Jeb Hensarling

Mr. HENSARLING

Mr. HENSARLING. I yield to the gentleman from North Carolina.

Mr. HENSARLING. Mr. Chairman, I move to strike the last word. Mr. Chairman, I'd like to associate myself with the comments of the gentlewoman from Tennessee. I, too, appreciate the leadership of the gentleman from Iowa in offering this amendment. Again, the dollars may be small but the principle is large, and frankly, Mr. Chairman, I really somewhat object to those who somehow suggest that after a budget was passed in this institution, representing the largest single tax increase in American history, that somehow amendments to try to save the people's money are somehow dilatory, are somehow frivolous, are somehow not worthy of debate in this democratic institution. We spent months, months debating one spending bill on whether or not to support our troops in Iraq, months, and now we hear protests from the other side, hours into a regular appropriations bill. Somehow after hours we've grown tired of that particular process. Mr. Chairman, I'm worried about this largest single tax increase in American history and what it means to people in my district, the Fifth District of Texas, how it impacts their ability to send their children to college, how it impacts their ability to start a small business, how it impacts their ability to pay their health care premiums. Every opportunity we have to try to get some of that money back to them is an important use of this body's time, a very important use. And so there are several amendments that have a very simple proposition behind them, and the simple proposition is in this particular Department, can't you level-fund from one year to the next year just that group administering the programs. All over America, after passing this single largest tax increase in the history, we're asking American families to somehow do with less, and all we're asking these people to do is do with the same amount that you had last year. That's all that we're asking, Mr. Chairman. But there are bigger issues involved here besides the roughly $2,600, $2,700 per family in the Fifth District of Texas who are going to have to pay that single largest tax increase in history. But we look to the future, and we know what happens if we don't take the first few steps towards fiscal sanity. Already we have been warned by the Congressional Budget Office, we've been warned by the Office of Management and Budget, we've been warned by the Comptroller General what is going to happen to this Nation if we don't do something about entitlement spending, something that our friends on the other side of the aisle refuse to engage in. Social Security and Medicare, in their budget, there's nothing about that. We've heard from Federal Reserve Chairman Ben Bernanke: Without early and meaningful action to address the rapid growth in entitlements, the U.S. economy could be seriously weakened, with future generations bearing much of the cost. Too much expenditure of the people's money impacts the people's security. We've heard from Comptroller General Walker: The rising costs of government entitlements are a fiscal cancer that threatens catastrophic consequences for our country and could bankrupt America. How are we going to pay for future homeland security bills if we don't take the first few steps towards fiscal responsibility now? Simply level-fund, level-fund, not cut, level-fund the administrative function and lead by example. Lead by example. Mr. Chairman, we haven't even talked about the secret earmark slush fund yet, which, again, I don't understand. I would think if there was any party who would heed the lessons well of the last election, it would be the party that has become the majority party. They know the people are outraged at earmarks, at the process, and so instead of taking this forward, the new majority is taking us backwards. Now, Mr. Chairman, I don't want to necessarily personalize debate, so I will paraphrase here, but recently the Wisconsin State Journal, and I paraphrase, said the Democrats are now dodging the very reforms they helped to generate, and that with this new secret slush fund, and I paraphrase once again, it would prevent lawmakers from questioning earmarks.

Mr. HENSARLING

Mr. HENSARLING. Mr. Speaker, I certainly understand the passion behind this debate, for I, too, have friends and loved ones who have been stricken with debilitating diseases who are longing for hope. But in listening to the debate, Mr. Speaker, I fear not one in 100 understand what it is truly about. This is not a debate on whether stem cell research is legal in America. It is. It's not even a debate on whether or not embryonic stem cell research is legal in America. It is. It is not even a debate on whether the Federal Government will be permitted to fund embryonic stem cell research. It does, to the tune of roughly $40 million a year. What this debate is about, Mr. Speaker, is whether or not, going forward, should taxpayer funds be used to destroy what many consider to be human life for research purposes. And this is especially, especially highlighted when we know that there are ethical alternatives and promising alternatives, such as adult stem cells, umbilical blood cord, amniotic fluid and, today, headlines, banner headlines all around the Nation about the promise now of skin cells. Let's fund stem cell research, but let's fund it ethically. And, Mr. Speaker, when this body takes on such profound issues, let's always err on the side of life.

