To enhance the oversight authority of the Comptroller General of the United States with respect to expenditures under the Troubled Asset Relief Program.

HELPING FAMILIES SAVE THEIR HOMES ACT OF 2009

The PRESIDING OFFICER. Under the previous order, the Senate will
resume consideration of S. 896, which the clerk will report.
The assistant legislative clerk read as follows:

A bill (S. 896) to prevent mortgage foreclosures and
enhance mortgage credit availability.

Pending:

Dodd/Shelby amendment No. 1018, in the nature of a
substitute.
Corker amendment No. 1019 (to amendment No. 1018), to
address safe harbor for certain servicers.

[[Page S5052]]

Vitter amendment No. 1016 (to amendment No. 1018), to
authorize and remove impediments to the repayment of funds
received under the Troubled Asset Relief Program.
Vitter amendment No. 1017 (to amendment No. 1018), to
provide that the primary and foundational responsibility of
the Federal Housing Administration shall be to safeguard and
preserve the solvency of the Administration.

The PRESIDING OFFICER. The Senator from Connecticut is recognized.
Mr. DODD. Mr. President, I am going to take a few minutes to explain.
I know the leadership has already made these announcements, but as I
have been told, at 5:30 there will be two votes on amendments offered
by our colleague from Louisiana, Senator Vitter. I am going to take a
few minutes here, once again, to review the underlying proposals
Senator Shelby of Alabama and I have crafted as part of this bill. Then
I will take a few minutes to express my views on the two Vitter
amendments. I presume Senator Vitter himself may come over and talk
about this or others who are interested in the two amendments may show
up to express their interest in them as well.
I thank the majority leader, Senator Reid, for scheduling the time
for the consideration of this bill. Obviously, the importance of
foreclosure mitigation is still critical. I still believe, as many do,
that the root cause of our financial problems in this country began
with the residential mortgage market, the predatory lending that went
on with literally millions of people in this country. The Wall Street
Journal reported that some 60 to 65 percent of people who were talked
into predatory loans, subprime loans, actually qualified for
conventional mortgages. Conventional mortgages are far less costly than
subprime mortgages, but because there was a greater financial reward
for brokers and others who were able to market and sell the subprime
mortgages, they were marketed to people. Of course, those mortgages
became far more costly. There were adjustable rate mortgages, there
were teaser rates with almost no downpayments required and very little
interest payments for months on end and then, of course, ballooning to
the point that many people could ill-afford them. For many, they could
not the afford them at all, to the point that problem migrated to other
areas of our economy. As a result, today we find ourselves in a
recession, and a deep one at that.
This bill is designed to help families save their homes. That is what
it is designed to do. There are a lot of provisions that relate to the
smaller banks in the country and how we can be of some help to them to
get credit moving.
I did this last week at the close of business, but I thought I would
spend a few minutes to review, once again, the major provisions of the
bill without going into great detail as to what is included in each
provision and then, as I said, address the two Vitter amendments that
will be offered later this afternoon.
This amendment we have offered is a substitute amendment that Senator
Shelby and I have before us now, which is S. 896. It expands the number
of tools available to try to prevent foreclosures and the ability of
homeowners and loan servicers to use those tools. In addition, the bill
includes provisions to make the banking system more stable and improve
the availability of credit.
Specifically, there are about 8 or 9 or 10 major provisions of the
bill.
The first of these provisions expands the ability of the Federal
Housing Administration in rural housing to modify loans. I made the
point last week that this is absolutely critical. FHA has been a savior
in many cases, providing credit when credit has not been available
elsewhere to keep a limited housing market open. It is very important
that they have the tools to do that--certainly the tools to modify FHA
or USDA loans, as they do for non-Government loans they service.
This part of the bill is one that is critically important and can
make a huge difference to people. There will be amendments offered to
modify this provision of the bill. If we end up undermining the role of
the FHA at this critical time, we can make it far more difficult for
these foreclosures to be mitigated and decrease the possibility of
people remaining in their homes.
Second, it expands access to the HOPE for Homeowners legislation,
which makes a number of changes to that bill we adopted last summer. It
was a program that was well intended but left a lot of problems in
terms of the effectiveness and efficiency of the legislation. This bill
will allow for the option to lower fees and streamline the borrower
certification requirements. We give the Secretary of the housing agency
in our country limited discretion to determine the amount and
distribution of future appreciation. We ban the very wealthiest in our
country from being involved in this program. It was never intended to
be such. We allow for incentive payments to servicers and originators
who participate in the program. Again, it is something designed to be
of help to the average citizens, working families in this country.
Third, we create more enforcement tools for the FHA to eliminate bad
lenders. This was an important provision that provides the tools to the
housing and urban development agency to more expeditiously drop lenders
that break FHA rules. This was needed to strengthen those provisions
and make sure resources go to the areas that need them. They are
certainly not to be used by lenders who are violating the rules of FHA.
We then provide for a safe harbor for servicers who would either
modify a loan consistent with the Obama foreclosure mitigation program
or refinance the borrower into a HOPE for Homeowners loan. This has
been a contentious issue between bankers and investors, trying to do
something with regard to mitigation. This has been narrowly drawn.
The House-passed bill--and I say this respectfully of the other
body--had a broad provision in this area. This was an idea Senator
Martinez offered a number of weeks ago. He has since modified this--and
I agree with him--to try to restrict time, duration, and circumstances
in which a safe harbor would apply.
What is a safe harbor? A safe harbor is designed to encourage the
servicers to modify loans, servicers who have had contracts with
investors. The investors obviously are somewhat reluctant to watch a
modification of any of these things that would deprive them of the
ability to take legal action against a servicer who engaged in a
modification creating a safe harbor for the servicer. We encourage
them--it doesn't mandate but encourages them to modify those loans with
the borrower, in the absence of which I doubt any servicer will be
willing to step forward do so.
So this is an absolutely critical area. While there are still
concerns on the part of some, I believe it is the right step to be
taking. It is limited in duration. It is limited to only the Obama
foreclosure mitigation and the HOPE for Homeowners, only in those two
instances, and therefore would not be as open and broad-based as
provisions that have been adopted elsewhere.
So I encourage my colleagues to be supportive. There will be an
effort to change this in a way that I think would make it unworkable in
terms of achieving the desired results here. Again, with 10,000
foreclosures going on every single day in our country, we need to try
to bring closure to that problem where we can. This is not going to
solve every foreclosure, but it can certainly make a huge difference.
An estimated 1.7 to 2 million foreclosures can be avoided with this
kind of proposal in the bill.
With the Obama proposals and HOPE for Homeowners proposals, we think
that would make a significant difference, allow people to stay in their
homes, and allow the lenders to get some payment back rather than the
property falling into foreclosure.
As the Presiding Officer knows, the contagion effect of a foreclosed
property in a neighborhood is very daunting. We know for a fact that
with one foreclosure in a neighborhood of a one-square-block area, the
value of every other property in that square block declines by as much
as $5,000 that very day. The last thing you want to see on your block,
in your neighborhood, is foreclosed, boarded-up properties
deteriorating. If you have a home there and that property is declining
in value by the day, obviously everyone is adversely affected.
So while I know this is a contentious issue for some, I am pleased
that most

