Providing for consideration of the bill (H.R. 1461) to reform the regulation of certain housing-related Government-sponsored enterprises, and for other purposes.

Mr. Chairman, I yield myself as much time as I may consume.

Mr. Chairman, I agree with a great deal of what the gentleman from Ohio (Mr. Oxley) has said, as I agree with a great deal of what is in the bill. In the nature of parliamentary debate, we will be focusing on some specific points where I disagree, but I do not want that to obscure the fact that there is a great deal of agreement.

Mr. Chairman, I yield 4\1/2\ minutes to the gentlewoman from California (Ms. Waters) who as ranking member of the minority on the Housing Subcommittee has had a major role in shaping our position and in the impact of the affordable housing front.

Mr. Chairman, I yield myself 30 seconds to welcome the conversion of the gentleman from Texas to an increased section 8 voucher program. We on our side have several times offered amendments to do that in the appropriations bill. I did not remember him as a supporter. But conversion is a great thing, and I celebrate it, and I look forward to the gentleman from Texas voting with us the next time we move to increase the section 8 voucher program. But it does not solve all of the problems.

Mr. Chairman, I yield 3 minutes to the gentlewoman from California (Ms. Lee), someone who has been very hardworking, both on voter registration and on housing.

Mr. Chairman, I yield myself 1 minute. I would be glad to yield the gentlewoman from Ohio further time to point out the weaknesses in the manager's amendment. I share her appreciation of the extremely excessive language there. I think she is more optimistic than I about some of these little tweaks, but I do appreciate her understanding of its problems.

There are further problems, and there are other ways that we will get at it, but I welcome the gentlewoman's expression of disagreement with the extreme sweep of the manager's amendment.

When the gentlewoman says she is not in need of further time, I think she is being very kind to her colleagues in the Republican Study Committee. She is being very kind to our colleagues who miswrote this amendment.

The only thing that I would differ with the gentlewoman is she said there are unintended consequences. No, to her they are unintended. To the people who think poor people vote too much, they were intended. But we can work together to fix it.

Mr. Chairman, I yield 3 minutes to the gentleman from Pennsylvania (Mr. Kanjorski), the ranking member of the subcommittee of jurisdiction here, who has been one of the major architects of what we believe is mostly a very good piece of legislation.

Mr. Chairman, I yield 3 minutes to the gentleman from Georgia (Mr. Lewis). Since this is a bill which in its form in the manager's amendment would interfere with voter registration efforts, there can be no more appropriate speaker on our side than the gentleman from Georgia, who, 40 years ago and more, literally risked his life to advance the rights of people to vote. And I do not think he will be deterred any more today than he was by Bull Connor.

Mr. Chairman, I yield myself 15 seconds to say the gentleman from Louisiana has phrased that conundrum for groups exactly correctly.

I agree with the Roman Catholic Church of the United States that they should not have to make that choice, and the Episcopal Church and the Baptist. That is exactly what the Catholic Church says: We have been doing housing; do not make us choose.

Mr. Chairman, I yield for the purpose of making a unanimous consent request to the gentlewoman from California (Ms. Zoe Lofgren).

(Ms. ZOE LOFGREN of California asked and was given permission to revise and extend her remarks.)

Mr. Chairman, I yield 5 minutes to the gentleman from California (Mr. Baca), one of our most energetic members on the committee, fully familiar with the need for housing in particular.

Mr. Chairman, I yield myself such time as I may consume.

First, let me say that I am glad that the gentleman from Louisiana (Mr. Baker) indicated the status of the gentleman from Delaware (Mr. Castle), because I would not have wanted him to have been an unindicated co-contributor. I think that was very helpful.

Mr. Chairman, I yield 2\1/2\ minutes to the gentleman from New York (Mr. Meeks), a very active member of the Committee on Financial Services who is very aware of the need for housing.

Mr. Chairman, I yield 2\1/2\ minutes to the gentleman from Massachusetts (Mr. Lynch), who has worked in the building trades and knows this issue very well.

Mr. Chairman, I yield 2\1/2\ minutes to the gentleman from New York (Mr. Crowley), one of the most active members of the committee and very familiar with needs for housing.

Mr. Chairman, I yield 2\1/2\ minutes to the gentleman from New Jersey (Mr. Pascrell) to speak regarding a very important provision of the bill as it now exists.

Mr. Chairman, I yield myself the balance of my time.

Mr. Chairman, I have noticed a certain level of discomfort on some of my friends on the Republican side and some of my not so good friends on the Republican side. So I want to be very generous and ease their discomfort.

