To establish a maximum rate of interest for loans insured under title II of the National Housing Act, and for other purposes.

NEW DIRECTION FOR ENERGY INDEPENDENCE, NATIONAL SECURITY, AND CONSUMER
PROTECTION ACT AND THE RENEWABLE ENERGY AND ENERGY CONSERVATION TAX ACT
OF 2007--Continued

Cloture Motion

The PRESIDING OFFICER. Under the previous order, pursuant to rule
XXII, the clerk will report the motion to invoke cloture.
The legislative clerk read as follows:

Cloture Motion

We, the undersigned Senators, in accordance with the
provisions of rule XXII of the Standing Rules of the Senate,
hereby move to bring to a close debate on the substitute
amendment No. 4387 to H.R. 3221.
Christopher J. Dodd, Harry Reid, Mark L. Pryor, Max
Baucus, Charles E. Schumer, Patty Murray, Claire
McCaskill, Patrick J. Leahy, Daniel K. Akaka, Ken
Salazar, Sherrod Brown, Bryon L. Dorgan, Evan Bayh,
Edward M. Kennedy, Jon Tester, John F. Kerry, Bill
Nelson.

The PRESIDING OFFICER. By unanimous consent, the mandatory quorum
call is waived.
The question is, Is it the sense of the Senate that debate on
amendment No. 4387, offered by the Senator from Connecticut, Mr. Dodd,
to H.R. 3221, shall be brought to a close? The yeas and nays are
mandatory under the rule.
The clerk will call the roll.
The assistant legislative clerk called the roll.
Mr. KYL. The following Senators are necessarily absent: the Senator
from Colorado (Mr. Allard) and the Senator from North Carolina (Mrs.
Dole).
The PRESIDING OFFICER. Are there any other Senators in the Chamber
desiring to vote?
The yeas and nays resulted--yeas 92, nays 6, as follows:

[Rollcall Vote No. 93 Leg.]

YEAS--92

Akaka
Alexander
Barrasso
Baucus
Bayh
Bennett
Biden
Bingaman
Bond
Boxer
Brown
Brownback
Burr
Byrd
Cantwell
Cardin
Carper
Casey
Chambliss
Clinton
Cochran
Coleman
Collins
Conrad
Corker
Cornyn
Craig
Crapo
Dodd
Domenici
Dorgan
Durbin
Ensign
Enzi
Feingold
Feinstein
Graham
Grassley
Gregg
Hagel
Harkin
Hatch
Hutchison
Inouye
Isakson
Johnson
Kennedy
Kerry
Klobuchar
Kohl
Landrieu
Lautenberg
Leahy
Levin
Lieberman
Lincoln
Lugar
Martinez
McCain
McCaskill
McConnell
Menendez
Mikulski
Murkowski
Murray
Nelson (FL)
Nelson (NE)
Obama
Pryor
Reed
Reid
Roberts
Rockefeller
Salazar
Sanders
Schumer
Sessions
Shelby
Smith
Snowe
Stabenow
Stevens
Sununu
Tester
Thune
Vitter
Voinovich
Warner
Webb
Whitehouse
Wicker
Wyden

NAYS--6

Bunning
Coburn
DeMint
Inhofe
Kyl
Specter

NOT VOTING--2

Allard
Dole
The PRESIDING OFFICER. On this vote, the yeas are 92, the nays are 6.
Three-fifths of the Senators duly chosen and sworn having voted in the
affirmative, the motion is agreed to.
Who seeks recognition?
Mr. DODD. Mr. President, I suggest the absence of a quorum.
The PRESIDING OFFICER. The clerk will call the roll.
The assistant legislative clerk proceeded to call the roll.
Mr. GREGG. I ask unanimous consent that the order for the quorum call
be rescinded.
The PRESIDING OFFICER. Without objection, it is so ordered.
Mr. GREGG. I ask unanimous consent to set aside the pending amendment
so I may offer an amendment.
Mrs. LINCOLN. I object.
The PRESIDING OFFICER. Objection is heard.
Mr. GREGG. Mr. President, I am most surprised to hear my colleagues
on the other side object to my request to call up an amendment, to have
it called up and be heard. I thought the Senate was here to do
business. I think it is reasonable as part of doing that business that
we should address the largest item in this bill that involves passing a
cost on to our children, which is the net operating loss proposal.
Now, the way this net operating loss works is that homebuilders--that
is who it is directed toward, although anybody can take advantage of
it; I do not think it is limited to the homebuilders who built all of
those homes and made these massive amounts of money by offering people
subprime mortgages which they then took the proceeds from over the last
4 or 5 years, which subprime mortgages have now caused this Nation to
go through a massive contraction and which have created one of the
largest bubbles in the history of Government, in the history of
commerce. Those folks, having made a huge amount of money--I mean
massive amounts of money, and, in fact, in the last quarter, they were
the largest earning sector in our economy--those folks are now asking
that they get an additional $20 billion bailout, $20 billion bailout by
allowing them, now that they are losing money, to go back and take a
tax deduction of their losses against the gains which they had in prior
years.
This is as if you said to someone in business, say somebody running a

[[Page S2727]]

small grocery store: OK, if you make money for 4 years, make a lot of
money, and then you find you cannot compete or you have made some
business error in your judgment and you lose money for a couple of
years, we, the Government, are going to come in and give you insurance
so you never lose money. You are able to go back during the years when
you made money to recover the taxes you paid and use it today to give
you profits.
My goodness, I think Adam Smith would be rolling over in his grave to
hear this concept of economics. This is Komisar economics where nobody
can lose, except for the taxpayer in the next generation who has to pay
this bill. Remember, this $20 billion is going to be paid by somebody
because it is being spent around here in the operation of the
Government. And who is going to pay it? Well, it is obviously not going
to be the homebuilder, the large corporations which ran up these huge
profits. They are actually going to take that money in, take it in as
income. No, that is going to be paid for by John and Mary Smith, John
and Mary Smith working for a living today, or their children because it
will go on the Federal debt--$20 billion on the Federal debt as a
result of this little piece of chicanery.
It is unbelievable that we would claim this was a stimulus to begin
with. In fact, if we are in an economic slowdown and if that economic
slowdown is tied to the housing industry, none of these revenues will
benefit that economic slowdown because they do not come in this year.
They will be claimed this year, and they will be reimbursed next year.
I think the estimate is that almost all of these recovery costs,
recovery of taxes owed and paid as a result of getting this extra loss
carryback, will occur in the next budget year, 2009. So, as a practical
matter, it is not going to help in the next 6 months, which is when all
of the major economists who have discussed this issue say we need some
stimulus in the economy. No, it is not. It is simply a bonus payment
from one group of people, the American taxpayers and their children,
hard-working Americans, to another group of people, the speculative
housing industry that ran up these huge expansions in the housing
inventory over the last 3 years and then sold them in the subprime
market in a way which many people have said in many instances were not
appropriate, that they took advantage of the borrowers and then took
those proceeds in as income, paid taxes on them, and now they want
their taxes back because they are suddenly losing money.
Well, if you made money for 3 or 4 years--and a lot of money--you
should not have a bonus given to you during the years when you are not
making money simply because you happen to be one sector of this economy
called the housing industry. In fact, just the opposite should happen,
quite honestly. The market should be allowed to work here relative to
the large housing manufacturers.
There is some legitimacy for doing something about homeowners who got
hit with a subprime mortgage which is resetting at a rate that is
astronomical on them today and they are willing to pay and could pay
for and maintain their home if they had a reasonable mortgage rate.
There is some reason for arguing those folks might and should get some
support, or at least some assistance so they can stay in their homes,
they can continue to pay their mortgages.
But there is no practical commercial argument which justifies taking
tax dollars from working Americans and paying them to homebuilders
because homebuilders suddenly start to lose money--after they had great
years. It is not like this has been a distressed industry over a long
period of time. This is an industry which has always been cyclical.
This cycle was a creation of their excess, nothing else. They were
greedy. They built a lot of homes the market did not need. They sold
them to people who could not afford them. They sold them with
instruments which were totally inappropriately structured: the subprime
mortgages. Then they took all that profit, and they used it. But,
unfortunately, they had to pay taxes on that profit. So now they want
their taxes back, and they want the American people to subsidize them
on it.
Well, under no color of an open market, of a capitalist system--of
even a marginally capitalist system; I do not think even France would
accept this as a concept--should somebody who made a huge amount of
money, created a speculative bubble, benefit from the taxpayers when
that bubble bursts.
Yes, the people who were harmed inappropriately, the folks who bought
those subprimes and did not understand the nature of them and maybe
were misled relative to the nature of them, they justifiably could have
some support, as long as they are the primary owners of that home and
it was not bought for speculation and they are able to support a
reasonable mortgage rate. Maybe there is some way to adjust that.
But this bill does not do that in this area. This net loss carry-back
is simply a gift--pure and simply a gift--to one segment of our
industrial community which participated in a very lucrative few years
and now is having a hard time, created the problem which we now
confront, and now wants to be given a gift. Unfortunately, this gift
has to be paid for, as I said before.
We are going to run, this year, it looks like, a deficit somewhere of
around $400 billion to $420 billion. That is the deficit we are going
to run. That is up from a deficit which was under $200 billion last
year. That is a huge increase in our deficit.
Now, who pays a deficit? Who pays for a deficit? Well, our children
pay for it. All this goes on to our children's backs. They are the ones
who pay the cost of paying off the debt, which is borrowed in order to
finance a deficit.

So why would we want to say to them: OK, future Americans--young
people coming through school today, going to college, thinking about
starting a family, thinking about maybe having children and sending
their kids to college--why would we want to say to them: We are going
to stick you with a $20 billion bill so we can take care of the large
housing manufacturers in this country who basically created a major
disruption in our economy by putting on the market a massive inventory
of homes we did not need and then using practices which were at the
margin to draw people into buying those homes through subprime mortgage
lending?
Why would we say that to them? How can we possibly, as a government,
justify doing that to the next generation? But that is what we are
going to do with this bill. We are putting $20 billion on their backs.
Where is the money going? It goes into the pocket, primarily--at least
that is the game plan; it is not specifically written so--it will be
taken advantage of solely by manufacturers of homes. And I suspect
there are going to be some other industries which will suffer losses in
this economy that may take advantage of it. But it was written
primarily to take advantage of the homebuilder industry, which is
obviously an honorable industry, but it is also an industry which goes
through cycles.
In this cycle, there is no reason we should be stepping up with this
special gift to that part of our economy when we do not have any money
to make the gift with, when we have to borrow the money to pay for the
gift.
So that is why I have offered this amendment--or tried to offer this
amendment. Now, it seems to me if everybody is so comfortable with this
legislation and this idea of a net loss carry-back being extended and
expanded, they should be willing to vote on this amendment. Is there no
courage on the other side of the aisle? Are the sponsors of this
concept afraid to vote and stand up for this bill with this proposal?
It appears so.
I am not offering an alternative. I am just saying let's have an up-
or-down vote on whether we should give a $20 billion gift to one
segment of our commercial society at the expense of the next generation
that has to pay the debt for this bill. I am just saying, stand up and
be counted, so to say, as to whether you are for or against this
amendment.
So, again, I will renew my request. I ask unanimous consent that the
pending amendment be set aside and that my amendment relating to net
loss carry forward, which strikes the provisions of the net loss carry
forward, be called up.
The PRESIDING OFFICER. Is there objection?
Mr. BAUCUS. Mr. President, I object.

