Pete Sessions

Mr. SESSIONS

Mr. SESSIONS. I thank the gentleman for not only coming to the floor but for his thoughtful ideas. Mr. Speaker, in closing, I'd like to stress that while my friends on the other side of the aisle claim to be protecting consumers with this legislation, in reality, they're going to limit credit, reduce benefits, and raise interest rates for every single consumer, whether they were a good consumer or a risky consumer. I think the American taxpayer, really, the American public, including small businessmen and -women, really deserve the same accountability and transparency with their dollars to be used in a way that they see fit. Mr. Speaker, we as a Nation have a real problem, and we need real solutions, and passing this legislation today when we already have a statute that will take place is simply a waste of time. We need to protect jobs. We need to provide more jobs. We need to encourage economic growth. And we need to restore the American public's faith in their Members of Congress. And I believe today you have heard very succinctly the Republican Party come down and talk about how this bill is a big overreach that will impact and cause problems to a system rather than making it better. With that, I encourage a ``no'' vote on this closed rule. I yield back the balance of my time.

Mr. SESSIONS

Mr. SESSIONS. Madam Speaker, I have a motion to recommit at the desk.

Mr. SESSIONS. I am in its current form.

Mr. SESSIONS. I appreciate the gentleman doing that, for him accepting this, in the spirit of what you have done. I appreciate that because it lives up to the gentleman's word of accepting. It is my hope that by what I am going to do now, it will ensure it will be in the final bill. Madam Speaker, I will ask for a recorded vote. I yield back the balance of my time.

Mr. SESSIONS. I would yield to the gentleman.

Mr. SESSIONS. Madam Speaker, yesterday in the Rules Committee I offered two amendments to this legislation. My first amendment asked for the courts to limit fees for attorneys filing lawsuits created by this legislation to reasonable levels to ensure that real victims of predatory lending, not trial lawyers, are fairly compensated for wrongdoing. Unsurprisingly, this amendment was rejected by the committee Democrats on a party-line vote of 9-4. In rejecting this amendment, my Democrat colleagues chose to put trial lawyer fees over victims' compensation in cases where homeowners have been defrauded. My second amendment would require that ACORN meet the same transparency and reporting requirements that Democrats demanded from any financial institutions receiving TARP funds. My amendment would have ensured accountability and transparency for any taxpayer funds distributed as a result of this legislation. I will repeat that: my amendment would have ensured accountability and transparency for any taxpayer funds distributed as a result of this legislation, just like TARP funding that we have already passed in this body. But, once again, my colleagues in the Rules Committee decided to vote against this and in favor of special interests, and the amendment failed. Madam Speaker, the main component of this amendment really was not received because it singled out ACORN as a group. And I note that it has a well-documented history of deceit and fraud, which, just again this week, ACORN has been accused in 26 counts of breaking the law in the State of Nevada, and today, seven more counts brought against them by a Democratic prosecutor in Pennsylvania. So to answer this criticism, I am offering this motion to recommit to extend transparency and good government provisions from my original amendment to any group that is receiving government grants for legal or housing counseling.

Mr. SESSIONS

Mr. SESSIONS. Madam Speaker, I yield myself such time as I may consume. I rise today in opposition to this rule and to the underlying legislation. This structured rule does not call for the open, honest debate that has been promised by my Democrat colleagues time and time again; yet here we are again discussing the mortgage reform bill for the second day. It is essential to provide for more transparency and accountability in the lending process, but there is also a laundry list of important issues that face this Congress. And all this week we will have but one bill on the floor of the House of Representatives to debate. I think that's unfair to the American taxpayer when there is much work to be done. Today not only will we be discussing the flawed underlying legislation, which is already addressed in Federal statute, as we spoke about yesterday being on the floor, that Federal Reserve has already issued the rules and regulations as a result of feedback from industry last year, but what we are here to do is to try to redo that to put the majority's mark on that legislation, which already takes care of the problem. But this legislation that we're going to handle again today limits choice, reduces credit, and increases costs to consumers and taxpayers at a time when the effort should be about making home mortgages more reliable, least cost conscious, and making sure that consumers would be able to have an opportunity to have a chance to have a home. But what we are going to do is, by allowing a patchwork of State laws to confuse the system, we are going to now create qualified mortgages which require lenders to hold 5 percent credit and creates a $140 million slush fund for trial lawyers. So what we are going to do is limit choice, reduce credit, and increase costs, and make sure now there is a slush fund for trial lawyers to sue the same companies that we were trying to encourage to lend to the marketplace so people could have money. Madam Speaker, you will also hear about the amendments that our Democrat majority has made in order and failed to make in order today, no matter how substantive those amendments were. We have heard the number of amendments that were made in order. My good friend knows that there were about 20 Democrat amendments that were put into the manager's amendment. So the 8-5 ratio is a little bit deceptive. It should be 8 plus 20, it's 28 versus 5 Republican amendments. I offered two amendments in the Rules Committee last night, and both were struck down on party line vote--I guess that's no surprise. One was to limit trial lawyers access to taxpayer funds, and one was to ensure organizations like ACORN or any organization that receives money from the Federal Government, are more transparent and accountable with any government funds they receive. At the end of 2007, the Board of Governors of the Federal Reserve undertook careful review of the abuses in the mortgage process system, and they took public comments, held public hearings across the country. And after careful deliberations, they finalized new comprehensive mortgage rules. These rules are going to take effect 5 months from now in October. So not only are we spending all of 1 week on one piece of legislation, but the necessary regulations already exist in Federal statutes, and companies all across this country are already aiming at implementing those rules and regulations being ready for October. This legislation fails to address the uneven patchwork of state mortgage lending laws and leaves lenders and consumers with unfair and confusing laws where the costs will ultimately be borne by customers. While this legislation attempts to establish is a new class of loans called qualified mortgages which will enjoy safe harbor and exemption from further restrictions in this bill, this will ultimately limit consumer choice on mortgages and unduly burden the mortgage industry, essentially excluding numerous safe and affordable mortgage products that serve and have been good to borrowers as well. Madam Speaker, the Democrats are here today to say that they are on the side of the consumer and the borrower, even if it limits choices and raises interest rates for every single consumer that chooses to use this avenue to buy a home. Mr. Michael Menzies, on behalf of the Independent Community Bankers Association, in committee hearings on April 23, 2009, stated, ``Lots of this legislation simply increases our cost of doing business rather than helping us do a better job with our customers.'' Another regulation that will narrow choice, lessen credit and increase costs for borrowers and taxpayers is the lender risk retention provisions requiring lenders to retain at least 5 percent of the credit risk presented by all loans that are not deemed qualified mortgage. While I do believe that it is important to have some ownership in your investments, these far-reaching requirements would make it impossible for many lenders to operate, especially small and local lenders. With the current economic crisis and all the efforts to inject capital into the financial services sector, why would we want to limit the use of capital and threaten to further impair banks' abilities to lend? Madam Speaker, this is not a solution for the ailing economy. In addition, this legislation directs HUD to establish a brand-new $140 million slush fund for legal organizations to provide a full range of foreclosure-related services. Madam Speaker, my friends on the other side of the aisle actually take these steps simply to fund trial lawyers in this legislation. If this doesn't force a flood of litigation, I really don't know what will. And Margot Saunders of the National Consumer Law Center, a consumer-advocate organization, said on April 23, 2009, in the Financial Services hearing, ``We have tried to propose repeatedly that you draft a simple bill that creates market-based incentives for enforcement rather than litigation opportunities,'' and I might say, which is full in this bill. In other words, what we are doing is looking for paying lawyers to come and do what we should do here in this body with thoughtful, honest, straightforward legislation, which is why I offered an amendment in the Rules Committee last night, that of course was defeated on a party-line vote. Madam Speaker, I include the amendment in the Record. Amendment to H.R. 1728, as Reported Offered by Mr. Sessions of Texas After section 220 insert the following new section:

Mr. SESSIONS. Madam Speaker, at this time I yield 2 minutes to the gentleman from Egan, Illinois (Mr. Manzullo).

Mr. SESSIONS. Madam Speaker, we began this debate and discussion yesterday where we were trying to talk about the impact of this bill and what feedback would come as a result of hearings that Chairman Frank did have, and one of them, one of the outcomes of that, was a letter dated May 5, 2009. The letter comes from the Mortgage Bankers Association, one of the primary impacting organizations and, certainly, they are there in communities to serve on behalf of the American people for people's housing needs. Madam Speaker, I would submit for the Record a letter that was sent to Speaker Pelosi and Leader Boehner about their feedback about this legislation. Mortgage Bankers Association, Washington, DC, May 5, 2009. Hon. Nancy Pelosi, Speaker of the House, U.S. House of Representatives, Washington, DC. Hon. John Boehner, Republican Leader, U.S. House of Representatives, Washington,

Mr. SESSIONS. Madam Speaker, at this hearing that was held about this bill, a lot of feedback was provided by the marketplace--people who were impacted the most; people who every day are in front of lenders and trying to get people in homes. Part of the feedback was provided from the American Bankers Association. I'd like to insert into the Record a letter related to that meeting and this legislation. American Bankers Association, Washington, DC May 6, 2009. To: Members of the House of Representatives. From: Floyd E. Stoner, Executive Vice President, Government Relations and Public Policy. Re: H.R. 1728, the Mortgage Reform and Anti-Predatory Lending Act of 2009. I am writing on behalf of the members of the American Bankers Association regarding H.R. 1728, the Mortgage Reform and Anti-Predatory Lending Act of 2009, which the House of Representatives is scheduled to consider beginning on Wednesday, May 6, 2009. H.R. 1728 is far-reaching legislation designed to prevent a recurrence of the problems in the subprime market that have harmed many American homebuyers. We appreciate that this legislation seeks to address the source of most of these problems, the loosely regulated and largely unexamined mortgage originators operating outside of the regulatory structure within which federally insured depository institutions function. However, we are concerned that this major legislation can have a negative impact on both insured depository institutions and credit-worthy borrowers seeking to buy homes--impacts which have the potential to impair economic recovery. In considering any new legislation, it is critical to recognize the significant regulatory and structural changes that are already underway in the mortgage industry that will provide much greater protections to consumers. It is essential to recognize that the further changes proposed in H.R. 1728 will be cumulative to the changes already being implemented under revisions to Truth in Lending Act, Real Estate Settlement Procedures Act, and Home Mortgage Disclosure Act regulations. We have worked with the Financial Services Committee and are pleased that a number of concerns were addressed either prior to, or during, Committee consideration of the legislation. While we greatly appreciate the comprehensive, inclusive consultation that has gone into the drafting process so far, and the desire to avoid unduly restricting credit, we remain concerned that the bill still, in our view, needs serious work. We plan to work with the Congress as the legislation moves forward to clarify additional areas of concern. To that end, we offer the following comments. Safe harbor: The legislation creates a category of ``qualified mortgages'' which are given a safe harbor from the expanded liability of the legislation. ``Qualified mortgages'' are also exempt from certain other key restrictions in the bill, including the risk retention requirements. While the very narrow safe harbor included in the original bill has been expanded beyond just 30 year fixed rate loans, we are concerned that it is still far too narrow. An amendment adopted during Committee consideration of the bill expanded the safe harbor to include fixed rate loans of terms other than 30 years, as well as some adjustable rate mortgages. However, the language on adjustable rate mortgages (ARMs) remains too restrictive. To qualify for the safe harbor, ARMs would have to be underwritten to the maximum rate possible during the first seven years of the loan. Consider the example of a five year ARM with the initial rate set at 5 percent and with caps on increases in later years set at 2 percent per year. Under the pending bill, this loan would have to be underwritten at a rate of 9 percent (because in the seventh year of the loan the rate could--but by no means is likely--to go to 9 percent for that year). In this instance, even though the borrower could not pay more than 5 percent for the first five years of the loan, and not more than 7 percent in the sixth year, they would have to be able to afford the loan at 9 percent for all seven years in order to qualify. This will shut the door to affordability to many borrowers. We strongly recommend that this provision be altered to reflect a more realistic underwriting standard. Similarly, we are concerned that to be included in the safe harbor, loan points and fees must be limited to not more than 2 percent of the loan amount. The bill should be clarified to ensure that bona fide discount points paid by a borrower to reduce the interest rate on a loan are not included in this calculation. The relevant threshold in this instance should be the annualized percentage rate (APR) as currently defined in regulation implemented pursuant to the Truth in Lending Act. We also believe that the 2 percent cap should not be statutory, but instead should be determined by the federal bank regulators to accommodate small dollar loans which may carry fixed fees taking the loan beyond a 2 percent cap. The bank regulators are better suited to determining the appropriate cap on fees paid in association with different loan products. Risk retention: We are pleased that the bill was modified during Committee consideration to provide the bank regulatory agencies with the authority to exempt loans (beyond those exempted under the safe harbor) from the 5 percent credit risk retention provisions of the bill. While this expanded regulatory discretion is a step in the right direction, we remain firm in our conviction that federally regulated and examined insured depository institutions should be exempt from risk retention requirements. Insured depositories already have significant risk retention--and the capital to back that risk. Loans sold by insured depositories into the secondary market frequently include recourse agreements, so that if there is an underwriting or other error or omission, the depository can be forced to buy the loan back. Again, because insured depositories have strong capital positions, they can and do buy back recourse loans. The same cannot be said of other lenders who lack capital. For these lenders, greater risk retention is needed. For insured depositories, it is not. We recommend excluding insured depositories from the risk retention provisions of the bill. Uniform national standards: We are gravely concerned with the enforcement provisions of the bill, especially in light of an amendment adopted in Committee which would grant state attorneys general enforcement authority over the Truth in Lending Act provisions added by the bill. The current language of the bill will lead to conflicting enforcement actions between state attorneys general and federal banking regulators. It will cause confusion to consumers and lenders alike and will generally undermine the regulatory framework for mortgage lending in the nation. A confusing enforcement scheme is likely to harm borrowers and provide the unscrupulous with new opportunities. At a minimum, we urge you to adopt clarifying provisions which would give the federal banking regulators notice of a state attorney general's intention to act, and allow the federal regulator a reasonable time to act before the state is allowed to do so. Such a framework is needed to bring order and clarity to the process. We anticipate a number of amendments during floor consideration. As a general rule, we oppose amendments which would increase regulatory burden on banks and their employees, and support amendments which recognize the role that regulated, insured, and examined institutions play in protecting consumers' interests and in providing products and services which benefit our national marketplace. We appreciate the working relationship that has been established between the Members of the Committee and all interested parties, and we shall continue working with Members of Congress as this legislation moves through the legislative process. This letter goes to all Members of the House of Representatives. So each of my colleagues openly received a copy of this. It is from Floyd Stoner, executive vice president with the American Bankers Association. Here is what their conclusions are after seeing the legislation. They are ``concerned that this major legislation can have a negative impact on both insured depository institutions and creditworthy borrowers seeking to buy homes--impacts which have the potential to impair our economic recovery.'' So what the American Bankers are saying is that the answer, the antidote, the medicine that now-Speaker Pelosi is coming up with will actually have the potential to impair economic recovery. So every single Member of Congress got this letter. We will find out today what their views are. But the American Bankers Association also said, and pretty much ends their letter by saying: ``The bill still, in our view, needs serious work.'' We should reject this bill. We should understand that the people who are engaged in trying to make sure people have loans and are worried about our economy are saying it not only has the potential to impair economic recovery, but the bill needs serious work. I reserve the balance of my time.

