Puerto Rico Economic Stimulus Act of 2003

Mr. President, I rise to introduce The Federal Housing Enterprise Oversight Modernization Act of 2003, legislation to establish a new, world-class regulator for our housing Government Sponsored Enterprises (GSEs)--Fannie Mae and Freddie Mac--as an agency within the Department of Treasury.

There is no doubt that housing finance is essential to our economy and has been one of our Nation's few economic bright spots in recent years. Given its critical role, and the size and complex financial structures of the GSE's, which account for billions of mortgage-finance dollars, we need a credible, world-class regulator that can provide effective oversight.

Regrettably, the current system of GSE supervision fails to meet that standard.

This legislation has four primary objectives: establishing a new, independent regulator that is credible and capable; ensuring safe and sound capital; promoting market discipline and transparency through enhanced disclosures; and providing an incremental approach to ultimately consolidating supervision of the Federal Home Loan Banks under the regulatory framework contained in this legislation.

The proposal also recognizes the importance of the GSEs' underlying housing mission and leaves responsibility for establishing the GSEs annual housing goals and overseeing their compliance with fair housing laws with the Department of Housing and Urban Development (HUD).

The legislation would create a new agency, the Office of Federal Housing Enterprise Supervision (OFHES), as a bureau within the Department of the Treasury, with a structure similar to that of the Office of the Comptroller of the Currency (OCC) and the Office of Thrift Supervision (OTS).

The agency would have general regulatory, supervisory and enforcement authority with respect to the enterprises, be independent of Treasury with regard to its comments and congressional testimony, and have a director, appointed for a five-year term, who would be given a seat on the Federal Financial Institutions Examination Council (FFIEC). To ensure that the enterprises' activities remain consistent with the scope of their charter, the agency would be authorized to approve all new enterprise programs, but in close consultation with HUD.

Additionally, the agency would be given broad new authority to hire experienced personnel, a significant portion of whom will be designated specifically to carry out examinations and supervisory activities, to make certain that the agency can fulfill its safety and soundness responsibilities.

Central to that oversight function is ensuring that the enterprises maintain safe and sound capital through vigorous, continuous monitoring. The legislation therefore requires the new agency to ensure that the enterprises remain in continuous compliance with their statutorily prescribed minimum capital holding requirements.

By ensuring that the GSEs maintain adequate capital, we will mitigate the risks to the enterprises, and our financial markets, from unforeseen shocks that can, and do, occasionally occur in our financial markets. To accomplish this, the legislation takes a multi-pronged approach to the issue of risk-based capital.

First, the legislation requires the new agency to continually monitor the risk-based capital held by the enterprises, but it also provides the new agency's director with the flexibility to adjust the risk-based capital level of the enterprises in order to ensure their safe and sound financial operation.

The legislation also authorizes the new agency to conduct a comprehensive review of the enterprises' risk-based capital rule every five years. Part of the review would include a report to Congress entailing what, if any, proposed changes the new agency believes are needed to the risk-based capital rule to better align the capital held by the enterprises with risk, and reflect evolving best practices for risk-based capital standards for large, complex financial institutions. However, on a continual basis the Director would have the authority to adjust elements to the enterprises' stress test other than those specifically prescribed in the risk-based rule.

With regard to the GSE non-mortgage related investments, this legislation affirms the notion that those investments should be of the highest quality and within the scope of the enterprises' respective charters. It does so by requiring the new agency to continuously monitor the appropriateness of the investments in the liquid and non- liquid portfolios of the GSEs and by certifying that the liquidity management practices of the enterprises coinform with recommendations contained in the ``Sound Practices for Managing Liquidity in Banking Organizations'' established by the Basel Committee.

The capital and liquidity management provisions of this legislation are balanced. They ensure that the enterprises maintain appropriate minimum capital and are adequately capitalized relative to their risks. They also empower the new agency to take appropriate action if enterprises become undercapitalized, and promote sound liquidity management practices. At the same time, the bill is not so overly prescriptive that it would undermine the

essential liquidity the enterprises' provide, which has enabled America's housing markets to become the envy of the world.

