderate-income individuals. You are not doing a good job right now. We are going to focus your attention on it. If you are having a problem securitizing these lower loans, fine, don't securitize them, but hold them in your portfolio and make that the crux of your business. Your business should not be, as it has been in the past, simply making larger profits than normal, the raises and salaries given to the top executives. Your business is helping the people in Mississippi and Louisiana.

Mr. GARRETT of New Jersey. Mr. Chairman, I demand a recorded vote.

Mr. GARRETT of New Jersey. Mr. Chairman, I offer an amendment.

Mr. GARRETT of New Jersey. Mr. Chairman, I come to the floor at this late evening time now to offer this amendment and, in essence, what we're trying too do here is to, bottom line is to help protect middle class American home owners as we move forward with this legislation with the housing fund in it, with the world class regulator, and to protect the American taxpayer from what we heard not only on the floor tonight, but going all the way back to testimony when this bill was being first considered from Chairman Bernanke, the potential for an MTI, a mortgage tax increase. We know how the underlying bill works. H.R. 1427 takes 1.2 basis points of the GSE's total annual business, not their profit, but the total annual business and directs those funds to help in an appropriate manner, some would say, to provide for low income housing. What this amendment does not do, and I know we have heard from the other side every time we tried to make any improvement to this legislation, that we characterize our efforts to improve the legislation to try to kill the underlying fund in this bill. Anyone making a clear reading of this amendment would realize this amendment does not do that in any way shape or form. This does not kill the fund. It improves the fund and it does so in a manner consistent with what the chairman said he has intended for the underlying bill in the first place, and that is to say that the increased tax would not hit those who we're trying to help, the low and moderate income earners. How does it do that? Well, if you just look to the text of the amendment, section 4, prohibits pass through of costs of allocation. The director shall by regulation prohibit such enterprises, the GSEs from treating the cost of enterprises of making allocation required under paragraph 1 as regular business expenses. In essence, what the amendment does is says it cannot pass those costs down the line to the originator and to the home owners. It has to be just where the chairman has said he intended it to be all along, on the stockholders and the investors in the GSEs. So I would hope that this commonsense amendment which basically effectuates what the Chairman said he intended for this legislation would seek unanimous support.

Mr. GARRETT of New Jersey. Thank you. Would the gentleman, by chance, have at your fingertips there the language from the CBO?

Mr. GARRETT of New Jersey. I'm not looking for a yield. I'm looking for a moment.

Mr. GARRETT of New Jersey. I'm not looking for that either. Just for a moment.

Mr. GARRETT of New Jersey. Mr. Chairman, I move to strike the requisite number of words. Let me just say this very briefly, that I believe that the issue of the solvency of Social Security is significantly an important issue. And I appreciate your comments on germaneness. But I appreciate the opportunity for our constituents at home to be able to hear this debate and this discussion with regard to how we see it as important and doing everything humanly possible to make sure that it is solvent and there for our seniors in the future. I yield my time to the gentleman from Illinois.