[[Page S5053]]

of the consumer groups, the realtors, the Financial Roundtable, and
others strongly support the provisions Senator Shelby and I have in
this bill when it comes to the issue of safe harbor. Again, I thank
Senator Martinez, my colleague from Florida, for initiating the idea of
this proposal.
The next provision authorizes an additional $130 million for
foreclosure prevention activities. Senator Reid is the author. I
mentioned earlier that his support in creating the space and time for
this bill to come up has been critically important but also the
addition of this language which we now know is terribly effective.
Earlier, Senator Schumer and others offered language to provide
resources for the support of the prevention activities; that is,
counseling activities. It proved very helpful. These can be complicated
areas. To get into the issue of modifying a mortgage requires some good
counseling. This is not a matter where the average person can just walk
in and negotiate by themselves. I think having people who are
experienced and knowledgeable, as we now have across the country, who
can assist in this process, has been a great asset. These additional
resources Senator Reid of Nevada has offered here will make a huge
difference for people across our Nation, in addition to what has
already been allocated.
Then we have some provisions to increase the deposit insurance with
the Federal Deposit Insurance Corporation from $100,000 to $250,000. I
mentioned earlier how important that is to people to avoid the kinds of
runs that can occur when fear grips investors and depositors.
Certainly, those who have even a passing knowledge of history, of the
Great Depression, know what happened when fear gripped the country and
there were great runs on the banks, people running and taking their
deposits out of the banks, feeling as though they were going to lose
them, and the old notion of hiding it in your mattress was not a joke;
people actually did that. They buried their hard-earned money on their
property rather than keep it in what they perceived as an unsafe
institution where they could lose those resources.
So back in the 1930s, the FDIC was created to provide, among other
things, an ability, when a bank is in trouble, to make that transition
from a closed bank to one that could open so the people would not loose
their resources, as well as providing insurance so that money would not
be lost, a full guarantee of up to $100,000.
The world has changed a lot since the 1980s, which is when I believe
that provision, the $100,000, was added, over the last 29 or 30 years.
Raising it to $250,000 we believed was necessary to assist, providing
further guarantee and assistance as well.
We increased borrowing authority in this bill for both the FDIC and
the National Credit Union Administration, from $100 billion in the case
of the FDIC and $6 billion for the National Credit Union
Administration. There is additional authority that requires the
approval of a two-thirds vote of the FDIC or National Credit Union
Administration, a two-thirds vote of the Federal Reserve Board, and
agreement by the Secretary of Treasury in consultation with the
President of the United States.
We stretch out the payment of assessments to rebuild bank thrift and
credit union deposit insurance funds to 8 years. This was a very
important provision; for many of our lending institutions, that period
of assessment is absolutely essential. If it is too short, it obviously
puts a huge financial burden on these institutions. I believe the 8
years was a provision that was very important to these institutions and
one that they are very pleased our legislation includes. I hope that
will work as well as we intend it to.
We also improve the FDIC systemic risk special assessment authority.
Again, that is a real relief to institutions that would not participate
in that program, that would have been assessed anyway. This provision
of the bill protects them from that kind of assessment. Again, it is
essentially important.
That is a very quick review of the major provisions of the bill. As I
mentioned earlier, this legislation enjoys broad-based support in our
country, from major groups of people from major consumer groups in our
Nation: The National Consumer Law Center, the Independent Community
Bankers, the Center for Responsible Lending, along with the Housing
Policy Council, the Financial Services Roundtable, the American Bankers
Association. Rarely do I find these organizations coming together
around a bill.
You will normally have the consumer groups on one side and your
financial services sector on the other side. That is normally how it
works. But because of the effort made by so many people on our
committee and elsewhere, we have put together a piece of legislation
which we think will make a difference on foreclosure, provide some
needed reform to our major financial institutions, provide counseling
and additional support for people who seek that kind of help, as well
as attract the kind of support from diverse institutions that watch and
care very much about these groups.
Last week I included letters of support. I should add as well that
Lenders One, an association of mid-sized independent mortgage brokers,
and the Mortgage Bankers Association, have endorsed what Senator Shelby
and I have put together in this bill.
That is a rough summary of the legislation. Of course, anybody who is
interested in further information about this, we would welcome them to
come over and discuss any provision they have interest in.
Let me, at this point, if I can, address the two amendments which
this body will consider at 5:30. The first one I will discuss is the
amendment of Senator Vitter of Louisiana No. 1015.
This amendment, as I understand it--obviously Senator Vitter will
come and explain his own amendment. I hope I am accurately describing
it. Under the Emergency Economic Stabilization Act, currently it
requires the Treasury to permit a TARP recipient to repay the financial
assistance it receives subject to consultation with the appropriate
Federal banking agency. When the assistance is repaid, the recipient
must also buy back the warrants it provided to the Treasury at the
current market price.
As I understand the Vitter amendment, it would require the Treasury
to permit a TARP recipient to repay TARP assistance it received if the
institution would be ``well capitalized'' after repaying the funds.
Capitalization of our lending institutions is a critical component,
as the Presiding Officer knows, very important, certainly essential,
before one would even consider, again, having TARP money come back, the
whole idea of insisting upon properly capitalized institutions.
Under the amendment, Treasury could not condition the right of a TARP
recipient to repay TARP on an agreement to also buy back the warrants.
Under the current law, payback of the TARP money must be accompanied by
the repurchase of those warrants.
In fact, the amendment gives the TARP recipient the right to
determine when the Treasury must buy back the warrants it received; the
TARP recipient is not required to pay market price for them.
I oppose the amendment and urge my colleagues to vote against it, I
say respectfully of the author of the amendment, Senator Vitter, a
member of our committee. I am concerned this amendment, if adopted,
would further destabilize our financial system and could harm taxpayers
who, of course, are the ones who put up the TARP money.
Under this amendment, the Treasury would be forced to permit a bank
that received TARP money to repay that assistance based on the sole
criterion that the bank would remain well capitalized. Again, I
emphasize that is an important consideration, but it is not the only
one.
If there is one lesson we have learned from this crisis, the
definition for what ``well capitalized'' means is inadequate. For
example, Citibank and Bank of America are well capitalized according to
the standard in the amendment, and despite their obvious troubles, they
would be able to return the TARP money they received. The standard the
amendment would establish is simply ineffective and not comprehensive
enough.
Currently, the regulators can consider the bank's condition in a more
complete, holistic way in assessing its

[[Page S5054]]

fitness to return TARP funds. The amendment would tie the hands of the
regulators to this one particular factor, capital, a very important one
but not the only one, a factor that has already proven to be faulty and
insufficient to weather today's economic climate.
To get out from under the executive compensation restrictions and
other conditions imposed by Treasury, for example, institutions that
are in a weakened condition may put themselves and the broader economy
at risk. That is why this is important. If we are only talking about
one institution, certainly getting the TARP money back is something we
would all welcome. But I think we need to look at this beyond just what
the effect is on that one institution but what is the effect of the
overall financial system. That was the reason why these TARP dollars
went out in the first place.
So while being well capitalized is very important, if you limit it to
that and that only and allow an institution, such as the ones I have
mentioned, to then move beyond that, there could be put at risk the
larger economy, which is, of course, the major goal here, to get the
overall economy functioning and moving in the right direction.
If banks were allowed to move in that direction merely on that basis
alone, then I think we would regret that. Again, I think it is
something we ought to be striving for, but this amendment is too
narrow, in my view, to limit the decisions strictly on that one
criterion. If lending is limited as a result of this amendment, that
would mean more businesses closing for lack of financing, more job
losses in our country, and a further weakening of the overall economy,
delaying even further the recovery we all seek.
It also would mean more foreclosures, which is at the heart of the
bill. Foreclosed homes will stay on the market longer because people
would not be able to get mortgages to buy these homes.
As my colleagues know, the large banks have gone through the so-
called stress tests. Many of them, despite being designated as ``well-
capitalized,'' may still be forced to raise more capital, we are told.
It strikes me as unwise that we want to tie Treasury's hands at this
important time, right when the results of the stress tests are to be
announced.
The amendment would also harm the taxpayer by allowing the TARP
recipient to decide when warrants may be exercised and by limiting the
Treasury's ability to require the repurchase of warrants when TARP
funds have been repaid.
It also harms the taxpayer by eliminating the requirement that
Treasury pay market price for the warrants and would allow banks to try
to negotiate a better price, thereby reducing the returns to the
taxpayers who put up the money in the first place.
In conclusion, I would respectfully oppose this amendment. Current
law already allows the banks to repay their TARP funding--in fact, we
would encourage it--when it is the right time and safe to do so,
examining an array of criteria, not just being well-capitalized. The
quicker we can do that, the better off we are going to be. But it will
be important that when some of these major institutions repay that,
that in so doing they are not going to be jeopardizing the economy at
large.