[[Page S2728]]

The PRESIDING OFFICER. Objection is heard.
The Senator from New Hampshire.
Mr. GREGG. Well, I guess that makes the point. It is too bad. I would
hope people would ask why. Why can't we have a vote? What is the fear
out there? Are we so concerned about this segment of our industry that
we are not willing to vote up or down on whether this type of a $20
billion event should occur? I hope not. It seems to me it is reasonable
that the Congress should vote on that. The Senate should vote on that.
Mr. President, $20 billion is a lot of money. Do you know $20 billion
would run the State of New Hampshire for 5 years? This is a lot of
money. This is big-time dollars. Twenty billion dollars is going to
cost our children a lot because it compounds with interest. You just do
not borrow it. You borrow it and have to pay interest on it. Of course,
the interest gets paid to the Chinese or the Indians or the Saudis
because they are the ones who probably buy the debt.
So not only do we end up with a $20 billion bill we pass on to our
kids, but we end up with our kids having to pay interest to the Saudis
or the Chinese to support that debt. Also, that one segment of our
society which participated in the robustness and the excitement of
large economic expansion, and maybe inflated that expansion rather
dramatically, does not have to bear the burden of their excesses.
Well, as I said, Adam Smith would be a little stunned to find this is
the way the market has worked and the Government of the United States--
which is allegedly the Government of a capitalist system--functions. So
I will probably renew this request later on because it does seem to me,
since this is by far the single biggest spending item in this bill, or
tax item in this bill, it should have an up-or-down vote and an open
debate.
I yield the floor.
The PRESIDING OFFICER. The Senator from Montana.
Mr. BAUCUS. Mr. President, just a couple comments about the points
made by the Senator from New Hampshire.
No. 1, it is not a $20 billion bill. That is not accurate at all. It
is, first of all, about $6 billion. It is over 10 years. So it is much
less than what the Senator makes it sound like it is.
Second, we all know the housing problems that occurred in this
country--the subprime mortgage problems, as well as other mortgages in
distress and home buyers in distress. The figure I saw was that about
10 percent of American homes are underwater, meaning the value of the
homes for 10 percent of Americans is much less than the mortgage on
their homes.
This is a very complicated problem. It requires a complicated
solution. Senator Dodd is to be commended for the Banking Committee's
provisions in this housing bill. We in the Finance Committee wrote the
tax provisions in this bill, and they are designed to help lots of
different areas, lots of different people, in lots of different ways.
One is the mortgage revenue bond provisions, which helps States
finance new mortgages for people, homeowners. Another is the tax credit
for distressed homes. That helps people. That helps home buyers. That
is in this legislation.
Another is to help give a little break to people who do not itemize
their income tax returns but have property taxes so they can get a
break on their property taxes. So we provide in this bill that if you
have property taxes, you get at least a $500 deduction against your
income taxes if you are single, $1,000 if you are married, irrespective
of whether you itemize or use the standard deduction. That helps
people.
There is a business provision in here to give a break to
homebuilders. Why? Because homebuilders are going out of business. This
is not a typical homebuilders' housing cycle we are in now. This is
atypical.
A lot of areas in our country are very distressed. A lot of
homebuilders are distressed, laying off a lot of people. The number of
construction jobs is down--in the hundreds of thousands. For
homebuilders' jobs, it is of a similar magnitude. These are people with
hammers and nails going out building houses who no longer are building
any houses, and they are laid off.
So this bill--basically, in that one provision with respect to
homebuilders--kind of evens things out a little bit so homebuilders do
not have to lay quite so many people off and they can still keep
building some homes, which helps prevent a further deterioration of the
value of the homes in a certain area. This is nowhere close to solving
the problem, but it helps a little bit. That is why this is in this
legislation.
So we have several provisions we in the Finance Committee passed out
to help individuals. This one helps businesses in the business of
homebuilding and homebuilders employ people, and those are the people
who have lost their jobs.
So we are trying to help that sector a little bit so those people who
build homes--some of them--can get back to work and not be laid off and
also so some homes that might otherwise not be built might now be built
to help alleviate the problem.
Homebuilders are not the cause of the problem. The problem, frankly,
is worldwide where cash was slushing around, which helped create this
situation where lenders were very easily lending money. The terms were
very easy. People were enticed into buying homes. Mortgage brokers, for
example, were very aggressive in encouraging people to buy homes with
no downpayments and whatnot.
But homebuilders--they are not the problem. They are building the
homes. Now, they are feeling the pain, as a lot of other Americans are,
and I believe--and I think the Finance Committee believes--this is one
of several provisions which will help address the housing crisis a
little bit. That is why I think it should be in this bill, and I very
much hope the Senate approves the bill if not today, by tomorrow.
Mr. President, I yield the floor and suggest the absence of a quorum.
The PRESIDING OFFICER (Mr. Sanders). The clerk will call the roll.
The bill clerk proceeded to call the roll.
Mr. BROWNBACK. Mr. President, I ask unanimous consent that the order
for the quorum call be rescinded.
The PRESIDING OFFICER. Without objection, it is so ordered.
Mr. BROWNBACK. Mr. President, I ask unanimous consent to speak as in
morning business for the utmost urgency of recognizing the University
of Kansas basketball team's accomplishments last night.
The PRESIDING OFFICER. Without objection, it is so ordered.

Recognizing the University of Kansas Basketball Team

Mr. BROWNBACK. Mr. President, I am delighted my colleagues granted me
this special privilege to speak as in morning business on something so
important. This is a bit personal if you are a Kansan. The sport of
basketball was invented in Kansas by James Naismith in 1891, and last
night it was perfected by the University of Kansas basketball team.
I don't know how many people got to watch it. What a fabulous game. I
was able to be there, which was a great delight. It went into an
overtime game with less than 3 seconds to play and a three-point shot
by Mario Chalmers sent it into overtime. It was a classic of college
basketball. The whole place was in pandemonium. There were great teams
on both sides--Memphis and KU--playing this game. At the end of the
day, Kansas came out with a victory. It was a fantastic night.
I congratulate the NCAA on the Final Four and the tournament. I think
they do a spectacular job of bringing people together and having a
great venue. This game was in San Antonio last night, a fantastic
celebration of amateur athletics. These players are phenomenal in all
they can do. It is certainly a great day to be a Kansan, a great day to
be a Jayhawk.
My law school degree is from the University of Kansas. It is a great
basketball school, with four national championships, one added last
night. They have a great tradition of basketball at the school. I think
we have one of the best mascots in the country, the jayhawk, which most
people would recognize, being at the University of Kansas, but not
knowing what it is. It has a civil war legacy in the fight over
slavery, where Kansas was the State that started the fight on slavery,
being settled by abolitionists. One of the

[[Page S2729]]

things the proslavery forces were calling Kansas was jayhawkers, in a
derisive way, but that then became a symbol much for the State and for
the University of Kansas. I like the heritage of that symbol as well.
Twenty years ago was the last time we won a basketball championship.
That one was Danny Manning and ``the miracles.'' He was a guy who went
on to play very well at the professional level. Danny Manning is now
coach at the University of Kansas. I can't name anybody else on that
team, but he was one who carried them forward.
Last night was a great team effort by a balanced team. I recognize as
well coach Bill Self. This was his first Final Four, and he wins it.
Along the way, he beat a rival school in basketball for Kansas. In
North Carolina, there has been a long connection between North Carolina
and Kansas. Dean Smith, a long-time coach at North Carolina, was from
Kansas. Roy Williams, a long-time coach at Kansas, was from North
Carolina. There were a number of people in Kansas, in my State, who
were not particularly forgiving of Roy Williams going back to North
Carolina even though he had given us a number of good years. I think on
Saturday there was a lot of forgiveness. This was the first match
between Kansas and North Carolina since he had left Kansas, and we were
fortunate enough to be successful in that game. It was a great
tournament overall.

