Arlen Specter

Mr. SPECTER

Mr. SPECTER. I agree and will support these efforts, as well.

Mr. SPECTER. I agree with Senator Harkin. WIA was passed in 1998 to unify this country's fragmented employment and training system. Since then it has impacted the lives of millions. Our subcommittee seeks to continue the Senate's commitment to our nation's workers; they are the heart and soul of our economy.

Mr. SPECTER. I agree with the chairman and senator from Maryland. This program is important because it promotes independence and healthy aging by engaging seniors before a crisis and responding to their changing needs over time.

Mr. SPECTER

Mr. SPECTER. Mr. President, I thank the Chair and note for the record that the other Senator from Pennsylvania is presiding. I do not use the term ``junior Senator'' because Senator Casey is so distinguished, I wouldn't want to have any suggestion of limited status. We are taking up now the appropriations bill which has no rival for greater importance to America. Others may stand alongside it as equals, but when you deal with the Nation's health and education and labor, job safety, job training and medical research, the Centers for Disease Control, and Head Start, we deal with the fundamentals of governmental involvement for the general welfare as recited in the Constitution. Health is our No. 1 capital asset. Without going into any details on that, I know that in depth from personal experience. Without your health, you can't do anything. But similarly, or about as important, is an education, to be able to do something productive and constructive. We have submitted a bill which we believe fairly addresses the needs of the country and is not excessive in its expenditures. Last year's bill for this committee was $144.8 billion. The President has come in with a budget request of $141.3 billion. That is $3.5 billion less than last year. If one figures in inflation, we are looking at about a $7.2 billion cut. We simply can't accommodate that and do the Pell grants, the education funding, the title I funding, the President's program on Leave No Child Behind or the National Institutes of Health. We are out of fat. We are through tissue. We are to the bone and beyond. The National Institutes of Health are the crown jewels of the Federal Government, maybe the only jewels of the Federal Government. Enormous strides have been made in combating the major ailments of our society-- heart disease, cancer, Alzheimer's, and Parkinson's--but in FY06 there was a $50 million cut on the National Cancer Institute, which I won't call scandalous or outlandish, I will say it is inappropriate. This year we have added in this budget only $1 billion. When I say ``only,'' at $20 billion, raising it to $29.9, that doesn't keep up with the cost of inflation. There are many grants which are now being turned away by NIH. We had a vote last night on a motion to recommit the bill on Commerce-Justice-Science. I voted against recommitment and made a brief floor statement that to send the bill back to committee to come back with the President's figure would constitute a surrender of the congressional responsibility to appropriate. Article I gives us that responsibility and the authority. If we are going to accept the President's figure, then why don't we start there and leave us to fill in the blanks. But so that the record will contain a statement on legislative process, if anybody is watching on C-SPAN 2, coming to these bills, the one today on Labor, Health and Human Services, and Education and coming to the bill which we passed last night on Commerce-Justice-Science, it is an elaborate, painstaking process. There are hearings. There are deliberations. There are meetings. Then there is what is called a markup in the subcommittee. We go through the budget. Meanwhile, staff has worked diligently on it. If it was generally known how hard the staff works, people would be amazed. They say if you asked: How many people in Washington in the Federal Government work? that most people would respond about half. The fact is, this is a very difficult job, especially for staff. Senators work too. So do House Members. Without going into that, though, we did not come up with these figures and pull them out of the air. They were worked through very carefully. The bill which was passed yesterday had some increases which were very vital increases. They were increases on law enforcement which America needs. For example, the appropriation for the Federal Bureau of Investigation was increased by $383 million over the preceding year. The Community Oriented Policing Services, the program known as COPS, to get additional law enforcement officers on the street, was increased by $1.639 million. That means that America is being better protected. It goes to the local governments. It is seed money. They hire additional police. The Federal allocation does not last long. Then it is our expectation they will keep the police. State and local law enforcement assistance was increased by $163 million. I refer to that only briefly to give you