The amendment, however, could cut credit availability at a time when
credit is desperately needed; and could put more institutions at risk
when stability is needed; and it is a bad deal, further, for the
American taxpayer who, ultimately, is the one who put up the resources
and hopes to get repaid when this economy begins to recover.
Again, respectfully I say to my colleague and friend from Louisiana,
I would oppose that amendment.
The second amendment is No. 1017. This amendment deals with the
Federal Housing Administration. The Vitter amendment would establish
``solvency'' as the ``primary foundational responsibility'' of the
Federal Housing Administration, the FHA.
The amendment then requires the Secretary to close down any FHA
program if it seems ``reasonably likely'' that the FHA might need
credit subsidy from Congress. Again, I oppose this amendment because it
does exactly the opposite of what we ought to be doing at a moment such
as this.
We thank our lucky stars that we have the FHA providing credit at
this time. In exactly a moment such as this, you need the FHA out there
to provide that credit when credit is so unavailable through the
clogged-up financial system in our Nation. First and foremost, this
amendment fails to reflect the fact that the primary mission of the
Federal Housing Administration is to help create and sustain home
ownership for American families.
The mission of the FHA is especially important now, while we are
struggling through such troubled economic times. FHA currently insures
nearly 30 percent of the mortgage market in our Nation.
If you extend the logic that the amendment proposes, you would shut
the doors of Fannie Mae and Freddie Mac right now because both have had
to draw on their credit lines from the Treasury. Without them, we would
lose the other 70 percent of the mortgage market overnight, turning a
housing recession into a deep housing depression.
In my view, if it were not for the Federal Government at this hour,
working through FHA and other federally supported institutions, there
would be no mortgage credit available at all.
The FHA has a mission. It is to ensure that adequate and affordable
mortgage credit is available in every part of our Nation. It is
currently fulfilling that mission admirably, while many other sources
of credit, as I mentioned earlier, have totally disappeared or almost
completely disappeared.
The Federal Housing Administration pushes against the prevailing
downward winds in our economy. It is countercyclical. The Senator's
amendment would turn the FHA into a procyclical program, withdrawing
credit, pulling it back, when credit is so difficult to come by. This
change would help deepen the worst housing recession we are
experiencing since the Great Depression.
Moreover, I think it is important to know that FHA fund is not at
risk. As of the second half of the fiscal year 2009, the sum of FHA's
investments and cash on hand is nearly $32 billion. Its net position,
assets minus liabilities, on March 31 of this year, was a positive
$11.8 billion. Although FHA's capital has fallen to 3 percent, it is
still 50 percent above its statutorily mandated level of 2 percent.
Falling capital in tough times is to be expected. That is what is going
on. We all understand that. That is what you have capital for, to
protect yourself in the bad times.
In addition, it is important to remember that FHA has always been a
fixed-rate mortgage insurer. It never got involved in the exotic and
often predatory practices offered by the subprime lenders. FHA has also
required income to be documented and verified.
In fact, because FHA has been known for its solid loan products, more
and more people with better credit quality are using FHA today. Over
the past 6 months, the average credit score in FHA has increased by
nearly 40 points.
Finally, current law already establishes a fiduciary duty ``to ensure
that the Mutual Mortgage Insurance Fund remains financially sound.''
The Secretary is already required to make program changes or adjust
premiums if FHA's performance is expected to differ substantially from
the baseline established by an independent actuarial report.
Secretary Donovan has assured me and the Congress that the Congress
would be immediately alerted if he thought the FHA was at risk at all.
In short, I ask my colleagues, again, I say this respectfully of its
author, to oppose this amendment. It is not needed. It would be exactly
the wrong message, the wrong action to be taking at this critical time.
Solvency is not an insignificant issue, but the role of the FHA is not
to provide solvency, necessarily, but it is to provide credit at a time
when credit is not available.
When as many people as I have indicated by the facts are relying on
the FHA at a time when we are trying to encourage home ownership on
responsible terms--and the FHA, as I pointed out earlier, was not one
of these exotic lenders that was out there with these predatory
practices. Quite the contrary. So rather than, in a sense, changing the
mission of the FHA, fundamentally altering what its goal is

[[Page S5055]]

and ought to be at these times, we need to oppose this amendment.
Again, we need to rely, as we can and must, on the fact that the FHA
is in sound shape. If it is not for some reason, we have every reason
to believe we can take improvement steps.
Accordingly, again, I would urge our colleagues, when talking about
both of these amendments, join me in opposing them, given the
difficulty that both these amendments would raise if they were to be
adopted.
Again, I will be happy to be in the Chamber for the next hour or so.
If people wish to come over and engage in a discussion or debate, I
welcome that opportunity. But at 5:30, in a little more than an hour,
we will have a vote on both these amendments of our colleague from
Louisiana.
Let me say, again, I think we assume this is personal in nature. It
is not. I have respect for my colleague. We have a different point of
view on matters. That is the nature of the institution and the debate
that occurs.
I don't question his motives or the sincerity behind his amendments,
but I believe in both cases they would move us in the opposite
direction from where we need to be going.
With regard to TARP funding, all of us wish to get the TARP money
back to the taxpayers as quickly as we can with interest. But we need
to understand it is more than just capitalization when we make that
decision. We don't want to do harm to our economy at a critical moment
such as this. Secondly, with regard to FHA, solvency is important. The
mission of FHA is, of course, to be countercyclical, not procyclical.
At a critical time such as this, depriving them of that opportunity to
fill a credit gap that does not exist today would be exactly the wrong
message and do great damage to a critical component of home ownership.
I yield the floor and suggest the absence of a quorum.
The PRESIDING OFFICER (Mrs. Hagan). The clerk will call the roll.
The bill clerk proceeded to call the roll.
Mr. BOND. Madam President, I ask unanimous consent that the order for
the quorum call be rescinded.
The PRESIDING OFFICER. Without objection, it is so ordered.
Mr. BOND. Madam President, I rise today to offer some remarks on the
Helping Families Save Their Homes Act of 2009.
The housing foreclosure crisis continues to affect families and
communities throughout the Nation. I appreciate the good efforts of
Senators Dodd and Shelby and the Banking Committee for trying to tackle
this crisis. Until we address these issues head-on and remove the toxic
assets that have poisoned not only our financial system but the world's
financial system, economic recovery will be difficult to achieve.
President Obama himself said, when he addressed us in January, that all
the other things happening are not going to get us out of the crisis we
are in until we get the toxic assets out of the system.
I particularly appreciate the fact that included in the bill is the
Dodd-Crapo-Bond bill as an amendment which will strengthen the power of
the Federal Deposit Insurance Corporation to go after institutions
which are on the verge of failing. To me, that is the direction this
administration and the previous administration should have been
following but have not.
But there are some troubling aspects of the Government's action in
the FHA area, and I am concerned about the implications of some of the
provisions in the bill before us. My biggest concern is the health and
solvency of the Department of Housing and Urban Development's Federal
Housing Administration, or FHA. I appreciate the work the managers have
done to deal with the fraud issues. I also support Senator Vitter's
efforts to raise this issue through an amendment he has offered. I
think this amendment goes in the right direction. We might want to work
on some of the language, but it gets at the problem.
The bottom line is this: The FHA is a powder keg that could explode,
leaving the taxpayers on the hook if Congress and the administration
continue to overburden the Government agency. As I stated at a recent
Transportation, Housing and Urban Development Appropriations
Subcommittee hearing, the FHA's health and solvency are at high risk.
The signs are troubling in many areas: FHA default rates are at their
highest level in several years. FHA's economic value has fallen by
almost 40 percent over the past year. FHA approval of new lenders has
increased by 525 percent over the past 2 years, and there is evidence
that some former subprime lenders and brokers have infiltrated FHA to
conduct business. That in itself ought to be an alarm bell that goes
off. Fraudulent activity in the mortgage industry has put and is at
risk of exposing FHA to more risk. FHA has seen a significant increase
in foreclosures, which endangers the stability of communities and
neighboring homes. The rise in FHA defaults and foreclosures,
especially in areas already victimized by subprime lending, threatens
to make a bad problem worse. These troubling signs all point to a
powder keg that is waiting to explode.
What does this mean for taxpayers? It means, by law, FHA is required
to carry a 2-percent reserve or a 50-to-1 leverage rate. If it falls
below that statutory level, FHA must raise the premiums it charges to
borrowers or Congress must appropriate funds. That means taxpayers
footing more of the bill.
I have a message for my colleagues in Congress and the
administration: Americans do not want another bailout. The taxpayer
credit card is maxed out.
Luckily, HUD is currently being led by a very capable leader, HUD
Secretary Shaun Donovan. However, he alone cannot fix the longstanding
problems with HUD and FHA. The Congress and the administration must not
make Secretary Donovan's job harder by placing more risk on FHA until
the problems of the agency are fixed or the agency will crash.
I read in today's Wall Street Journal an editorial, which I will ask
to be printed in the Record, that says:

In a rational world, Congress and the White House would
tighten FHA underwriting standards, in particular by
eliminating the 100% guarantee. That guarantee means banks
and mortgage lenders have no skin in the game; lenders
collect the 2% to 3% origination fees on as many FHA loans as
they can push out the door regardless of whether the borrower
has a likelihood of repaying the mortgage.

