Brad Miller

Mr. MILLER of North Carolina

Mr. MILLER of North Carolina. Thank you, Mr. Turner. If you will stay a moment, I have a question or two. I know that your start in politics was in local politics, that you were the mayor of Dayton. And my observation of people who work in local politics is they can't just spout talking points. They really have got to solve problems. They don't have much choice in the matter. And I'm pleased that after more than 6 years in Congress, that hasn't worn off completely. You do still have some sense of the practical to you which I appreciate. I said a moment ago that I would come back to what went wrong. Obviously, for more than 40 percent of all corporate profits, they are now on taxpayer life support. And what went wrong was that their economic models, their business models, assumed that property values would continue to appreciate and home values would continue to appreciate. In 2004, home values across the country appreciated by 11 percent, and they assumed--looking back, obviously foolishly--they assumed that property values would continue to go up. And what happened when property values simply stalled was they had a business model that only worked if property values continued to go up. They might go up quickly or slowly, but they would continue to go up, and they couldn't possibly, couldn't possibly go down. But when they stalled, people could not get out of their mortgage. More and more people were underwater in their mortgage. They owed more money on their house than their house was worth. They could not get out of their mortgage. They couldn't sell their house because they couldn't pay the mortgage. And property values and foreclosure were just inextricably linked. Nationwide property values have now gone down, according to some economists, by about 30 percent from their peak in 2006, I think it was. And for most middle class families, the equity they have in their home is the bulk of their net worth. It is their life savings. And they are seeing that disappear. Even the people that have mortgages they can pay, who aren't in subprime mortgages, when their property values collapse, their home value collapses, they see their life savings evaporate with the collapse in home values. As you pointed out, foreclosed homes sit vacant, stigmatizing neighborhoods and killing the property values in those neighborhoods. And in many markets around the country that have been hardest hit by subprime lending and by the foreclosure crisis, half or more of the homes on the market are foreclosures. And those houses are priced to sell. In Dayton, what has been the effect of this on home values? Well, what has been the effect of the foreclosure crisis on home values in Dayton?

Mr. MILLER of North Carolina. You mentioned in your remarks the number of people, the 2.5 million families who have already lost their homes to foreclosure because of the subprime crisis, and you said the estimates are that many more will. The estimate that I have seen, the economists at Credit Suisse, was at 8.1 to 10.2 million families. More families will lose their homes by the end of 2012, in the next 4 years. And if that happens, if we can't do something to stop that, it is hard to imagine that anything else we do to fix the economy is going to work. That is going to be catastrophic for those families. Those families will fall out of the middle class and into poverty and probably will never climb back out. But it is going to be catastrophic for the whole economy. One further question, though. I have talked about the relationship between home values, the collapse of home values and foreclosures; but a family that has seen their home collapse in value is not going to be in any hurry to go buy a new car or to buy anything they don't have to have. What has been the effect of the economy in Dayton generally? What has been the effect on the car dealerships and the retailers? Are you seeing an effect on the economy, the retail economy, in Dayton as a whole?

Mr. MILLER of North Carolina. I could on one hand, yes.

Mr. MILLER of North Carolina. I did vote in October for the TARP, the bailout, and it was certainly a bitter pill for me, having been one of the sternest critics of the industry for the whole time I have been in Congress. I did it because I thought there were exigent circumstances that I thought the country was facing, but I said at the time that we have to reform the industry. We cannot just get back to where we were. We have to address the kinds of practices that led us to where we are.