some idea as to what we did yesterday and why it seemed to me to be inappropriate to refer it back to committee, which means we would take the President's figure, which was about $3.2 billion lower, in another subcommittee worked under the distinguished leadership of Senator Mikulski and Senator Shelby. If we are to discharge our responsibilities under the Constitution, we have to stand by our guns as to what we want to do. Now, I am not saying the figure on yesterday's bill is not to be modified. The President has set the tone on that when he vetoed the SCHIP bill. Congress came in at $35 billion over 5 years, and the President came in at $4.8 billion. Then he said he was willing to negotiate. There are some in the Congress who do not want to negotiate, who want to let the program lapse because it would be politically disadvantageous to the President if there is no continuation of the program for children's health. Well, I do not think that will happen. I do not think that should happen. Because if some Members of Congress stand in the way of negotiations and a compromise, people will find out about it and it will be a political detriment to those who stand in the way of negotiations. So as I said last night on the Senate floor, if you have the Senate bill on Commerce, Justice and Science higher than the President's figure by $3.2 billion, let's negotiate, just like the President said on SCHIP. On this bill, we are prepared to negotiate. The first line of negotiation has already been announced by Senator Harkin, and that was in response to a Statement of Administration Policy issued today from the Executive Office of the President: The Administration strongly opposes provisions in this bill that overturn the President's policy regarding human embryonic stem cell research. Well, Senator Harkin and I have considered this issue very carefully, and we have decided, much against our preference, to accede to what the President has strongly opposed. We do this in the context--not that we agree with the President, because we strongly disagree with him--but we would like to get this bill passed, and we are prepared to compromise. This stem cell issue is one which is very near and dear to me. We found out about the potential for stem cells in November of 1998. Ten days, two weeks later--I chaired the subcommittee--we had hearings. We had 20 hearings on it. The research has shown me that these stem cells are a tremendous potential for curing the maladies of the world. We have 400,000 of them that are frozen that are going to be thrown away. This is a long, involved subject, but in a nutshell, we are going to have Federal funding of stem cell research. It is a matter of when, not a matter of whether or if. It will happen. It will happen. So in removing this provision from the bill, I do it with great reluctance and great regret. But I do it after consultation with the groups, the advocacy groups for stem cell research. They have been consulted. They are in the middle of all this, and they understand the reasons for it. They also understand if we pursue this, there will be a great many amendments which could pass and be harmful to the interests of the health of this country and to what the advocacy groups are seeking to accomplish. So we come to a bill which I think America needs. It is worth pointing out that our bill is substantially under the bill passed by the House of Representatives. We have come in at $152.1 billion. The House of Representatives has come in at 154.2 billion. So they are $2.1 billion higher than we are. But this is our best judgment as to what ought to be done. If anybody disagrees with it, Senators have the right to come to the floor and offer amendments, if they want to reduce the funding. We are prepared to listen. And we are prepared to negotiate with the President. But I am not prepared to take the figure the President has automatically. I am not prepared to do that. If we are going to do that, there is no reason to have the hearings and the meetings and the markup and the full committee and the laborious work we go through. If we are going to take the President's figure, it may as well come out of the White House as to what they are doing, if all we are left to do is fill in the blanks. I think it would be a dereliction of duty for us not to come forward with our conclusions on what appropriations are necessary for these three major Departments. At the present time we are proceeding here, we have started the confirmation proceedings of Judge Michael Mukasey. I was there earlier this morning, and I have to return there. So I will be taking care of my duties here as best I can. Since I am not twins, there will be someone else here to take over on the occasions when I cannot be here. But I did want these views to be expressed, and there is a long, erudite statement prepared by extraordinary staff, Bettilou Taylor--some call her the 101st Senator, but I think that diminishes her standing--and Sudip Parikh. So, Mr. President, I ask unanimous consent that statement be printed in the Record.