Mr. HENSARLING

Mr. HENSARLING. Mr. Chairman, I actually had alluded to this. I hope that the chairman was able to listen at the time. This goes further into the discussion of the mortgage tax that those of us on this side of the aisle believe is being imposed upon the American people by this so-called Affordable Housing Fund. Earlier this evening the chairman said that he believes that this will be paid by the shareholders. We believe on this side of the aisle that, due to the duopoly power, the Fannie and Freddie, that they already control roughly 80 percent of the market in which they operate, that a substantial portion of the cost of the so-called Affordable Housing Fund will, indeed, be imposed upon homeowners in the form of higher mortgages, indeed, functionally a mortgage tax, a new mortgage tax on the American people. I was heartened to hear, although I disagree with his economic analysis, that the chairman has concluded that this will be paid by the shareholders. My amendment is fairly simple. It amends the section dealing with having the regulator suspend the program. Now, we know that within the language the program can be suspended, essentially, dealing with systemic risk of the economy. What my amendment does is, if the regulator finds out that, contrary to the chairman's opinion, that there is a mortgage tax, that indeed it has an adverse impact upon the cost of housing in America, that mortgages rise, that the program will be terminated. So, again, I hope I understood the chairman correctly when he said that he thought this cost would go to shareholders. If he does, I would hope that he would accept the amendment. And if the chairman chooses not to accept the amendment, and I am sure the gentleman will let us know soon, then I guess what we are admitting is that, indeed, there is a mortgage tax to be imposed on hardworking homeowners, some of which we heard from earlier this evening from the Fifth District of Texas, and we know how an additional tax is going to adversely impact them in the ability to keep their homes. So I hope the chairman is right that shareholders, as opposed to homeowners, end up paying this if we are going to be stuck with this particular program. So this is a very simple amendment that says if we have a mortgage tax, the program is suspended. If we are confident there is no mortgage tax, then there shouldn't be any opposition to this particular legislation. With that, Mr. Chairman, I request an ``aye'' vote.

Mr. HENSARLING. Mr. Chairman, I move to strike the last word. Mr. Chairman, I wish to associate myself with the comments of the gentleman from Louisiana. I, too, wish to raise my voice loud and clear on the issue, but certainly in a far less articulate manner than the gentleman from Louisiana who is well versed on this issue. In my opinion, Mr. Chairman, the only thing worse than a regulated monopoly is an unregulated monopoly. I don't necessarily trust private companies. I trust competitive marketplaces, and wherever Fannie and Freddie goes, I feel the competitive marketplace leaves. Since I have been on the committee 4\1/2\ years now, we have heard frequently from our past Federal Reserve chairman and our present Federal Reserve chairman. Their voices could not be more clear on the matter that they believe the GSEs pose a very significant systemic risk to our economy. Now in a competitive marketplace, you are punished for misleading accounting. In a competitive marketplace, you are punished for bad business decisions. In a competitive marketplace, you are certainly, certainly punished for fraud. We no longer have an Enron. We no longer have a WorldCom. We no longer have an Arthur Andersen. We no longer have a New Century. A competitive marketplace, before they could lead to systemic risk, took care of those who may have engaged in faulty accounting, fraud, or poor business decisions. But that is not the case with Fannie and Freddie. And now where we finally have empowered the regulator to do something, the first thing we do is clip his wings. I just feel on this matter, I am going to listen to Chairman Greenspan and I am going to listen to Chairman Bernanke, and I don't totally know the impact of the language of the people who offered the amendment, including my dear friend from Texas, completely, I don't know if I completely understand its impact, but what it seems to do, all of a sudden it seems to say well, the regulator can make sure that Fannie and Freddie can't harm themselves, but they can't make sure that they don't harm the rest of us. That is my interpretation of this amendment. So again, if we are going to sanction a government, if we are going to create essentially a duopoly, and the last time I looked at the records controlled 80 percent of the market in which they operate, and as opposed to retrenching, they seem to prosper when they misstate their earnings, when they have billions and billions of misstated earnings, when they mislead the government and when they mislead their investors, when they couldn't produce audited financials in years, and, I believe, hold more debt than the publicly held debt of the Federal Government, I think we ought to err on the side of strengthening the regulator's ability to protect us by the systemic risk of what we, we in Congress, have created in the first place. So I, too, wanted to raise my voice loud and clear on this issue. I certainly appreciate the chairman's willingness to work with the gentleman from Louisiana and others of us on the committee who are very concerned about the potential systemic risk posed by the activities of Fannie and Freddie.