Mr. SESSIONS. I yield myself such time as I may consume. I appreciate the gentleman coming down and talking about how Republicans are to blame for all this mess, but I'd like to harken back to September 25, 2003, at a hearing that was held back in the Financial Services Committee. Our current chairman, Barney Frank, who's a very thoughtful and diligent chairman, thoughtful on the ideas of the entire industry, said, ``I don't think we face a crisis.'' This is 2003. ``I don't think we face a crisis. I don't think that we have an impending disaster. We have a chance to improve regulation of two entities I think that, on the whole, are working well.'' So perhaps the most thoughtful person in the country, certainly in this Congress, back on September, 25, 2003, is saying, ``I don't think we face a crisis, and I don't think we have an impending disaster.'' Further, he said, ``I don't see any financial crisis. You can always make things better, but I do think we should dispel the notion that we are here today because something rotten has gone on.'' That was Barney Frank. That was Barney Frank at the hearings. So the gentleman wants to blame Republicans. And yet, here we had the lead, very thoughtful and articulate, Democratic ranking member, arguing that there was nothing wrong and nothing was about to happen. Yet, today, what we have is another answer: Oh, I'm sorry. We forgot to say, and we know that the Fed has already taken care of this problem with rules and regulations that are already known and will be in place in October. Here we have now legislation to re-address that issue. And the answer that comes back from the marketplace is, This legislation limits choice, reduces credit, and increases cost to consumers and taxpayers. I would have assumed that if there was nothing wrong in 2003, and now we corrected it with a series of hearings, including the Federal Reserve, that we would want to help the marketplace--not limit its ability, its choices, and put exposure to taxpayers. That's why we're opposed to this. We're opposed to it not because we're trying to stop it, but because we're trying to make it better. We think what should have been made better has already been done by the Fed. This Congress knows it. Every single Member of Congress got a letter to their office directly from the American Bankers Association saying serious flaws in this legislation. I reserve the balance of my time.

Mr. SESSIONS. Madam Speaker, I appreciate the gentleman. By the way, the gentleman and I are friends. We are speaking about policy here, disagreements. I would say to the speakers that have come on the Democratic side today, it sounds like an argument they are having within their own party. Everybody is trying to blame the Republican party and George Bush for what happened; yet, if the gentleman didn't like 2003, I will go to the end of 2004, December 16, 2004, if we need to get more current. And I will quote the gentleman, the chairman of the committee: ``The SEC's finding that Fannie Mae used incorrect accounting is serious and disturbing. While these improper decisions by Fannie Mae do not threaten the financial soundness of the corporation, and should have been used by anyone in an effort to cut back on Fannie Mae's housing efforts, they do not reveal troubling deficiencies in its corporate governance.'' All of these signals that came to Members of Congress from people who were on the committee, including one of the most distinguished members of the committee, said: We don't have a problem. There is no soundness problem. There is no weakness problem. I don't see a financial crisis. Sure, we can always do things better, but I think we should dispel the notion that we are here today because there is something that is rotten that has gone on. Well, why are we trying to extend blame? Why don't we just talk about the problem that we are in today? And if we are going to do that, my notion would be that what we should do is listen to the people who are in the banking business saying this is a problem. This bill has serious flaws. Madam Speaker, I yield 5 minutes to the gentlewoman from Minnesota (Mrs. Bachmann).

Mr. SESSIONS. Madam Speaker, I am really down to no speakers and just my closing statement. So I would encourage my friends to go ahead and utilize their time, and then I will close as appropriate.

Mr. SESSIONS. Madam Speaker, in closing, I would like to thank the gentleman from California and each of the Members from his side who have participated today, including the gentleman, Mr. Frank. I would like to stress that while my friends on the other side of the aisle claim to be protecting consumers and have said that people want to delay this legislation, that is not true. It has already taken place. Whatever we need, the Federal Reserve has already done. What we will say is that what this legislation is doing is benefiting trial lawyers with tax dollars. And perhaps more importantly, it is causing this circumstance to be aggravated and to be worsened. We already understand there will be less credit that will be available. This will raise the costs of loans and mortgages that people will want to receive. At a time, especially, when the economy needs help, this will harm the economy. And that is directly what the American Bankers Association has said in a letter to every single Member of Congress. So I hope every single Member should hear this. They need to be talking to their staff, ``hey, did that letter come in on this legislation that we are handling today?'' And that letter says, ``serious flaws, serious flaws, bigger problem.'' We need to be providing for jobs. We need to be encouraging economic growth. We need to encourage investment. And this legislation does not accomplish that.