Mr. SPECTER. Before I yield the floor, I wish to compliment my distinguished colleague, Senator Tom Harkin. Senator Harkin and I have worked side by side. Sometimes I have been chairman; sometimes he has been chairman. I like it better when I am chairman. But I also like it when he is chairman. We have what we call a seamless transfer of the gavel. People complain there is a lot of bickering in Washington, DC, and there is too much infighting. Well, Tom Harkin and Arlen Specter do not do that. We try to set an example of working together in the public interest. May I also add, I do the same thing with Senator Robert P. Casey, Jr., my colleague from Pennsylvania. We meet frequently and go over the key issues. When there are major events--we had a big hearing in Philadelphia on juvenile gang violence. I invited Senator Casey to come along. He has had some ideas and some programs he has advocated, and he has invited me. We went to Pittsburgh to swear in some judges. I made sure it suited Senator Casey's schedule. People like to see Democrats and Republicans working together. Senator Casey and I do, and, I say to the Senator from Iowa, certainly you and I do, Mr. Chairman. So I thank you. I thank Ellen Murray and Sudip for their extraordinary work.

Mr. SPECTER. There is a story that behind every successful man there is a surprised mother-in-law. But in the case of Tom Harkin and Arlen Specter, it is Ellen and Bettilou.

Mr. SPECTER. I yield the floor.

Mr. SPECTER

Mr. SPECTER. Madam President, I concur with my colleague and will agree to move these funds in conference committee.

Mr. SPECTER

Mr. SPECTER. Mr. President, I am opposed to the motion to commit because it would constitute abandonment, a surrender of the Congress's authority to participate in the appropriations process. There is a fundamental constitutional issue involved by this body at this time. I believe we ought to be frugal and fiscally responsible, and I have repeatedly supported the constitutional amendment for a balanced budget so we would live within our means. I have supported the line-item veto. In the tenure I have had here on the Appropriations Committee, I have been zealous in supporting programs which were meritorious and worthy of the taxpayers' money. We all pay taxes, and we know how painful that is. I do not believe we are being profligate. Now, there was an opportunity in the Appropriations Committee for this motion to have been made to establish the President's figure, but it was not done. There were opportunities to pare and trim many of the items. But if we are going to accept the President's figure, then we are surrendering our constitutional authority to be involved in the appropriations process. Now, Congress does not act alone. We all know that. Congress makes a presentment, and the President either signs it or he vetoes it. But certainly who can deny we have a role--really the fundamental role, as article I is written--giving the constitutional authority to Congress on appropriations. Now, we have a similar matter pending on SCHIP, health care for children. Congress has submitted a bill with a $35 billion increase over 5 years. The President has said it is too much. He wants $5 billion. He has said he is prepared to negotiate. Well, that is the way the political process works. The Congress passes a bill, the President vetoes it, and then we sit down and try to work it out. But I do not think it is appropriate for the Congress to submit to whatever figure the President puts on it.