There are people who are not happy with everything in the manager's amendment. A lot of what is in the manager's amendment a lot of us like, the preference for the gulf areas, some of the restrictions on what people do with the use of funds.

There are three small provisions in the manager's amendment that are controversial. The one that says no faith-based groups can go in there, the principal purpose; and the one that says nonpartisan voter registration and nonpartisan get out the vote are not possible.

So I want to tell people this: If the manager's amendment is defeated, I will offer as the recommittal motion the exact manager's amendment minus those three specifics. So if they like the manager's amendment but do not want to keep the Catholic Church out of affordable housing, do not want to have the problem that the gentlewoman from Ohio (Ms. Pryce) mentioned where they cannot take old people to the polls, and do not want to restrict nonpartisan voter registration, if the manager's amendment is defeated, everything except those three things that were in the manager's amendment will be in the recommit.

And as proof of that, I have given a copy of what the recommit would then be over to the Republican side. They can look it up, as Casey Stengel used to say. They will be able to see that they can then carefully and in good conscience vote against the manager's amendment and then vote for the recommit because it will be their amendment; so they will get permission to vote for the recommit, and they will get everything in the manager's amendment except the one thing that keeps out faith-based, restricting it to people whose primary purpose is here, and the nonpartisan restriction on voter registration. All the other restrictions and everything else will be in it. So do not worry. I am making their life easier.

Mr. Chairman, I yield myself such time as I may consume.

Mr. Chairman, I claimed the time in opposition to the manager's amendment because I am in opposition to a small part of the manager's amendment, and, like many Members, I have a dilemma. Much of the manager's amendment is what a manager's amendment ought to be, the result of taking into account in some cases things that happened after the bill came out of committee like the hurricanes, some refinements. It is a very good amendment.

There are two small changes I would like to make. First, the manager's amendment says, unlike the bill that passed committee, that a nonprofit group may only ask for these funds and build housing with these funds if building housing is its primary purpose. Understand that that unequivocally says no faith-based institution may apply unless we have a faith-based institution that worships housing. I am not aware of any, but I do not want to be narrow-minded. There may be one. But any other faith-based institution has as its primary purpose its faith, and this excludes organizations that have been doing work.

The gentleman from Louisiana correctly pointed out, well, if they have been already doing this, this does not stop them. It just means they cannot get the new money.

But we want this money to be used well. There is a wealth of experience in the Catholic Church, in the Episcopal Church, in the Methodist Church, in the Jewish Community Housing For the Elderly. In other groups, the Local Initiative Support Corporation, in other groups, the Enterprise Fund, nonprofit groups, some of which have housing as their primary purpose and some do not, why do we want to say to groups that have a very successful record of building affordable housing, including church groups, that they cannot participate in this program? But that is what it does.

So one thing that I would change in the manager's amendment is to say that they can do this if housing is one of their primary purposes, not their only primary purpose. It lets the faith-based groups back in.

Secondly, we agree that we should prohibit the groups, and, remember, we are not talking about using the money from the Affordable Housing Fund for anything but housing. That is very clear.

The Members have said, well, and I kind of slipped into this, well, political activism, et cetera. Not a penny of the affordable housing funds can be used for anything but housing; and there are strict penalties if you get caught doing that. By the way, there may be some who think that if you participate in affordable housing that it will be so profitable that it will generate funds that you can use elsewhere.

When I mentioned that point yesterday, people from the Catholic Conference and the Episcopal group and all the other groups started to laugh. Anyone who has done subsidized housing knows the organizations usually wind up further subsidizing with their own funds rather than end up making money.

But we are talking about now only what you can do with your own money if you use affordable housing funds for affordable housing. We have agreed to a lot of restrictions. We have agreed that with your own money, if you agree to participate in this fund, you cannot engage in any Federal election activity as it is defined in the Federal Election Campaign Act. You cannot make expenditure for any electioneering communication as defined in the Federal Campaign Act. You cannot make any lobbying expenditure except under the limits of 501(c)3. All of those we have accepted. They are in the manager's amendment as further restrictions, and we accept them.

All we are saying is that nonpartisan voter registration and get-out- the-vote should be permitted uses, in other words, what the gentleman from Ohio talked about. We had the gentleman from Florida read the ACORN Plan. That plan by ACORN would have made them ineligible to participate in this fund. It was partisan. People have every right to be partisan. We have made a concession here, that, yes, we will say that if you are engaged in partisan political activity you cannot do this.

Here is what will be the parliamentary situation. If this manager's amendment is defeated, I will offer as the recommittal motion 99.5 percent, textually, of the manager's amendment. It is over there at the majority's side. We will not touch it from what it now is. The only changes we will make is we will, instead of saying this has to be your primary purpose, which excludes faith-based groups, we will say it has to be one of your primary purposes.