As a wise sportsman famously said: ``It's never over until it's
over,'' especially if Mario Chalmers has one more shot to take.
Sometimes big games are disappointments, but last night was certainly
not the case, as the Nation was treated to a classic in college
basketball. From James Naismith, as I mentioned, who invented the game
in 1891, to the Kansas Jayhawks of 2008 that perfected the game, our
school has had a great history and a great legacy of basketball.
Through players like Wilt Chamberlain and Danny Manning, KU now has 13
Final Four appearances and 3 national championships. It is fantastic
what they have been able to accomplish.
Again, congratulations to the University of Kansas men's basketball
team for a great season, for a thrilling championship game, for writing
another amazing chapter in the storied history of Jayhawk basketball.
And what goes along with that rich tradition is a number of different
chants, but the one that has the most lasting memory with Jayhawkers is
``Rock Chalk, Jayhawk,'' which we don't get to say on the Senate floor
very often. Congratulations to a fabulous team and a fabulous effort.
Mr. President, I yield the floor, and I suggest the absence of a
quorum.
The PRESIDING OFFICER. The clerk will call the roll.
The legislative clerk proceeded to call the roll.
Mr. CASEY. Madam President, I ask unanimous consent that the order
for the quorum call be rescinded.
The PRESIDING OFFICER (Mrs. McCaskill). Without objection, it is so
ordered.
Mr. CASEY. Madam President, I rise to speak about a housing matter. I
have two amendments, but I am only speaking about them today, I will
not be calling them up. I did want to speak very briefly and very
generally about both of them.
There are two very important matters that come before us as parts of
our debate on housing. The first involves appraisals. We know that one
of the biggest concerns a lot of people have in attacking the problem
of subprime mortgages and the aftermath of a lot of bad loans was that
faulty and sometimes fraudulent appraisals were part of that. The first
amendment I will speak of today deals with the question of how do we
get a second independent appraisal for properties that are so-called
flipped properties.
When you have a property that may go into foreclosure and then it is
sold later, sometimes we have instances where property is sold at a
grossly inflated price that does not reflect the true value, and then
down the road another purchaser, a homeowner, would buy it, and then
you have extraordinary inflation, often fraudulent inflation of the
cost of a property. Our office has worked closely with Senator Martinez
on this as well. What this amendment does is to make it very clear
that, in those instances where you have a house flipped within 180 days
of the date of purchase, there will, in fact, be a second independent
appraisal done.
Some of the work on this in the other body has been done by
Representative Paul Kanjorski. He has worked on these issues for years.
I commend him for his work in Congress on these and other matters that
pertain to housing and to the financial questions that arise with
regard to affordable housing.
First of all, we want to make sure, in those instances that a second
independent appraisal is done, it would have to be by a qualified
appraiser. That would mean the appraiser has to be certified in the
State or somehow licensed in the State. And second, that the appraisal
is performed in conformity with uniform standards of professional
appraisal practice to make sure it is done the right way. We want to
make sure consumers are given a copy of that appraisal, that it is done
thoroughly, and that a statement is made by the creditor that any
appraisal prepared for the mortgage is for the sole use of the creditor
and that the consumers may choose to have a separate appraisal
conducted at their own expense.
There will be heavy penalties imposed for those who violate this. It
is one way to deal with one of the various problems we encounter when
it comes to the difficulties so many families are confronting right
now. The worst thing that can happen to a homeowner who saves money and
borrows money to fulfill a dream of owning a home is to be presented
with a situation where they buy a home that has been grossly and
fraudulently inflated beyond its value and they don't find out about
that until those who perpetrated the fraud are far away and have
already made their money. This will hold people in the market
accountable, as they should be held accountable.
We will have more time to talk about it later.
I want to make another point about a separate amendment. In the city
of Philadelphia, as in many of our major urban areas, housing is a
terribly difficult challenge for so many people. In the city of
Philadelphia, we have more than 80,000--as HUD, Housing and Urban
Development, officials would call them, clients--more than 80,000
clients in the city of Philadelphia who rely on HUD and the housing
authority there to provide affordable housing in that city.
A dispute has arisen about a number of things. We don't have to go
into the reasons for those disputes, but because of that dispute, now
there is an agreement that was worked out between HUD and the housing
authority called the Moving to Work Agreement which has allowed people
not just to have the benefit of an agreement that provides them with
the opportunity to live in housing that is safe and affordable, but
also this agreement has allowed the Philadelphia Housing Authority to
use the leverage of this agreement to borrow money and to finance other
housing priorities in the city of Philadelphia.
Because of that, because of the importance of that agreement, we want
to make sure the agreement stays in place at least for a year. That is
what the amendment Senator Specter and I have been working on does.
That is the reason for it, to give a 1-year extension so that the
Moving to Work Agreement in the city of Philadelphia, with the U.S.
Housing and Urban Development agency, stays in place for 1 year so we
can continue to work out an arrangement between the housing authority
and HUD.
Unfortunately, we have not been successful in working for many months
on this. But I think it is critically important not to allow a
bureaucratic fight between a housing authority and a Federal agency to
interfere with important services that are provided to Philadelphians
who benefit from this; some more than 80,000 Philadelphians.
Those are the two amendments I wish to speak about. We will have time
later as we proceed to deal with them more directly. I wished to make
sure we make both thorough and accurate and independent appraisals a
priority as well as to make sure that when we are dealing with a local
housing authority, we do not let a dispute prevent Philadelphians from
getting the benefit of the services provided in this case by the Moving
to Work Agreement.

[[Page S2730]]

I yield the floor, and I suggest the absence of a quorum.
The PRESIDING OFFICER. The clerk will call the roll.
The assistant legislative clerk proceeded to call the roll.
Mr. McCONNELL. Mr. President, I ask unanimous consent that the order
for the quorum call be rescinded.
The PRESIDING OFFICER (Mr. Nelson of Nebraska). Without objection, it
is so ordered.
Mr. McCONNELL. I ask unanimous consent that I be allowed to proceed
as in morning business.
The PRESIDING OFFICER. Without objection, it is so ordered.

Colombia Free Trade Agreement

Mr. McCONNELL. Mr. President, today the administration sought to
strengthen America's ties with an already close ally by moving forward
with the Colombia Free Trade Agreement. Now it is up to Congress to
pass this very important piece of legislation.
The Colombia Free Trade Agreement is more than an act of friendship
between allies. It would strengthen our security and strengthen our
economy. It would send a strong and unmistakable signal to our other
allies in Latin America that the United States stands with those who
support strong markets and free societies, especially in the face of
threats.
Colombia's support for free markets and Democratic reform under
President Uribe has made it an even stronger ally of the United States
in recent years, a very sharp contrast to its next-door neighbor,
Venezuela. We cannot allow election-year politics in the United States
to make a resurgent Colombia more vulnerable to its anti-America
neighbor.
America got a closeup of Venezuela's dictator at the U.N., when he
likened an American President to the devil and predicted America's
demise. His anti-Americanism has not softened since that speech, nor
has the threat Hugo Chavez poses to regional stability. Chavez is a
corrosive influence in South America. He embraces state sponsors of
terrorism such as Iran, for example, and he is aggressively courting
like-minded leaders of other Latin American countries in order to draw
a line in the sand between himself and his allies and America and its
allies.
Now, most Latin American leaders such as President Uribe know allying
themselves with Chavez is harmful in the long run. Unfortunately,
Uribe's government has been severely tested by Chavez and his allies.
Ecuador supports, for example, terrorist proxies in Colombia. Chavez
has made it quite clear he supports Ecuador's efforts when he recently
sent troops to the Colombian border.
Colombia has made tremendous progress. Not long ago, it appeared on
the verge of collapse. Entire regions of the country were essentially
ungoverned. Yet President Uribe, to his great credit, has pulled the
country back from the brink.
The Colombia Free Trade Agreement is an important acknowledgment of
the strides Colombia has made. And its passage would send a strong
signal America is committed to Colombia's continued success and the
success of our other allies in the region.
Now, as important, the Colombia Free Trade Agreement would strengthen
the U.S. economy, our economy, at a time when Americans are searching
for some economic good news. Some seem to think our economy can somehow
grow without the trading partners. These people who are arguing that
nonsense also say we are best served if we trade only with ourselves.
How absurd is that? In fact, the opposite is true. America needs
trading partners to buy the goods we are making in our country. This is
especially true when there is an imbalance in market access. The
imbalance between the United States and Colombia is startling indeed.
Today, more than 90 percent of Colombian exports to the United States
enter our country duty free. So they are getting 90 percent of their
imports into our country duty free, even as American exporters face
steep barriers to selling American-made goods to Colombia.
Democrats and Republicans agree it was important for Colombian
exporters to enjoy the benefits of increased access to our markets. Why
would we not want to give American products made by American workers
the same opportunity we are giving Colombians already in our market?
The current situation is totally unfair. Virtually all U.S. farm
goods are slammed with tariffs on their way down to Colombia, while
virtually all Colombian farm goods coming here enter the United States
without any tariffs at all.
The beneficiary of this arrangement is abundantly clear, and it is
not U.S. workers or the economy they support. We hear a lot of rhetoric
about the need for fair trade. Permitting equal access to Colombian
markets is the very essence of fair trade. That is what this free-trade
agreement would do.
Looking at my own State, for example, more than one-sixth of all
manufacturing jobs in my State rely on exports. Kentucky exports about
$15 billion in manufacturing goods every single year, including $67
million in exports to Colombia last year--a figure that is all but
certain to go up after this free-trade agreement is ratified.
In these economic times, we should be expanding overseas markets for
American-made products and American-grown goods. Now, some have argued
labor conditions in Colombia are reason not to support the Colombian
Free Trade Agreement. That is a total red herring. How does maintaining
high tariffs on goods of the United States shipped to Colombia reduce
violence against union jobs down there?
How does rejecting an ally that has helped reduce homicides against
union members by 79 percent improve trade union safety? What nonsense
these arguments are. I mean even the Washington Post, no bastion of
conservatism, has called the issue completely bogus.
Today the L.A. Times, again not a bastion of conservatism, said the
same thing, noting pressure from human rights groups and labor
organizations has prompted Colombia to already do what the Democrats in
Congress have urged, which is to improve the country's dismal labor
record.
If Senators truly wish to help Colombia's union members, they need to
vote for this agreement, reward Colombia for its improvements in this
area, and encourage Colombia to draw even closer to the United States.
I would close by noting this free-trade agreement comes nearly a
year, a year after an agreement was struck between the U.S. Trade
Representative, the House Democratic leadership, and the House Ways and
Means Committee on a plan to move forward with all the free-trade
agreements this Congress.
The deal stated: In return for USTR negotiating unprecedented new
labor and environmental standards, House Democrats would proceed with
free-trade agreements for Peru, Panama, Korea, and Colombia. The USTR
did its part. Yet the Democratic Congress has not lived up to its end
of the bargain. So far only the Peru agreement has been passed.
We should reject an isolationism that limits economic growth and
stunts job creation here at home. We should support this important
Latin American ally. The time is long past for Congress to do what it
promised and move forward on America's trade agenda.
Congress must reaffirm its commitment to an invigorated Colombia and,
in the process, help our own economy at a difficult economic moment.
I yield the floor and suggest the absence of a quorum.
The PRESIDING OFFICER. The clerk will call the roll.
The assistant legislative clerk proceeded to call the roll.
Mr. BUNNING. Mr. President, I ask unanimous consent that the order
for the quorum call be rescinded.
The PRESIDING OFFICER (Mr. Salazar). Without objection, it is so
ordered.
Mr. BUNNING. Mr. President, what is the pending business before the
Senate?
The PRESIDING OFFICER. The pending business is the Sanders amendment.
Mr. BUNNING. Mr. President, I ask unanimous consent that the
amendment be set aside so I may speak on the bill itself for 15
minutes.
The PRESIDING OFFICER. The Senator may speak on the bill without
setting aside the amendment.
Mr. BUNNING. I thank the Chair.
Mr. President, this is an unusually bad bill, and I have opposed it
from the very start. The course it has followed almost guarantees that
it will be filled