Mr. SPECTER. Is he wiser than the 535 Members of Congress? Does he have more authority under article II than the Congress? Article II does not say anything about the President's authority on appropriations. He derives that authority by virtue of the Constitution, which gives him the right to sign or veto. But the appropriations authority, all through the Constitution, vests with the Congress. Now, this is an issue and a vote which goes far beyond this particular bill. Next we have the appropriations bill on Labor, Health and Human Services, and Education, a subcommittee which I chaired for many years and am now ranking. If we are going to submit on this bill to the President's figure, you can be sure there will be a motion to commit that bill, which is over the President's figure, and a motion to commit all of the bills which are over the President's figure. We might as well not even convene and act. These appropriations bills are the result of a lot of very careful thought and a lot of hard work by staff and by Senators. We have subcommittees, we have full committee work, and we present it to the body. If there are some motions to reduce it, those motions could have been made before the bill came to the floor of the Senate. We had a confrontation in 1995, where the Government was shut down, and I think a lesson was learned by both branches. I do not think that is going to recur. But at least let's try to compromise, to follow on this bill and other bills the same outline which the President has recommended. The President's view was we ought to negotiate and compromise on SCHIP, and that ought to be done here if we are to fulfill our constitutional responsibility for appropriations. I yield the floor.

Mr. SPECTER

Mr. SPECTER. Mr. President, I seek recognition today to discuss the Identity Theft Enforcement and Restitution Act of 2007, which I am introducing with Senator Leahy. In 2006, some 8.4 million Americans became victims to identity theft. Victims are often left with a bad credit report and must spend months and even years regaining their financial health. In the meantime, victims have difficulty getting credit, obtaining loans, renting apartments, and even getting hired. On a national level, experts estimate that identity theft costs the U.S. economy $49.3 billion last year and costs each victim an average of $617. Identity thieves frequently acquire a person's existing credit account information and then purchase products and services using either the actual credit card or simply the account number and expiration date. They also use Social Security numbers and other identifying information to open new accounts in a person's name. Identity thieves frequently obtain both existing account information and the information needed to open new accounts electronically--either by gaining unauthorized access to a computer or by fraudulently inducing victims to provide such information. The Identity Theft Enforcement and Restitution Act will provide Federal prosecutors with new tools to combat identity theft. First, the bill will expand Federal computer fraud statutes to cover business organizations. Identity thieves frequently impersonate businesses in order to steal sensitive personal information from consumers. However, current law only provides for prosecution of identity theft perpetrated against an individual. Under the bill, prosecutors will be able to go after identity thieves even when the computer they use to steal information is located in the same State as the victim's computer. Under current law, Federal courts only have jurisdiction if the thief uses an interstate communication to access the victim's computer. The bill will make it a crime to threaten to steal or release information from a computer. Under current law, prosecutors can only bring extortion charges against those who threaten to shut down or damage a computer. The bill will make it a crime to use malicious ``spyware'' to damage a computer, regardless of the amount of damage. Under current law, damage to a victim's computer must exceed $5,000 before a prosecutor can bring charges. The bill will also increase the penalties Federal prosecutors can seek for identity theft. The bill will enable prosecutors to seek enhanced penalties where a violation of the Federal computer fraud statutes includes conspiracy. Prosecutors also will be able to seek enhanced penalties where a violation of the Federal computer fraud statutes involves passing counterfeit securities, mail theft, and tax fraud. Finally, and perhaps most importantly, the bill will enable Federal prosecutors to seek restitution for the time and money that victims spend restoring their credit. The impact of identity theft is not limited to direct financial loss. Victims frequently spend significant amounts of time fixing or monitoring credit reports and disputing charges with individual creditors. The Federal Trade Commission has reported that victims spend an average of 30 hours trying to resolve identity theft-related issues with banks, credit agencies, and other institutions. According to the FTC, a total of 297 million hours were expended in 1 year by victims trying to deal with the impact of identity theft. The Criminal Code currently allows prosecutors to seek restitution for the direct financial losses that victims experience. However, the code does not expressly permit prosecutors to obtain restitution for the time and money victims spend resolving the problems that arise as a result of identity theft. The Identity Theft Enforcement and Restitution Act of 2007 will allow prosecutors to seek restitution from a criminal defendant for the time and resources victims spend trying to repair their credit. The bill will require judges to determine the amount of time reasonably spent and the value of the victim's time. Many of these provisions were included in the recommendations of the President's Identity Theft Task Force. These changes were recommended by the agency responsible for prosecuting identity theft, the Justice Department. I expect broad bipartisan support for this bill, and I urge my colleagues to support it.