Madam President, I ask unanimous consent to have this article printed
in the Record following my remarks.
The PRESIDING OFFICER. Without objection, it is so ordered.
(See exhibit 1.)
Mr. BOND. Let me reemphasize, because this is important, if we
continue to overburden FHA, this powder keg may explode.
I thank my colleague, Senator Vitter, for highlighting the need to
make protecting FHA solvency a priority--so taxpayers are not left on
the hook. I ask my colleagues to support that amendment.
Madam President, I yield the floor.

[From the Wall Street Journal, May 4, 2009]

Exhibit 1

The Next Housing Bust

Everyone knows how loose mortgage underwriting led to the
go-go days of multitrillion-dollar subprime lending. What
isn't well known is that a parallel subprime market has
emerged over the past year--all made possible by the Federal
Housing Administration. This also won't end happily for
taxpayers or the housing market.
Last year banks issued $180 billion of new mortgages
insured by the FHA, which means they carry a 100% taxpayer
guarantee. Many of these have the same characteristics as
subprime loans: low downpayment requirements, high-risk
borrowers, and in many cases shady mortgage originators. FHA
now insures nearly one of every three new mortgages, up from
2% in 2006.
The financial results so far are not as dire as those
created by the subprime frenzy of 2004-2007, but taxpayer
losses are mounting on its $562 billion portfolio. According
to Mortgage Bankers Association data, more than one in eight
FHA loans, is now delinquent--nearly triple the rate on
conventional, nonsubprime loan portfolios. Another 7.5% of
recent FHA loans are in ``serious delinquency,'' which means
at least three months overdue.
The FHA is almost certainly going to need a taxpayer
bailout in the months ahead. The only debate is how Much it
will cost. By law FHA must carry a 2% reserve (or a 50 to l
leverage rate), and it is now 3% and falling. Some experts
see bailout costs from $50 billion to $100 billion or more,
depending on how long the recession lasts.
How did this happen? The FHA was created during the
Depression to help moderate-income and first time homebuyers
obtain a mortgage. However, as subprime lending took off,
banks fled from the FHA and its business fell by almost 80%.
Under the Bush

[[Page S5056]]

Administration, the FHA then began a bizarre initiative to
``regain its market share.'' And beginning in 2007, the Bush
FHA, Congress, the homebuilders and Realtors teamed up to
expand the agency's role.
The bill that passed last summer more than doubled the
maximum loan amount that FHA can insure--to $719,000 from
$362,500 in high-priced markets. Congress evidently believes
that a moderate-income buyer can afford a $700,000 house.
This increase in the loan amount was supposed to boost the
housing market as subprime crashed and demand for homes
plummeted. But FHA's expansion has hardly arrested the
housing market decline. The higher FHA loan ceiling was also
supposed to be tempor- rary, but this year Congress made it
permanent.
Even more foolish has been the campaign to lower FHA
downpayment requirements. When FHA opened in the 1930s, the
downpayment minimum was 20%; it fell to 10% in the 1960s, and
then 3% in 1978. Last year the Senate wisely insisted on
raising the downpayment to 3.5%, but that is still far too
low to reduce delinquencies in a falling market.
Because FHA also allows borrowers to finance closing costs
and other fees as part of the mortgage, the purchaser's
equity can be very close to zero. With even a small drop in
prices, many homeowners soon have mortgages larger than their
home's value--which is one reason FHA's defaults are rising.
Every study shows that by far the best way to reduce defaults
and foreclosures is to increase downpayments. Banks know this
and have returned to a 10% minimum downpayment on their non-
FHA loans.
In a rational world, Congress and the White House would
tighten FHA underwriting standards, in particular by
eliminating the 100% guarantee. That guarantee means banks
and mortgage lenders have no skin in the game; lenders
collect the 2% to 3% origination fees on as many FHA loans as
they can push out the door regardless of whether the borrower
has a likelihood of repaying the mortgage. The Washington
Post reported in March a near-tripling in the past year in
the number of loans in which a borrower failed to make more
than a single payment. One Florida bank, Great Country
Mortgage of Coral Gables, had a 64% default rate on its FHA
properties.
The Veterans Affairs housing program has a default rate
about half that of FHA loans, mainly because the VA provides
only a 50% maximum guarantee. If banks won't take half the
risk of nonpayment, this is a market test that the loan
shouldn't be made.
These reforms have long been blocked by the powerful
housing lobby--Realtors, homebuilders and mortgage bankers,
backed by their friends in Congress. They claim FHA makes
money for taxpayers through the premiums it collects from
homebuyers. But keep in mind these are the same folks who
said taxpayers weren't at risk with Fannie Mae and Freddie
Mac.
A major lesson of Fan and Fred and the subprime fiasco is
that no one benefits when we push families into homes they
can't afford. Yet that's what Congress is doing once again as
it relentlessly expands FHA lending with minimal oversight or
taxpayer safeguards.

The PRESIDING OFFICER. The Senator from Ohio.
Mr. BROWN. Madam President, I applaud the work of Chairman Dodd on
this issue, as on so many others--fighting the terrible problems of
credit card abuse, dealing with the home foreclosure mess--and thank
him for his work.
(The remarks of Mr. Brown are printed in today's Record under
``Morning Business.'')
The PRESIDING OFFICER. The Senator from Connecticut.

Amendments Nos. 1020 and 1021 to Amendment No. 1018

Mr. DODD. Madam President, I know this may confuse some people. I am
going to call up a couple amendments for my colleague from Iowa,
Senator Grassley. He cannot be here.
I ask unanimous consent to temporarily set aside the pending
amendments and call up amendments Nos. 1020 and 1021 on behalf of the
Senator from Iowa, Mr. Grassley.
The PRESIDING OFFICER. Without objection, it is so ordered.
The clerk will report.
The bill clerk read as follows:

The Senator from Connecticut [Mr. Dodd], for Mr. Grassley,
for himself, Mr. Baucus, and Ms. Snowe, proposes an amendment
numbered 1020.
The Senator from Connecticut [Mr. Dodd], for Mr. Grassley,
proposes an amendment numbered 1021.

The amendments are as follows:

Amendment No. 1020 to Amendment No. 1018

(Purpose: To enhance the oversight authority of the Comptroller General
of the United States with respect to expenditures under the Troubled
Asset Relief Program)

At the end of the bill, add the following:

TITLE V--ENHANCED OVERSIGHT OF THE TROUBLED ASSET RELIEF PROGRAM

SEC. 501. ENHANCED OVERSIGHT OF THE TROUBLED ASSET RELIEF
PROGRAM.