Mr. SESSIONS. Madam Speaker, on that I demand the yeas and nays.

Mr. SESSIONS

Mr. SESSIONS. I thank the gentlewoman. As I rise today, before I begin my formal statements, I would like to acknowledge that the gentleman, Mr. Frank, the chairman of the committee, has come to the floor, and I want to personally thank the gentleman for engaging with me and perhaps other members of the Republican Party on working on this bill. I want to personally thank the chairman for that engagement and believe that it will result in the opportunity for Republicans to have a better say on the bill that will be before the House today, and I want to personally thank the gentleman. Madam Speaker, I do rise today, however, in opposition to H.R. 1728, which is the majority's misled attempt to bring stability back into the mortgage market. As the American people will soon see, many provisions of the bill are a destructive force to both the lending industry and, in turn, the American homebuyer. First, the new Federal Reserve regulations already exist and are about to be implemented in October of this year, which means that this work on predatory lending has already taken place. Second, this bill establishes a new group of qualified mortgages, which limits consumer choice of mortgages and unduly burdens the mortgage industry. Third, it establishes new credit risk retention rules, which dramatically limit the successful functioning of the secondary market, especially small, nonbank lenders. And, fourth, it authorizes a $140 million slush fund for legal defense funds. Last July, the Federal Reserve issued new regulations under the Home Ownership and Equity Protection Act which implemented many provisions of the predatory lending legislation of Congress last year. As part of this implementation, new Federal rules have been developed which address predatory practices and products, bringing an end to a variety of issues which have haunted the subprime market, such as poor underwriting standards. These rules already are set to take effect in October of this year. My colleagues from both sides of the aisle understand that these new regulations will soon be in effect, and certainly cleaning up the lending industry is important. Even Chairman Frank has previous knowledge, and I quote, that ``the Federal Reserve has adopted regulations so that the predatory and deceptive lending practices that led to the subprime crisis will be prohibited,'' already done. But rather than allowing the Fed's carefully constructed regulations to take effect, this new majority has decided to draft their own mortgage reform bill with their own unique twist. Unfortunately, this twist includes new and untested mandates and duties, that even if they can be implemented, they may end up punishing the very consumers that this majority party is trying to protect. My question is simple: Why is Congress meddling with regulations that will soon yield significant and expected benefits in combating mortgage fraud, eliminating the bad actors of the industry, and providing greater protection to the consumer? While this legislation attempts to correct past excesses in the mortgage market by establishing new standards for mortgage origination, and imposing greater legal liability on the secondary market, this bill, in fact, injects legal uncertainty into the lending process, thereby raising the cost and reducing the availability of mortgage credit to consumers. Allowing a slush fund for people to sue is a prime example of what we are talking about. I would like to say this is an unintended consequence. I think it's an intended consequence. One of the primary provisions which contribute to the higher cost and reduced availability of loans is the misconstrued establishment of a new class of loans called qualified mortgages. Any loans deemed as qualified mortgages are, in theory, protected under the bill's limited safe harbor and are exempt from the new lending risk retention requirements. All other nonqualified mortgages are excluded from this safe harbor and siphoned into the category of subprime mortgages. In turn, any lender can be sued for selling nonqualified mortgages. The kicker, however, is that H.R. 1728 makes all real safe harbor mortgages rebuttable, meaning that borrowers can sue any creditor for any mortgage. Under the terms of this bill, no mortgages are protected by safe harbor laws and all lenders can be sued. That is going to have a direct and devastating consequence on the marketplace. When the bill was introduced in Congress, the last Congress, the bill appropriately filtered most mortgages into three types of loans. For the sake of explanation, let's call them green, yellow and red mortgages. Green light mortgages are good, traditional, protected mortgages. Yellow light mortgages are potentially hazardous mortgages. In this case, the consumer has the right to sue for loss in the case of predatory lending, while the lender maintains the right to a fair defense. Lastly, red mortgages are simply mortgages presumed bad and the law allows the consumer to sue for any loss. Unfortunately, according to this year's version of the bill, the law will only allow for green and red light mortgages, and, most importantly, neither of them will have a real safe harbor because borrowers can sue any creditor for any mortgage. Regardless of how safe and affordable and how well an alternative mortgage may have served the borrower, lenders will begin making fewer and more expensive loans out of fear of being sued. At the end of the day, what is the purpose of this mortgage reform? A government-mandated mortgage structure enforced by the very taxes paid by the American homeowner, or providing for consumer choice of loans which best suits the needs of responsible homebuyers with the assurance of meaningful customer protection? I think we can see what we are going to get. Madam Speaker, I have a concern also with the new ``credit risk retention'' requirements. This provision will force any loan originator to hold 5 percent of any mortgage that does not fit the bill's narrow safe harbor, what is known as the ``qualified mortgage.'' The ``credit risk retention,'' as it is referred to, requirement is a far-reaching requirement that leaves my colleagues and me confused as to how certain groups, such as smaller lenders, will even survive. The fact stands that many smaller nonbank lenders do not have the same reliable sources of funding as depository institutions. These lenders would be unable to compete, let alone to operate, at a competitive level. They simply cannot compete. Additionally, this provision will necessitate that larger lenders increase their capital. This is the wrong approach during a time when the government is concerned that lenders are insufficiently capitalized; moreover, during a time in which the government is making the taxpayer pay for these insufficiencies. David Kittle, chairman of the Mortgage Bankers Association, testified in front of the Financial Services Committee on April 23 of this year. And here is what he said, ``at a time when policymakers are focusing so much of their efforts on injecting capital into the financial services sector, this provision would force an inefficient use of capital across all types of institutions and threaten to further impair their ability to lend at all.'' This will simply narrow choices, lessen credit and increase costs for borrowers and taxpayers, as well as increasing lawsuits. While a critical element of mortgage reform should be giving incentives for greater accountability to lenders without damaging the mortgage market, H.R. 1728 imposes huge liability on all groups involved in issuing a loan while circumventing any investor liability. Unfortunately, the bill magnifies the already substantial legal risks faced by participants in the mortgage market, dramatically reducing any incentives for lenders to partake in the mortgage market. And as if new litigation were not enough, this bill authorizes $140 million for legal assistance grant funds to legal organizations to provide taxpayer-funded legal defenses for homeowners in default or facing eviction. Simply put, this bill sets up lenders for failure by burdening them with undue liabilities and funding trial lawyers. This bill lacks the key taxpayer and lender protections, opening the door to taxpayer-financed frivolous civil lawsuits which will ultimately ruin the mortgage industry. I'm sure it will empower a bigger Federal Government, however. Additionally, this bill subjects the taxpayer to involuntarily funding groups like ACORN, who will be eligible for receiving grants from this legislation. My colleague from Minnesota was able to add a provision which sufficiently blocks any organization that has been indicted from receiving any funds--for example, ACORN. Unfortunately, the majority is actively making efforts to reopen groups like ACORN to taxpayer funds with no regard for past indiscretions. Restructuring the mortgage industry is essential in returning safety and security to the housing industry. We don't debate that. Unfortunately, the majority party is choosing to streamline an overzealous mortgage bill without allowing the Federal Reserve regulations to first go into effect, not to mention the destructive nature of this bill on the lending industry and what the impact of this bill will have on every single American who is striving for the dream of homeownership, namely, making it more expensive and less available to those people who need it the most. H.R. 1728 is a jackpot for trial lawyers, kryptonite for the mortgage industry, and ultimately crushes dreams of homeownership for many Americans. Therefore, Madam Speaker, I oppose the rule and the underlying legislation, and I hope my colleagues do the same. I reserve the balance of my time.