Mr. MILLER of North Carolina. There has been a lot of hand-wringing by the political establishment, by the political pundits, the populism--they use the word ``populism'' as if it is completely synonymous with the word ``demagoguery,'' which it is not--the populist rage at what has happened in the financial sector and the AIG bonuses. To me, I think many Americans know the kinds of practices that have gone on. It is not just mortgages. Certainly it includes mortgages, but it is also credit card practices. Just 2 weeks ago we had legislation that we have now passed that would fundamentally reform credit card practices. Many, many Americans have had very distasteful and very expensive experiences with credit card companies that left them furious at that industry, the same industry. Overdraft fees. Overdraft fees. They don't really affect the middle middle to upper middle class. It is more people who really are struggling. When they get to the end of the month and there is more month than there is paycheck, they might go beyond the amount of money in the bank. The lending industry has actually designed what they call fee-harvesting software that batches the transactions, the checks, the ATM visits, the debit card purchases, that batches them in a way that maximizes the overdraft fee. And an overdraft fee is typically $35. If someone gets to the end of the month and has $100 in their bank account and they go to the ATM and get $20, they buy something on their debit card for $20, go back to the ATM and get another $20 and make a $15 purchase with their debit card, and then another $25, and then write a $105 check, the software runs the $105 purchase through first, and charges a $35 overdraft fee on that and then a $35 fee on the $20, the $20, the $20, the $15 and the $20. Americans are furious. And then they see the very industry that they think cheated them on their mortgage, cheated them on their credit card, cheated them with overdraft fees, they see their tax money going to help save that industry from their own bad judgment. I think it is righteous anger, and I think we need to, as you have said, we need to reform the practices that led us to where we are. Mr. Ellison has returned.

Mr. MILLER of North Carolina. In these hours, it is typically the case that Members are filled with praise for one another, and I wonder sometimes when I hear a Member say, I thank the gentleman for his leadership, I wonder sometimes whether he is actually thanking for him for his leadership or is just stalling to think of what to say next. We are joined by Mr. Ellison, who has joined the Financial Services Committee. He is now in his second term, and he has been a great friend and ally on that committee and a great advocate for consumers.

Mr. MILLER of North Carolina. Quite possibly 10 or 15; I mean, a successful broker.

Mr. MILLER of North Carolina. And that's what they told the borrowers. This is my business----

Mr. MILLER of North Carolina. Thank you, Mr. Ellison. I want to address a couple of other points. One that is frequently cited, argued, that the people who signed those mortgages should have known better. Here is the reality. Economists call it asymmetry of information. In other words, one of the parties to a transaction knew what was in the documents because they wrote the documents. They had their lawyers write them. It was little print. It was legalese. There was a lot of it. And most Americans who may feel smug that they didn't sign a subprime loan have probably gotten burned on a credit card, and they know what credit card contracts are like. And they know that the bank wrote the credit card contract and they didn't have any say in what was in that contract, and they know that it was complicated and it was designed to trap them and had little trip wires and whatever else. But the same was true of mortgages. The Federal Trade Commission actually quizzed both prime and subprime borrowers, people who got good mortgages and people who got the toxic mortgages right after closing, right after they signed the documents, and it was an open book test with their documents in front of them. They quizzed them on what the terms of their mortgages were, and almost nobody knew what they were signing. A half could not identify the total amount of the loan. A third could not identify what the interest rate was. That was with the documents in front of them. Two-thirds did not know there was a prepayment penalty if they had one, and 90 percent did not know the total up-front cost. Up-front cost is where predation lives. That was what predatory lending was all about. And in addition to that, most borrowers, particularly subprime borrowers--70 percent of the subprime borrowers got a mortgage broker. They thought mortgage brokers presented themselves as a mortgage professional. Now they tell Congress that they should be regulated like a used car salesman--which is actually unfair to used car salesmen because there are some consumer protections in selling a used car. But they said they should simply be a salesman. It should be buyer beware; that there should be no particular protections. They shouldn't be treated like a lawyer or someone else who has a fiduciary duty--I think a point that you made in committee. Brokers were being paid not just by the borrower, but by the lender. And the worse the loan was for them, the more the lender paid the broker. Now, most Americans, when they hear that, just think that's crooked.

Mr. MILLER of North Carolina. Yes. It was one of the documents, it was one of many documents that the borrowers signed. And guess who handed them that document and explained to them what they were signing? The broker. And if the borrower asked, what is this I'm signing? What the broker would say is, well, this just means that the lender is paying part of my fee, saving you money. So, yes, there was a disclosure. Was it an effective disclosure, was it a disclosure that really told consumers what was going on? No, it was not.