Mr. SPECTER

Mr. SPECTER. Mr. President, I seek recognition today to discuss the Identity Theft Enforcement and Restitution Act of 2007, which I am introducing with Senator Leahy. In 2006, some 8.4 million Americans became victims to identity theft. Victims are often left with a bad credit report and must spend months and even years regaining their financial health. In the meantime, victims have difficulty getting credit, obtaining loans, renting apartments, and even getting hired. On a national level, experts estimate that identity theft costs the U.S. economy $49.3 billion last year and costs each victim an average of $617. Identity thieves frequently acquire a person's existing credit account information and then purchase products and services using either the actual credit card or simply the account number and expiration date. They also use Social Security numbers and other identifying information to open new accounts in a person's name. Identity thieves frequently obtain both existing account information and the information needed to open new accounts electronically--either by gaining unauthorized access to a computer or by fraudulently inducing victims to provide such information. The Identity Theft Enforcement and Restitution Act will provide Federal prosecutors with new tools to combat identity theft. First, the bill will expand Federal computer fraud statutes to cover business organizations. Identity thieves frequently impersonate businesses in order to steal sensitive personal information from consumers. However, current law only provides for prosecution of identity theft perpetrated against an individual. Under the bill, prosecutors will be able to go after identity thieves even when the computer they use to steal information is located in the same State as the victim's computer. Under current law, Federal courts only have jurisdiction if the thief uses an interstate communication to access the victim's computer. The bill will make it a crime to threaten to steal or release information from a computer. Under current law, prosecutors can only bring extortion charges against those who threaten to shut down or damage a computer. The bill will make it a crime to use malicious ``spyware'' to damage a computer, regardless of the amount of damage. Under current law, damage to a victim's computer must exceed $5,000 before a prosecutor can bring charges. The bill will also increase the penalties Federal prosecutors can seek for identity theft. The bill will enable prosecutors to seek enhanced penalties where a violation of the Federal computer fraud statutes includes conspiracy. Prosecutors also will be able to seek enhanced penalties where a violation of the Federal computer fraud statutes involves passing counterfeit securities, mail theft, and tax fraud. Finally, and perhaps most importantly, the bill will enable Federal prosecutors to seek restitution for the time and money that victims spend restoring their credit. The impact of identity theft is not limited to direct financial loss. Victims frequently spend significant amounts of time fixing or monitoring credit reports and disputing charges with individual creditors. The Federal Trade Commission has reported that victims spend an average of 30 hours trying to resolve identity theft-related issues with banks, credit agencies, and other institutions. According to the FTC, a total of 297 million hours were expended in 1 year by victims trying to deal with the impact of identity theft. The Criminal Code currently allows prosecutors to seek restitution for the direct financial losses that victims experience. However, the code does not expressly permit prosecutors to obtain restitution for the time and money victims spend resolving the problems that arise as a result of identity theft. The Identity Theft Enforcement and Restitution Act of 2007 will allow prosecutors to seek restitution from a criminal defendant for the time and resources victims spend trying to repair their credit. The bill will require judges to determine the amount of time reasonably spent and the value of the victim's time. Many of these provisions were included in the recommendations of the President's Identity Theft Task Force. These changes were recommended by the agency responsible for prosecuting identity theft, the Justice Department. I expect broad bipartisan support for this bill, and I urge my colleagues to support it.

Mr. SPECTER

Mr. SPECTER. Mr. President, I yield 5 minutes to the Senator from Mississippi and then 5 minutes to the Senator from Texas.

Mr. SPECTER

Mr. SPECTER. Mr. President, I yield 5 minutes to the Senator from Texas.

Mr. SPECTER. Mr. President, how much time remains?

Mr. SPECTER. Mr. President, I support the nomination of Jennifer Walker Elrod for the Fifth Circuit Court of Appeals. She has an excellent academic record: magna cum laude from Baylor, where she was Phi Beta Kappa and cum laude from Harvard Law School. She has served as an adjunct faculty member at the University of Houston Law Center. She has been in the practice of law for some 15 years, spending 8 years at the law firm Baker Botts. She has done extensive pro bono work including as general counsel for the Communities in Schools in Houston. She has extensive participation in the bar association. She's a member of the Mexican-American Bar Association of Houston and the Houston Bar Association. I believe her record qualifies her for the circuit court, notwithstanding the considerations of age and experience.

Mr. SPECTER. I do.