The third element of this bill that should dramatically improve the GSE's regulatory framework promotes transparency through enhanced disclosures requirements.

This legislation statutorily requires Fannie Mae, Freddie Mac and the Federal Home Loan Banks to disclose a variety of information that will provide the public, investors, and Congress with a better understanding of the underlying financial health of our housing enterprises.

First, the legislation requires the GSEs to register their equities under the Securities Exchange Act of 1934, and to comply with SEC disclosure and reporting requirements contained under sections 12 (Registration Requirements for Securities), 14 (Proxy Voting Information) and 16 (Insider Sales) of the 1934 Act.

These disclosures are consistent with the highest standards of corporate governance and disclosure required of other public companies and in my mind there is no reason why the GSEs should not be required to do so as well.

Second, this legislation would require Fannie Mae and Freddie Mac to disclose information regarding their interest rate and credit risks. Specifically, each enterprise would regularly report the impact on their mortgage portfolios of a 50 basis point change in interest rates and a 25 basis point change in the slope of the yield curve. They would also be required to disclose, on a quarterly basis, the financial impact on each enterprise of an immediate 5 percent decline in U.S. home prices.

Additionally, the bill requires the GSEs to acquire credit ratings from an SEC-recognized credit rating agency to provide an assessment of the risk to the government and independent financial health of each enterprise. This ``stand-along'' rating would be derived from the underlying credit quality of each enterprise and assume no direct support from the Federal Government.

These disclosures will ensure that the standards of financial disclosure of the GSEs are in line with the rest of corporate America, making the enterprises subject to public scrutiny and market disciplinary forces.

Finally, the bill takes an incremental approach towards incorporating oversight of the Federal Home Loan Banks into the new regulatory framework created under this bill.

The bill requires Treasury, in consultation with HUD, to issue a report to Congress no later than six months after the date of the bill's enactment on the appropriate manner upon which to consolidate the responsibilities of the Federal Housing Finance Board, and oversight of the Federal Home Loan Banks (FHLBs), into the regulatory framework contained under this bill.

And as I mentioned earlier, the FHLBs would be required to immediately comply with financial disclosure and reporting requirements under the 1934 act in a manner similar to those required of Fannie Mae and Freddie Mac under this bill.

Lastly, the legislation would authorize the Secretary of the Treasury to designate an individual to serve as one of the five Federal Housing Finance Board members. This authority, transferred from HUD, would immediately involve Treasury in the regulatory rubric of the FHFB and ease the transition of the consolidation of the FHFBs regulatory responsibilities into this new agency.

In conclusion, the reforms contained in this proposal are very important. They would establish a new regulatory framework that promotes sound and safe financial operations at the GSEs. They would promote stability in our capital markets by providing investors with better information about the financial health of the enterprises. They would affirm the GSEs' critical role in our nation's housing market. And they would protect investors and taxpayers, while preserving the opportunity of millions of families to pursue the American dream of homeownership.

I urge my colleagues to support this, important legislation.

I ask unanimous consent that the text of the bill be printed in the Record.

Mr. President, I rise today to introduce the Good Samaritan Abandoned and Inactive Mine Reclamation Act of 2003.

I have been involved with efforts to clean up abandoned hardrock mines for a long time. In fact, I was an original cosponsor of a bill in the 106th Congress. The Western Governors Association regarded that the bill as a first step in the right direction, and I am proud to build and improve upon that experience in crafting my own legislation.

Abandoned hardrock mines pose significant environmental and safety hazards to communities across the Western United States. In fact, the Western Governor's Association concluded that there are at least 400,000 such sites across the West, many of which cover our public lands.