Mr. HENSARLING. Mr. Chairman, I demand a recorded vote.

Mr. HENSARLING. Thank you.

Mr. HENSARLING. I thank the gentleman for yielding. I was going to ask the chairman for a clarification. What I heard earlier in the evening is that shareholders will pay the cost of the Affordable Housing Fund. And what I think I'm hearing now is that the shareholders will pay substantially most of the housing fund, which leaves some portion paid by somebody else. So I am asking the chairman, in his opinion, if it is no longer being paid totally by the shareholders, doesn't that mean that some portion is indeed being paid by the homeowner? Thus, we can debate the quantity of the mortgage tax that will be imposed upon the homeowner. But it seems to me if we've gone from total shareholder payment to substantial shareholder payment, there is a mortgage tax. And I might request the gentleman from Georgia to yield to the chairman for clarification.

Mr. HENSARLING. Again, I thank the chairman for yielding. I simply said that you seem to imply that this was designed to somehow kill the program. I just wanted to make it very clear that any way I could get rid of this program, I would. But I would ask the chairman for a clarification.

Mr. HENSARLING. I thank the chairman for yielding. I want to make it very clear; I have agendas, I don't have hidden agendas. I want to make it very clear, I do disagree with this program. But if we are going to have the program----

Mr. HENSARLING. Will the gentleman yield?

Mr. HENSARLING. Mr. Chairman, I offer an amendment.