Mr. MILLER of North Carolina. Yes. It was a nondisclosure disclosure. This is actually a rate sheet. This is from a lender that is now long out of business, but this is how mortgage rates were set. Across the top it shows the loan to value, what percentage--it might be 95 percent--and a credit score, how well a consumer or borrower paid their bills, what they had earned for themselves. Their reputation also factored in. The industry used to call that ``character'' as one of their considerations in lending. And so on this sheet, a 95 percent loan, a loan where the borrower only had 5 percent and the borrower had a credit score between 640 and 659 would pay 7.55 percent interest. But over here, there is the payment that the lender made to the broker called the yield spread premium. And it says, if the borrower signed a mortgage that was a half a point higher interest rate than they qualified for based upon their loan to value and their credit score, the interest rate that they earned by how well they paid their bills, the lender would pay the broker 1 percent of the loan. That was called a yield spread premium. Now, I think most Americans hearing this can't believe that this was ever legal. It's still legal. The bill we passed last week would prohibit this, would end it. But this means that even those borrowers who are trying as hard as they could, knowing that they were entering into a complicated and important transaction to buy a home or to borrow money against their home, who would try to get a professional voice, someone to be on their side, someone who would understand it and would lead the borrower through it and find the best loan for the borrower, their trust is being betrayed. Now, if our bill passes, we will have finally ended this. But those who feel smug and say, well, they should have known better, the odds were so stacked against them, they never had a chance.

Mr. MILLER of North Carolina. Some of our colleagues make that argument frequently. It is an explanation for the crisis that the lending industry loves. They welcome that explanation. Here is the reality: As long as home prices were appreciating, they didn't have to pay attention to whether borrowers could really pay it back or not because the house would appreciate in value. The borrower, if they couldn't pay back the loan, they certainly weren't going to allow it to be foreclosed, they would sell it. I asked those very questions of a spokesman for the industry at a hearing just last year to Robert Story, who was vice chairman of the Mortgage Bankers Association. I asked if the cost of foreclosure is actually recoverable by the lender out of the proceeds of the foreclosure sale. So if there is equity in the home, the lender recovers the cost; is that correct? He said, okay, as long as there is equity in the home, it really isn't an economic problem for the lender, that's right. He said, that's correct, but most people who have equity in their homes don't go into foreclosure because they can sell their home because they have equity in their home and they can reduce the price. As long as home prices continued to appreciate, there was no way they were going to lose money even if a borrower couldn't pay back the mortgage. And I asked that at some point, too, when we had the questions in committee again and again about predatory borrowing, people who are committing fraud. I asked Sheila Bair, the Chair of the Federal Deposit Insurance Company, I asked on April 9, 2007, If lenders were really getting half of all loans, subprime loans, without full income verification, do any of you--I was speaking to a panel of witnesses--really think that no one buying those loans really had a clue that there was a problem? And Sheila Bair said, I don't think they looked. It's amazing to me; investors who are holding the ultimate risk in the loans, and I don't think they looked. I don't think the rating agencies looked. It's one of the breakdowns of the system that we have. Market discipline was not there, nobody was looking. But I asked the panel after she said that, I said, Does anyone here think that the masters of the universe on Wall Street who bought those loans were really being played for chumps by middle class families who were borrowing from them? And John Dugan, the Comptroller of the Currency, said, I think there was a belief that income was no longer predictive of people paying the loans back, and you could rely on the history of house prices going up. And so they ignored it. And I think that proved to be a very dangerous decline in underwriting standards. Well, no kidding. And we've had story after story about how lax the underwriting standards were, about how little they did really to make sure that the borrowers could pay the loans back because it didn't matter. The New York Times ran an article on WaMu, Washington Mutual, one of the leading subprime lenders. And they quoted an appraiser who worked with WaMu who said, If you were alive, they would give you a loan. Actually, I think if you were dead, they would still give you a loan. There were memos to the originators of loans from WaMu saying, A thin file is a good file. Don't ask too many questions. There was an article in the press in just the last week or two about a similar memo that JPMorgan Chase sent out to everyone who was originating mortgages, Don't ask questions. If you don't want to know the answer, if it might disqualify someone for the loan, just don't ask. They weren't worried about people paying the loans back. Now, that was catastrophic for the borrower because the borrower was going to lose the equity in their home if they had to sell their home. And once you've gotten yourself into the middle class by buying a home, and God forbid you lose it to foreclosure, but even if you had to sell it because you can't pay the mortgage, you really are falling out of the middle class. Some have argued that we haven't done anything about borrower fraud. We don't have to do anything about borrower fraud. There is already the law of fraud that if the lender was really duped by the borrower, they could sue the borrower, but they would have to show that they actually reasonably relied upon what the borrower told them. They weren't relying on what the borrower told them; they were asking to be lied to. And in most cases, the broker filled it out and just gave it to the borrower to sign.