[[Page S2731]]

with the worst kind of gimmickry, and it is. The Senate may be the most
deliberative body in the world, but this bill is anything but the
product of deliberation. It is a jumble of disjointed ideas, unlikely
to solve the crisis at hand, and it is unpopular. It turns out that the
American people do not like the idea of bailing out banks and their
neighbors who gambled on home prices. The voters understand what is
going on in Washington better than we do.
What is more, several of the complicated tax provisions in this bill
never benefited from a full review by the Senate Finance Committee.
Normally, this is a critical part of the Senate's deliberation.
One example of a provision that could use more review is the new
deduction for State property taxes. While it may be well intended, this
new provision will complicate life for millions of American homeowners
who will have to calculate their taxes twice to find out which method
results in a lower tax. This complicates tax filings, and any Senator
who has said the Tax Code is too complicated should be ashamed to vote
for this provision.
Because the Senate has not had any serious review of this provision,
colleagues also may not know that this provision also allocates more of
the Nation's tax burdens to residents of States that impose an income
tax, such as Kentucky.
The State with the highest income taxes faces the biggest relative
tax increase, and this is illustrated in the chart that supporters of
this provision hastily distributed to us. For example, the chart shows
that 59 percent of Texan homeowners but only 23 percent of Maryland
residents will benefit.
The chairman of the Senate Finance Committee, on which I serve, is
not even managing this bill, even though tax provisions account for
about two-thirds of its cost. That is kind of hard to explain to the
average Senator on the Finance Committee.
Another provision that deserves far more scrutiny is the $4 billion
in community development block grants that will be allocated to the
States and local governments to buy foreclosed properties. To begin
with, this current program is very poorly managed. The Wall Street
Journal called it among the worst run programs in Washington, and there
is a lot of competition for that title. The White House called the
program ineffective just 2 months ago, and when the HUD inspector
general testified before Congress in 2006, he explained that his agency
had recently indicted 159 individuals and recovered $120 million of
misappropriated funds. GAO also has criticized the targeting of grant
recipients, which is a polite way of saying that the money is going to
those with political connections and influence in local governments.
Adding money to this program is risky at best.
Let's have no illusions. This extraordinarily unwise grant of
taxpayers' money is really just a bailout for banks in disguise. It
goes to States, but the ultimate beneficiary will be banks that made
risky loans.
Instead of selling foreclosed properties on the open market, these
banks will have the luxury of selling to local officials with whom they
may already have a relationship. These officials will be buying
properties not with their own funds but with OPM--OPM stands for
``other people's money''--and in this case, the OPM comes from you and
me, the American taxpayers, and the millions of unborn Americans whom
we are saddling with even more debt.

Another provision that could benefit from more thoughtful
deliberation is the $100 million spending on counseling. Yes,
counseling is a good idea before a homeowner signs a loan they can't
afford. But afterward, the real problem is financial. It is too late
for counseling.
We also don't know all that much about the nonprofit groups that will
get the money. Are some of these groups funded mostly by credit card
companies? Are they? If so, will they have a clear conflict of
interest? Maybe they will actually advise people to abandon their home,
to foreclose, in order to pay credit card debt. That would make the
foreclosure situation worse, not better. One thing is certain: no
amount of counseling is going to put money that they do not have into
homeowners' pockets.
Now, I have an amendment that I have tried to get a vote on that
would do so--put money into homeowners' pockets--and that is why I
think it is appropriate to redirect these public funds toward helping
homeowners with the cost of refinancing. If we are going to give away
$4.1 billion--I will say it one more time--if we are going to give away
$4.1 billion in this bill, let's give it back to the taxpayers and do
so in a way that encourages homeowners to restructure their mortgages
and keep them out of bankruptcy and foreclosure. My amendment would do
this. It would use the $4 billion in funding this bill uses to bail out
banks and give it back to taxpayers while simplifying the Tax Code as
well.
The Joint Committee on Taxation says that this amendment would be
revenue-neutral over 10 years. It is entirely paid for within the four
corners of this legislation.
This change in the tax law that my amendment contains is strongly
supported by the Mortgage Bankers Association because it would get to
the heart of the housing crisis. Let me try to explain.
Often, when people are searching for a home, they are more concerned
about qualifying for financing than getting the best possible terms on
that loan. Millions of homeowners have taken out an adjustable rate
mortgage that has a low interest rate for a short period of time, often
2 or 3 years. These loans adjust to a much higher rate after the
initial period. The assumption of many homeowners has been that they
can refinance later in a conventional fixed mortgage loan for 30 years.
But the Tax Code creates an obstacle to this.
According to Bank of America research, published in the Wall Street
Journal, more than $510 billion worth of adjustable mortgages,
including prime and subprime loans, will reach the end of their fixed
rate period before December of this year. For the holders of these
loans, the options are stark: Refinance or default. It is unlikely that
many of them can long afford the high interest rates on these mortgages
after the fixed rate period expires.
Unfortunately, our tax law has this exactly backward. It encourages
homeowners to spend lavishly on first-time financing, but it exacts a
penalty when homeowners find they are living beyond their means and
need to refinance. My amendment would have changed all this. It would
allow homeowners to currently deduct the mortgage interest points that
lenders typically charge in connection with a home mortgage refinance.
For example, under my amendment, if a homeowner has a $200,000
adjustable rate mortgage and refinances into a 30-year fixed mortgage,
paying 1 percent in points, the homeowner would have a $2,000 tax
deduction for home mortgage interest paid. That is under my amendment.
Under present law, the homeowner would only be allowed to deduct $66.
There is no good reason to allow the deduction for home purchase
mortgages and to deny it for those who need it to refinance.
My amendment would remove a significant financial obstacle to
refinancing that would allow struggling borrowers to keep their homes.
It would help Americans to get out of first mortgages that they have
entered into without being able to shop for the best possible mortgage.
Unlike some of the other provisions in this bill, it truly would help
prevent foreclosures for many who are about to have their homes
foreclosed.
Mr. President, I yield the floor, and I suggest the absence of a
quorum.
The PRESIDING OFFICER. The clerk will call the roll.
The legislative clerk proceeded to call the roll.
The PRESIDING OFFICER. The Senator from North Dakota.
Mr. DORGAN. Mr. President, I ask unanimous consent that the order for
the quorum call be rescinded.
The PRESIDING OFFICER. Without objection, it is so ordered.

Iraq

Mr. DORGAN. Mr. President, today has been a fairly significant day
here in the Congress. General Petraeus and Ambassador Crocker have
flown back to the United States from the country of Iraq, and they have
reported to both the Armed Services Committee and also the Foreign
Affairs Committee. I have not had a chance to listen to their
testimony--I don't serve on either of those committees--but I know the
news will carry the testimony, and I

[[Page S2732]]

am sure I will see portions of it and will certainly read their
testimony tomorrow morning, but I wanted to make this point.
While General Petraeus and Ambassador Crocker have come here today
and I am sure have talked about the progress that results from the
surge--although there has been a substantial amount of violence, and
tragically, I believe 11 U.S. soldiers have lost their lives in Iraq
just in the last few days--I think there is no question that the extra
soldiers, the additional 30,000 or 40,000 soldiers they took to Baghdad
and to the streets of Iraq, dampened down the violence some. Yet there
is so much discussion about Iraq and so little discussion about
something else that matters a great deal to our lives.
This is the 2,400th day since 9/11, and 2,400 days later, Osama bin
Laden is still at large, the same Osama bin Laden who boasted the day
after 9/11--a day when thousands of innocent Americans were killed--
Osama bin Laden boasted about having engineered the murders of these
Americans. Two thousand four hundred days later, he is not only at
large, but he is reconstituting the leadership and the al-Qaida force,
including building training camps to train additional terrorists.
Now, Mr. President, are some moments in history where I just remember
where I was. I remember where I was as a very young boy when John F.
Kennedy died. I remember the day. I remember the day astronauts walked
on the moon. And I remember 9/11 very clearly. And it occurred to me on
9/11 that surely our country bring those who were responsible to
account. When thousands of Americans were murdered and al-Qaida and its
leader, Osama bin Laden, boasted about having engineered that murder,
it occurred to me that Osama bin Laden is not long for this world, or
at least Osama bin Laden will certainly be brought to justice and get
his due rewards for murdering so many Americans. Yet, 2,400 days later,
that has not happened. Now, one might ask the question: Why? And does
it have to do with the detour into Iraq?
I want to point out that in July of last year, the last time a
National Intelligence Estimate was given to us by all of the combined
intelligence services in our Government, here is what they said:

Al-Qaida is and will remain the most serious terrorist
threat to the homeland.

Let me read that again. That is the assessment of our National
Intelligence Estimate in our country, the official assessment.

Al-Qaida is and will remain the most serious terrorist
threat to the homeland. We assess the group has protected or
regenerated key elements of its homeland attack capability,
including a safe haven in the Pakistan Federally Administered
Tribal Areas, operational lieutenants, and its top
leadership.

Al-Qaida is the most serious threat to us, No. 1. No. 2, it has
regrouped and regenerated key elements of its attack capability. No. 3,
it is in a safe haven in Pakistan.
Now, who would have guessed that 2,400 days after our country was
attacked, an attack that Osama bin Laden boasted about having
engineered, that there would be 1 square inch of ground on this planet
that would be called a safe haven for someone who murdered over 3,000
Americans? Who would have believed that to be the case? Not me. Almost
certainly I would have thought he would have been brought to justice.
Here is an October 3 story from last year by Griff Witte of the
Washington Post. It quotes top military officials in Pakistan talking
about al-Qaida.

``They've had a chance to regroup and reorganize,'' said a
Western military official in Pakistan. ``They're well
equipped. They're clearly getting training from somewhere.
And they're using more advanced tactics.''

This is from CIA Director Hayden, a week ago, on ``Meet the Press'':

It is very clear to us that al-Qaida has been able, over
the past 18 months or so, to establish a safe haven along the
Afghanistan-Pakistan border area that they have not enjoyed
before; that they are bringing operatives into that region
for training.

Now, I have flown over that Afghan-Pakistan area. I have been in an
airplane at 20,000 feet and looked down. I understand there is no
boundary. You don't know where Afghan ends and Pakistan begins. I
understand it is a tough area, tribally controlled areas. But what I
don't understand is how, 2,400 days later, we are told by our top
intelligence officials that the greatest threat to our homeland here in
America is al-Qaida and its leadership--the greatest threat to our
homeland is al-Qaida and its leadership--and they are in a safe haven,
quote-unquote. There shouldn't be 1 acre of ground on this planet that
is safe for those who murdered Americans on 9/11.
So what happened? What has caused this to happen? Well, this country
took a detour. President Bush told the American people and Secretary of
State Colin Powell in a presentation to the world and the United
Nations told us about the alleged threat posed by the country of
Iraq. He made the case for a military attack against the country of
Iraq. They made the case that Saddam Hussein was a bad guy. They got no
argument about that. Saddam Hussein was in many ways a brutal dictator.
There were football-field-size graves that were unearthed in Iraq with
thousands of people who had been murdered by Saddam Hussein. So there
is no argument about Saddam Hussein.