Section 116 of the Emergency Economic Stabilization Act of
2008 (12 U.S.C. 5226) is amended--
(1) in subsection (a)(1)(A)--
(A) in clause (iii), by striking ``and'' at the end;
(B) in clause (iv), by striking the period at the end and
inserting ``; and''; and
(C) by adding at the end the following:
``(v) public accountability for the exercise of such
authority, including with respect to actions taken by those
entities participating in programs established under this
Act.''; and
(2) in subsection (a)(2)--
(A) by redesignating subparagraph (C) as subparagraph (E);
and
(B) by striking subparagraph (B) and inserting the
following:
``(B) Access to records.--
``(i) In general.--Notwithstanding any other provision of
law, and for purposes of reviewing the performance of the
TARP, the Comptroller General shall have access, upon
request, to any information, data, schedules, books,
accounts, financial records, reports, files, electronic
communications, or other papers, things, or property
belonging to or in use by the TARP, any entity established by
the Secretary under this Act, or any entity participating in
a program established under the authority of this Act, and to
the officers, employees, directors, independent public
accountants, financial advisors and any and all other agents
and representatives thereof, at such time as the Comptroller
General may request.
``(ii) Verification.--The Comptroller General shall be
afforded full facilities for verifying transactions with the
balances or securities held by, among others, depositories,
fiscal agents, and custodians.
``(iii) Copies.--The Comptroller General may make and
retain copies of such books, accounts, and other records as
the Comptroller General deems appropriate.
``(C) Agreement by entities.--Each contract, term sheet, or
other agreement between the Secretary or the TARP (or any
TARP vehicle, officer, director, employee, independent public
accountant, financial advisor, or other TARP agent or
representative) and an entity participating in a program
established under this Act shall provide for access by the
Comptroller General in accordance with this section.
``(D) Restriction on public disclosure.--
``(i) In general.--The Comptroller General may not publicly
disclose proprietary or trade secret information obtained
under this section.
``(ii) Exception for congressional committees.--This
subparagraph does not limit disclosures to congressional
committees or members thereof having jurisdiction over any
private or public entity participating in a program
established under this Act.
``(iii) Rule of construction.--Nothing in this section
shall be construed to alter or amend the prohibitions against
the disclosure of trade secrets or other information
prohibited by section 1905 of title 18, United States Code,
or other applicable provisions of law.''.

Amendment No. 1021 to Amendment No. 1018

(Purpose: To amend chapter 7 of title 31, United States Code, to
provide the Comptroller General additional audit authorities relating
to the Board of Governors of the Federal Reserve System, and for other
purposes)

At the appropriate place insert the following:

TITLE__--COMPTROLLER GENERAL ADDITIONAL AUDIT AUTHORITIES

SEC. ___. COMPTROLLER GENERAL ADDITIONAL AUDIT AUTHORITIES.

(a) Definition of Agency.--Section 714(a) of title 31,
United States Code, is amended by striking ``Federal Reserve
Board,'' and inserting ``Board of Governors of the Federal
Reserve System (in this section referred to as the `Board'),
the Federal Open Market Committee, the Federal Advisory
Council,''.
(b) Audits of the Board of Governors of the Federal Reserve
System and the Federal Reserve Banks.--Section 714(b) of
title 31, United States Code, is amended by striking the
second sentence.
(c) Confidential Information.--Section 714(c) of title 31,
United States Code, is amended--
(1) by redesignating paragraphs (2) and (3) as paragraphs
(3) and (4), respectively; and
(2) by inserting after paragraph (1) the following:
``(2)(A) Except as provided under paragraph (4), an officer
or employee of the Government Accountability Office may not
provide to any person outside the Government Accountability
Office any document or name described under subparagraph (B)
if that document or name is maintained as confidential by the
Board, the Federal Open Market Committee, the Federal
Advisory Council, or any Federal reserve bank.
``(B) The documents and names referred to under
subparagraph (A) are--
``(i) any document relating to--
``(I) transactions for or with a foreign central bank,
government of a foreign country, or nonprivate international
financing organization;
``(II) deliberations, decisions, or actions on monetary
policy matters, including discount window operations,
reserves of member banks, securities credit, interest on
deposits, and open market operations; or
``(III) transactions made under the direction of the
Federal Open Market Committee; or

[[Page S5057]]

``(ii) the name of any foreign central bank, government of
a foreign country, or non-private international financing
organization associated with a transaction described under
clause (i)(I).''; and
(3) by striking paragraph (4) (as redesignated by this
subsection) and inserting the following:
``(4) This subsection shall not--
``(A) authorize an officer or employee of an agency to
withhold information from any committee or subcommittee of
jurisdiction of Congress, or any member of such committee or
subcommittee; or
``(B) limit any disclosure by the Government Accountability
Office to any committee or subcommittee of jurisdiction of
Congress, or any member of such committee or subcommittee.''.
(d) Access to Records.--
(1) Access to records.--Section 714(d)(1) of title 31,
United States Code, is amended--
(A) in the first sentence, by inserting ``or any entity
established by an agency'' after ``an agency''; and
(B) by inserting ``The Comptroller General shall have
access to the officers, employees, contractors, and other
agents and representatives of an agency or any entity
established by an agency at any reasonable time as the
Comptroller General may request. The Comptroller General may
make and retain copies of such books, accounts, and other
records as the Comptroller General determines appropriate.''
after the first sentence.
(2) Unauthorized access.--Section 714(d)(2) of title 31,
United States Code, is amended by inserting ``, copies of any
record,'' after ``records''.
(e) Availability of Draft Reports for Comment.--Section
718(a) of title 31, United States Code, is amended by
striking ``Federal Reserve Board,'' and inserting ``Board of
Governors of the Federal Reserve System, the Federal Open
Market Committee, the Federal Advisory Council,''.

Mr. DODD. Madam President, let me just say that my offering these
amendments should not necessarily indicate we have reached an agreement
on these amendments. Senator Grassley's staff and our staff are working
together to see if we can achieve an agreement on them. We hope we do.
But certainly he has the right to raise those amendments, and I was
more than happy to offer them on his behalf.
With that, I suggest the absence of a quorum.
The PRESIDING OFFICER. The clerk will call the roll.
The bill clerk proceeded to call the roll.
Mr. VITTER. Madam President, I ask unanimous consent that the order
for the quorum call be rescinded.
The PRESIDING OFFICER. Without objection, it is so ordered.

Amendments Nos. 1016 and 1017

Under the previous order, the time until 5:30 shall be equally
divided prior to a vote in relation to amendments Nos. 1016 and 1017
offered by the Senator from Louisiana, Mr. Vitter.
The Senator from Louisiana is recognized.
Mr. VITTER. Madam President, I rise to again present my amendments
coming up for a vote, Nos. 1016 and 1017. I have spoken before on this
floor about them, but I want to summarize briefly.
Amendment No. 1016 is very simple and straightforward, but it is very
important as well. It says any bank that has accepted taxpayer TARP
dollars can repay those dollars, with interest, and get out of the
program whenever it wants, as long as it meets all of the safety and
soundness criteria, and all the capitalization and liquidity criteria
that all of the regulators who regulate that bank have on them. Again,
this is a very basic but important idea.
The TARP program was designed to stabilize shaky banks. So if a bank
wants to give back the money, with interest, as long as it meets all of
the safety and soundness criteria--every one in sight--it should be
able to do that.
You would think this would be beyond debate. Unfortunately, it is not
and, unfortunately, several folks, starting with the Secretary of the
Treasury, Timothy Geithner, are refusing to let this happen. In fact,
Secretary Geithner has been very clear that this isn't simply up to
those banks; it is up to their new senior partner, the Federal
Government. It is sort of like when the mob comes in as your partner in
a business; you lose complete control and you cannot decide that it is
not time for them to buy you out. After that happens, no, no, no, it is
no longer your decision.
As the Wall Street Journal recently reported, with regard to an
interview with the Secretary, he indicated that the ``health of
individual banks won't be the sole criteria for whether financial firms
will be allowed to repay bailout funds.''
What a great, brave, new world we now live in, where individual
private institutions cannot set their own course, cannot decide their
own destiny, and cannot even give back taxpayer dollars to benefit the
taxpayer, benefit the Treasury, with interest, as long as they meet all
of the safety and soundness and capitalization and liquidity
requirements in sight.
There is also a provision in my amendment that says Treasury cannot
force repayment buyback of the warrants at a price they name. That is
completely noncontroversial, since a distinguished member of the
majority, Senator Jack Reed of Rhode Island, is proposing precisely my
same language with regard to warrants. This is an important issue
regarding our free market system and whether we are going to allow it
to get back to a private firm-based free market system.
I urge my colleagues to support this amendment.
Second is my amendment No. 1017. This amendment has to do with the
Federal Housing Administration. It simply focuses like a laser beam on
the importance of preserving and protecting the fundamental solvency of
the FHA. This amendment requires that the first duty of the FHA is to
maintain that solvency. It says if the provisions of this underlying
bill, or any other existing requirement, cause the FHA to be reasonably
likely to need a bailout from Congress--which a lot of folks think is
imminent--then the Commissioner shall temporarily suspend that program
which is causing a need for a bailout and recommend legislation to
Congress to fix the situation.
Many observers, including the Wall Street Journal, think it is a
virtual certainty that we are headed toward a crippling blow to the FHA
needing a bailout from Congress. Rather than rush there and heap more
burdens and more requirements and more need for more money on the FHA,
which this underlying bill does, perhaps we should put in place some
basic protections to the solvency of the FHA. That is what my amendment
does very clearly.
With that, I reserve the remainder of my time.
The PRESIDING OFFICER. Who yields time?
The Senator from Connecticut is recognized.
Mr. DODD. Madam President, I see my friend from Louisiana is here. I
spoke earlier about my colleague's two amendments. I appreciate the
spirit and motivation behind them. I will take a couple of minutes to
review my concern about them.
First, regarding Senator Vitter's first amendment, No. 1016, dealing
with TARP money, I think we all would like money coming back sooner
rather than later--getting to a point where these resources come back,
with additional interest, to the extent that taxpayers can be made
whole as a result of coming up with that money in the first instance
and trying to bring stability to the financial markets. There is no
debate about that. We agree about that.
There was significant debate that occurred about whether there should
be TARP money to begin with. It wasn't all one way. I supported it. I
thought it made sense to try to stabilize our economy. I believe most
believe that the decision made last September, early October, was the
right one. In fact, had we not done that, we probably would have lost
major lending institutions in the country over many months. Obviously,
this administration inherited a good part of the problem, which didn't
begin overnight, and it is trying to grapple with it in a holistic
fashion, institution by institution.
My concern with the amendment of my friend from Louisiana is this: He
is absolutely correct that, again, if we have an institution that is
well capitalized, that is a very important criteria in consideration of
when these TARP moneys ought to be repaid. My concern is it is not the
only criteria. We have major lending institutions, which I could make a
case both in Citi and Bank of America, that are well capitalized but,
frankly, they have other issues they are grappling with beyond being
well capitalized.
If that was the sole criterion, then we would be able to have the
TARP money come back. Citi may want to do that, and Bank of America--
and I am not suggesting they do, but they may--