We will continue the restriction on electioneering and lobbying, et cetera, but we will say that electioneering and communications or partisanship are banned, but nonpartisan voter registration and nonpartisan get-out-the-vote are not banned. That is the question.

Should we say that if you do affordable housing, you cannot also do voter registration, nonpartisan voter registration. If you are caught doing it in a partisan way, then you would lose the funds under here.

You cannot do get out the vote.

Again, voting and residence are very closely linked in America. You vote from your home. In some cases you might vote in your home, if you are in an elderly development. What about the people, and the gentleman from Ohio raised this. The gentleman from Ohio said, well, we are going to work on it. Yes, it has to be worked on, because right now, thanks to the demands of the Republican Study Committee, it is not there, the right to do that.

If you have a housing development, you cannot, under this manager's amendment, help the old people in the development vote. You cannot invite somebody in to do voter registration. They can come in on their own, but you cannot cooperate. Again, I want to emphasize and I would say to my Republican friends, this is a bill that has a lot of bipartisan support. We have some partisan differences in other areas than housing, but this one got pretty bipartisan.

What happened is this: there are people who do not like affordable housing. I have to say the gentleman from Texas (Mr. Hensarling) is not here, but he said why do you not just do vouchers instead of this. He was being honest. He is not really for the affordable housing program at all.

I did look up, on June 29th this year, the House by a majority adopted an amendment to increase section 8 vouchers. The gentleman from Texas (Mr. Hensarling) voted against that. Thirty Republicans voted for it. He was not one of them.

I think there are people who do not want the housing to go forward, and there are others who do not want to see an increased voter participation by people they do not think will be serious enough voters. If that is what the House wants to vote on, okay.

But procedurally what you have is a bill comes out of committee; it is held up for months because a part of the Republican Party does not want to put this to a fair vote. Well, I regret that. We should have had a fair vote. I am just offering you the next best thing. It is not the same thing. It is not a clean vote, but here is the functional equivalent.

Members can have two choices: they can vote against the manager's amendment and know that I will offer a recommittal motion, which will be everything in the manager's amendment except the one provision that prevents faith-based groups from participating; and the one that says no nonpartisan voter registration or the voter turnout.

Alternatively, if people vote for the manager's amendment, maybe some people will be afraid: well, I do not want to look like I am not helping the people in the hurricane area, then I will offer a recommit. The recommit will make those three small specific changes in the manager's amendment.

In other words, Members will have a chance to vote on everything in the manager's amendment, all the restrictions on what these groups can do with their own money, all the restrictions of what they can do with affordable housing money, put our faith-based groups in and have the voter registration be allowed. That is what will be before us.

Mr. Chairman, I reserve the balance of my time.

Mr. Chairman, I first yield myself 1 minute to say I do not think it is a fair characterization of the low- income housing activities of the Catholic Church or other organizations that they are trying to back up the truck to the Treasury. In the first place, there is no debate that every penny in the affordable housing fund goes for affordable housing.

The question is, what do you have to give up as a choice of doing the affordable housing. Every faith organization in America, every Protestant denomination, every branch of Judaism, and the Roman Catholic Church says we do housing, and the gentleman is right. They could simply refuse to take any money from this and go forward, because they are not eligible for money from this.

Why do that? Why say to the faith-based organization, whatever happened to your belief in the importance of helping faith-based organizations? Is it over already, that romance? Because that is what we just want to change. All we want is to allow our religious organizations in part to be able to participate without stopping their voter registration and other activity.

Mr. Chairman, I yield the balance of my time to the gentleman from Pennsylvania (Mr. Kanjorski).

Mr. Chairman, I yield for the purpose of

making a unanimous consent request to the gentlewoman from Texas (Ms. Jackson-Lee).

(Ms. JACKSON-LEE of Texas asked and was given permission to revise and extend her remarks.)

Mr. Chairman, I yield myself 3 minutes.

Mr. Chairman, the gentleman from Iowa is a thoughtful Member and the former chairman of the committee, who has been very critical of the role of GSEs, and I think this is, frankly, not so much a specific amendment as an expression of a sense that, a view that they have gotten too large. One particular aspect to the amendment seems to me to sum this up when it calls for higher minimum capital requirements as the director deems necessary or appropriate to ensure long-term institutional viability and competitive equity in the market.

