Jeb Hensarling

Mr. HENSARLING

Mr. HENSARLING. Mr. Speaker, I ask unanimous consent that all Members may have 5 legislative days within which to revise and extend their remarks and submit extraneous materials on the bill under consideration.

Mr. HENSARLING. Mr. Speaker, I yield myself such time as I may consume. I rise today in support of H.R. 1210, the Portfolio Lending and Mortgage Access Act, a bill approved by the Committee on Financial Services, which I chair, on a bipartisan vote of 38-18. First, I want to thank the gentleman from Kentucky (Mr. Barr), an outstanding member of our committee, for his leadership in finding simple ways to allow aspiring home buyers across the Nation to obtain mortgages more easily, absent the onerous regulations that are presently being applied so that they can qualify a mortgage through market competition. The aim of H.R. 1210 is simple. Banks and credit unions should be free to originate mortgages as long as they keep them on their books, as long as they keep the risk. This is responsible lending, Mr. Speaker, and it helps more qualified borrowers obtain mortgages so that perhaps they can get their piece of the American Dream. H.R. 1210, again, does this by allowing lenders, particularly hometown community banks and credit unions, to treat mortgages held on their balance sheets as ``qualified mortgages'' for purposes of the CFPB's mortgage lending rules. As we know, the Dodd-Frank Act made significant changes to our mortgage lending marketplace. One specific provision in section 1411 of Dodd-Frank requires mortgage lenders to determine at the time a loan is made that the borrower has a reasonable ability to repay it. The ability to repay requirements are intended to ensure a lender takes into account the borrower's capacity to actually repay the loan. Section 1412 of Dodd-Frank creates a legal safe harbor for compliance with the ability to repay rule for lenders who issue so-called qualified mortgages, or QMs. Now, Mr. Chairman, it seems obvious that loans that are held by a lender should be regulated differently than loans that are originated and then sold to a third party. They have completely different characteristics. Again, lenders that hold the loans on their own books in their own portfolio assume all--all--of the exposure of risk to nonperformance and default. Lending 101 tells us that when the borrower is unable to repay the loan, the bank that made the loan, if it keeps it on its books, is the one that is going to lose the money and any future profit that would be derived from the loan. Portfolio lenders with poor underwriting thus will not stay in business very long. In this sense, mortgages that are held in portfolio are already prudently regulated by market discipline. Yet without a safe harbor from the threat of litigation, which H.R. 1210 would provide, lenders will not make loans to otherwise creditworthy individuals. We hear this from community banks and credit unions every day. If they don't meet the QM standards, the loans simply aren't going to get made as a practical matter. So let me stress, the CFPB's restrictions on mortgage lending will have a disproportionate impact on low- and moderate-income home buyers, especially those from rural and certain urban areas. According to the Federal Reserve, within a few years under this QM rule, roughly one-third of Black and Hispanic borrowers may find themselves disqualified from obtaining a mortgage because of the qualified mortgage rule. This is based simply on a rigid debt-to-income requirement. A recent survey tells us that 73 percent of community bankers have actually decreased their mortgage business or completely stopped, Mr. Speaker, completely stopped their mortgage business or providing mortgage loans due to the expense of complying with the QM, qualified mortgage, regulatory burden. That is why a lot of community banks and credit unions across the country say that QM doesn't stand for ``qualified mortgage''; it stands for ``quitting mortgages.'' It should not be the job of Congress or unelected and unaccountable Washington regulators to decide who gets a mortgage and who does not or to force community banks and credit unions to function like regulated utilities, issuing only plain vanilla mortgages, rubberstamped in Washington for select groups. Now, opponents of this bill will attempt to derail it in branding it some kind of gift to Wall Street. Let me be clear. H.R. 1210 is a gift to home buyers, all home buyers looking for a more transparent and competitive market. When it comes to loans that are held on the books, the size of the institution does not matter. A loan held in portfolio will carry the exact same amount of risk and profit regardless of the size of the bank that holds it. The commonsense legislation that is before us recognizes that the most effective way to ensure a borrower has the ability to repay is not one-size-fits-all, top-down regulation from Washington. Let's, again, remember that the financial crisis was primarily caused by misguided Washington policies helping put people into homes they could not afford to keep, hurting underwriting standards. Portfolio lending did not cause the crisis. I urge all of my colleagues to support the legislation of the gentleman from Kentucky. Support the American Dream. Mr. Speaker, I reserve the balance of my time.

Mr. HENSARLING. I yield myself 30 seconds to say I am fascinated to hear the specter of discrimination continually waved by the other side, yet the Federal Reserve says, when the qualified mortgage rule is fully implemented, fully one-third of all Blacks and Hispanics won't be able to qualify for a mortgage. Yet we hear silence from the other side. The reason we had the meltdown is because so many of my friends on the other side of the aisle wanted to roll the dice on so-called affordable housing goals of Fannie and Freddie. It turned out to be the largest bailout in American history. If people are going to make bad loans, here is an idea: Let's not bail them out with taxpayers' money, but give everybody a fair shot at home ownership. That means, if a bank makes the loan, they hold it on their books. Let them keep it. Let it be a qualified mortgage. I yield 5 minutes to the gentleman from Kentucky (Mr. Barr), the sponsor of the bill.