[[Page S5058]]

their problems could migrate very quickly to the larger financial
problems with which we are trying to deal.
On the one hand, I agree with the motivation, and that is we ought to
try to get to the bottom of this as quickly as we can, get the TARP
moneys back so the Treasury is replenished with these resources. On the
other hand, if we do so prematurely solely on the basis of being well
capitalized, we can end up compounding a problem that is already
serious and making it far worse.
For that reason, I urge this amendment be rejected. I say that
respectfully to my colleague. I don't like getting up and opposing
amendments for the simple reason of opposing them. There is a
difference here, to have one criteria on which we would depend solely
on the determination of returning these dollars, putting the larger
issues at risk, I think would not be the right move to make at this
point. Therefore, at the appropriate time I will ask for the amendment
to be rejected.
Regarding FHA--and, again, I find myself in the awkward position of
not disagreeing with my colleague. Solvency is obviously an important
issue. Had the rest of the lending institutions in the country been as
prudent as FHA, we wouldn't be here talking about this larger problem.
FHA never engaged in the exotic instruments that many others did in
the subprime markets with teaser rates and no-doc loans, as they were
called, or liar loans. FHA has been a well-run, prudent operation.
Today, when very little credit is available for home mortgages, FHA is
proving to be vitally important. Thirty percent of the mortgage market
today is made up of FHA. If the goal of FHA is strictly the solvency of
it--today it is 50 percent above statutorily what it is required to
have on a cap of 2 percent, at 3 percent, less than 6 they had a while
ago. Obviously, we have to keep an eye on this. But the law statutorily
requires the Secretary of the Treasury to notify the Congress when, in
fact, there is danger of FHA falling either at or below that 2-percent
requirement.
Again, solvency is not insignificant. If that becomes the criteria at
a time when we need to be getting more credit out so we begin to get
the housing market moving again, I think it is absolutely essential. If
FHA is forced to close down just as it is needed most, making it
procyclical not countercyclical--which is exactly what we need to be is
countercyclical, not procyclical--then we would be turning the
recession in the housing area into a depression, which none of us want
to see happen.
At this hour, it is very important that we keep FHA moving in that
direction, watching, obviously, as my colleague from Louisiana suggests
by his amendment, that solvency not be disregarded.
Current statute already requires the Secretary to adjust programs
that ensure FHA remains financially sound. In fact, like all housing-
focused activities, FHA has lost money in this crisis, but it still has
more capital than the law requires, and the quality of its borrowers is
improving as we speak. That is to be applauded.
At this very moment, were we to move away from FHA when so much of
our housing market depends upon them, I think would be a step in the
wrong direction. For that reason, I respectfully ask our colleagues to
oppose this amendment. Again, I find myself in the awkward position of
not disagreeing with what my colleague talks about in the case of both
amendments; that is, getting TARP money back as soon as we can and that
solvency is a critically important function at FHA. That is why the
statute was written the way it was. I agree with him on those points. I
am just concerned if in the first case we set a sole criteria of being
well capitalized, and in the case of FHA if solvency is the only value,
then we lose the value of FHA at a time when housing is having a hard
time finding available credit.
I yield the floor.
The PRESIDING OFFICER. The Senator from Louisiana.
Mr. VITTER. Madam President, I appreciate the kind comments of my
colleague. I note that he never disagrees with me, although,
unfortunately, he always opposes my amendments. We will work through
that.
I have a few closing comments. First of all, with regard to my first
amendment allowing banks to repay the TARP money as long as they are
sound and secure, I note that the U.S. Chamber of Commerce strongly
supports this amendment. I have a letter from the Chamber.
I ask unanimous consent to have printed in the Record the letter from
the Chamber of Commerce.
There being no objection, the material was ordered to be printed in
the Record, as follows:

Chamber of Commerce

of the United States of America,

Washington, DC, May 4, 2009.
To the Members of the United States Senate: The U.S.
Chamber of Commerce, the world's largest business federation
representing more than three million businesses and
organizations of every size, sector, and region, supports
Vitter Amendment #1 to S. 896, the ``Helping Families Save
Their Homes Act of 2009.'' This amendment would remove
impediments to the repayment of funds received under the
Troubled Asset Relief Program (TARP).
The Chamber supported the passage of the Emergency Economic
Stabilization Act (EESA) and the creation of the TARP
program. Inadequate credit markets blocked the life blood of
the economy forcing thousands of businesses to close and
millions of people to lose their jobs. The EESA allows the
federal government to undertake temporary measures to
stabilize the financial services sector and restore fully
functioning credit markets. To bolster the effectiveness of
TARP, the Treasury Department requested that otherwise
healthy firms enter the program. Those firms have since
complied.
While the success and administration of TARP has been hotly
debated, the program was always envisioned as a temporary
measure. Last week, House Financial Services Committee Chair
Barney Frank was quoted in reports that he envisioned the
banking sector being TARP-free within a year and that ``it
would be good for public confidence'' if banks repay TARP
funds. Nevertheless, published reports have stated that
impediments may exist, or would be put in place, to make the
repayment of TARP funds problematic at best.
The Vitter Amendment would remove any impediments to
repaying TARP funds. The repayment of TARP funds is an
important element in restoring confidence in the financial
services sector and a vital and necessary step on the road to
economic recovery.
Accordingly, the Chamber urges you to support Vitter
Amendment #1 to S. 896.
Sincerely,

R. Bruce Josten,

Executive Vice President,
Government Affairs.

Mr. VITTER. Madam President, I also note a particular line in that
letter, which is an excellent point, which is that the repayment of
these moneys from TARP banks will actually be an enormously positive
confidence-inspiring turn of events, and I think it will do a lot to
shore up concern regarding financial institutions that will be
correctly perceived as movement in the right direction.
With regard to my second amendment regarding the FHA, I will just
note a couple of things. First of all, my amendment does not propose in
any way shutting down the FHA under any circumstances. What it says is,
if the FHA thinks it is headed toward insolvency, it is going to stop
these new mandates on it, these new programs which are pushing it
toward insolvency and, at the same time, immediately report to Congress
about how we deal with that situation.
Unfortunately, I don't think it is a very well kept secret that this
is a grave threat for the FHA to start walking down the path of Fannie
and Freddie and everyone else.
Again, the Wall Street Journal wrote in their very prescient article,
``The Next Housing Bust,'' predicting exactly that. There are very many
tell-tale signs on the horizon:

According to Mortgage Bankers Association data, more than
one in eight FHA loans is now delinquent, nearly triple the
rate of conventional non-subprime loan portfolios. Another
7.5 percent of recent FHA loans are in serious delinquency,
which means at least 3 months overdue. The FHA is almost
certainly going to need a taxpayer bailout in the months
ahead.