Mr. SPECTER. I thank the Senator from Maryland for that statement. Judge Jennifer Walker Elrod was nominated to a seat on the Fifth Circuit Court of Appeals on March 29, 2007, and a hearing was held on her nomination on July 19, 2007. Her nomination was reported favorably to the full Senate on September 20, 2007. Judge Elrod received her B.A., magna cum laude, in economics from Baylor University in 1988, where she was Phi Beta Kappa and was named the ``Outstanding Graduating Senior in the Honors Program.'' In 1992, she received her J.D., cum laude, from Harvard Law School. At Harvard, she was a senior editor and the assistant business manager for the Harvard Journal of Law and Public Policy, and she was a finalist in the James Barr Ames Moot Court Competition. After law school, Judge Elrod served as a law clerk to Judge Sim Lake of the United States District Court for the Southern District of Texas. Following her clerkship, Judge Elrod practiced law in the litigation department of Baker Botts in Houston, TX. In 2002, Governor Rick Perry appointed Judge Elrod to the 190th District Court in Harris County, TX, a State trial court. She was subsequently elected to the position in the 2002 general election and was reelected unopposed in 2006. During her time on the bench, Judge Elrod presided over more than 200 jury and nonjury trials. Judge Elrod has been dedicated to pro bono service and charitable causes her entire career. While working at Baker Botts, the firm gave her the Thomas Gibbs Gee Award for outstanding pro bono work. She also received the President's Award from the Houston Bar Association for Outstanding Service to the Bar. While in private practice, Judge Elrod served as a board member and the chair of the board of the Gulf Coast Legal Foundation, now Lone Star Legal Aid, which is one of the largest providers of legal aid services to the poor in Texas. The vacancy to which she is nominated is considered a ``judicial emergency'' by the nonpartisan Administrative Office of the Courts. The American Bar Association unanimously rated Judge Elrod ``qualified.''

Mr. SPECTER

Mr. SPECTER. Mr. President, I suggest the absence of a quorum.

Mr. SPECTER

Mr. SPECTER. Mr. President, while I have the floor, I want to say a few words about S. 2133, the Homeowners' Mortgage and Equity Savings Act, which I introduced yesterday. This legislation addresses the very severe problem of the many homeowners who are now in default on their mortgage payments. This problem has arisen largely because of the many homeowners with adjustable rate mortgages who face increased interest rates and unexpected increases in their mortgage payments. This is a complex matter, but in many cases, I think there is a real question as to whether lenders made adequate representations to borrowers. Regardless of whether the representations were adequate or not, many borrowers are now confronted with interest rates they had not anticipated and mortgage payments that they can't afford. In the past year, the percentage of homeowners with adjustable rate mortgages who are seriously delinquent either 90 days past due or in foreclosure--has nearly doubled. In my home State of Pennsylvania, the number of those who are seriously delinquent has gone up by some 40 percent. The problem is particularly severe among borrowers who had weak credit or low incomes and obtained mortgages at subprime rates. The Center for Responsible Lending projects that some 2.2 million Americans with subprime loans originated between 1998 and 2006 have lost or will lose their homes to foreclosure. Chapter 13 of the Bankruptcy Code currently give debtors breathing space by imposing a stay on collection of debts, including mortgages, and prevents lenders from foreclosing for a period of time. During that period debtors are given the opportunity to get caught up on their mortgage payments. However, the current Code does not permit any modification of mortgages. Now with many homeowners facing possible bankruptcy due to their mortgages, some relief is necessary. The legislation which I have introduced will provide a number of remedies. With respect to adjustable rate mortgages, it will allow bankruptcy judges to prevent or delay interest rate increases and to roll back interest rates that have already reset. This will enable the homeowner to continue to pay down the principal amount that they took on when they bought their house, but will give them relief from increases in their payments due to resetting interest rates. The bill also will allow the bankruptcy judges to waive early prepayment or prepayment penalties. Many of the borrowers face the situation where they could refinance and get less risky mortgages with manageable payments, but the penalties in their current mortgage contracts are so stiff that they cannot refinance. Now, the bill does not give bankruptcy judges the latitude to reduce the principal on a mortgage. Senator Durbin introduced a bill yesterday that goes beyond the bill I have introduced; it allows bankruptcy judges to reduce or ``cram down'' the principal on a mortgage in accordance with what the bankruptcy judge determines is the value of the property. My bill would only allow the reduction of principal if the lender and the homeowner agree. I think there is a very significant risk in allowing cram down. If we allow cram down, lenders will factor the risk of having the principal value of their loan reduced into the interest they charge to future home buyers. In other words, people who borrow in the future are going to pay more in interest if the lenders don't have the certainty that at least the principal value of their loan will be recognized and not reduced. Under current circumstances, I think it is fair, on these adjustable rate mortgages--which really are the problem if delinquency rates are any indication--to allow judges to modify interest rate increases which in many cases have been significant and in some cases the mortgage terms may have been fraudulent or just basically unfair. But when it comes to reducing the principal, then I think we go too far. Many of the consumer groups would prefer to see the bankruptcy judge have the latitude to reduce the principal, and that might help those who are in default now, but that will make it more difficult for those who borrow in the future. That is because--to repeat--lenders will have to charge more interest to take into account this additional risk. I have discussed the differences in our bills with Senator Durbin. We tried to come to terms and find an accommodation so that we could support the same legislation. However, it appears we do support legislation directed at the same problem. The legislation I introduced is aimed at helping those caught up in the current crisis without making it harder on those Americans to own a home in the future. The Judiciary Committee has jurisdiction on bankruptcy. The Committee has jurisdiction on the Durbin bill and on my bill, S. 2133. My position is not set in concrete. However, I am opposed to what Senator Durbin seeks to accomplish and I am disinclined at this state based on the investigation which my staff and I have made to support his bill. It is my hope that the Judiciary Committee will have hearings on this important issue and bring in mortgage bankers, consumer groups and investors to give us a better idea as to the intensity of the problem and what really ought to be done. Perhaps at that point we can meld our ideas into a common solution to the problem.