Mr. MILLER of North Carolina. Liar loans, yes. Sometimes they're called ``Alt A,'' that was Alternative A, that was the polite name, but they were also called liar loans. I do want to talk about where we go from here. The bill that the House has passed does reach a lot of the practices that have led us to where we are. It does limit the upfront cost, which is where the predators really made their living was by soaking borrowers at the front end, as Mr. Turner talked about, what they made came out of the equity in the borrower's home. It was lost in the loan documents, but it was in the lending industry's pocket by that point. It requires disclosures that are actually understandable. It requires standard forms that are actually developed by the banking regulators. They are designed to be understood, not disclosures designed by the industry that are designed not to be understood. It prohibits this compensation system that rewards brokers for betraying the trust of borrowers. It requires that the lending industry not make loans to people who don't have a reasonable ability to pay it back. It requires brokers to present borrowers with a set of options that are reasonably suitable to the borrower's needs. If we had that bill in effect 5 years ago, we would not have the crisis we have now. Now, there has been a lot more contributing to the crisis now than just subprime loans or even alternative loans, option arms, and all the rest, the exotic products--exotic mortgages is what Alan Greenspan called them. It has gone well beyond that now. But this is what precipitated it, this is what got it started. This was the match that started the newspapers, that started the kindling that started the hard wood. This is what started the fire of mortgage lending. But we have to go beyond this. Again, let me go back to this chart of the financial industry profits as a share of U.S. business profits. It peaked during the subprime heyday at more than 40 percent of all profits. This is when the lending industry is saying, you know, we have to do these things to make credit available to people. If you rein in what we're doing, we just won't be able to make credit available to people, and you are going to hurt the very people you are trying to help. No. They were making a killing. This is gone now. This is in addition. This is after all the vulgar compensation that we've heard about. In addition to CEO compensation up and down the line, the financial industry pays very well. Compensation in the financial industry was almost twice of what Americans generally got. But this money is now gone. In the words of the country music song, ``It's in the bank in someone else's name.'' And now we're dealing with the fallout after this. But look at what it was back in the fifties and the sixties when our economy was doing pretty well. We had a manufacturing base. The middle class was doing well. Their lives were improving. Their economic conditions were improving. They were making just ordinary profits of, you know, 10 to 15 percent, not more than 40 percent. The financial industry wants to go from where we are, which is that they're on taxpayer life support. But they want to go back to this. This is not what we need to go back to. Mr. Ellison, I know that you also support the legislation that Mr. Delahunt and I have introduced. I actually lost a coin flip. It's Delahunt/Miller instead of Miller/Delahunt. But in addition to what we've done to get at mortgage lending practices and credit card practices to create a regulator whose only job is to look at financial products, consumer financial products and look at those up front to see if they're fair to the consumer and prohibit those that aren't. In addition to Mr. Ellison, there are several prominent supporters of this proposal. Joseph Stiglitz, a professor of economics at Columbia who's won the Nobel Prize.