Mr. HENSARLING. Mr. Chairman, I heard the gentleman from Georgia earlier read some correspondence from a bishop. I don't have any correspondence from a bishop this evening, but I do have some correspondence from some hard working families in the Fifth Congressional District of Texas talking about what we could do to make their housing affordable. And I think it's particularly important when we think about my friends from the other side of the aisle earlier today, literally just a couple of hours ago, passing the single largest tax increase in American history that will amount to roughly $2,700 a year on the families in the Fifth District of Texas. I heard from the Freeman family in Mesquite, and they wrote me, that ``With the extra $2,700 being forced to pay to Washington, my family could lose our home, or we may be forced to give up education because the money won't be there to pay for it. It is really unfair that the low man on the totem pole is always having to give everything up. These extra taxes are not needed.'' Well, one way we can make housing affordable is not tax people with homes in the first place. I heard from the Kirkendoll family in Garland, Texas. ``Dear Congressman Hensarling, I am unemployed on Social Security and my wife works. At this point, between taxes and utilities, we're at the breaking point of being able to keep a home.'' You know, one of the greatest ways that a home is affordable is you don't take money away from the family in the first place. And so, besides the single largest tax increase in American history that the Democrat majority passed earlier today, now they want to pass on a mortgage tax on hard working families struggling to make ends meet as well. I heard from the Stevens family in Mesquite, Texas. ``Congressman Hensarling, I wanted to let you know that I'm a single mom that does not receive any type of child support, and a tax increase of this amount would break me. I would be at risk of losing my home with this type of increase. I'm writing to ask your help to keep this from happening. This will be devastating to middle income families and families in my situation.'' Mr. Chairman, I have many more letters like this. And so we've heard so much rhetoric from our friends on the other side of the aisle that somehow we don't care about affordable housing. The greatest affordable housing program in the history of this Nation is a good job and a low tax rate. And yet, with the single largest tax increase in American history passed by the majority earlier today, they threaten the almost 8 million new jobs empowering people to buy homes. You take the tax relief away. You increase taxes on capital dividends, capital gains, you start taking those jobs away. And then you pass on this roughly $2,700 a year on hard working families all over America, you've got a double whammy. You start taking their jobs away, and then you start taking their ability to pay for these mortgages. I listened very closely to the chairman of the committee earlier when he accused the gentleman of New Jersey from, I guess, subscribing to naive economics. I will admit, it's been a number of years ago, but I actually studied economics. I have a degree in economics. I spent 10 years in private business. And what I know about economics is that when you have a government sanctioned duopoly, as opposed to an atomistic competitive marketplace, they have a great ability to pass on costs to their customers, in this case, ultimately, the homeowner. So I guess the gentleman, our chairman, has studied a different economics than I do. And I did listen when the chairman said that it's the shareholders that will pay. So I'm offering an amendment later this evening that says this so-called affordable housing fund will go away if the regulator determines that interest rates go up. And since the chairman believes that only shareholders will pay, I look forward to him accepting that amendment.

Mr. HENSARLING. Reclaiming my time.

Mr. HENSARLING. Mr. Chairman, I move to strike the requisite number of words. I'd like to yield 30 seconds to the ranking member.

Mr. HENSARLING

Mr. HENSARLING. Mr. Chairman, I move to strike the last word, and I yield to the gentleman from Texas.

Mr. HENSARLING. Mr. Chairman, I demand a recorded vote.

Mr. HENSARLING. Mr. Chairman, I thank the gentleman for yielding. And, again, I guess the chairman has a whole lot more confidence on the attributes of an ill-defined housing trust fund than I do. I have read earlier comments that the chairman has made: ``The placeholder would similarly preserve from this bill to the next bill our ability to spend money on a housing trust fund.'' And I know that the chairman, I believe in the same markup of March 28, in responding to a question: ``Would the gentleman be willing to accept an amendment that explicitly states that it would be subject to PAYGO?'' the chairman replied, ``No.'' So knowing that PAYGO, as the Democratic side has defined it, applies to new entitlement spending and to tax relief, it makes one a little bit suspicious thinking maybe there could be a new entitlement here. The housing trust fund does not appear to be defined; so maybe it is an entitlement; maybe it is not an entitlement. But if it is defined, I don't know. I just happen to be very passionate about not wanting to be part of an effort that might ultimately lead to helping create a new entitlement program and exacerbate the number one fiscal challenge in America. But I don't know how the chairman can say with such great definition if we are going to potentially create a funding stream for a housing trust fund, we don't define it, that he knows absolutely it will not or ever have the attributes of an entitlement. I thank the gentleman for yielding.