Mr. SPECTER

Mr. SPECTER. Mr. President, I don't know that anybody else is seeking recognition. Senator Leahy has already said he was not going to ask for the yeas and nays, and I do not intend to. Senator Cardin says he is not going to. So I yield back my time.

Mr. SPECTER. I yield the floor, and I reserve the remainder of my time.

Mr. SPECTER

Mr. SPECTER. Mr. President, I seek recognition to introduce the Homeowners' Mortgage and Equity Savings Act of 2007. In recent years, low interest rates and easily available credit have significantly increased home ownership in this country. The U.S. home ownership rate increased from 64 percent in 1994 to over 69 percent in 2004. The increase has been particularly dramatic among minority groups. During that same period, the home ownership rate among Hispanics and Latinos rose by around 20 percent, to nearly 50 percent. For African Americans, the rate rose by 14 percent, also nearing 50 percent. However, with interest rates at all-time lows, lenders increasingly offered mortgages to those who previously either would not have qualified for a mortgage or could not have afforded the payments on a mortgage. To do this, lenders offered new types of mortgages designed to keep monthly payments low, at least in the short term. In particular, lenders issued large numbers of adjustable rate mortgages, ``ARMS'', loans that often feature low introductory interest rates that later adjust to significantly higher rates. Lenders also issued no- down-payment or interest-only mortgages, which also often featured low introductory interest rates that later increase significantly. With the era of easy money and low interest rates over, a crisis looms. Many borrowers with adjustable rate, interest-only or no-down- payment mortgages have been unable to keep up with their monthly mortgage payments that have reset to higher rates. In many cases, resetting interest rates means monthly payments increase by $250 to $300 on a typical $1,200 monthly mortgage. Moreover, many ARMS featured early repayment penalties, making it difficult for homeowners to fix the situation by refinancing and obtaining less risky mortgages. As a result of resetting interest rates, delinquencies and foreclosures involving ARMs have risen dramatically. Delinquencies and foreclosures have been particularly high among borrowers with weak credit who were issued loans at subprime rates. According to the Mortgage Bankers Association, between the second quarter of 2006 and the second quarter of this year, the percentage of homeowners with subprime ARMs who are seriously delinquent, those who are either more than 90 days past due or in foreclosure, has nearly doubled, from 6.52 to 12.40 percent. The number rose by over 20 percent during the second quarter of this year alone. The Center for Responsible Lending projects that 2.2 million Americans with subprime loans originated between 1998 and 2006 have lost or will lose their home to foreclosure. While the situation has been most severe for homeowners with subprime loans, the problem now is spreading to those with prime rate loans. In the past year, the percentage of homeowners with prime rate ARMs that were seriously delinquent on their mortgage payments more than doubled from 0.92 to 2.02 percent. According to the Mortgage Bankers Association, in the second quarter of this year, the number of homeowners who got foreclosure notices reached an all time high of 0.65 percent, largely because of increases among homeowners with ARMs, delinquencies and foreclosures for fixed rates mortgages have increased only moderately. The situation will only get worse in coming months as an estimated 2 million homeowners with adjustable rate mortgages see their interest rates reset to much higher rates. According to some sources, a quarter of those homeowners face losing their homes. In my home State of Pennsylvania, the number of homeowners with subprime ARMs who are seriously delinquent has risen to 13.82 percent, an increase of over 40 percent since this time last year. Among homeowners who qualified for prime rate ARMs, the number who are seriously delinquent has increased to 2.43 percent, an increase of over 50 percent since last year. Especially hard hit is the Allentown- Bethlehem-Easton area, where the foreclosure rate for subprime loans originated in 2006 is 20 percent. In some cases, borrowers made bad decisions by ignoring the risk and taking on mortgages they knew someday they might not be able to afford. In other cases, it appears that borrowers were steered to riskier mortgages when they qualified for safer options. There is also evidence that lenders failed to fully disclose the risks involved with certain mortgages and instead emphasized low monthly payments. The push to issue subprime and adjustable rate mortgages was aggravated by Wall Street investors chasing high rates of return on the secondary market. Many homeowners facing foreclosure will seek relief in bankruptcy. Bankruptcy has traditionally provided a second chance for borrowers by giving them relief from their creditors. Chapter 13 in particular has enabled homeowners facing foreclosure to keep their homes. Chapter 13 gives debtors breathing space by imposing a stay on collection of debts, including mortgages, which prevents lenders from foreclosing for a period of time. During that time, debtors are given an opportunity to get caught up on their mortgage payments. Finally, Chapter 13 makes it more likely that debtors will be able to make their mortgage payments over the long term by giving them a discharge from many of their other debts. However, the drafters of the bankruptcy code never anticipated the current crisis where so many face possible bankruptcy, not because of consumer debts, but because of their mortgages. When the current bankruptcy code was drafted in the late 1970s, most homeowners had traditional 30-year fixed rate mortgages with substantial down payments. As a result, few homeowners faced bankruptcy because of their mortgage. As such, the drafters did not see a need for bankruptcy judges to have the power to alter the terms of mortgages on primary residences. Given the fact that so many homeowners now face foreclosure and possible bankruptcy because of their mortgages, I believe Congress should take action. I am therefore introducing a targeted bill which will allow bankruptcy courts to provide relief to homeowners caught up in the current crisis. The bill will provide relief for low-income homeowners who, because of changed circumstances, can no longer afford their mortgages. Easily available credit made homeownership a reality for many lower income Americans. It is these same homeowners who are the ones now caught up in the credit crunch and facing the loss of their homes. The bill will allow bankruptcy judges to provide relief by restructuring the mortgage terms that have created the biggest problems for homeowners. Most importantly, the bill will allow bankruptcy judges to prevent or delay interest rate increases as well as to roll back interest rates that have already reset. This will make it possible for many more debtors to hold onto their homes in the long run. The bill also will allow bankruptcy judges to waive early repayment or prepayment penalties. Many lenders impose large penalties on homeowners that repay their mortgages early, penalties that prevent many homeowners from refinancing and switching to a sounder mortgage. These penalties are particularly egregious since they don't reflect any increased risk taken on by the lender. They are merely intended to discourage borrowers from making a better choice for themselves by switching to another loan. This bill is not a bailout and it is not aimed at those who knew the risk and proceeded anyway. When housing prices were rising, speculators bid up the prices of homes hoping to quickly sell them for an easy profit. With prices falling, many of those speculators find themselves with properties worth less than what they paid. These speculators took the risk that housing prices would fall and now must live with the downside of that risk. The bill will allow judges to write down the principal value of the loan, but only if both the debtor and creditor agree. Giving judges discretion to write down the principal value of loans could provide a significant windfall to those who gambled that housing prices would never fall, including speculators. That is a gamble lenders and future homeowners should not be forced to finance. Taking too broad an approach to this problem will only hurt future borrowers. Allowing bankruptcy judges free rein to rewrite mortgage loans will only increase the risk that lenders take on when they issue mortgages. Investors respond to increased risk by insisting on higher rates of return and mortgage lenders must respond in kind by raising their rates. That will only make it more difficult for those Americans who wish to become homeowners in the future. In the longer run, the market will correct some of what has gone wrong. The number of risky loans being issued has already declined dramatically, in large part because investors are refusing to provide the liquidity necessary to issue such loans. In addition, as predatory or fraudulent practices come to light, the Congress, and in particular the Banking Committee, should take action to prevent such practices from occurring in the future. I urge my colleagues to join me in offering relief for those who are caught up in the current crisis and face losing their homes.