Mr. MILLER of North Carolina. Elizabeth Warren. Robert Shiller who is a professor of economics at Yale, widely published, well regarded, seen as a likely future winner of the Nobel Prize. He probably has an economics status that the golfing world has, the best golfer never to have won a major, and I hope that that status or that reputation for Professor Shiller does not have the same career consequences as that reputation in golf has. But Elizabeth Warren, as you point out, a professor of law at Harvard, is probably the best known and most vocal advocate for it. And she compares it to a toaster. That a manufacturer of a toaster--you know, a consumer doesn't know what's on the insides of a toaster. And if a toaster manufacturer is just trying to make the most money that they can--she made these arguments just earlier this week on the Charlie Rose show--take out the insulation from the toaster, and the toaster has maybe a one in five chance of catching fire. It's more profitable for the manufacturer of the toaster. They would make more money, though the Consumer Product Safety Commission is at least supposed to keep them from doing that kind of thing. Why is there not a regulator who looks in the same way at financial products? That is Elizabeth Warren's analogy, and that probably rings true with a lot of people. But in my late and unlamented law career, I did some insurance regulatory work, and I can't tell you how different insurance is from lending. Insurance has been regulated because there have been abuses in the past. Before an insurer can offer a policy, the insurance commissions in the various States approve the policy form. What are you insuring against? Do you have little tricks in there that you aren't really insuring people against what they think they're getting? What is the likelihood that there is really going to be a loss? And is the premium right? Is the premium right? Is it not too high so it gouges consumers? And is it not too low so that insurance companies might make a quick profit but not have the money to pay claims when claims come due? And that happened in the past. That's why we have that regulation, and that's what's happened now. The financial industry has made a huge profit, huge profit. More than 40 percent of all corporate profits by these consumer lending practices. But now that the consumers can't pay their credit card bills and can't pay their mortgages, they're stuck. The American people are not deadbeats. They're stuck. They are working hard. And if anything goes wrong in their life, if they lose their job or someone in the family gets sick or if they go through a divorce, they really don't have much room to play. And they've got to be able to borrow money. But the industry made a killing, and now they're getting bailed out. I don't want to go through a cycle of making a killing and getting bailed out, making a killing and getting bailed out. Let's have a set of regulations in place that provides the American people the kinds of financial services, the kinds of financial products that really meet their needs and doesn't produce this kind of profit, that really produces the kind of profits we had back in the manufacturing days, back when the lives of ordinary Americans and the middle class was improved.

Mr. MILLER of North Carolina. Thank you, Mr. Ellison, for participating. We have covered a great many topics that I wanted to cover. There are many more that we have not. The arguments that the Community Reinvestment Act of 1977 caused our financial crisis in 2008.

Mr. MILLER of North Carolina. Actually, the Federal Reserve Board's statistics show that 6 percent of subprime loans were by lenders who were subject to the Community Reinvestment Act--not all lenders were, or just those with federally insured deposits--and were in the neighborhoods where the Community Reinvestment Act encourages savings. And all the evidence says that that 6 percent perform better than others. So it is not that that is exaggerated. It is completely untrue. There is no truth to that argument at all. If we had longer, we could talk about the role of Freddie and Fannie. Certainly they are blameworthy. They acted badly, but they did not lead the financial industry into this crisis, as has frequently been charged. What led the industry into this crisis was the pursuit of profits and not an honest living but a killing. Not an honest living by providing services to people who needed it, credit to people who needed it on reasonable terms but a killing by cheating people. And we can't go back to that. What we need to do now is not just climb out of where we are but try to restore what we had before. We need to reform the industry and the consumer lending practices. Mr. Speaker, I don't think I have much time to yield back, but I do yield back the balance of my time.

Mr. MILLER of North Carolina

Mr. MILLER of North Carolina. Well, if it's done on a standardized form, it probably is very helpful if it's on a standardized form. What's the disadvantage of putting it in writing rather than its being oral?

Mr. MILLER of North Carolina. Mr. Chairman, on two successive days now, Mr. Hensarling has said in the course of addressing the body, ``Can anyone over there tell me what `net tangible benefit' is?'' And then a second later saying, ``Hearing nothing, they must not have an answer.'' I don't believe anybody watching on C-SPAN is under the impression that we are all paying rapt attention to every word that comes out of Mr. Hensarling's mouth. And the reason we didn't hop up isn't because we didn't know what the answer is. It is more the case that we kind of lean over to each other and say, What did he just say? ``Net tangible benefit'' is based very closely on a rule of law in securities law called, that gets at churning or making transactions in a stock market account just to generate fees for the broker. The problem this gets at is flipping of loans, of coming back to a homeowner and persuading them to refinance just to create more fees for everyone involved in the mortgage system, to refinance so they can get the home owner deeper and deeper in debt. Rather than trying to delineate every possible net tangible benefit, the bill gives the regulatory authorities, the banking agencies, the authority to say exactly what a net tangible benefit is. Announcement by the Chair

Mr. MILLER of North Carolina. Mr. Chairman, I rise to claim time in opposition.