Let's try to head this off before another collapse, another rattling
of the system is upon us and keep the FHA solvent rather than having it
shaken, having public confidence rattled once again and having Congress
have to act in a complete emergency atmosphere. My amendment would head
that off in an effective way.
Madam President, I reserve the remainder of my time to the extent I
have any.
The PRESIDING OFFICER. The Senator from Connecticut.
Mr. DODD. Madam President, I wish to add regarding the FHA amendment,

[[Page S5059]]

for my colleague's information, joining me in opposing the amendment
are the mortgage bankers, homebuilders, realtors, Lenders One--the
people very involved in the residential mortgage market. I note they
expressed a concern about the amendment.
I suggest the absence of a quorum.
The PRESIDING OFFICER. Without objection, the clerk will call the
roll.
The assistant legislative clerk proceeded to call the roll.
Mr. DODD. Madam President, I ask unanimous consent that the order for
the quorum call be rescinded.
The PRESIDING OFFICER. Without objection, it is so ordered.
Under the previous order, there will now be 2 minutes of debate,
equally divided, prior to a vote on amendment No. 1016, offered by the
Senator from Louisiana, Mr. Vitter.
Mr. DODD. Madam President, I think we are both prepared to waive that
time. We have talked enough about the amendments, so I am prepared to
waive that time and go right to the vote.
The PRESIDING OFFICER. If all time is yielded back, the question is
on agreeing to amendment No. 1016.
Mr. VITTER. Madam President, I ask for the yeas and nays.
The PRESIDING OFFICER. Is there a sufficient second?
There appears to be.
The clerk will call the roll.
The assistant legislative clerk called the roll.
Mr. DURBIN. I announce that the Senator for South Dakota (Mr.
Johnson), the Senator from Massachusetts (Mr. Kennedy), the Senator
from West Virginia (Mr. Rockefeller), and the Senator from New
Hampshire (Mrs. Shaheen) are necessarily absent.
Mr. KYL. The following Senators are necessarily absent: the Senator
from Oklahoma (Mr. Coburn), the Senator from Florida (Mr. Martinez),
and the Senator from Arizona (Mr. McCain).
The PRESIDING OFFICER. Are there any other Senators in the Chamber
desiring to vote?
The result was announced--yeas 39, nays 53, as follows:

[Rollcall Vote No. 176 Leg.]

YEAS--39

Barrasso
Bayh
Bennett
Bond
Brownback
Bunning
Burr
Chambliss
Cochran
Collins
Cornyn
Crapo
DeMint
Dorgan
Ensign
Enzi
Graham
Grassley
Hatch
Hutchison
Inhofe
Isakson
Johanns
Kohl
Kyl
Lincoln
McConnell
Murkowski
Nelson (NE)
Risch
Roberts
Sessions
Shelby
Snowe
Thune
Vitter
Voinovich
Webb
Wicker

NAYS--53

Akaka
Alexander
Baucus
Begich
Bennet
Bingaman
Boxer
Brown
Burris
Byrd
Cantwell
Cardin
Carper
Casey
Conrad
Corker
Dodd
Durbin
Feingold
Feinstein
Gillibrand
Gregg
Hagan
Harkin
Inouye
Kaufman
Kerry
Klobuchar
Landrieu
Lautenberg
Leahy
Levin
Lieberman
Lugar
McCaskill
Menendez
Merkley
Mikulski
Murray
Nelson (FL)
Pryor
Reed
Reid
Sanders
Schumer
Specter
Stabenow
Tester
Udall (CO)
Udall (NM)
Warner
Whitehouse
Wyden

NOT VOTING--7

Coburn
Johnson
Kennedy
Martinez
McCain
Rockefeller
Shaheen
The amendment (No. 1016) was rejected.
Mr. DODD. Madam President, I move to reconsider the vote, and I move
to lay that motion on the table.
The motion to lay on the table was agreed to.
The PRESIDING OFFICER. Under the previous order, there will now be 2
minutes of debate equally divided prior to a vote on amendment No.
1017, offered by the Senator from Louisiana, Mr. Vitter.
The Senator from Connecticut is recognized.
Mr. DODD. Madam President, I believe Senator Vitter and I are
prepared to waive the 2 minutes equally divided.
The PRESIDING OFFICER. Without objection, it is so ordered.
The question is on agreeing to amendment No. 1017.
Mr. DODD. Does my colleague want a recorded vote?
Mr. VITTER. I ask for the yeas and nays.
The PRESIDING OFFICER. Is there a sufficient second? There is a
sufficient second.
The clerk will call the roll.
Mr. DURBIN. I announce that the Senator from South Dakota (Mr.
Johnson), the Senator from Massachusetts (Mr. Kennedy), the Senator
from West Virginia (Mr. Rockefeller), and the Senator from New
Hampshire (Mrs. Shaheen) are necessarily absent.
Mr. KYL. The following Senators are necessarily absent: the Senator
from Florida (Mr. Martinez), the Senator from Arizona (Mr. McCain), and
the Senator from Oklahoma (Mr. Coburn).
The PRESIDING OFFICER (Mr. Begich). Are there any other Senators in
the Chamber desiring to vote?
The result was announced--yeas 36, nays 56, as follows:

[Rollcall Vote No. 177 Leg.]

YEAS--36

Alexander
Barrasso
Bennett
Bond
Brownback
Bunning
Burr
Chambliss
Cochran
Collins
Corker
Cornyn
Crapo
DeMint
Ensign
Enzi
Graham
Grassley
Gregg
Hatch
Hutchison
Inhofe
Isakson
Johanns
Kyl
Lugar
McConnell
Murkowski
Risch
Roberts
Sessions
Shelby
Snowe
Thune
Vitter
Wicker

NAYS--56

Akaka
Baucus
Bayh
Begich
Bennet
Bingaman
Boxer
Brown
Burris
Byrd
Cantwell
Cardin
Carper
Casey
Conrad
Dodd
Dorgan
Durbin
Feingold
Feinstein
Gillibrand
Hagan
Harkin
Inouye
Kaufman
Kerry
Klobuchar
Kohl
Landrieu
Lautenberg
Leahy
Levin
Lieberman
Lincoln
McCaskill
Menendez
Merkley
Mikulski
Murray
Nelson (NE)
Nelson (FL)
Pryor
Reed
Reid
Sanders
Schumer
Specter
Stabenow
Tester
Udall (CO)
Udall (NM)
Voinovich
Warner
Webb
Whitehouse
Wyden

NOT VOTING--7

Coburn
Johnson
Kennedy
Martinez
McCain
Rockefeller
Shaheen
The amendment (No. 1017) was rejected.
Mr. DODD. Mr. President, I move to reconsider the vote and lay that
motion on the table.
The motion to lay on the table was agreed to.
The PRESIDING OFFICER. The Senator from Louisiana is recognized.