Mr. HENSARLING. I yield the gentleman from Maine an additional 10 seconds.

Mr. HENSARLING. Mr. Speaker, I yield 3 minutes to the gentleman from North Carolina (Mr. Pittenger).

Mr. HENSARLING. Mr. Speaker, I yield 2 minutes to the gentleman from Arkansas (Mr. Hill).

Mr. HENSARLING. I yield the gentleman an additional 30 seconds.

Mr. HENSARLING

Mr. HENSARLING. Well, I thank the gentleman for his leadership on this. Again, I have portions of the act in front of me. The bill stipulates: ``Nothing in this Act shall be construed to require.'' That is what the act says on a formal policy directive. ``If the Federal Open Market Committee determines that such plans cannot or should not be achieved due to changing market conditions.'' Again this is about communication. When we have an economy that is underperforming, where had we only had the average recovery in the post-war era every man, woman, and child in America would have $6,000 more, millions would be back to work, I think the American people deserve to ask some hard questions. This is such an incredible red herring with this argument on independence. Mr. Chairman, the Board of Governors have 14-year terms-- second only to lifetime appointments to the bench--14-year terms, independent funding of the congressional appropriations process. And so now we don't want them to answer some questions. Will their feelings get hurt if they are asked some tough questions by Members of Congress? Are they that delicate that they can't conduct monetary policy if in an open committee hearing they have to answer questions? I think the American people, Mr. Chairman, are saying: Give me a break. Mr. Chairman, I reserve the balance of my time.

Mr. HENSARLING. Mr. Chairman, I ask unanimous consent to claim the time in opposition to the amendment, although I am not opposed.

Mr. HENSARLING. I yield the gentleman from Wisconsin 30 seconds.

Mr. HENSARLING. Mr. Chairman, I yield 3 minutes to the gentleman from Pennsylvania (Mr. Rothfus).

Mr. HENSARLING. Mr. Chairman, I yield 3 minutes to the gentleman from Minnesota (Mr. Emmer).

Mr. HENSARLING. Mr. Chairman, may I inquire as to how much time is remaining on both sides?

Mr. HENSARLING. Mr. Chairman, I yield 2 minutes to the gentleman from Michigan (Mr. Huizenga), the author of the FORM Act.

Mr. HENSARLING. I thank the gentleman for yielding. I want to urge all Members of the House to adopt his amendment. With respect to full transcripts of the FOMC meetings, all this is doing is simply codifying a current practice. It is simply to make sure that there is a transparency, at least this level of transparency, that the Fed doesn't backslide. With respect to the dual mandate, the truth is the Fed has many mandates and they all ought to be examined. The Fed has been around for 100 years. It is time to poke under the hood. That is why we are having the Centennial Monetary Commission, and I think it is important that we take a good look to see if, at times, these are working at cross purposes. So I thank the gentleman from Iowa for his leadership. I urge all Members to adopt his amendment.

Mr. HENSARLING. Mr. Chairman, the ranking member for the last 13 minutes has let us know that the President and his bureaucratic appointees don't want any more transparency and accountability. I don't particularly find a news flash in that. I have the greatest amount of respect for Chair Yellen. I both like and respect her. I have never encountered a bureaucrat who didn't want more money, more power, less transparency, and less accountability. She is no different. The Dodd-Frank Act has vastly expanded the powers of the Federal Reserve. Mr. Chairman, for all intents and purposes, they have the ability to actually come in and de facto manage any large financial institution in America. The government has that power. It is a frightening power that has been given by Dodd-Frank, and transparency and accountability is demanded. In addition, we have a Federal Reserve taking monetary policy and tools to a place it has never been before. At a bare minimum, it owes the people's elected Representatives, the Congress, some transparency on why it is doing what it is doing. I would, yet again, encourage all Members to actually read the bill before they claim to know what is in the bill. The Federal Reserve maintains its monetary policy independence, as it should. But it must explain to the rest of us what that is and why they choose to deviate from it if they believe economic circumstances warrant. Again, if they want to base monetary policy on the Taylor rule, so be it. If they want to base it on a rousing game of rock, paper, and scissors, so be it. The American people demand answers because this economy is still underperforming. It is not working for working people. This has to change. We have had the largest economic monetary policy stimulus in our Nation's history, but yet it does not work for working people, and the poor continue to follow behind. All this bill by the gentleman of Michigan does is bring about needed transparency and accountability to the most powerful economic agency in government today. It is demanded by the vast increases in power by the Dodd-Frank Act. The American people deserve answers. We should enact it. I encourage all Members to vote for H.R. 3189, the FORM Act. I yield back the balance of my time.