Mr. MILLER of North Carolina. Mr. Chairman, Mr. McHenry and other opponents of this bill have said that the bill will have the effect of outlawing certain kinds of loans and limiting choices. Yes, Mr. Chairman, we do intend to limit choices. They say they would defend to the death the right of consumers to choose to get cheated blind, to get cheated out of their income, to get cheated out of their life savings. And we want to limit that choice because we don't think that consumers really choose that. When someone needs to borrow money to buy a house or borrow money against their house or get a credit card or on overdraft fees, or whatever else, they shouldn't have to swim in waters filled with fins. There should be some protections. This amendment changes, in a fairly modest way, the protections of HOEPA for high-cost loans, which are highly regulated loans. And because they are highly regulated, they are fairly rarely made. But it allows loans up to 6.5 percent higher interest rate than prime--that is well more than twice prime--on subordinate loans, 8.5 percent above prime. And it raises the up-front cost that triggers a HOEPA loan, a high-cost loan, from 8 percent to 5 percent and closes some of the triggers. Do we want fewer loans like that made? Yes, Mr. Chairman, we do. That is exactly what we intend. North Carolina did something very much like this in 1999. The Commissioner of Banks of North Carolina has testified repeatedly before Congress. There was a study at the University of North Carolina at Chapel Hill Business School. At least one business publication, industry publication, looked into it and found there was no change, there was no diminution in the availability or terms of mortgage credit in North Carolina. Did people make fewer loans like this? Yes. That was the whole point; they got better loans. That is the point, making sure that people get better loans. Mr. Chairman, I reserve the balance of my time.

Mr. MILLER of North Carolina. Mr. Chairman, I am happy to go home to North Carolina and explain to voters that I did vote against allowing loans that would be more than 6.5 percent higher than prime, except very highly regulated loans in very unusual circumstances. These loans are made, they are rare, they should be rare. We need better loans. Does anyone really think there were not enough bad loans made in the last few years? It has been in the papers. We have had a foreclosure crisis. We now have a financial crisis. We need better loans. Those loans were not about making credit available to people who couldn't get it otherwise; it was people being taken advantage of and cheated, and we need to do better by the American people. Mr. Chairman, I yield back the balance of my time.

Mr. MILLER of North Carolina. Mr. Chairman, this is a simplified disclosure. Ms. Titus's amendment is good work. It is a helpful clarification. The bill elsewhere already requires disclosure at the outset in a timely way. It requires the originator to present the consumer, the homebuyer, the homeowner with an array of mortgage products that are suitable to that consumer, mortgages that the consumer likely qualifies for and are appropriate to the consumer's existing circumstances, and requires a disclosure of comparative costs and benefits of each of the mortgage products offered. This simply requires that it be in a form. It doesn't bring down the thumb on one side of the scale. It really lets the consumer make the decision and make the decision based upon good information. Elsewhere in the bill, we also require standardized forms designed by the bank regulators, not by the lenders, so we make sure that this is being presented in a way that's designed so that consumers can understand it, not designed in a way so consumers won't understand it. This amendment is a helpful clarification. It will help consumers understand what they're doing. I support Ms. Titus's amendment.

Mr. MILLER of North Carolina. The bill elsewhere requires a full, complete, and timely disclosure to each consumer of the comparative costs and benefits of each residential mortgage loan product.

Mr. MILLER of North Carolina

Mr. MILLER of North Carolina. Madam Speaker, I rise to respond to what several on the other side have said, Mrs. Bachmann, Mr. Sessions and others, that now is not the time to do this. Madam Speaker, I introduced this legislation or legislation like it in 2003, in 2005, in 2007 and now again in 2009. It has never been the time by the likes of the members of the minority party and by the likes of the lending industry. Now their arguments have been a little different. In 2003 and in 2005, they said, ``are you kidding? These loans are great. This is the unfettered market at its best, creating these innovative loans so people can get credit that they otherwise couldn't get. And those Democrats like Miller, who want to restrict it, they just don't know a good thing when they see it.'' In 2007, especially now, they are saying, ``isn't it terrible that all those liberals made the poor lenders make these loans? But now is not the time. Now is not the time to restrict credit.'' Madam Speaker, they will never think it is the right time to protect the American people from abusive lending practices. We need, when credit starts flowing again, when the housing market revives again, the mortgage market revives again, we need to make sure there are rules in place so people can make an honest living by making reasonable loans to people who need to borrow money to buy a house. We don't need to go back to letting people make a killing by cheating people out of the equity in their home by predatory mortgages.