The fact is, there are a number of bad leaders in this world. That
doesn't mean we go invade their country.
After 9/11 the case was made that Iraq was a threat to the United
States of America. They said Iraq was trying to get yellowcake from
Niger and build a nuclear capabilities; Iraq was buying aluminum tubes
for the purpose of reconstituting its nuclear capabilities; Iraq has
mobile chemical weapons laboratories to produce weapons of mass
destruction, which threatened this country.
That is all pretty ominous. Colin Powell, at the request of President
Bush, showed all the evidence to the world. Then, of course, in the
years since discovered that evidence was false. The yellowcake from
Niger was from a forged document. Yet it purported to tell the world
that Saddam Hussein was trying to reconstitute his nuclear capability
by buying yellowcake from Niger--a forged document. No one has ever
described to us where that forgery came from.
The aluminum tubes, Condoleezza Rice, Stephen Hadley, and others sat
idly by while in their offices they received reports from other parts
of our Government saying those aluminum tubes were not for a
reconstitution of nuclear capability. That information was withheld
from Congress and the American people.
Mobile chemical weapons laboratories? That came from a man named
Curveball; a man named Curveball. Curveball was an informant who was
being held by the Germans. Curveball used to be a taxicab driver in
Baghdad, largely considered a drunk and a fabricator by the German
authorities. This country, this administration, this President, and
this Secretary of State used Curveball as an example and a source--a
single source, mind you--to describe mobile chemical weapons
laboratories that existed in Iraq and therefore threatened this
country.
It turns out it was not true. It turns out that thin thread, one
person held by German authorities--again, considered to be a drunk and
a fabricator, a former taxicab driver from Baghdad--was cited as a
source, just an unidentified source to the entire world, to support the
contention that what Saddam Hussein was doing in Iraq threatened this
country.
So the President, Condoleezza Rice, Colin Powell, Stephen Hadley, and
especially, of course, the neocons--Vice President Cheney, Douglas
Feith--all of them. They all got what they wanted. This country went
into a detour, and the detour was right into the middle of Iraq. It was
going to be a very simple operation, last only a very short amount of
time. The fact is, we have been there now fighting in Iraq longer than
the Second World War lasted, and we have reports today by the top
general in Iraq, General Petraeus, a U.S. general, and by the U.S.
Ambassador, Ambassador Crocker--both good Americans--who come to us to
describe progress, progress in Iraq.
I don't know how progress is being measured. I hope we have a lot of
progress. I hope we have enough progress so we can begin withdrawing
American troops from Iraq.
But the fact is, Saddam Hussein is dead. He was executed. The Iraqi
people had the ability to write a new constitution and then vote for
it. They had the ability to vote for a new government, which they have.
And they had the ability to receive two-thirds of a trillion dollars
from the American taxpayers, which we have spent in Iraq

[[Page S2733]]

and a smaller amount in Afghanistan. We have spent $16 billion of that
training military and police capability for able-bodied Iraqis. Four
hundred thousand able-bodied Iraqis have been trained for military and
police work.
The question remains now, in my judgment, if 400,000 Iraqis who have
been trained by using $16 billion of our money, and been trained by our
people, if they don't have the will to provide the security in the
country of Iraq that is their country, not ours, then we can't stay
there 2 years or 4 years or 20 years or 100 years, as some have
suggested. We must begin to bring troops home and say to the Iraqis:
This is your country, not ours. This is your responsibility, not ours.
You have a new government. We spent the money to train able-bodied
Iraqis. Now you have to have the will to take back your country.
My point about Iraq, however, is that we will not only have been
detoured in terms of two-thirds of a trillion dollars-plus, we have
been detoured here and bogged down in a long-term civil strife in Iraq
that has been deadly for this country and deadly for the Iraqis at a
time in which the greatest threat to America and greatest continuing
threat to our homeland comes from al-Qaida. Don't take that from me.
Take that from the top military experts in our Government.
If that in fact is the top threat to our homeland, why, 2,400 days
after 9/11, is Osama bin Laden in a safe haven? Why is there a safe
haven anywhere on Earth for Osama bin Laden? That ought to be the
question that is asked today. That ought to be the question that is
answered for the American people.
I think all of us understand that the terrorist threat exists. It
remains, and likely will remain for some time, but we didn't eliminate
the terrorist threat and didn't address the terrorist threat by sending
soldiers to Iraq. The purpose of sending soldiers to Iraq was to
respond to what we now know to have been largely untrue, the threat
that Iraq represented a threat to our country. But we do know now, as a
result of our National Intelligence Estimate, that Osama bin Laden is a
threat to our country. We knew that on 9/11. We knew that on the day he
killed 3,000-plus innocent Americans. Everybody knows that. You don't
need some intoxicated former taxicab driver from Baghdad to tell us
that. We know Osama bin Laden is a threat. We now know that 6 years
after he engineered the 9/11 attack that our intelligence estimate says
he or his al-Qaida organization is the most serious terrorist threat to
our homeland.

Were there any hearings today on Capitol Hill asking questions of the
people who are supposed to be doing this, What kind of progress are you
making? Are you really going after him? Is this job No. 1? Or is all
the spotlight on the same spot, that is Iraq, while Osama bin Laden
over here in northern Pakistan is rebuilding training camps, recruiting
new terrorists, and reconstituting his al-Qaida leadership to once
again remain the most serious threat to this country's homeland?
My only point is there is nothing Republican or Democrat or
conservative or liberal about any of this. This is all about common
sense. What is the greatest threat to this country? The National
Intelligence Estimate says it is the al-Qaida leadership. So what are
we doing about that? Is there any progress?
Were there any hearings today asking whether there is progress? Were
there any hearings asking whether we are bringing Osama bin Laden to
justice, calling in officials who ought to be working on this? It seems
to me, after 2,400 days the American people have a right to expect some
answers.
Again, I think it is good that we have hearings today. We will no
doubt read about the hearings, the testimony of General Petraeus who,
by all accounts, is a wonderful American soldier. I met Ambassador
Crocker when he was Ambassador in Afghanistan. He is a good American
diplomat. We will no doubt hear a lot of discussion about what they
said today.
All the talk today is about Iraq. That is a very important subject.
But I assume what will not be discussed today is anything about the
most serious terrorist threat to our homeland, and that is the person
and the leadership and the organization that engineered the attack that
murdered thousands of innocent Americans on 9/11. I hope those hearings
are held soon. I hope this administration gives us a report from time
to time on what we can expect.
Will there be another 2,400 days? Another national intelligence
report telling us that the person who engineered the 9/11 attack is in
a safe or secure--by the way, that word has been used as well--safe
haven or secure haven? There ought not be anyplace safe or secure on
this Earth for those who engineered the 9/11 attack, but it certainly
has been safe and secure for 2,400 days.
My hope is we will not be on the floor of this Senate talking about
another 2,400 days. We should be focusing on bringing to justice those
who perpetrated the 9/11 attack. That goal, in my judgment, has taken a
back seat to the detour that took us to Iraq all these many years, and
I hope that will change soon.
I yield the floor and suggest the absence of a quorum.
The PRESIDING OFFICER. The clerk will call the roll.
The legislative clerk proceeded to call the roll.
Mr. DORGAN. Mr. President, I ask unanimous consent the order for the
quorum call be rescinded.
The PRESIDING OFFICER. Without objection, it is so ordered.
Mr. DORGAN. Mr. President, in just another couple of minutes, there
is an amendment I believe has been filed to the underlying housing
bill. I want to make a comment on it. It is an amendment that would
extend the renewable energy tax credits. It is a very important
amendment. I wish we would extend the renewable energy tax credits for
a lengthy period of time. I am not sure if that amendment will be
considered germane. If it is, we need to pass it. But I want to make
this point.
This country has a history now going back to 1992 with respect to
renewable energy for wind energy through the production tax credit and
things we put in place to encourage renewable energy. We have a history
of kind of a pathetic and anemic response to all this.
Let me describe what we did with oil. Once we decided we wanted to
encourage people to look for oil and gas, we were at it. In 1916,
Congress put in place deep, aggressive tax credits and incentives for
people to go drill for oil and gas. So for almost 100 years our
country's policies have been for going out to drill for oil and gas.
God bless you, we are going to give you some big tax breaks. We want
you to do that. That has been America's policy: find more oil and gas.
In 1992, the Congress put in place a provision that said: Now we want
to encourage renewable energy. With oil we put in place permanent,
robust tax incentives that have lasted almost a century. What did we do
with renewables? When it came to renewable energy, it was kind of a
pathetic, lackluster response. It was temporary and short term. We
would extend it a little bit here and then we let it expire. We have
extended it five times, and let it expire three times. What a pathetic
response.
What this country has an obligation to do with respect to wind and
solar energy and the basic renewables is to say to this country and
developers: Look, here is where America is headed. For the next decade,
here is where we are going, and you can count on it because this is
America's policy. We ought to do that.
We are doing 1 year, 2 years, or 3 years at a time, but the
production tax credit ought to be extended for 10 years. We should say
here is where we are headed, and you can count on it. We are not going
to want to be 2 years, 5 years, or 10 years from now 70 percent
dependent on the Saudis and Kuwaitis and Iraqis and Venezuelans for our
oil. That makes no sense. Yet the only way we are going to get out of
this box is to say we are going to begin providing renewable energy in
a very aggressive way. But we don't do that with the incentives we put
in place. We just start and stop, stutter-start, stop, and every time
we stop for a year, the whole investment cycle blows off. It goes to
zero. So you have all kinds of projects on the shelf that sit there and
never get deployed.
In solar, for example, we are way behind in solar because you can't
do solar and put a tax incentive in for 1 year. You can't do that. It
takes a number of years to get a solar project up and running. You can,
if you get a short-term