Now, we are all for long-term institutional viability, but competitive equity means, look, there are banks who complain that because Fannie and Freddie are perceived to have some back-up from the Congress, and let me say right now, if you are listening, if you are buying Fannie or Freddie's paper because you think I am going to vote to bail you out, sell it, and cash it in, I am not going to do that. I do not think there is a Federal guarantee. I certainly, as a great supporter of their housing role, do not plan to do that. But banks complain that they cannot meet Fannie and Freddie's price because Fannie and Freddie can borrow money more cheaply. That is part of what we are dealing with here when you talk about competitive equity.

I agree that Fannie and Freddie get certain advantages in this. That is why we have virtual unanimity here. There are debates about restrictions on what happens when you go into the Affordable Housing Fund, but there is virtual unanimity about having an Affordable Housing Fund.

What we are saying is there are two ways we can do this. We can reduce what we think is Freddie and Fannie's competitive advantage, or you can make sure that more of that competitive advantage is shared with the housing market, and that is the position that the majority, bipartisan majority of the committee has taken.

When the gentleman from Iowa talks about competitive equity, it seems to me you are inviting the banks to say, wait a minute, that is not fair, and we do not want Fannie and Freddie to be able to do this as cheaply as possible because it is not fair to us.

With regard to the powers of the regulator, the gentleman from Louisiana played a major role in this, and the gentleman from Pennsylvania was with him, and the chair and ranking member of the subcommittee. The regulator is fully empowered. The regulator within the bill is fully empowered to do whatever is necessary for safety and soundness. The regulator can raise capital in general; the regulator can decide that a particular activity is risky, and capital should be raised to compensate for that. But to go beyond and to get into competitive equity, it seems to me to be not so much a concern for safety and soundness as the philosophical question.

I would also say that with all of the misdeeds of Fannie and Freddie, their safety and soundness has not been called into question. Yes, there were accounting misdeeds, and people got money who should not have gotten it, and some are being penalized as they should be, but safety and soundness has not been called into question, and this legislation further enhances what the regulator does.

I yield to the gentleman from Iowa.

Competitive equity.

Well, I would say to the gentleman, we agree on this. Competitive equity has got nothing to do with protecting the taxpayers, except the taxpayers who happen to own banks. That is where competitive equity comes in.

The fact is that safety and soundness is what protects the taxpayers. Competitive equity has to do with fairness to competitors. That does not implicate the Treasury.

Mr. Chairman, I yield such time as he may consume to the gentleman from Texas (Mr. Neugebauer).

Mr. Chairman, I yield myself 2 minutes.

Mr. Chairman, first, the administration has been somewhat inconsistent on this. A year ago, Secretary of HUD Jackson boasted about the fact that he was insisting Freddie and Fannie increase the extent to which they do low-income housing because we have always had affordable housing goals enforced by law. So the administration last year was insisting that Fannie and Freddie use more of their money to help low-income people.

Let me say, I am not surprised. The gentleman from Texas (Mr. Paul) has been straightforward. He is one of the most intellectually honest Members of the House. Sometimes, like on casino gambling and medical marijuana, I am glad to be with him. This time we disagree. He is very clear in saying we should not be doing subsidized housing. He is quite clear.

If his amendment were to pass, we would not be able to have an affordable housing program because the level of profits Fannie and Freddie generate, which we are tapping in part, 5 percent, to do affordable housing, would substantially diminish.

Yes, I think people ought to be able to work to build housing; but low-income people, people working at the minimum wage, a minimum wage the gentleman does not want to raise, are not going to be able to build their own housing.

People in the hurricane area who get priority, if the affordable housing bill goes through, that part of the bill goes through, hundreds of millions of dollars will be available to replace housing literally washed away in Mississippi, Alabama, Texas, and in Florida. There is no way people down there will be able to do it on their own. The gentleman has been quite explicit, and I appreciate his being honest about it.

If this amendment passes, the effect will be to substantially increase the capital cost to Fannie and Freddie. They will have to pay more for capital. Once they pay more for capital, not only would the affordable housing fund disappear, but so will the ability of the Bush administration, through Secretary Jackson, to demand that they meet certain housing goals. And leave aside the affordable housing program, the Bush administration, under Secretary Jackson, is proud of what it did to order Fannie and Freddie to do more to meet affordable housing goals, to buy up mortgages for people at 80 percent of median income. I hope that the gentleman's amendment in this particular case is defeated.

Mr. Chairman, I reserve the balance of my time.

Mr. Chairman, I yield myself 30 seconds.

The gentleman's amendment actually does not go quite far enough, but he has a germaneness problem. What he really wants to do is abolish HUD, given his philosophy. He does not think there should be a Federal housing program. Since he cannot get at HUD, he goes after Fannie and Freddie in ways that would reduce substantially what we do in housing.