Mr. HENSARLING. Mr. Chairman, the first thing I'd like to do is really thank the chairman of the full committee. There are many on this side of the aisle who talk a lot about making this the most open and democratic and fair Congress. Many of their deeds do not match their words. But I want to congratulate the committee chairman for this open process this evening and his commitment to the institution, his commitment to democracy and permitting these amendments to be offered. And although I have two remaining, Mr. Chairman, I have decided to only offer one. The amendment I offer at this moment, No. 30, achieves one very simple purpose. I understand that our side has lost on the creation of the so-called affordable housing fund, but in the underlying legislation, there is a place holder for something called an affordable housing trust fund. And apparently, if this fund, which is rather ill-defined, is created at some later time, the bill would authorize funds to be transferred from the affordable housing fund to the housing trust fund. I've been pretty diligent in my attendance of our subcommittee and committee hearings. I don't recall a hearing on the housing trust fund. I don't remember a markup on the housing trust fund. And I don't know exactly what the housing trust fund is, but I'm nervous about it. I'm nervous about it because when I look at almost every other government trust fund, what I see is an entitlement. Entitlement spending, Mr. Chairman. And the last thing we need to do is to be authorizing spending for a yet to be created entitlement spending fund. The number one fiscal challenge in the Nation is to reform entitlement spending. And I believe the Chairman's passion about wanting to create affordable housing. I have profound philosophical differences with our chairman, but I don't doubt his passion. I don't doubt his sincerity. But I have my passion. I have my passion. And right now, according to the Office of Management and Budget, the Congressional Budget Office, the Federal Reserve chairman, we are on the road to bankrupt the next generation. Ask anybody who has looked at the long-term spending patterns of entitlement spending in America today and they're going to tell you, we're facing a fiscal fork in the road. In one generation, in one generation, either there will be almost no Federal Government except for Medicare, Medicaid and Social Security, there will be no HUD. None of these housing programs will exist. And the other fork in the road, Mr. Chairman, is that we're going to have to double taxes, on the next generation just to balance the budget. Don't take my word for it. Go to the Web site of OMB, GAO, CBO. They're all going to tell you the same thing. And yet here we are tonight deciding that we are going to transfer funds to this yet-to-be-created housing trust fund, create yet another entitlement spending. I am a Member of Congress, but let me tell you something else. I also happen to be a father of a 5-year-old daughter and a 3-year-old son who are already looking at paying for unfunded obligations in this entitlement spending of $50 trillion and now we are going to add to it. And I have heard many speakers on this side of the aisle eloquently speak about the least of these among us. Well, I maintain the least of these among us are those who cannot vote and those who are yet to be born. So I don't particularly care to take it on trust or faith that I am not somehow enabling the next new entitlement to hopefully hasten the bankruptcy of next generation. The Comptroller General of America has said we are on the verge of being the very first generation in America's history to leave the next generation with a lower standard of living. I myself will not sit idly by and allow that to happen. So perhaps the chairman has a good idea of what he intends to with the housing trust fund. I do not and I will not create another entitlement program.

Mr. HENSARLING. Mr. Chairman, I offer an amendment.

Mr. HENSARLING. Mr. Chairman, the purpose of this amendment is quite simple, and that is to keep the status quo with respect to the conforming loan limits. The underlying bill would raise it to 150 percent in what are known as certain high-cost areas. I think there are several reasons, Mr. Chairman, why I think the underlying bill contains misguided policy. Number 1, when you look at why were the GSEs chartered in the first place, they receive a panoply of Federal benefits that we are all familiar with. But supposedly, they received these benefits from the Federal Government for a specific purpose, to support the purchases of mortgages made to low- and moderate-income families, mortgages on properties located in underserved areas, mortgages made to very low- income families and low-income families in low-income areas. I do not believe that the charter was to help subsidize housing by the government for the wealthiest in our society. That's not why they were chartered. The Conforming Loan Limit right now, I believe, is already too high. To qualify for the $417,000 mortgage right now, a family would have to earn at least $130,000, more than twice the median family income in this country, not by the standards of the Nation, a low or moderate income. But in the House bill to increase the conforming loan limit by 50 percent to $625,000 in any area where the average home price is over the limit, to qualify for that mortgage, a family's income on an 80/20 LTV would have to be $180,000, almost three times the national median, and that ranks at roughly the top 5 percent of all family incomes in America. According to OFHEO, the regulator, of the GSEs, using data supplied by the National Association of Realtors in 2007, there were only seven areas that would be affected by this, and that would be comprised of areas in about eight or nine different States, which means that 40 to 42 other States would gain nothing by this and arguably might lose something. The other argument that I would pose is that after all the behavior of the GSEs, all of the misrepresentations to the public, misrepresentations to investors, misrepresentations to Congress, billions and billions of dollars of accounting misstatements, earnings being manipulated so that executives could receive bonuses, what does Congress do? We reward them. We expand their market share. We give them an opportunity to make even greater profits. I mean, it leads one to believe that if Enron had been clever enough to change their name to the Enron Housing Corp. we might have done something to still keep them in business. We are expanding their market share. Another point to make is that, and I will grant that any time you have a Federal subsidy, certainly you can lower the price, but the arguments that somehow people can't get in a home without increasing the loan limits to 150 percent, I don't understand. The industry experts have estimated the rate on the spread on the rate to be about 20 basis points, and a current 30-year rate fixed mortgage, that amounts to about $80-a-month difference we are talking about. At least under one scenario, CRS, we are looking at about $28 a month. I am having a hard time believing that knowing how competitive the marketplace is, in almost all communities in the jumbo market area, that this is somehow preventing people from getting into a home. Now, some will speak to a disparity, and I agree. There is the disparity, but I don't think raising the conforming loan limits to 150 percent in only a limited number of areas in the Nation is the solution to that particular challenge. So I have great reservations about expanding the conforming loan limits. But having said that, given the lateness of the hour, given the outcome of this particular amendment in committee, I do think these were important points to be made. But at this point, Mr. Chairman, I ask unanimous consent to withdraw the amendment.