Mr. SESSIONS. Madam Speaker, I find myself in a position of making sure that this body does understand that lots of debates have taken place. I know the gentleman, Mr. Frank, has been on the committee for a long time and has argued very vehemently for years that the crisis was not about to happen, that the crisis and the changes that were made to Fannie and Freddie and subprime mortgages and all these things, that there was no crisis that was getting ready to happen. And I would respectfully say to the gentleman, it seems like Mr. Greenspan agreed with that. Something did happen. And it is up to us as thoughtful Members to make sure that we appropriately then take action where necessary. This was done last year. The Federal Reserve understood it, went through a deliberative process, took feedback from the industry and took feedback from consumers. The damage had been done. We are now talking about predatory lending. We are not talking about what got us in the problem in the first place. We are talking about now that people are in trouble, how do we help save them? How do we help work with them? How do we make sure that the system properly works not just for people who might be in trouble, but people who might be in the future? The Federal Reserve has already done this. We already know that those rules will take place in October. What I would argue with the gentleman about is going then too far, not doing something. I wouldn't argue with the gentleman. The gentleman is really very thoughtful in much of what he does. But the legislation will narrow choices, lessen credit and increase costs for borrowers and taxpayers. And at some point there has to be some balance. We are in agreement that we ought to move forward, that we ought to do things, that the laws that will take place through the regulation of the Fed are proper, necessary and needed. But we are not for making lawsuits a better part of what we are doing, providing money for people to sue, narrowing choices, lessening credit and increasing costs. And that is our decisionmaking point where we disagree with not only this legislation but perhaps moving this bill in the first place. I reserve the balance of my time.

Mr. SESSIONS. Madam Speaker, you know, two points: first of all, we are sitting here blaming each other. I hope I am not doing that about the past. We were talking about today's bill, the right way to balance what needs to be done now with the understanding that the Fed has already acted, notwithstanding whether the gentleman, Mr. Frank, thinks that they should have acted or whether the chairman of the Fed should have done something. The bottom line is that the gentleman was right there with him the whole time. ``There is no problem. There is no systemic risk.'' And that was the constant message that we heard from the gentleman, Mr. Frank, about the same big issue. But I would like to take issue with one point, and that is Republicans have done nothing. Well, I would like to say that there was Republican-authored legislation called the SAFE Act. And the SAFE Act which created licensing and registration for the mortgage industry was enacted last year. The Conference of State Bank Supervisors had called ranking member, oh, yes, he is a Republican, Spencer Bachus' bill ``the most significant mortgage reform in years.'' So let's be a little bit clear: Republicans were not here doing nothing. Our friends, the majority party, were offering public comment about what was not going to happen, and the subprime mortgage effort did happen. And now what we are trying to do is work with a set of rules and regulations that have been agreed to by the Fed, well understood, and the industry as well down the line to make sure this October we know what those rules are. And now we are going to have our friends in the majority party to overlay new rules that empower trial lawyers that will narrow choices, lessen credit, and increase costs. There has got to be some balance. Mr. Speaker, I would argue today that notwithstanding the gentleman from Massachusetts (Mr. Frank) and the gentleman from Alabama (Mr. Bachus) and the gentleman from Texas (Mr. Hensarling), who has been mentioned a couple of times, have been very active for 6 or 8 years on this issue. Doing nothing would not be an accurate description. Saying that Republicans blocked attempts would not be a correct assertion. But saying that there has been work in the aftermath to try and do the right thing that is right on target already exists and we don't need to add to that would be equally true also. I reserve the balance of my time.

Mr. SESSIONS. Mr. Speaker, I am very pleased to engage the gentleman, and I appreciate him doing this. But, Mr. Speaker, my point would be the gentleman is trying to get into a political argument especially about how I may or may not have voted. He supposes I would have voted against the bill because it was a reasonable bill. I think that is what he is trying to say. I don't know how I voted on the bill, this section of the bill, at all. What I would say to you is that you can't have it both ways. You can't say Republicans did nothing and then say, oh, Republicans, a handful of Republicans did something, but the vast majority of Republicans voted against it. That is, Mr. Speaker, trying to take what we are attempting to do here today, making public policy wise choices in the open, and by the way, Republicans are for doing this on the floor to talk about every amendment, to talk about the processes, to talk about the expectations of performance, to talk about what we expect the laws to do; and now he is trying to have it both ways to say, I guess it was a Republican idea, but most Republicans opposed it. It was a Republican idea by the ranking member of Financial Services, Spencer Bachus, who is a Republican, and who moved forth in those responsibilities an opportunity for something to become law. And it is obvious the gentleman, Mr. Frank, at the time was willing to engage in that, and that should make all of us feel good. But I don't think we should turn around later and diminish that effort just because we want to make political points here today. And I don't mind making political points because here are the political points I would make: today we are going to narrow choices, lessen credit, and increase costs for borrowers and taxpayers. We are going to provide at a time when our country should be trying to lessen spending of money, we are going to provide an extra $140 million for people to go sue in court to overload our courts when resolution should be done by the legislation, but in fact also by the rules that are already provided by the Federal Reserve. Republicans aren't here just to say no and to come to fight. We are after good public policy. We are after public policy that will work for people and a marketplace so there are lenders in every single community. This bill that we are here today on will lessen, take away the number of qualified lenders who are available because now the costs are going to go up, fewer consumers will be able to get the loans and will pay more money because now we are going to give from the Federal Government $140 million to go sue somebody. Legislation should be about finding a balance. I'm not opposed to remedies. I'm not opposed to courts and people litigating for the right reasons. I am simply not interested in now that it is over, trying to find a way to beat up people when resolution, keeping people in their homes, finding a way for that balance to work. And today we will give full credit to Mr. Frank. He wants political credit; let's give him full political credit. All the Democrats will get full political credit today for doing essentially two things: number one, reworking what is already laws that are going to begin in October by the Federal Reserve; and, secondly, we will give you credit for these principles, narrowing choices, lessening credit, and increasing costs for borrowers and taxpayers. Making it more difficult at a time when America and Americans need the chance to go get a home loan, we are now going to add more rules and regulations to the mortgage industry. This is exactly where Republicans do draw the line. We are for well- balanced, well-meaning, thoughtful articulation on this floor to make sure we understand what we are doing. We are not for suing people and not for adding costly rules and regulations. The industry has already told us that is exactly what the intended outcome of this bill will be. I reserve the balance of my time.