[[Page S2734]]

wind turbine up perhaps. You can have a shorter time line on that. But
even with that, it seems to me that for wind or solar or any number of
these renewable technologies, this country has a responsibility to get
serious about becoming less dependent on Saudi Arabia and Kuwait and
Iraq and all those countries.
The Lord did something really interesting: He put oil over there
under the soil and put all the demand over here, with the blessings of
a country that expanded and produced a great economy. You know we put
little straws in this Earth every day and we suck oil out. We suck 84
to 85 million barrels of oil a day out of this Earth, and we use one-
fourth of it here in the United States, 21 million barrels a day, and
60 percent of it comes from off our shores. If you don't think that is
a dangerous dependency, then there is something wrong. I think that is
dangerous and we have to fix it. How do you fix it? You make a
commitment to renewable energy. My colleague from the State of
Washington was on the floor, Senator Cantwell, who has dedicated a lot
of her time and effort to this subject, and I commend her for it.
You know, you have to focus around here on so many things. Senator
Cantwell has focused substantially on these issues. I wished to work
with her. I want whatever she is proposing to succeed. We are working
together in the Energy Committee. I am also the chairman of the Water
and Energy Appropriations Subcommittee.
We need to do a lot. But, most importantly, we need to get this
Congress on the side of policy that this country can be proud to say:
We are going to make a commitment for the next decade, here is where we
are headed in America. We are in support of renewable energy. You can
count on us because we are going to put policies in place that will
tell you we are in support of it.
We cannot keep doing what we have been doing. It is unfair, unfair to
this country. So my hope is that when we consider this amendment, that
we can approve it. But my hope is we will go much further this year.
The minimum we should do on the production tax credit is a 5-year
commitment--minimum.
I have a bill that says we ought to provide the PTC for 10 years. You
know, it is one thing to talk about these things, it is another thing
to be serious and enact public policies that demonstrate to the country
and the world you are serious. We have not done that on renewable
energy. It is time, long past time we do it. I hope perhaps we will
support with the first step tomorrow.
I yield the floor, and I suggest the absence of a quorum.
The PRESIDING OFFICER. The clerk will call the roll.
The legislative clerk proceeded to call the roll.
Mr. GRASSLEY. I ask unanimous consent that the order for the quorum
call be rescinded.
The PRESIDING OFFICER. Without objection, it is so ordered.
Mr. GRASSLEY. Mr. President, I ask unanimous consent to speak as in
morning business for such time as I might consume but probably in the
neighborhood of 8 or 9 minutes for anybody else who might be wanting to
speak.
The PRESIDING OFFICER. Without objection, it is so ordered.

Colombia Free Trade Agreement

Mr. GRASSLEY. Today, President Bush submitted the Colombia Trade
Promotion Trade Agreement Implementing Act to Congress. This bill, as
the title implies, would implement our pending trade agreement with
Colombia, which the administration and Colombia signed in November
2006.
This is an important agreement that deserves our support. Some of the
economic reasons for supporting this trade agreement are that the
economic rationale is obvious. In my view, the economic rationale is
undeniable. That is because Colombia is a beneficiary of two of our
unilateral trade preference programs: The Andean Trade Preference Act,
and the Generalized System of Preferences.
Now, all this means is Colombia already gets duty-free access to U.S.
markets for the vast majority of its goods. Now, meanwhile, less than 3
percent of our exports to Colombia, and not a single U.S. agricultural
export, receives duty-free treatment from Colombia. Our exporters face
Colombian tariffs as high as 35 percent for nonagricultural goods and
even much higher tariffs for agricultural goods.
The Colombian trade agreement would thus eliminate this disparity or,
as we like to say so often, level the playing field for American
exporters, thus giving American workers the same access to Colombian
markets that their workers get to the U.S. markets; in other words,
being fair, leveling the playing field.
Now, the U.S. International Trade Commission has found that leveling
the playing field will increase our exports to Colombia by $1.1 billion
per year. That is as a result of eliminating the duty on goods. That
means real benefits for American farmers, for American manufacturers,
for American service suppliers.
One of the chief benefits is it will help keep good-paying jobs in
the United States. So I would ask my colleagues and the American people
to think about this whole proposition about the Colombian Free Trade
Agreement this way: Either we maintain the status quo or we create new
opportunities for American exporters.
At its heart, that is what this debate is all about. Last year,
exports accounted for more than 40 percent of our total economic
growth. We should be doing everything we can do to grow our exports
even further. That is what we did last December when the Senate voted
by this wide margin of 77 to 18 in favor of a free-trade agreement with
Peru.
The Colombian trade agreement is very much like this Peru agreement,
and the Colombian market is bigger than the Peru agreement. If it makes
sense to approve the Peru agreement, it makes even more sense to
approve the agreement with the country of Colombia.

Economic considerations are not the only reason to support the
Colombian agreement. I say this because too often we measure trade
entirely in economic terms. But there are a lot of ways to measure
trade other than in dollars and cents. Because in this instance and in
so many instances, trade agreements are about an important national
security priority.
There is one very specific reason for doing this with Colombia.
Because as my Senate colleagues know, Colombia is a strong Democratic
ally in a very dangerous neighborhood. For many years, it has been
under assault from the FARC, a group of narcoterrorists fighting to
overthrow the democratically elected Government in Colombia. It is
increasingly under pressure, as Colombia is, from Venezuela's President
Hugo Chavez. You have seen a lot of this in the news in the last month.
President Chavez of Venezuela is using oil wealth to divide Latin
America. He is trying to lure allies to his Socialist vision and, most
importantly, to promote his anti-U.S. agenda. He is fiercely opposed in
this process to anything that Colombia's President Uribe does in
cooperating with the United States or even having a friendship with the
United States.
There have been troubling reports that President Chavez may be
working with the FARC. Last month, he tried to create a diplomatic
crisis over a border incident that did not even involve Venezuela. He
took the side of the FARC against the Colombian Government. At a
challenging time such as this, the United States has a responsibility
to provide strong, principled leadership. Our agreeing to the Colombian
Free Trade Agreement is one way of showing strong, principled
leadership in support of a friend in South America.
We must stand by our allies. We must help to promote economic
stability, security and, most importantly, the rule of law, whether it
is in trade or nontrade areas. President Uribe has made it clear that
one of the most important steps we can take in this regard is then to
help him, through our implementation of the Colombian Trade Agreement
that levels the playing field for America, for America's manufacturers,
service providers, so we can get our products into Colombia on the same
basis as Colombian farmers or manufacturers or whatever have been able
to get their products into this country without duty.
Our leaders in Latin America are watching us in this process. They
see our approach to Colombia as a proxy for the overall attitude toward
Latin America. If Congress rejects this trade

[[Page S2735]]

agreement, or if we were to refuse to vote on it, our allies in Latin
America might well conclude that the word of the United States is no
good. That will not help Latin America, and it surely is not good for
our country.
I know some of my colleagues have concerns about this agreement. One
of those concerns is the issue of violence by Colombia or within
Colombia against labor leaders. Anti-union violence has been a serious
problem in Colombia for years.
If the Colombian Government were ignoring this issue, that might be
reason to oppose this agreement. But Colombia and President Uribe are
not ignoring the issue. To the contrary, Colombia has made massive
strides in its fight against anti-union violence. Moreover, I have yet
to hear a convincing reason why voting down the Colombian agreement or
refusing to vote on it will help to reduce violence against labor
leaders.
If we want to help Colombia reduce violence, and if we want to assist
in the demobilization process, we should be doing what we can to
enhance economic growth and create new opportunities for a legitimate
economy. One way we can advance that objective is to vote to implement
the Colombian trade agreement.
Now, the one other concern I have heard is the administration should
have waited to submit the agreement until it reached a procedural
agreement with the congressional leadership. The fact is, we have been
waiting for Congress to take up this issue for over 10 months. On May
10 of last year, there was a great, grand deal made about our
bipartisan compromise on trade that would pave the way for the
continuation of pending trade agreements, including the Colombian
agreement, including Peru, which has been passed, and including Panama,
which still is on the agenda.
Now, since May 10 of last year, there has been no action on Colombia.
This inaction violates the compact between the legislative and
executive branches of our Federal Government on trade. The
administration negotiated the Colombian trade agreement under the
Bipartisan Trade Promotion Authorization of 2002.
Under the trade promotion authority procedures, the administration
has an obligation to consult with Congress during the course of the
negotiation and to conclude an agreement that meets the negotiation
objectives specified in that statute, the Bipartisan Trade Promotion
Authority Act of 2002.
Now, the administration has done all those things required by that
act. The administration even went further by reopening the agreement to
implement the enhanced labor and environmental provisions that were
demanded by the new Democratic majority after the elections of 2006,
which was their right to do.
These agreements then on labor and the environment were part of the
May 10 bipartisan trade deal. Colombia has agreed to accept those
provisions. But the trade promotion authority places a firm
responsibility on Congress as well, the responsibility to process a
trade agreement for an up-or-down vote once it has been concluded.
Congress has had over 10 months to engage the administration and
commence that process. In that time, we have not even had a hearing on
the Colombian trade agreement. So the time for that process ran out.
Now, this is the position the administration is in. In order to
preserve sufficient time under the trade promotion authority to assure
a final vote this year, the President has now submitted the agreement
and implementing legislation to this Congress. But that does not mean
Congress must vote tomorrow.
Today's action by the President starts the 90-day legislative clock
in the House and Senate under that Bipartisan Trade Promotion Authority
Agreement of 2002.
So there remains plenty of time to work together on a bipartisan
basis to reach consensus. For example, I am engaging in intense
discussion with the chairman of the Finance Committee, Senator Baucus
of Montana, on a consensus bill to reauthorize our trade adjustment
assistance programs. We will certainly continue that effort. Trade
adjustment assistance is the top priority of Senator Baucus on the
trade agenda this year. I have agreed to work with him to advance his
priority that I also have an interest in advancing. But my priority is
implementation of the Colombian trade agreement. I expect to see a vote
on that as well. I think Congress can address both priorities. I think
Congress can meet both responsibilities. I think Congress can
accomplish them in a bipartisan way.
It is time to stop playing politics with our Nation's vital economic
and foreign policy interests. It is time to level the playing field
between the United States and Colombia on free trade. That level
playing field is going to benefit the United States. It is not going to
benefit Colombia much more, although it will benefit them some.
American workers deserve a fair opportunity to sell our products and
services abroad. Colombia deserves recognition for the tremendous
progress it has made over the past few years. It is time for Congress
to demonstrate leadership and to meet our responsibility in the
economic and foreign policy areas.
The United States-Colombia trade promotion agreement deserves an up-
or-down vote this year. This debate will continue. I hope that before
the end it becomes more of a dialog than a debate because I think
dialog is what foreign trade is all about.
This issue is too important. The stakes are too high. We must find a
way forward, and we need to find it together. I think we will.
I yield the floor and suggest the absence of a quorum.
The PRESIDING OFFICER (Mr. Menendez). The clerk will call the roll.
The assistant legislative clerk proceeded to call the roll.
Mr. DODD. I ask unanimous consent that the order for the quorum call
be rescinded.
The PRESIDING OFFICER. Without objection, it is so ordered.
Mr. DODD. Mr. President, I thought I might take a couple of minutes
toward the close of the day and share with my colleagues where we stand
on the matter of the housing proposal we have been on since the middle
of last week. I wish to again thank Majority Leader Reid. Without his
leadership, we would not be here. We would not be in a position to
actually do some things that are critically important to work our way
out of this mess our country is in when it comes to the foreclosure
crisis, the problems Americans are facing, not to mention the contagion
effects that are moving this issue beyond housing into other aspects of
our economy. It was Majority Leader Reid who reached out to the
Republican leader, suggesting we try to get together, Democrats and
Republicans, on a compromise proposal to move to and then deal with
other issues where we could, where there was some consensus, to then be
able to meet with the other body to see if we couldn't resolve
outstanding questions dealing with the issue of housing and
foreclosure.
As I have said over and over for the last week since Senator Shelby
and I spent that 24 hours we were given--not a great deal of time,
considering the number of issues involved in this question--to come
back with a package that represented Democrats' and Republicans' common
points on this question, there were a lot of issues Democrats wanted,
that I wanted, there were issues Republicans wanted that the other side
was not willing to agree to, and that was the charge we were to avoid,
to come back with a package on matters we could agree on, which is not
always easy in a Senate that is divided 51 to 49, where the margins are
narrow and the differences are significant. But nonetheless, we did
that.
This package includes positive provisions. One, we are going to get
an FHA modernization bill. That has been kicking around for a long
time. We took those loan limits from, I think it is $362,000 up to
$550,000. There were some 19 States that would have been excluded from
the FHA program or at least parts of States that would have been
excluded, such as California, my own State of Connecticut, candidly,
Massachusetts, New Jersey, many States, New York. There are pockets in
these States where even the average cost of a home is higher. So the
loan limits went up. FHA modernization does other good as well, an
important point.
The issue of counseling, last year we appropriated $42 million
nationwide for counseling services to deal with the housing crisis--
hardly enough to deal