Mr. HENSARLING. Mr. Chairman, I offer an amendment.

Mr. HENSARLING. Mr. Chairman, reclaiming my time, I am sure the gentleman from Georgia can get plenty of time from his side. All I am saying is the gentleman from Georgia is entitled to his own opinion, former Chairman Greenspan seems to have a different opinion of the use of the portfolio holdings in the housing mission. So in this particular case, I prefer to take the word of Chairman Greenspan and of Chairman Bernanke as opposed to my colleague from Georgia's expertise on the matter. These portfolios have nothing, nothing to do with their mission and have everything, everything to do with systemic risk. And if we are going to leave them in place, they ought to at least be dedicated, somehow dedicated, to low income housing purposes, which ostensibly is what the purposes of Fannie and Freddie were in the first place. Again, these are not operating, the GSEs are not operating in a competitive marketplace. They are operating in a government-sanctioned duopoly to where they have 80 percent of the market. There is not effective competition, there is not a check here, and we should approve the gentleman's amendment from New Jersey.

Mr. HENSARLING. Mr. Chairman, reclaiming my time, I tried to listen carefully to my friend from Georgia, his comments. I am not going to follow with the juice analogy and I don't care to put words in his mouth, but what I think I heard was he described the gentleman from New Jersey's amendment as perhaps the worst one that had been offered this evening, that would essentially gut the ability of Fannie and Freddie to achieve their affordable housing mission, or to achieve the mission that Congress has set up for them, and the gentleman is certainly entitled to his own opinion. But when it comes to the use of the portfolio holdings of Fannie and Freddie, which we know, number one, according to the last two, the present and the past Chairmen of the Federal Reserve, creates huge systemic risk to our economy, which ultimately can bring down housing opportunities for all. But if I could quote from a speech from Chairman Greenspan, who said, ``The Federal Reserve Board has been unable to find any credible purpose for the huge balance sheets built by Fannie and Freddie other than the creation of profit through the exploitation of the market- granted subsidy.'' To paraphrase, ``Their purchase of their own or each other's mortgage-backed securities with their market-subsidized debt do not contribute usefully to the mortgage market liquidity, to the enhancement of capital markets in the United States, or to the lowering of mortgage rates for the homeowners.'' Mr. Chairman, I would be happy to yield to the gentleman from Georgia.

Mr. HENSARLING. Mr. Chairman, I move to strike the last word. Mr. Chairman, I yield to the gentleman from New Jersey.