Mr. SESSIONS. Mr. Speaker, I appreciate this one-sided debate about how bad Republicans are, how we did nothing; but I believe the gentleman has already well answered that question and heard it that Republicans in fact have been proactive during this entire time. Mr. Speaker, I include for the Record a letter dated May 5, 2009, from the Mortgage Bankers Association whose title is ``Investing in Communities.'' Mortgage Bankers Association, Washington, DC, May 5, 2009. Hon. Nancy Pelosi, Speaker of the House, U.S. House of Representatives, Washington, DC. Hon. John Boehner, Republican Leader, U.S. House of Representatives, Washington,

Mr. SESSIONS. I want to thank not only the gentlewoman for extending the time, but also the gentleman, Mr. Frank, for engaging in this issue. Mr. Speaker, testifying to the Financial Services Subcommittee on behalf of a coalition of consumers, advocacy groups, and labor organizations from across the country, Margaret Saunders of the National Consumer Law Center, called this bill ``convoluted and virtually impossible as a mechanism to solve the current problem.'' Convoluted and virtually impossible as a mechanism to solve the current problem. We need to go back to the drawing table and remove many of the political provisions which will only cause further damage in the marketplace. It will further damage a fragile mortgage market that is in need of greater certainty, not more uncertainty. This afternoon in the Rules Committee, my friends on the other side of the aisle will have an opportunity to allow for quality changes to the underlying legislation, opportunities for Members of this body to hear debate and vote on amendments. I encourage an open rule, which will be an open and honest discussion just like we've had here on the floor today, on the discussions that the House will handle tomorrow. With respect to the 50-plus amendments to the legislation that were submitted to the Rules Committee yesterday morning, we'd like to see them all be made in order. Congress has an opportunity to provide for quality, meaningful returns, and to help the current mortgage lending process, and it is my hope that my Democrat colleague friends will allow for that process. With that, I oppose this rule and look forward to a better rule tomorrow. As always, I think that a better rule tomorrow, an open rule, will yield not only the intended results, but will help the American people to know what we intend to do with this legislation. I yield back the balance of my time.

Mr. SESSIONS

Mr. SESSIONS. Madam Speaker, I rise today in opposition to this rule and to the underlying legislation. This structured rule does not call for the open and honest debate that has been promised by my Democratic colleagues time after time. Today's action by my friends on the other side of the aisle is another example of the Federal Government overstepping its boundaries into the private marketplace. And I think it's important for us to note that people who get credit cards get this as an extension of their opportunity and their credit, and they have a responsibility when they sign a contract to live up to that responsibility. It is not a right that is being extended, I believe, today for us to go into the free market and to tinker with on a Federal basis what is a right that is reserved to the States today. We disagree with what is happening today. Not even 6 months ago, Madam Speaker, the Federal Reserve passed new credit card rules that would protect consumers and provide for more transparency and accountability in the marketplace. These new regulations are set to take effect in July 2010, an agreed-upon date to ensure the necessary time for banks and credit card companies to make crucial and critical adjustments to their business practices without making mistakes and without harming consumers. Part of what the gentleman from Colorado just described, some of the 60,000 letters of feedback to the industry, took place in that regard. It took place to the Federal Reserve taking information, working with credit card consumer groups to try and alleviate problems or perceived problems in the marketplace. However, with the growing Federal deficit, the current economic crisis, and the growing number of unemployed people, I would simply ask why is Congress passing legislation that already exists? Let's give those statutes and those rules and regulations which are going to be in place time to work. This legislation allows for the Federal Government to micromanage the way credit card companies and the banking industry does its business. Those hearings have already been held. Decisions have already been made by the Fed. Decisions with credit card companies and consumer groups to understand what changes needed to be made, they've already happened. If enacted into law, it is not credit card companies that will suffer. It will be every single person that has a credit card and for those who even want to have a credit card in the future. Every American will see an increase in their interest rates, and some of the current benefits that encourage responsible lending will most likely disappear. For example, cash advances, over-the-limit protection, would be just one example. My friends on the other side of the aisle not only remove any incentive for using credit cards responsibly, but they punish those managing their credit responsibly to subsidize those who are irresponsible. Madam Speaker, the Democrats also want to limit the amount of credit that is available to the middle class and low-income individuals. The very Americans that take the most advantage of credit will be harmed by what we're doing here today. This legislation prevents credit history from being used to price risk, as an example, meaning that some individuals may not now be able to get a credit card, especially if they are lower-income or they have blemished credit histories or are trying to establish credit for the first time, like college students. Additionally, the strain of this legislation could have a direct and adverse effect on small businesses which use this credit, especially in times like these where economic and job growth in this country are threatened. For individuals starting in a small business, this legislation means increased interest rates, reduced benefit, and shrinks the availability of credit, potentially limiting their options to even succeed in the marketplace. Meredith Whitney, a prominent banking analyst, in speaking as a result of this legislation, remarked in The Wall Street Journal that she expects a $2.7 trillion decrease in credit by the end of 2010 out of the current $5 trillion credit line available in this country. Madam Speaker, at a time when we're in economic downturns, the option of credit that is available for people--notwithstanding that they may have to pay a little bit more but will have the flexibility to have that credit--is important. In the current state of our economy, we urgently would say we need to increase liquidity and lower the cost of credit to stimulate more lending--not raise rates and reduce the availability of credit. This is not a solution for the ailing economy. This type of government control of private markets is really what my Democrat colleagues and this new administration have been exploring for quite some time. Whether it is federalizing our banks, federalizing our credit market, federalizing our health care system, federalizing the energy sector, this is what this new administration and my friends in the majority party wish to do. That said, this administration has taken their power grab a step further, first of all, in this legislation, to write contracts, to hire and fire executives, and to guarantee muffler warranties. They won't let banks pay back their loans. And now they are plotting a hostile takeover of the financial services industry, converting preferred shares into common equity shares, a drastic shift towards a government strategy of long-term ownership and involvement in some of our banks. Millions of Americans are outraged at the mismanagement of TARP and the reckless use of their tax dollars, and I believe that taxpayers are increasingly uneasy with the Federal Government's growing involvement in financial markets that we see on the floor today. In an effort to provide more protections to consumers and to taxpayers, I offered an amendment yesterday in the Rules Committee--a Rules Committee of which I have served for 11 years--that was defeated by a party-line vote of 7-3. Madam Speaker, I would like to insert in the Congressional Record a copy of that amendment. Amendment to H.R. 627, as Reported Offered by Mr. Sessions of Texas Add at the end the following new section:

Mr. SESSIONS. Madam Speaker, I referred to an article in The Wall Street Journal on March 10 of this year by Meredith Whitney. I would like to insert that into the Record, also. [From the Wall Street Journal, Mar. 10, 2009] Credit Cards Are the Next Credit Crunch (By Meredith Whitney) Few doubt the importance of consumer spending to the U.S. economy and its multiplier effect on the global economy, but what is under-appreciated is the role of credit-card availability in that spending. Currently, there is roughly $5 trillion in credit-card lines outstanding in the U.S., and a little more than $800 billion is currently drawn upon. While those numbers look small relative to total mortgage debt of over $10.5 trillion, credit-card debt is revolving and accordingly being paid off and drawn down over and over, creating a critical role in commerce in America. Just six months ago, I estimated that at least $2 trillion of available credit-card lines would be expunged from the system by the end of 2010. However, today, that estimate now looks optimistic, as available lines were reduced by nearly $500 billion in the fourth quarter of 2008 alone. My revised estimates are that over $2 trillion of credit-card lines will be cut inside of 2009, and $2.7 trillion by the end of 2010. Inevitably, credit lines will continue to be reduced across the system, but the velocity at which it is already occurring and will continue to occur will result in unintended consequences for consumer confidence, spending and the overall economy. Lenders, regulators and politicians need to show thoughtful leadership now on this issue in order to derail what I believe will be at least a 57% contraction in credit-card lines. There are several factors that are playing into this swift contraction in credit well beyond the scope of the current credit market disruption. First, the very foundation of credit-card lending over the past 15 years has been misguided. In order to facilitate national expansion and vast pools of consumer loans, lenders became overly reliant on FICO scores that have borne out to be simply unreliable. Further, the bulk of credit lines were extended during a time when unemployment averaged well below 6%. Overly optimistic underwriting standards made more borrowers appear creditworthy. As we return to more realistic underwriting standards, certain borrowers will no longer appear worth the risk, and therefore lines will continue to be pulled from those borrowers. Second, home price depreciation has been a more reliable determinant of consumer behavior than FICO scores. Hence, lenders have reduced credit lines based upon ``zip codes,'' or where home price depreciation has been most acute. Such a strategy carries the obvious hazard of putting good customers in more vulnerable liquidity positions simply because they live in a higher risk zip code. With this, frequency of default is increased. In other words, as lines are pulled and borrowing capacity is reduced, paying borrowers are pushed into vulnerable financial positions along with nonpaying borrowers, and therefore a greater number of defaults in fact occur. Third, credit-card lenders are currently playing a game of ``hot potato,'' in which no one wants to be the last one holding an open credit-card line to an individual or business. While a mortgage loan is largely a ``monogamous'' relationship between borrower and lender, an individual has multiple relationships with credit-card providers. Thus, as lines are cut, risk exposure increases to the remaining lender with the biggest line outstanding. Here, such a negative spiral strategy necessitates immediate action. Currently five lenders dominate two thirds of the market. These lenders need to work together to protect one another and preserve credit lines to able paying borrowers by setting consortium guidelines on credit. We, as Americans, are all in the same soup here, and desperate times are requiring of radical and cooperative measures. And fourth, along with many important and necessary mandates regarding fairness to consumers, impending changes to Unfair and Deceptive Acts or Practices (UDAP) regulations risk the very real unintended consequence of cutting off vast amounts of credit to consumers. Specifically, the new UDAP provisions would restrict repricing of risk, which could in turn restrict the availability of credit. If a lender cannot reprice for changing risk on an unsecured loan, the lender simply will not make the loan. This proposal is set to be effective by mid-2010, but talk now is of accelerating its adoption date. Politicians and regulators need to seriously consider what unintended consequences could occur from the implementation of this proposal in current form. Short of the U.S. government becoming a direct credit-card lender, invariably credit will come out of the system. Over the past 20 years, Americans have also grown to use their credit card as a cash-flow management tool. For example, 90% of credit-card users revolve a balance (i.e., don't pay it off in full) at least once a year, and over 45% of credit-card users revolve every month. Undeniably, consumers look at their unused credit balances as a ``what if' reserve. ``What if' my kid needs braces? ``What if' my dog gets sick? ``What if' I lose one of my jobs? This unused credit portion has grown to be relied on as a source of liquidity and a liquidity management tool for many U.S. consumers. In fact, a relatively small portion of U.S. consumers have actually maxed out their credit cards, and most currently have ample room to spare on their unused credit lines. For example, the industry credit line utilization rate (or percentage of total credit lines outstanding drawn upon) was just 17% at the end of 2008. However, this is in the process of changing dramatically. Without doubt, credit was extended too freely over the past 15 years, and a rationalization of lending is unavoidable. What is avoidable, however, is taking credit away from people who have the ability to pay their bills. If credit is taken away from what otherwise is an able borrower, that borrower's financial position weakens considerably. With two-thirds of the U.S. economy dependent upon consumer spending, we should tread carefully and act collectively. Essentially what this person is arguing, a person who looks at the markets every day, credit in this country, and I quote from this, ``Currently, there is roughly $5 trillion in credit card lines outstanding in the United States, and a little bit more than $800 billion is currently drawn upon.'' What we are saying is that people do have the ability to utilize more of their credit with credit cards. And I believe the vast majority of consumers are carefully and thoughtfully understanding that when they sign an agreement with a credit card company, that they understand that what they need to do is pay that back, and if not, that there will be a penalty, a fee, or interest that will be charged as a result of that. The free market today has lots of credit cards, lots of different companies, lots of different options that are available to people. But with what we are doing here today, that is going to change the way people do business for the vast majority of credit card users. It means that, today, if you follow all the rules, you pay either the first month or, properly what you're doing, that you are willing to keep that credit card because you need it without having to pay the penalty or the associated penalty to the risk that you have. Tomorrow, we are going to take risk out of the risky people and put the risk on everybody. And that is really what Meredith Whitney is trying to say here. Of the trillions of dollars that are available, credit card companies only draw down $800 billion. That is because the vast majority of people, very effectively and properly, use the credit that is available to them. The system does and did need tinkering; but when we tinker with that system, we should make sure that what we do is to add transparency, not rules and regulations that inflict what they do, and the changes, onto a contract willingly signed by a consumer. Madam Speaker, I reserve the balance of my time.