And, by the way, the administration's objection to this bill is not, as says the gentleman, that it is too much regulation. It is that we do not give the regulator enough powers. So the administration's position is somewhat opposite to the gentleman from Texas', not for the first time, to his credit.

Mr. Chairman, I yield 1\1/2\ minutes to the gentlewoman from Florida (Ms. Wasserman Schultz).

Mr. Chairman, we have had very limited time here, so I am going to stray to another topic relative to the bill.

Mr. Chairman, I yield 1 minute to the gentleman from California (Mr. Sherman).

Mr. Speaker, by direction of the Committee on Rules, I call up House Resolution 509 and ask for its immediate consideration.

Mr. Speaker, for the purpose of debate only, I yield the customary 30 minutes to the gentleman from Massachusetts (Mr. McGovern), pending which I yield myself such time as I may consume. During consideration of this resolution, all time yielded is for the purpose of debate only.

This structured rule provides for 1 hour of general debate, equally divided and controlled by the chairman and ranking minority member of the Committee on Financial Services. It waives all points of order against consideration of the bill, and provides that the amendment in the nature of a substitute recommended by the Committee on Financial Services now printed in the bill shall be considered as an original bill for the purpose of amendment and shall be considered as read. It waives all points of order against the amendment in the nature of a substitute and makes in order only those amendments printed in the Rules Committee report accompanying the resolution.

It provides that the amendments made in order may be offered only in the order printed in the report, offered only by a Member designated in the report, shall be considered as read, and shall be debatable for the time specified in the report equally divided and controlled by the proponent and opponent. They shall not be subject to amendment, and shall not be subject to a demand for a division of the question in the House or in the Committee of the Whole.

Finally, the rule waives all points of order against the amendments printed in the report and provides one motion to recommit with or without instructions.

Mr. Speaker, I rise today in strong support of this rule and the underlying legislation, H.R. 1461, the Federal Housing Finance Reform Act of 2005. This bill, cosponsored by my good friend, Chairman Richard Baker, was accepted at its full committee markup last May and reported to the House by an overwhelming bipartisan vote of 65 to 5. This balanced rule under debate makes in order a manager's amendment and an equal number of additional amendments from Members of both sides of the aisle, with four Republican and four Democrat amendments also made in order.

The purpose of this legislation is simple: to provide for the creation of a world-class regulator to oversee the housing government- sponsored entities that help make America's mortgage and capital markets the envy of the world.

Currently, approximately 70 percent of American households own their own home, a fact that is due in no small part to the liquid and strong capital markets that allow families to achieve the American dream of homeownership at rates never seen before.

But the same GSEs that help to drive high ownership rates are also among the largest U.S. financial institutions, with approximately $2.5 billion in assets. Between the two largest GSEs, Fannie Mae and Freddie Mac, nearly half the residential market is either owned or guaranteed. Because of their size and potential to have a disproportionate impact on America's capital markets, they require strong and effective oversight of their operations. The Federal Housing Finance Reform Act, brought forth by Chairman Mike Oxley and Chairman Richard Baker, will accomplish this goal.

This bill will provide for the continued strength of our mortgage markets by creating a new, world-class regulator with strong safety and soundness and mission powers to oversee these GSEs. It merges the Office of Federal Housing Enterprise Oversight, which currently regulates Fannie Mae and Freddie Mac, with the Federal Housing Finance Board, which currently regulates the Federal home loan banks, into a single entity. This new entity, the Federal Housing Finance Agency, will be headed by a Director who is appointed by the President and confirmed by the Senate. It will also be comprised of an advisory board, represented by the Department of the Treasury, HUD, and two nongovernmental members.

This regulator will be empowered to ensure the safety and soundness of GSEs through a number of increased powers similar to ones already given to bank regulators, including the ability to determine minimum and risk-based capital standards, to review and adjust portfolio holdings, to approve new programs and business activities, to mandate prudent management and operational standards, to take prompt corrective and enforcement actions, and to put critically undercapitalized GSEs into receivership, to require corporate governance improvements, and, lastly, to hire examination and accounting experts.

This legislation also establishes an Affordable Housing Fund, based on the Affordable Housing Program already in place for the Federal home loan banks. Fannie Mae and Freddie Mac will now have the opportunity to manage affordable housing programs funded by a percentage of their earnings. These funds will be awarded through a competitive application process to for-profit builders, State housing agencies, and nonprofit organizations; and, this fund will streamline HUD's current affordable housing goals for the GSEs to meet pressing needs in low-income and rural communities.