Kentucky Derby

Ms. LANDRIEU. Mr. President, I know we are probably going to move
forward on discussing the underlying bill. I ask unanimous consent to
speak about a resolution I would like to discuss for a moment, about a
wonderful event that actually took place in our country this weekend.
The PRESIDING OFFICER. Without objection, it is so ordered.
Ms. LANDRIEU. Mr. President, every year for 135 years, the country
has been watching and cheering and celebrating the Kentucky Derby.
While this event is not held in Louisiana--it is held in Kentucky--
many people in my State and around the country tune in. Some people
have the opportunity to actually attend what has become one of the most
extraordinary sporting events in our Nation's calendar year. This
weekend was no exception. It was an extraordinary race. Anyone who
watched it could attest to the tremendous skill of the Louisiana born-
and-bred jockey who rode Mine That Bird to a victory in a heart-
pounding, quite shocking and surprising victory. So this resolution
just simply says:

Whereas Calvin Borel, born and raised in St. Martin Parish,
Louisiana, began riding match horses at the age of 8;--

As my husband says, we just sort of strap them on and let them go,
but he most certainly learned at a young age--

Whereas Mr. Borel began his professional career as a jockey
at the age of 16;
Whereas [he] has won more than 4,500 career starts;
Whereas [he] won the 135th Kentucky Derby by 6\3/4\ length,
the greatest winning margin since 1946;
Where [he] is the first jockey since 1993 to win both the
Kentucky Oaks--

Which is the fillies race--

and the Kentucky Derby in the same year;
Whereas in 2 minutes and 2.66 seconds, [he] and Mine That
Bird completed the race and placed first, making it [his]
second Kentucky Derby victory: Now, therefore, be it
Resolved, That the Senate commends Calvin Borel and Mine
That Bird for their extraordinary victory at the 135th
Kentucky Derby.

[[Page S5060]]

It is sporting events like this and races run like this on a horse
that cost $9,500, I understand, that was trailored by the owner and its
manager that keeps this sport exciting and open for so many. For all of
us in Louisiana, we are very proud of this young jockey from down in
the bayou, as we say, and for the pride that he brings to our State and
to a wonderful industry.

Take Our Daughters and Sons to Work Day

Finally, let me take a moment before the Senator comes back to debate
the underlying bill and submit to the Record a statement about an event
that took place last week on Capitol Hill and actually around the
country. It is an event that Senator Kay Bailey Hutchison and I proudly
and happily, joyfully sponsor every year for the Senate; that is, Take
Our Daughters and Sons to Work Day.
It was started 17 years ago by Ms. Magazine, thinking it might be a
good idea for girls, particularly girls between the ages of 10 and 16,
to have an opportunity to go to work with their parents because many
women, of course, do wonderful work at home raising children and
working out of the home. But a lot of important work goes on outside of
the home as well. Ms. Magazine thought it would be a great opportunity
for girls, particularly, and then, of course, have included boys, to go
anywhere where their parents work, whether that work is out of the home
or in the home and actually come to appreciate the work that goes into
keeping our society moving forward and this country moving forward.
So Kay Bailey Hutchison and I cohosted. The Senator from Texas and I
host this every year. I would like to first acknowledge her support,
also acknowledge Ms. Magazine that founded this day, and to thank all
of our Senators and staffers and workers around the Capitol who
participated in that day.
I ask unanimous consent to print in the Record the names of the young
ladies who joined me that day.
There being no objection, the material was ordered to be printed in
the Record, as follows:

Sophie Boudreaux, Meraux, LA, Chalmette High School;
Dominique Cravins, Washington, DC, St. Peter's School;
Heather Duplessis, New Orleans, LA, Metairie Park Country Day
School; Maya English, Baton Rouge, LA, St. George's Episcopal
School; Matisse Gilmore, Mitchellville, MD; Monet Gilmore,
Mitchellville, MD; Golnaz Kamrad, Washington, DC, Georgetown
Day School; Mallory MacRostie, Bethesda, MD, Bethesda Chevy
Chase High School; Lily Silva, Washington, DC, Georgetown Day
School; Mary Shannon Snellings, daughter of Senator Mary
Landrieu, Washington, DC, Georgetown Day School; Mary Agnes
Nixon, Washington, DC, Aidan Montessori School; Sydni Rita-
Louise Sumas, New Orleans, LA, Ursuline Academy; Kelsey Teo,
Bristow, VA, Stonewall Jackson High School; Eliza Warner,
daughter of Senator Mark Warner, Alexandria, VA, Potomac
School; Brittany Watts, Tickfaw, LA, Hammond High School.

Ms. LANDRIEU. These young ladies and many young men who joined them
had a wonderful day, understanding what happens at the Capitol, working
in the Senate. I thank them and their parents for making this day
special for us and hope and trust that their day was inspirational to
them as they think about their career opportunities in the future.
I yield the floor and suggest the absence of a quorum.
The PRESIDING OFFICER. The clerk will call the roll.
The bill clerk proceeded to call the roll.
Mr. SCHUMER. I ask unanimous consent that the order for the quorum
call be rescinded.
The PRESIDING OFFICER. Without objection, it is so ordered.
Mr. SCHUMER. Mr. President, I will not offer my amendment at the
moment. We are still trying to negotiate it. But I want to discuss an
amendment I will offer, hopefully, with agreement. That is an amendment
that would require the Secretary of the Treasury, in consultation with
the Secretary of HUD and other housing-related Federal agencies, to
develop a program to address the rising defaults and foreclosures in
multifamily properties.
The program is necessary because the same excesses that occurred in
the single-family mortgage market also occurred in the multifamily
mortgage market, leading to buildings that are significantly
overleveraged with rent rolls that are unable to support basic
operational expenses and maintenance. The tenants of these buildings
had absolutely no input into the misguided decision of the owners and
lenders who mortgaged the property beyond supportable levels, but they
are the ones who will face the consequences of this investment and
foreclosure, as owners are unable to meet monthly payments and maintain
the properties.
In New York City alone, it is estimated that 60,000 units of
multifamily housing are at risk of disinvestment and foreclosure. We
have similar problems in smaller ways in many upstate cities as well.
We have seen buildings in New York where in order to make the loan
underwriting work, lenders estimated tenant turnover rates that would
double or triple the neighborhood average, rent increases that were not
even legal under local law, and expected maintenance costs that were
actually less than half of what the owner spent in previous years. This
kind of basic underwriting malpractice has left tens of thousands of
families in New York State and other States vulnerable. We are not the
only ones. New York has the eleventh highest multifamily delinquency
rate in the country, according to a recent Deutsche Bank report.
The 15 States with the highest multifamily delinquency rates are not
concentrated just in the Northeast or on the west coast. This is a
truly national problem. I ask my colleagues to listen because their
State may be among the one-third, or close to it, the 15 out of 50.
They are Tennessee, Georgia, Florida, Michigan, Nevada, Texas,
Illinois, Ohio, Indiana, Connecticut, Oklahoma, New York, Kentucky,
Missouri, and Mississippi.
While I am strongly supportive of the administration's efforts to
help families across the country obtain loan modifications and other
financing options, a similar effort to protect tenants of multifamily
properties must be made. It must be made in a way to protect the
tenants first and foremost and not let the developers and the
investors, who did all the wrong, get away with wrongs.
Housing experts in New York have begun to examine options to assist
these buildings. There are a number of different ways that might be
effective in addressing this problem. So the bottom line is, we need
Federal expertise, leadership, and support to help determine the best
course of action and implement a program across the country to ensure
that innocent tenants do not have to pay the price for the poor
decisions of landlords and lenders.
This should be an easy amendment to support. I am not asking for any
new money. We are certainly not asking to bail out any of the bad
actors or even giving specific directions to the Treasury Department to
take this approach or that one, although I have talked to the Secretary
of HUD about this problem and, in fact, we worked on some problems
related to this when he was the head of the HPD, the housing department
in New York City.
What we are doing in this amendment is simply asking the Congress to
direct Treasury to examine this problem and develop a program to
address it in whatever way they determine best. My hope is that the
Treasury will consult with HUD. It is unfair that tenants of
multifamily rental buildings are being left out in the cold while
single-family homeowners receive focused attention from their agencies.
Single-family homeowners should but so should those in multiple
developments.
I urge my colleagues to support the amendment.
I suggest the absence of a quorum.
The PRESIDING OFFICER. The clerk will call the roll.
The bill clerk proceeded to call the roll.
Mr. SCHUMER. 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. SCHUMER. Mr. President, I ask unanimous consent that once the
Senate resumes consideration of S. 896 on Tuesday, May 5, the time
until 10:50 a.m. be for debate with respect to the Corker amendment No.
1019, with the time equally divided and controlled between Senators
Dodd and Corker or their designees; that at 10:50 a.m., the Senate
proceed to vote in relation to the amendment, with no amendment in
order to the amendment prior to a vote.

[[Page S5061]]

The PRESIDING OFFICER. Without objection, it is so ordered.

____________________