Mr. MILLER of North Carolina

Mr. MILLER of North Carolina. The financial industry's explanation for our financial crisis is it was a weird, unpredictable combination of forces, this perfect storm of macroeconomic forces that no one could have seen coming. Who could have known that all this would happen is the way that many economists mock that argument. Mr. Chairman, I don't claim that I saw the whole financial crisis coming. I didn't know that these mortgages and subprime mortgages made in 2004 and 2006 would be as toxic as they have proven to be for the financial industry. But I knew that they were going to be toxic for homeowners, and I thought that was reason enough to do something. In 2003, I introduced legislation that would have prohibited many of the practices that have led us to where we are. Mr. Watt joined me then. Two years later, we introduced it again as Miller-Watt-Frank. So, yes, many on this side of the aisle have been worried about trying to do something about the toxic loans for a long time, perhaps not to protect Wall Street--it's pretty remarkable to hear the minority still defending or worrying about the poor, poor pitiful boys on Wall Street--but to protect consumers, to protect homeowners. We know what caused this crisis. We know what was in the loans in 2004 to 2006. Subprime loans went in 2003 from being 8 percent of all mortgage loans to 28 percent in 2006. Many people should never have gotten any loan. They didn't qualify for any loan. Actually, a clear majority of the people who got subprime loans, qualified for prime loans. They put their trust in the wrong person, and their trust was betrayed. Ninety percent of those loans had an adjustable rate, with a quick adjustment after just 2 or 3 years. They were 2/28s or 3/27s. Typically, the teaser rate hovered around prime. It wasn't much of a bargain in the first place and, in many cases, was above prime, and then would go up with an average typical monthly increase in payment of 30 to 50 percent. Seventy percent had prepayment penalties locking the borrowers in, 70 percent were originated by brokers that the borrowers thought were looking after their interest. There was a grotesque asymmetry of information. That's what economists call it. What it means is the lenders were writing all the fine print. Their lawyers wrote all that they gave the borrowers to sign and then the borrowers were stuck with it. They were counting on someone who was actually being paid, the broker who was being paid by the lenders, to get them the worst loan possible, while they were telling the borrowers they're trying to find for them the best loan possible. Now, throughout that period, we heard the same arguments then that we are still hearing after all that has happened. We're still hearing from the minority in opposition to this bill that all those terms that may look predatory were actually justifiably required to make loans available to people who otherwise would not qualify, to make homeownership available. This is financial innovation. This is the market at its best. We should celebrate. And we know what really happened during that period. Americans have heard a great deal about the vulgar compensation on Wall Street in the financial industry: the pay and the bonuses and all the perks, the million dollar-plus redecorations of the CEO offices, the corporate jets, and all the rest. Even after all of that, more than 40 percent of corporate profits in America were in the financial industry. Mr. Chairman, their margins weren't really that tight. They really didn't have to put all those terms in mortgages in order to make them. The terms that appear predatory on their face really were predatory. They were not about making loans available to people who otherwise couldn't get credit. They were about making as much money as they could as quickly as they could make it. We still hear the same arguments, the same parroted arguments from a discredited industry we have heard for years. We have heard letters from the mortgage bankers held up and read aloud as if they were brought down on stone tablets from Mount Sinai. We have heard the concerns of the Wall Street boys. Like everybody in America still believes what they have to say. It is very clear that the members of the minority's view of the role of government is that government should hold the American people while industry goes through their pockets. The mortgages that got us in this mess were shameful. It is shameful that this Congress, that this government ever allowed those mortgages to happen. This bill will begin to put an end to it, to make sure it never happens again. It limits the upfront costs that strip equity from mortgages. It prohibits a prepayment penalty that traps people in bad mortgages so they couldn't get out of them. It forbids compensation to brokers that creates the conflict of interest that many brokers betrayed the trust of borrowers.