Mr. HENSARLING. Mr. Chairman, we have at least three to four more speakers.

Mr. HENSARLING

Mr. HENSARLING. Mr. Chairman, I yield 3 minutes to the gentleman from Indiana (Mr. Stutzman).

Mr. HENSARLING. Mr. Chairman, I yield myself such time as I may consume. Mr. Chairman, I rise today in support of H.R. 1737, the Reforming CFPB Indirect Auto Financing Guidance Act. It is an important, bipartisan bill cosponsored by 166 Members of the House, including 65 Democratic Members. It was approved by the Financial Services Committee that I chair with strong bipartisan support, including more than half of the committee's Democratic members who voted. If Congress means what it says when we write a law, then the CFPB cannot be allowed to willfully ignore the law. Without this bill, the CFPB would have done a blatant end run around the Dodd-Frank Act as well as the Administrative Procedure Act. I would like to thank Representative Guinta of New Hampshire and Representative Perlmutter of Colorado for their leadership in providing the CFPB with an opportunity to live up to its claim of transparency and accountability. I want to thank the gentleman from Texas (Mr. Williams) as well for his outstanding work on this bill. The CFPB's flawed bulletin on indirect auto lending attempts to regulate compensation paid to auto dealers despite the fact that auto dealers were specifically exempted in the Dodd-Frank Act from CFPB rulemaking. By using this bulletin, the Bureau went far beyond merely clarifying existing law and instead, in trying to make new policy through this guidance, did this without using the normal rulemaking process and without public input. This is an affront, Mr. Chairman, to due process. This is an affront to the rule of law and to basic fairness. Furthermore, the CFPB has not been transparent in revealing the methodology it used to determine whether fair lending violations existed in the auto finance market. It took a year of constant pressure from Members of Congress and 13 different letters from 90 Democrat and Republican Members to get the CFPB to finally provide documentation regarding its disparate impacts. In the white paper ultimately provided by the CFPB, they admitted that their own proxy methodology for determining racial disparities is flawed and overestimates the number of African Americans by perhaps as much as 20 percent. Outside statisticians at the well-respected Charles River Associates found the figure could be off by as much as 41 percent. According to a series of three articles published this past September in the American Banker, internal agency documents show the CFPB was aware that their disparate impact methodology significantly overstates racial impact. In other words, Mr. Chairman, they knowingly used junk science and may have no evidence of unintentional discrimination based on the disparate impact theory. In those same internal memos, the American Banker newspaper also found that unaccountable CFPB bureaucrats chose to disregard the explicit exemption of auto dealers that Democrats, when they had a supermajority in both the Senate and the House and controlled the White House, put into Dodd-Frank. They chose to disregard the formal rulemaking requirement set out by the Administrative Procedure Act and instead used high-profile enforcement actions against large auto lenders to pressure them to lower the caps they set on dealer reserve. Now, not only does this call into question the CFPB's attempts to police the fairness of auto loans, its preferred outcomes will obviously increase costs for consumers. As was noted earlier, the CFPB has pressured finance companies to lower the caps they set on dealer reserve or eliminate this discretion altogether. However, under this pricing model, The Wall Street Journal recently revealed that interest payments for some consumers could increase by as much as $580 over the life of the loan. This shows the dire need for the CFPB to follow a transparent process when issuing any subsequent auto finance guidance. That is what H.R. 1737 will ensure. The bill is a simple bill. It requires the Bureau to, number one, provide notice and an opportunity for public comment. Number two, it says the CFPB must make any studies, data, or analysis used in writing the bulletin public. Number three, it must consult with other relevant regulators. Four, it must study the impact of the guidance on consumers as well as women-owned businesses, minority-owned businesses, and small businesses. To those who claim this bill somehow undermines the CFPB'S antidiscrimination efforts, let me quote from the views the Democrat members stated in our report: H.R. 1737 does not alter the CFPB's examination or enforcement activity pursuant to ECOA. That is simply a red herring. Mr. Chairman, I urge all my colleagues to support H.R. 1737. Mr. Chairman, I reserve the balance of my time.

Mr. HENSARLING. Mr. Chairman, I yield 3 minutes to the gentleman from Georgia (Mr. David Scott), my Democratic colleague.

Mr. HENSARLING. Mr. Chairman, might I inquire how much time is remaining on each side.

Mr. HENSARLING. Mr. Chairman, I yield 3 minutes to the gentleman from Texas (Mr. Hinojosa), my Democratic colleague.

Mr. HENSARLING. Mr. Chairman, I yield 2 minutes to the gentleman from Pennsylvania (Mr. Kelly).

Mr. HENSARLING. I yield the gentleman from Georgia an additional 1 minute.

Mr. HENSARLING. Mr. Chairman, I yield 2 minutes to the gentleman from New Jersey (Mr. Garrett), chairman of the Capital Markets and Government Sponsored Enterprises Subcommittee of our committee.