Mr. SESSIONS. Madam Speaker, I yield myself 3 minutes. Madam Speaker, one of the amendments that was talked about earlier that was denied in the Rules Committee deals with an issue that Secretary Geithner and the Treasury Department have openly talked about, and that is their decision to look at the possibility of taking that preferred stock which TARP funds were bought into and converting that to common stock. On April 21 there was an article in The Wall Street Journal that talked about this. It's entitled ``A Backdoor Nationalization.'' The bottom line is that immediately after this appeared in the press, the stock market promptly tumbled by 3.5 percent, meaning once again bad news to the marketplace, with J.P. Morgan falling 10 percent and financial stocks as a group more than 9 percent. This was on April 20. What this is about is that it would be a wholesale conversion, which would mean that the government would own a larger portion of banks, even more and even in a different way than they would with preferred stock. The Wall Street Journal says this is a back door to nationalization. That is because it would create uncertainty, not more certainty, by offering the specter of even greater lengths of periods of Federal control over the banking system. Perhaps even worse than that, what they would do is they would seek to transfer and force banks to do this because of the frailty of the banks at this point. It means that the government would force a change of a contract from a bank that they may have. Madam Speaker, that amendment should have been made in order. This Congress should be out on this as a policy, and we should be speaking up about this. Even though the amendment was not made in order, I encourage the Financial Services Committee of this Congress to make sure that they hold hearings on this exact issue. [From the Wall Street Journal, Apr. 21, 2009] A Backdoor Nationalization--The Latest Treasury Brainstorm Will Retard a Banking Recovery Just when you think the political class may have learned something in months of trying to fix the banking system, the ghost of Hank Paulson returns to haunt the Treasury. The latest Beltway blunder--and it would be a big one--is the Obama Administration's weekend news leak that it may insist on converting its preferred shares in some of the nation's largest banks into common equity. The stock market promptly tumbled by more than 3.5% yesterday, with J.P. Morgan falling 10% and financial stocks as a group off 9%, as measured by the NYSE Financials index. Note to White House: Sneaky nationalizations aren't any more popular with investors than the straightforward kind. The occasion for this latest nationalization trial balloon is the looming result of the Treasury's bank strip-tease-- a.k.a. ``stress tests.'' Treasury is worried, with cause, that some of the largest banks lack the capital to ride out future credit losses. Yet Secretary Timothy Geithner and the White House have concluded that they can't risk asking Congress for more bailout cash. Voila, they propose a preferred-for-common swap, which can conjure up an extra $100 billion in bank tangible common equity, a core measure of bank capital. Not that this really adds any new capital; it merely shifts the deck chairs on bank balance sheets. Why Treasury thinks anyone would find this reassuring is a mystery. The opposite is the more likely result, since it signals that Treasury no longer believes it can tap more public capital to support the financial system if the losses keep building. Worse, wholesale equity conversion would mean the government owns a larger share of more banks and is more entangled than ever in their operations. Giving Barney Frank more voting power is more likely to induce panic than restore confidence. Simply look at the reluctance of some banks-- notably J.P. Morgan Chase--to participate in Mr. Geithner's private-public toxic asset sale plan. The plan is rigged so taxpayers assume nearly all the downside risk, but the banks still don't want to play lest Congress become even more subject to political whim. A backdoor nationalization also creates more uncertainty, not less, by offering the specter of an even lengthier period of federal control over the banking system. And it creates the fear of even more intrusive government influence over bank lending and the allocation of capital. These fears have only been enhanced by the refusal of Treasury to let more banks repay their Troubled Asset Relief Program (TARP) money. As it stands, banks and their owners at least know how much they owe Uncle Sam, and those preferred shares represent a distinct and separate tier of bank capital. Once the government is mixed in with the rest of the equity holders, the value of its investments--and the cost to the banks of buying out the Treasury--will fluctuate by the day. Congress is also still trying to advance a mortgage- cramdown bill that would hammer the value of already distressed mortgage-backed securities, and now the Administration is talking up legislation to curb credit- card fees and interest. Both of these bills would damage bank profits, but large government ownership stakes would leave the banks helpless to oppose them. (See Citigroup, 36% owned by the feds and now a pro-cramdown lobbyist.) We've come to this pass in part because the Obama Administration is afraid to ask Congress for the money for a meaningful bank recapitalization. And it may need that money now in part because Mr. Paulson's Treasury insisted on buying preferred stock in all the big banks instead of looking at each case on its merits. That decision last fall squandered TARP money on banks that probably didn't need it and left the Administration short of funds for banks that really do. The sounder strategy--and the one we've recommended for two years--is to address systemic financial problems the old- fashioned way: bank by bank, through the Federal Deposit Insurance Corp. and a resolution agency with the capacity to hold troubled assets and work them off over time. If the stress tests reveal that some of our largest institutions are insolvent or nearly so, it's then time to seize the bank, sell off assets and recapitalize the remainder. (Meanwhile, the healthier institutions would get a vote of confidence and could attract new private capital.) Bondholders would take a haircut and shareholders may well be wiped out. But converting preferred shares to equity does nothing to help bondholders in the long run anyway. And putting the taxpayer first in line for any losses alongside equity holders offers shareholders little other than an immediate dilution of their ownership stake. Treasury's equity conversion proposal increases the political risks for banks while imposing no discipline on shareholders, bondholders or management at failed or failing institutions. The proposal would also be one more example of how Treasury isn't keeping its word. When he forced banks to accept public capital whether they needed it or not, Mr. Paulson said the deal was temporary and the terms wouldn't be onerous. To renege on those promises now will only make a bank recovery longer and more difficult. Madam Speaker, I reserve the balance of my time.

Mr. SESSIONS. Madam Speaker, I appreciate the gentleman from Virginia coming down and setting the record straight about how the Bush administration has caused all these problems and all these tax cuts. But I would remind the gentleman that the greatest economic boom in the history of the United States and the world occurred during the time that we encouraged and incentivized investors to be a part of growing our economy. As I recall, the facts of the case are that 3 years ago when our friends, the Democrats, became the new majority, they announced quite openly that those tax cut days were over with, and that's when the investor left. And when the investor left, that's when our economy started going downhill. Let's tell the truth here. What we just passed just yesterday was the largest spending budget in the history of the universe that will lead to a debt that will double and triple, double and triple, in the next few years. That is a national security issue. And that's part of what we are talking about here today. The interference in the marketplace by my friends, the Democrats, that not only wiped out, took the investor out of the equation, but today are going to create an even worse circumstance for credit cardholders at a time when the extension of credit is needed more than ever. Madam Speaker, I reserve the balance of my time.