Mr. SPECTER

Mr. SPECTER. Mr. President, I seek recognition to introduce the Homeowners' Mortgage and Equity Savings Act of 2007. In recent years, low interest rates and easily available credit have significantly increased home ownership in this country. The U.S. home ownership rate increased from 64 percent in 1994 to over 69 percent in 2004. The increase has been particularly dramatic among minority groups. During that same period, the home ownership rate among Hispanics and Latinos rose by around 20 percent, to nearly 50 percent. For African Americans, the rate rose by 14 percent, also nearing 50 percent. However, with interest rates at all-time lows, lenders increasingly offered mortgages to those who previously either would not have qualified for a mortgage or could not have afforded the payments on a mortgage. To do this, lenders offered new types of mortgages designed to keep monthly payments low, at least in the short term. In particular, lenders issued large numbers of adjustable rate mortgages, ``ARMS'', loans that often feature low introductory interest rates that later adjust to significantly higher rates. Lenders also issued no- down-payment or interest-only mortgages, which also often featured low introductory interest rates that later increase significantly. With the era of easy money and low interest rates over, a crisis looms. Many borrowers with adjustable rate, interest-only or no-down- payment mortgages have been unable to keep up with their monthly mortgage payments that have reset to higher rates. In many cases, resetting interest rates means monthly payments increase by $250 to $300 on a typical $1,200 monthly mortgage. Moreover, many ARMS featured early repayment penalties, making it difficult for homeowners to fix the situation by refinancing and obtaining less risky mortgages. As a result of resetting interest rates, delinquencies and foreclosures involving ARMs have risen dramatically. Delinquencies and foreclosures have been particularly high among borrowers with weak credit who were issued loans at subprime rates. According to the Mortgage Bankers Association, between the second quarter of 2006 and the second quarter of this year, the percentage of homeowners with subprime ARMs who are seriously delinquent, those who are either more than 90 days past due or in foreclosure, has nearly doubled, from 6.52 to 12.40 percent. The number rose by over 20 percent during the second quarter of this year alone. The Center for Responsible Lending projects that 2.2 million Americans with subprime loans originated between 1998 and 2006 have lost or will lose their home to foreclosure. While the situation has been most severe for homeowners with subprime loans, the problem now is spreading to those with prime rate loans. In the past year, the percentage of homeowners with prime rate ARMs that were seriously delinquent on their mortgage payments more than doubled from 0.92 to 2.02 percent. According to the Mortgage Bankers Association, in the second quarter of this year, the number of homeowners who got foreclosure notices reached an all time high of 0.65 percent, largely because of increases among homeowners with ARMs, delinquencies and foreclosures for fixed rates mortgages have increased only moderately. The situation will only get worse in coming months as an estimated 2 million homeowners with adjustable rate mortgages see their interest rates reset to much higher rates. According to some sources, a quarter of those homeowners face losing their homes. In my home State of Pennsylvania, the number of homeowners with subprime ARMs who are seriously delinquent has risen to 13.82 percent, an increase of over 40 percent since this time last year. Among homeowners who qualified for prime rate ARMs, the number who are seriously delinquent has increased to 2.43 percent, an increase of over 50 percent since last year. Especially hard hit is the Allentown- Bethlehem-Easton area, where the foreclosure rate for subprime loans originated in 2006 is 20 percent. In some cases, borrowers made bad decisions by ignoring the risk and taking on mortgages they knew someday they might not be able to afford. In other cases, it appears that borrowers were steered to riskier mortgages when they qualified for safer options. There is also evidence that lenders failed to fully disclose the risks involved with certain mortgages and instead emphasized low monthly payments. The push to issue subprime and adjustable rate mortgages was aggravated by Wall Street investors chasing high rates of return on the secondary market. Many homeowners facing foreclosure will seek relief in bankruptcy. Bankruptcy has traditionally provided a second chance for borrowers by giving them relief from their creditors. Chapter 13 in particular has enabled homeowners facing foreclosure to keep their homes. Chapter 13 gives debtors breathing space by imposing a stay on collection of debts, including mortgages, which prevents lenders from foreclosing for a period of time. During that time, debtors are given an opportunity to get caught up on their mortgage payments. Finally, Chapter 13 makes it more likely that debtors will be able to make their mortgage payments over the long term by giving them a discharge from many of their other debts. However, the drafters of the bankruptcy code never anticipated the current crisis where so many face possible bankruptcy, not because of consumer debts, but because of their mortgages. When the current bankruptcy code was drafted in the late 1970s, most homeowners had traditional 30-year fixed rate mortgages with substantial down payments. As a result, few homeowners faced bankruptcy because of their mortgage. As such, the drafters did not see a need for bankruptcy judges to have the power to alter the terms of mortgages on primary residences. Given the fact that so many homeowners now face foreclosure and possible bankruptcy because of their mortgages, I believe Congress should take action. I am therefore introducing a targeted bill which will allow bankruptcy courts to provide relief to homeowners caught up in the current crisis. The bill will provide relief for low-income homeowners who, because of changed circumstances, can no longer afford their mortgages. Easily available credit made homeownership a reality for many lower income Americans. It is these same homeowners who are the ones now caught up in the credit crunch and facing the loss of their homes. The bill will allow bankruptcy judges to provide relief by restructuring the mortgage terms that have created the biggest problems for homeowners. Most importantly, the bill will allow bankruptcy judges to prevent or delay interest rate increases as well as to roll back interest rates that have already reset. This will make it possible for many more debtors to hold onto their homes in the long run. The bill also will allow bankruptcy judges to waive early repayment or prepayment penalties. Many lenders impose large penalties on homeowners that repay their mortgages early, penalties that prevent many homeowners from refinancing and switching to a sounder mortgage. These penalties are particularly egregious since they don't reflect any increased risk taken on by the lender. They are merely intended to discourage borrowers from making a better choice for themselves by switching to another loan. This bill is not a bailout and it is not aimed at those who knew the risk and proceeded anyway. When housing prices were rising, speculators bid up the prices of homes hoping to quickly sell them for an easy profit. With prices falling, many of those speculators find themselves with properties worth less than what they paid. These speculators took the risk that housing prices would fall and now must live with the downside of that risk. The bill will allow judges to write down the principal value of the loan, but only if both the debtor and creditor agree. Giving judges discretion to write down the principal value of loans could provide a significant windfall to those who gambled that housing prices would never fall, including speculators. That is a gamble lenders and future homeowners should not be forced to finance. Taking too broad an approach to this problem will only hurt future borrowers. Allowing bankruptcy judges free rein to rewrite mortgage loans will only increase the risk that lenders take on when they issue mortgages. Investors respond to increased risk by insisting on higher rates of return and mortgage lenders must respond in kind by raising their rates. That will only make it more difficult for those Americans who wish to become homeowners in the future. In the longer run, the market will correct some of what has gone wrong. The number of risky loans being issued has already declined dramatically, in large part because investors are refusing to provide the liquidity necessary to issue such loans. In addition, as predatory or fraudulent practices come to light, the Congress, and in particular the Banking Committee, should take action to prevent such practices from occurring in the future. I urge my colleagues to join me in offering relief for those who are caught up in the current crisis and face losing their homes.

Mr. SPECTER

Mr. SPECTER. I understand that the Senate is likely to take up legislation which will include a number of Medicare provisions during this session of Congress. I would appreciate the assurance of the chairman and ranking member of the Finance Committee that any Medicare related legislation that is considered by the Senate this session include a 2-year extension of the section 508 program that is retroactive to October 1, 2007.