The history of abandoned hardrock mines is linked to government policies promoting the westward expansion of our Nation, and Federal policies during times of war. Due to the historic nature of these sites, the party responsible for the environmental problem is not always identifiable or not economically viable to be compelled to clean up the site.

Abandoned mine lands (AMLs) are areas adjacent to or affected by abandoned mines. They often contain unmined mineral deposits, mine dumps, and tailings that contaminate the surrounding watershed and ecosystem. Streams near AML sites--including many in Colorado--may contain metals or be so acidic that fish and aquatic insects cannot live in them. Water too polluted for fish and insects is also water too polluted for people. Further, abandoned mine sites pose very real safety hazards for folks enjoying the West's wild lands.

Although abandoned hardrock mining in the West goes back a hundred years, the Clean Water Act has only been in existence for thirty. The Clean

Water Act was an important and historic piece of legislation that did a lot of good, but it failed to promote the reclamation of abandoned hardrock mine sites. In fact, if an environmental group or county or interested party wanted to clean an abandoned mine site, they would incur liability under the Act.

The Western Governors Association has repeatedly called on Congress to amend the Clean Water Act's National Pollutant Discharge Elimination System permit program. The WGA stated that the NPDES program ``has become an overwhelming disincentive for any voluntary cleanup efforts of AMLs because of the liability that can be inherited for any discharges from an abandoned mine site remaining after cleanup, even though the volunteering remediating party had no previous responsibility or liability for the site, and has reduced the water quality impacts from the site by completing a cleanup project.''

My bill recognizes that there are a lot of good, responsible folks across our Western communities who recognize the environmental harm that AMLs pose and finally gives them the tools to do something about it. My bill establishes a ``Good Samaritan'' permit program under the Clean Water Act, administered by the EPA or a State-approved agency allowing an applicant to develop a strategy to remediate an affected area, and be granted a permit to do the work without penalizing them for their good deed.

In order to be granted a Good Samaritan permit, my bill requires an applicant to meet comprehensive standards ensuring that they have the financial and technical resources to get the job done. An applicant must establish remediation and monitoring schedules for the clean up project and identify funding sources to carry out the plan.

My bill's goal is to promote the clean-up of abandoned hardrock mines. Therefore, it allows communities, interest stakeholder groups, and corporations, as coalitions or individually to be ``Good Samaritans.'' The transparent and publicly open permit application process helps to ensure that permit holders are acting in good faith and have the technical and financial wherewithal to get the job done.

Further, if a permit holder is found to have violated the terms of the permit, he or she could lose their liability protection and subject to an enforcement action.

The West's States, communities, and interested parties have been prevented from cleaning up their own communities for far too long. My bill provides a transparent, flexible, and enforceable permit system that removes the unintentional liability associated with abandoned hardrock mine cleanup.

I look forward to working with my colleagues on speedy passage of this important legislation.

I ask unanimous consent that the text of the bill be printed in the Record.

Mr. President, the Commonwealth of Puerto Rico has been a territory of the United States since 1898. Since 1917, people born in Puerto Rico have been citizens of the United States under Federal laws applicable in the territory.

One of the interesting, and most misunderstood, aspects of Puerto Rico's unique relationship with the United States, is that the U.S. citizens who reside there are not required to file tax returns and pay income tax on the money they earn on the island. That might lead one to conclude that this is a huge benefit to the majority of people who live on the island. The reality, however, is that well over half--and perhaps as much as three-quarters--of Puerto Rican families would likely owe no U.S. income tax if they were taxed in the same manner as other citizens.

Why? Because Puerto Rico struggles with a high rate of poverty. Fifty-eight percent of Puerto Rican children live below the national poverty level--which is an improvement from 67 percent in the early 1990s. That means that today more than one-half of Puerto Rican children live in a family that earns less than $17,000 a year. In contrast, the State with the highest child poverty rate, Mississippi, has a child poverty rate of 27 percent.