[[Page S2736]]

with the demands people had on counseling. Senator Bond and I offered
an amendment last year and got $180 million for counseling services
which we thought contributed, and it did, to assisting groups across
the country, nonprofits to work with those facing foreclosure or in
highly distressed mortgages to work out those differences.
I would have liked to have added $200 million more to the counseling
program. That is a proposal Senator Murray, who cares deeply about this
issue, Senator Schumer, who cares about the issue, and others wanted to
bring up. When we sat down to negotiate that issue, there was little or
no appetite for any additional money in the counseling area. So we
compromised between the 200 and zero and came up with $100 million. I
would have liked more. But again, we were directed and asked by the
leadership to try to develop a set of consensus ideas. Again, there may
be other amendments--there was on this--to add additional funds to it.

We provided money for community development block grants to assist
communities that have a lot of distressed properties or foreclosed
properties. I have made the case over and over what this can do to a
community and neighborhood. When you have a single foreclosed property,
the value of every other home in that neighborhood or the surrounding
area can decline in value immediately. What you don't need is more
supply out there. Right now we are overloaded with supply. It is one of
the reasons why the market is not doing as much in correcting this
problem, because of the oversupply of housing. So when we do what we
can to clean up housing, to get it back on the market and hopefully get
people into that housing, it not only benefits the people who get to
purchase a home, but it also does a lot to increase the value of the
surrounding homes, not to mention, of course, stabilizing a declining
property tax base, which supports police, fire, social services, all
the other issues that are adversely affected when you have a foreclosed
property or properties in your neighborhood or community. So that was a
major achievement in this bill.
I would have liked some additional funds for community development
block grants. It is a very good program. It works very well. To target
these resources into that area is something we can applaud in this
legislation.
We also have offered some tax credits for people who move into
foreclosed properties. It is a 2-year deal. It involves about $3,500 a
year in tax credits. The idea is to get this property back on the tax
rolls, to get people into the property so, again, you stabilize
neighborhoods before you end up with further declining values and
erosion in these areas, blight, all the other problems that happen.
How big a problem can that be? Let me tell you how big that can be. I
have one community in my State that I have talked about where there are
6,000 foreclosures in a city of 100,000 people. Let me tell you what
that looks like in a city. Imagine if you end up with 6,000 boarded-up
properties in a city of 100,000 people or less. Obviously, the value of
every other home in that city is going to be adversely affected. So
while people said: I don't think you ought to be providing a tax credit
to get owner-occupied people into these homes, well, you can make a
case for that, but I think we all benefit if we can get someone into
that property, clean it up. That is taxes coming into the community.
The value of surrounding homes I think are benefited from it. So again,
I think that is a good provision. It was offered here. It has to be
foreclosed property. You have to live in the house for a period of
time. It doesn't invite speculation or involve new properties. It is
foreclosed properties.
We also had a number of provisions to deal with veterans. Again, I
thank Senator John Kerry, Senator Dan Akaka of Hawaii, Senator Coleman,
among others, Senator Sanders of Vermont. All had ideas on how we could
assist our men and women in uniform who are facing not only the
difficulty of being in the military service today, potentially serving
in Afghanistan and Iraq, but also facing potential foreclosures. We
have done a lot in this bill to make sure they are not going to be
adversely affected.
It may not seem like much or a lot of people, but the fact that we
could do something to help mayors and local governments with foreclosed
properties, as well as providing some way for people to get into these
homes, is a positive step, not to mention the FHA modernization, the
mortgage revenue bonds, $1.6 billion, not exactly a small amount of
money, designed specifically to get people into fixed rate affordable
mortgages that they can work out. That is going to be a tremendous
asset to people.
There are some related matters we probably have to deal with in the
Tax Code so it could be even more potent, but it is a major
accomplishment in this bill that is something we can applaud again and
celebrate as being very helpful. In fact, this is the $10 billion in
mortgage revenue bond authority included in this proposal.
There are other provisions in the bill. Frankly, there are some that
go too far. I am the first to admit it. But I was asked to try to put
something together. In doing so, I wished to have a provision in here
that I cared deeply about and that is the home preservation idea, where
we could forestall the ability of people. In the ultimate situation,
where you provide money to mayors to clean up, why not stop foreclosure
in the first place. I have talked about it since January. There is, I
think, sort of a growing constituency that understands this and has
offered some ideas on how to be supportive. But I couldn't get my own
idea in this bill as the negotiator. I tried to convince my good friend
from Alabama and others this was a provision I thought we ought to have
in this bill.
He has some very legitimate questions about it. A good set of
hearings probably will accomplish it. This Thursday, we are going to
have a hearing on this idea and other ideas in the Banking Committee
and a hearing the following week as well because we would like to have
a couple hearings on it. My hope is that at the conclusion, we can have
a markup and, along with some other provisions the Presiding Officer is
aware of, as a member of the committee, we can bring back as a package,
hopefully, in a bipartisan way, that we can move through this Chamber
that will contribute some answers to this economic crisis that has as
its center the foreclosure crisis.
My own provision is not part of this package as much as I wanted it
and argued for it. But I couldn't get it included at all. So there are
things I would have liked to have had in this bill that are not here.
There are some things in this bill that I think go too far. I will be
the first to admit it. But I have learned over the years that if you
wait for the perfect, you don't get much. In this body with 100
Members, with very different views on a lot of these matters, you do
your best. Particularly when you are divided 51 to 49, it is hard to
develop that kind of consensus. But that is what it is, and that is how
you get legislation passed. You begin to have to move on it. That is
why I am urging my colleagues and I am grateful for the vote on
cloture. I don't like to cut off debate for anyone on matters where
certain amendments may not then survive a postcloture motion. But we
need to come to some closure on this.
I would say to the Presiding Officer as well that there are about 15
or 20 amendments that are going to be worked out, I think, that various
people have offered in addition to what is in the core provisions here
that we are working hard on, the adjoining staff, to try to accommodate
where we can. So in addition to the core provisions, there are other
ideas that have come forward that we hope to have included in this
final product that we can produce, hopefully, by tomorrow.
But we are pretty much done with the debate. We have debated this a
lot. People know or can find out whether their amendments are germane
or survive postcloture or would avoid an objection being filed against
them. If that is the case and they want to come over and let Senator
Shelby and me talk about them and listen to people's ideas, it is still
possible some additional ideas can be included.
I have been told there are some people who are just going to object
to anything that comes up. I would wish that would not be the case, but
that is a right Members have. They have the

[[Page S2737]]