Under this rule we also have the opportunity to discuss a manager's amendment to this legislation, which makes a significant number of improvements to the bill. Chief among these is the recognition that Congress must provide strong, market-based incentives to rebuild the devastated gulf coast region in the wake of Hurricanes Katrina and Rita. The manager's amendment will ensure that during the first 2 years, additional weight will be given to Hurricane Katrina and Rita disaster areas and to those families affected by these catastrophes. Priority will be given for other disaster areas and to areas of greatest impact and geographic diversity.

The manager's amendment also recognizes the need for fast action in the gulf region, and speeds up the effective dates of this legislation from 1 year to 6 months after enactment. Finally, the manager's amendment sunsets the fund after 5 years, at which point the Director will report to Congress on whether funds should be extended or modified to improve its efficiency and effectiveness so that Congress can exercise appropriate oversight of this new program.

Mr. Speaker, I strongly support this legislation to reform and improve oversight of housing GSEs, and I would like to thank Chairman Richard Baker and Chairman Mike Oxley and their colleagues on the Financial Services Committee for their hard work on this important legislation. I encourage my colleagues to support this fair and balanced rule and the underlying legislation.

Mr. Speaker, I reserve the balance of my time.

Mr. Speaker, it is right out there in front of everybody: Republicans are good on policy and, evidently, the Democrats do not like the politics. The policy is what this Financial Services Committee is all about. That is why they produced this great bill.

I am pleased to yield 3 minutes at this time to the gentleman from Florida (Mr. Feeney) who serves on that committee.

Mr. Speaker, I yield myself such time as I may consume.

I am very disappointed that the gentleman from Maryland referred to this as a closed rule, when in fact he knows it is not a closed rule.

The gentleman from Maryland understands that what we have done and undertaken in this rule is the opportunity that would allow any Member, but in particular a Member of the minority, a chance to vote on a manager's amendment, a motion to recommit, and certainly final passage.

I yield to the gentleman from Maryland.

Mr. Speaker, reclaiming my time, so that the gentleman does understand the facts of the case, the committee had no discussion on this point. The discussion took place in the Rules Committee, because a decision was made well after May, at the time that the committee brought it forward.

I yield to the gentleman from Massachusetts.

Mr. Speaker, reclaiming my time, my point is that the gentleman from Maryland referred to this as being a closed rule. It is not a closed rule.

Mr. Speaker, I will insert in the Record a campaign plan from ACORN that is very much a part of this debate today about what organizations and groups plan to do with politics and money.

Floridians for All--Campaign Plan for a November 2004 Minimum Wage

Constitutional Amendment Initiative

Introduction

A Florida constitutional amendment initiative to create a

minimum wage of $6.15 with indexing will help defeat George

W. Bush and other Republicans by increasing Democratic

turnout in a close election, will deliver wage gains to at

least 300,000 Floridians, and will catalyze the construction

of permanent progressive political infrastructure that will

help redirect Florida politics in a more progressive,

Democratic direction.

The 2004 election in Florida is shaping up to be just as

close as 2000, which Al Gore won by 537 votes. Although there

have been demographic changes and growth throughout Florida

when the 2000 total is adjusted for 2004 it is still-razor

thin: Unofficial NCEC analysis shows that Gore's adjusted

margin is 404, combined with the 2004 adjusted Nader voter--

25,138 (assuming 25 percent stay home, 25 percent vote for

Bush and 50 percent vote for Gore). The 2004 adjusted margin

is 25,542--too close for comfort.

The 2004 projections indicate addition turnout of 370,000 a

total of 6.4 million, increasing the vote goal by 200,000 in

order to have a winning margin. The other significant change

in preliminary analysis is that the electorate will have 10

percent fewer ticket splitters than 2000. With less

persuadable voters, the need to increase base voters and

turning out more infrequent voters is critical to reach the

vote goal in Florida.

Given that turnout is down when the economy is bad, since

our voters are more discouraged, the need for a exciting

ballot initiative strategy that works to address the needs of

the most economically needy, and also likely Democratic

voters, is a fundamental part of a winning strategy in

Florida.

Florida ACORN is building a coalition, called Floridians

for All, that will unite labor unions, community and civil

rights organizations, the faith community, elected officials,

sectors of the business community, political organizations,

and thousands of grassroots activists behind the proposed

strategy. At the same time, we are building the

infrastructure to carry out the campaign and ensure the

accomplishment of our objectives.