For over 30 years, U.S. policy toward improving the economic situation on the island has focused on corporate tax incentives. Today, I am introducing legislation that focuses on providing direct stimulus to the part of economy in Puerto Rico that has been neglected--Puerto Rican families and children. Putting money into the hands of the people who will spend it will provide the most direct stimulus for the economy of the island.

This bill puts Puerto Rican families on par with other families in America by extending to them the benefits of our social safety net. Specifically, the bill makes residents of Puerto Rico eligible for the earned income tax credit, the refundable per child tax credit, and the Supplemental Security Income program.

Although Puerto Rican families are not subject to the Federal income tax, they do pay Federal payroll taxes. Just like other working families in America that work hard and play by the rules, low-income employees in Puerto Rico deserve relief from those payroll taxes. The earned income tax credit and the refundable portion of the child tax credit have long been recognized as an effective way to provide such relief. The Puerto Rico Economic Stimulus Act says that families in Puerto Rico should also be able to claim these credits, in the same way, and subject to the

same limitations, as families in Florida, Tennessee, Texas, or New York.

Workers in Puerto Rico pay payroll taxes like all other Americans. While some may disagree with the notion of providing refundable credits to offset payroll taxes that is a different debate than whether low- income families in Puerto Rico should be treated the same as low-income families in the 50 States. This is a matter of equity, not tax policy.

I ask unanimous consent that the full text of this bill be printed in the Record.

Mr. President, the Commonwealth of Puerto Rico has been a territory of the United States since 1898. Since 1917, people born in Puerto Rico have been citizens of the United States under Federal laws applicable in the territory.

One of the interesting, and most misunderstood, aspects of Puerto Rico's unique relationship with the United States, is that the U.S. citizens who reside there are not required to file tax returns and pay income tax on the money they earn on the island. That might lead one to conclude that this is a huge benefit to the majority of people who live on the island. The reality, however, is that well over half--and perhaps as much as three-quarters--of Puerto Rican families would likely owe no U.S. income tax if they were taxed in the same manner as other citizens.

Why? Because Puerto Rico struggles with a high rate of poverty. Fifty-eight percent of Puerto Rican children live below the national poverty level--which is an improvement from 67 percent in the early 1990s. That means that today more than one-half of Puerto Rican children live in a family that earns less than $17,000 a year. In contrast, the State with the highest child poverty rate, Mississippi, has a child poverty rate of 27 percent.

For over 30 years, U.S. policy toward improving the economic situation on the island has focused on corporate tax incentives. Today, I am introducing legislation that focuses on providing direct stimulus to the part of economy in Puerto Rico that has been neglected--Puerto Rican families and children. Putting money into the hands of the people who will spend it will provide the most direct stimulus for the economy of the island.

This bill puts Puerto Rican families on par with other families in America by extending to them the benefits of our social safety net. Specifically, the bill makes residents of Puerto Rico eligible for the earned income tax credit, the refundable per child tax credit, and the Supplemental Security Income program.

Although Puerto Rican families are not subject to the Federal income tax, they do pay Federal payroll taxes. Just like other working families in America that work hard and play by the rules, low-income employees in Puerto Rico deserve relief from those payroll taxes. The earned income tax credit and the refundable portion of the child tax credit have long been recognized as an effective way to provide such relief. The Puerto Rico Economic Stimulus Act says that families in Puerto Rico should also be able to claim these credits, in the same way, and subject to the

same limitations, as families in Florida, Tennessee, Texas, or New York.

Workers in Puerto Rico pay payroll taxes like all other Americans. While some may disagree with the notion of providing refundable credits to offset payroll taxes that is a different debate than whether low- income families in Puerto Rico should be treated the same as low-income families in the 50 States. This is a matter of equity, not tax policy.

I ask unanimous consent that the full text of this bill be printed in the Record.

Mr. President, I ask unanimous consent that the text of the legislation, ``To replace certain Coastal Barrier Resources System maps'' be printed in the Record.