right to object to anything because it takes unanimous consent to bring
up these matters. If you do not get the consent, it does not come up.
So I know the Democratic leader, working with the Republican leader, is
trying to convince those Members who have blanket objections to
anything to remove those objections and to allow some of these ideas to
come up to be considered as part of this package.
We then have to go through the process of meeting with the other
body. Congressman Barney Frank, the chairman of the Financial Services
Committee of the House, is working on a similar package or related
package. I am never going to get there to work out some differences,
some of the different ideas that may become a part of this legislation,
if I do not leave here. We cannot solve this problem by talking to
ourselves. We are going to have to sit down and talk with people who
have different points of view on this if we are going to come up with
some common answers.
So that is sort of the status of play here at 6:30 this evening.
There is no reason why we need to exhaust 30 hours. There is a lot of
other work to be done in this body on other matters. This is not the
only issue that is before this Congress.
So my hope would be that tomorrow morning, for those who have
additional ideas who want to come over, for those who are waiting to
see if we can get some answers, that we do that. I am prepared to spend
the time to try to work things out where we can and to say to those
where we cannot work it out: I am sorry, I cannot accommodate every
Member who has an idea on this bill. Beyond that, we need to come to
closure and move on. My hope would be we would not have to wait until 9
p.m. tomorrow night to arrive at that point.
I am more than happy to yield back time under the 30 hours, as I am
confident Senator Shelby would be, but we do not want to do that
without giving our colleagues an opportunity to be heard on these
matters.
So I will urge colleagues in the morning, if they would come over and
bring their ideas or at least if they have amendments to bring them up.
We can vote on some of these. Some may carry, some may not, but allow
us to move forward and have a final vote on this package and then go
back to work in the committee to bring out these additional ideas we
have been talking about, as well as to get to a conference with the
other body to try to resolve what is in this bill and what they will
offer themselves.
With that, Mr. President, I ask unanimous consent to add Senators
Kohl and Carper as cosponsors to amendment No. 4489, as submitted by
Senator McCaskill.
The PRESIDING OFFICER. Without objection, it is so ordered.
Mr. MARTINEZ. Mr. President, I would like to commend the hard work of
Chairman Dodd and Ranking Member Shelby for putting together a
bipartisan package of housing provisions.
If we have learned anything from the current economic situation, it
is the need for improved oversight of the lending industry. There is a
need to restore investor and consumer confidence in the housing market.
Although this bill goes a long way to helping families and communities
deal with issues related to foreclosure, there's still a critical
component missing--regulatory reform of government-sponsored
enterprises.
I would like to take a moment to remind my colleagues what
precipitated the need for Congress to consider GSE regulatory reform.
In May 2006, OFHEO published a special report detailing egregious
management and accounting scandals that highlighted a corporate culture
of greed and corruption. I would like to read a few excerpts from the
summary of that report:
Fannie Mae senior management promoted an image of the Enterprise as
one of the lowest-risk financial institutions in the world and as
``best in class'' in terms of risk management, financial reporting,
internal control, and corporate governance. The findings in the report
show that risks at Fannie Mae were greatly understated and that the
image was false.
During the period covered by the report--1998 to mid-2004--Fannie Mae
reported extremely smooth profit growth and hit announced targets for
earnings per share precisely each quarter. Those achievements were
illusions deliberately and systematically created by the Enterprise's
senior management with the aid of inappropriate accounting and improper
earnings management. A large number of Fannie Mae's accounting policies
and practices did not comply with Generally Accepted Accounting
Principles, GAAP.
The Enterprise also had serious problems of internal control,
financial reporting, and corporate governance. Those errors resulted in
Fannie Mae overstating reported income and capital by a currently
estimated $10.6 billion. By deliberately and intentionally manipulating
accounting to hit earnings targets, senior management maximized the
bonuses and other executive compensation they received, at the expense
of shareholders.
Earnings management made a significant contribution to the
compensation of Fannie Mae chairman and CEO Franklin Raines, which
totaled over $90 million from 1998 through 2003. Of that total, over
$52 million was directly tied to achieving earnings per share targets.
Fannie Mae consistently took a significant amount of interest rate risk
and, when interest rates fell in 2002, incurred billions of dollars in
economic losses.
The Enterprise also had huge operational and reputational risk
exposures.
Fannie Mae's Board of Directors contributed to those problems by
failing to be sufficiently informed and to act independently of its
chairman, Franklin Raines, and other senior executives; by failing to
exercise the requisite oversight over the Enterprise's operations; and
by failing to discover or ensure the correction of a wide variety of
unsafe and unsound practices.
The board's failures continued in the wake of revelations of
accounting problems and improper earnings management at Freddie Mac and
other high profile firms, the initiation of OFHEO's special examination
and credible allegations of improper earnings management made by an
employee of the Enterprise's Office of the Controller.
Senior management did not make investments in accounting systems,
computer systems, other infrastructure, and staffing needed to support
a sound internal control system, proper accounting and GAAP-consistent
financial reporting. Those failures came at a time when Fannie Mae
faced many operational challenges related to its rapid growth and
changing accounting and legal requirements. Fannie Mae senior
management sought to interfere with OFHEO's special examination by
directing the Enterprise's lobbyist to use their ties to Congressional
staff to generate a congressional request for the inspector general of
the Department of Housing and Urban development, HUD, to investigate
OFHEO's conduct of that examination; and insert into an appropriations
bill language that would reduce the agency's appropriations until the
Director of OFHEO was replaced.
While I will concede that the Enterprises have made great strides in
cleaning up their acts, Congress must enact regulatory reform to ensure
that such deliberate and egregious practices can never happen again.
This legislation achieves that objective and it is high time we take
action to pass it.
If we really want to assist our fragile markets, we cannot forego the
opportunity to include meaningful and comprehensive GSE reform in this
housing package. I have spent the past five years advocating for GSE
reform, first as Secretary of HUD and now here in the Senate. There has
been a great deal of talk about reforming GSEs, but we haven't closed
the deal.
The junior Senator from Delaware and I are offering this amendment
because we believe the housing legislation before us represents the
best opportunity for Congress to pass GSE reform.
There has been a great deal of uncertainty lately in the housing
market, and as one of the most reliable resources for homeowners, we
cannot afford to let the future of GSEs like Fannie Mae and Freddie Mac
to remain equally as uncertain.
The combined obligations of Fannie Mae, Freddie Mac, and the Federal
Home Loan Banks exceed $6 trillion. The Fed's bailout of Bear Sterns
last month would look like a drop in the bucket compared to what would
happen

[[Page S2738]]

if one of these institutions were to fail. This is a risk we simply
can't afford to take without giving the U.S. taxpayer every opportunity
to ensure safety and soundness--a world-class regulator gives us that.
Last year, the House passed a bipartisan GSE reform bill, and our
amendment mirrors that legislation. This amendment is broadly supported
by those within the financial sector as well as the Treasury Department
and OFHEO. It contains the essential components necessary for
overhauling GSE oversight and for providing stability and strength to
our housing finance system.
And given Congress's recent action raising conforming loan limits and
OFHEO's decision to lower Fannie and Freddie's capital requirements,
GSE reform is more critical than ever. We passed an economic stimulus
package that increased the maximum size of a mortgage that Fannie and
Freddie can purchase this year to almost $730,000 in high-cost areas,
and recently OFHEO lowered their capital surplus requirements from 30
to 20 percent.
While I agree that these were necessary steps given the current
market conditions, I am very concerned about the additional risk Fannie
and Freddie will assume given these changes.
I am committed to ensuring the long-term sustainability of the GSEs
and regulatory reform is critical to that effort. In terms of current
regulation, OFHEO has done a great job with the tools at its disposal,
but the problem is the regulator needs greater powers--like those of
other Federal banking regulators. We need a world-class regulator to
ensure the GSEs continue to operate in a safe and sound manner and that
they remain focused on their affordable housing mission.
One of the most important elements of this proposal is the creation
of a new regulator that is both politically independent and funded
outside of the appropriations process. In order for this regulator to
be credible, they cannot be subject to the annual budget machinations
of a committee or the political influence inherent in Washington.
Part of its broad responsibility would be to ensure a more coherent
regulatory framework, better enforcement, and a more consistent and
aggressive effort on affordable housing. The regulator would have the
ability to monitor the agency's portfolios--and direct the enterprises
to acquire or sell any asset in order to maintain risk consistent with
their missions. The regulator would also have the ability to set both
minimum and risk-based capital levels for the GSEs--in other words, the
amount of capital an enterprise would be required to hold would be
directly related to the amount of risk they have undertaken.
The regulator would posses enhanced enforcement powers and be able to
provide prompt corrective action, including the authority to set and
enforce prudential management and internal control standards. It would
also have the ability to put a GSE into receivership, and exercise a
role in the authority over safety, soundness and mission. Finally, it
would have a say in new product review and approval.
I know many of my colleagues have concerns that this legislation does
not go far enough in its regulation of the enterprises or that the
inclusion of an affordable housing fund is nothing more than a
``political slush fund.'' Funds would be allocated to and distributed
by the states, rather than the GSEs, under a formula to be developed by
HUD.
The most important component of reform legislation is the
establishment of a stronger, more credible regulator--which is greatly
needed. Homeowners are frustrated and consumers are worried about what
lies ahead for our housing market.
We have an opportunity to inject some much-needed confidence into a
sagging portion of our economy, and I believe it would be irresponsible
to further delay addressing this important issue. Ensuring the
soundness of Fannie and Freddie will give market participants the
confidence they need to continue investing in mortgage products. That
confidence is critical for the proper functioning of our financial
markets. In the same bipartisan spirit that helped us come to an
agreement on the housing bill, I would urge my colleagues to follow the
same course of action in passing this necessary bill.
Ms. SNOWE. Mr. President, I am not only deeply concerned that
increasing foreclosures threaten the dream of home ownership, but it is
also critical to understand that the housing crisis that the Senate is
currently grappling with affects every corner of this country,
including both small and large States.
Therefore, I have introduced an amendment that would ensure that
States with low populations receive their fair share of the increase in
mortgage revenue bond allocations provided for within the Dodd-Shelby
substitute amendment.
Under current law, there is a small State floor that sets a minimum
level of allocations of mortgage revenue bonds that any one State will
receive. These bonds provide State housing finance agencies, like the
Maine Housing Authority, that provided $134.4 million of loans to
first-time homebuyers in 2006, a financing source for low-cost loans to
first-time homebuyers.
It is imperative that we understand the magnitude of mortgage
difficulties facing our Nation. By 2009, more than a trillion dollars
of mortgages originated during the subprime lending boom will reset to
higher interest rates. Currently, according to the Mortgage Bankers
Association, 43 percent of subprime ARMs are already in foreclosure.
This exceptionally high number is expected to skyrocket over the next
year once the next wave of ARM loans reset and borrowers' mortgage
payments increase by 30 to 50 percent. In December, the Center for
Responsible Lending predicted that 2.2 million families with subprime
loans will lose their homes to foreclosure.
High foreclosure rates harm communities, create blighted areas, and
stunt local and national economic potential. Consequently, it is in the
best interest of all of the parties involved in the subprime crisis
that Congress act to preserve home ownership, and minimize
foreclosures.
Appropriately, the housing stimulus legislation currently before the
Senate extends for 2008 the availability of these low-cost mortgages to
refinancings in addition to first-time homebuyers. This proposal, based
from legislation, S. 2517, introduced by Senator Smith, and of which, I
have joined as a cosponsor, will help provide a low-cost refinancing
alternative to those struggling to meet their payment obligations as
their subprime loans begin to reset. It only makes sense to offer such
an alternative to foreclosures.
Additionally, the proposal increases the authorization level of the
tax-exempt mortgage revenue bonds by $10 billion for 2008. But,
however, the proposal failed to apply the floor provided for under the
current authorization levels to the increase for this year. My
amendment addresses this inequity by providing an additional $930
million of authorization that ensures that more populous States will
receive no less than what they are receiving under the Dodd-Shelby
compromise while at the same time increases the allocation for smaller
States to levels that they should receive if the floor were applied to
the $10 billion authorization increase. So no State will be worse off
by my amendment while making sure that smaller States are treated
fairly.
According to the Mortgage Bankers Association, Maine, with a
population of only 1.3 million, has a foreclosure rate of 2.4 percent
while the national average is 2 percent. As you can see, Maine's
foreclosure rate is well above the national average and goes to show
that homeowners are struggling in small States as well as large States,
and my amendment simply addresses the current housing crisis in a way
that is fair to all States, both large and small.
Mr. President, I am committed to this issue, and urge my colleagues
to join me in supporting this critical amendment that is a matter of
equity and fairness.

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