The empirical evidence from other states indicates that

initiatives generally increase voter turnout, and that

minimum wage initiatives can significantly increase the

turnout of supporters without increasing turnout from the

opposition. [ACORN's own experience running municipal and

state minimum wage ballots [Denver, Houston (1996), Missouri

(1996), New Orleans (2002)] supports the conclusion that

these efforts are highly motivating to low-wage voters.] In

2000, 6.1 million voters came to the polls in Florida, a

turnout of approximately 70 percent. A targeted campaign that

works to turn out 1 percent of that electorate, approximately

61,000 voters, would not only make the difference for the

Democratic Presidential candidate but also lend significant

support to Congressional and local races. [As an example,

Congressional District 5 was won by conservative Republican

Ginny Brown-Waite, by little over 4,000 votes. From the top

of the ticket on down, a ballot initiative strategy which

mobilizes infrequent voters and energizes unregistered

Democratic constituency will help defeat George W. Bush

and allow Floridians to vote themselves a raise.]

An estimated 300,000 Florida workers would receive a direct

raise from our proposal. Moreover, thousands more would

receive residual raises because of their wage level just

above the new minimum. Floridians sorely need this proposed

raise. In 2001 over 28 percent of Florida's workers earned

less than the poverty line (approximately $8.70 an hour). A

full 20 percent of those workers earned less that $7.69 an

hour, a result that can be partially explained by the

concentration of workers in the lowest wage job sectors--

retail and service. A whopping 37.3 percent of the state's

workforce is employed in service sector jobs, with another

19.6 percent in the low wage retail sector. The additional

earnings of minimum wage workers, almost $700 mi1lion in the

first year alone, would be directly pumped back into the

economy, helping to stimulate the stagnant economy created

under the watch of Bush's destructive tax cuts. Not only is

this proposal beneficial to Florida's economy, it also helps

to seed a mass constituency for future change.

Because we are starting this campaign early, and because we

have a plan, the Floridians for All Campaign will challenge

the institutional forces for progressive and Democratic

change in the state to build permanent political capacity.

This is particularly important to rehabilitating the long-

term prospects of our side. In a state where Democrats

control only 53 of 160 legislative seats, and zero

Constitutional offices, the need to rebuild infrastructure

and capacity to win, has never been more important. For

example, the signature gathering phase of the campaign wil1

lead to the construction of a vast database of hundreds of

thousands of economic justice activists and voters in the

state. These are the same voters the Democratic Party must

court and win to regain a presence in state politics. The

campaign will also force organizations like ACORN to build

massive field capacity to deliver these necessary signatures

and GOTV. A vast network of activists and voters, combined

with sophisticated field campaign will act as a unifying

force among Democratic electoral forces. The combined

strength of community, labor, and--faith organizations

committed to mobilizing their members and leaders at the

grassroots level, will result in a cohesive strategy to

retake the White House in 2004 and rebuild the Florida

Democratic Party.

Campaign Goals

The goals of this campaign are threefold:

1. To increase voter turnout of working class, mainly

Democratic voters without increasing opposition turnout;

2. To increase the power of progressive constituencies by

moving a mass agenda, putting together the capacity to get on

the ballot and win, and by putting our side on the offensive;

3. To deliver a wage increase to hundreds of thousands of

Floridians.

Increasing turnout is crucial to a successful 2004

electoral strategy from the top of the ticket all the way

down, through the many key races in Florida that include not

only the Presidency, but also a key Senate race,

Congressional seats and also significant turnover in the

Florida Legislature. Given these many key races, exciting

and mobilizing constituency has never been more important,

but in order to do this there must be a compelling issue

on the ballot. Though presidential year elections always

result in

higber turnout, the 2000 elections demonstrate the

importance of every vote in Florida; and we do not want to

leave turnout to chance. These turnout figures from the

most recent Florida elections demonstrate the overall

decline in voter participation and the need to refocus

efforts on mobilizing and motivating our base.

------------------------------------------------------------------------

Percent ------------------------------------------------------------------------ 1992.......................................................... 83 1994.......................................................... 66 1996.......................................................... 67 1998.......................................................... 49 2000.......................................................... 70 2002.......................................................... 55

Mr. Speaker, I yield myself such time as I may consume.

Mr. Speaker, the gentleman from Kansas City very clearly articulated the exact reason why this bill is moving forward, and the reason why Chairman Richard Baker and the chairman of the committee, Chairman Mike Oxley, have moved forward a bill that is so powerful, that will include more dollars.

But I believe that the argument that is here is about politics, pure and simple politics, rather than policy. And this bill is about policy. It is about getting millions of dollars that will be given to the source at which we will create more and better housing for really poor people.

The gentleman referred to him being a member of the United Methodist Church. I am a member of the United Methodist Church. When you look at a Web site for Habitat for Humanity, you will see large corporations on that list who contribute to new houses in this country, not-for-profits and others; and number four on that list is my church, of the entire country, my church the Highland Park United Methodist Church of Dallas, Texas. We build houses in Dallas, Texas, for poor people, people who are without that ability for their families.

But what we are asking here is the ability to move this bill to create thousands of more homes. And I think what Mike Oxley wants in this bill is to make it about policy, not about politics. And I am proud of how we are doing this.

Mr. Speaker, I reserve the balance of my time.

Mr. Speaker, I yield 3 minutes to the gentleman from the Fifth Congressional District of Texas (Mr. Hensarling).

Mr. Speaker, I yield 4 minutes to the gentleman from Baton Rouge (Mr. Baker), the author of the bill.

Mr. Speaker, I yield 5 minutes to the gentleman from Ohio (Mr. Oxley), chairman of the Committee on Financial Services.

(Mr. OXLEY asked and was given permission to revise and extend his remarks.)

Mr. Speaker, I yield myself the balance of my time.

Mr. Speaker, I heard the gentleman from Massachusetts refer to his 25 years of service in this distinguished body, and I have great respect for that; but I want him to know, and I am certain he remembers this, that the Democrats when they were in the majority, many times denied Republicans an opportunity in the legislative and rulemaking process to have motions to recommit. In fact, the Republican majority has given the minority that under this rule, as we have the entire time we have been in the majority.

This vote today is simply on the rule. The committee voted for the bill 65-5. Members are going to have an opportunity during consideration of these amendments to voice their disapproval of the manager's amendment and vote it down if that is what they choose to do.

The purpose of these changes that we are talking about in the manager's amendment is to prevent nonprofits from receiving these funds and engaging in political activity, to ensure that the scarce and available funds for housing resources are allocated effectively and for their intended purpose, pure and simple. We want to make sure that they are used for rebuilding houses with the primary emphasis in the gulf region.

This legislation does not prevent nonprofit organizations from pursuing a political agenda if they so choose. It simply prevents them from accepting these funds if they put politics first. It is their choice.

Hurricanes do not take party affiliation into account, and these funds are being contributed by the housing GSEs to rebuild this important region of our country. It should not be done on a political basis. I am very proud of this bill and the underlying legislation.

Mr. Speaker, I yield back the balance of my time, and I move the previous question on the resolution.

The previous question was ordered.

Mr. Chairman, H.R. 1461 fails to address the core problems with the Government Sponsored Enterprises, GSEs. Furthermore, since this legislation creates new government programs that will further artificially increase the demand for housing, H.R. 1461 increases the economic damage that will occur when the housing bubble bursts. The main problem with the GSEs is the special privileges the Federal Government gives the GSEs. According to the Congressional Budget Office, the housing-related GSEs received almost 20 billion dollars worth of indirect federal subsidies in fiscal year 2004 alone.

One of the major privileges the Federal Government grants to the GSEs is a line of credit from the United States Treasury. According to some estimates, the line of credit may be worth over two billion dollars. GSEs also benefit from an explicit grant of legal authority given to the Federal Reserve to purchase the debt of the GSEs. GSEs are the only institutions besides the United States Treasury granted explicit statutory authority to monetize their debt through the Federal Reserve. This provision gives the GSEs a source of liquidity unavailable to their competitors.

This implicit promise by the government to bail out the GSEs in times of economic difficulty helps the GSEs attract investors who are willing to settle for lower yields than they would demand in the absence of the subsidy. Thus, the line of credit distorts the allocation of capital. More importantly, the line of credit is a promise on behalf of the government to engage in a massive unconstitutional and immoral income transfer from working Americans to holders of GSE debt. This is why I am offering an amendment to cut off this line of credit. I hope my colleagues join me in protecting taxpayers from having to bail out Fannie Mae and Freddie Mac when the housing bubble bursts.

The connection between the GSEs and the government helps isolate the GSEs' managements from market discipline. This isolation from market discipline is the root cause of the mismanagement occurring at Fannie and Freddie. After all, if investors did not believe that the Federal Government would bail out Fannie and Freddie if the GSEs faced financial crises, then investors would have forced the GSEs to provide assurances that the GSEs are following accepted management and accounting practices before investors would consider Fannie and Freddie to be good investments.

Federal Reserve Chairman Alan Greenspan has expressed concern that the government subsidies provided to the GSEs makes investors underestimate the risk of investing in Fannie Mae and Freddie Mac. Although he has endorsed many of the regulatory ``solutions'' being considered here today, Chairman Greenspan has implicitly admitted the subsidies are the true source of the problems with Fannie and Freddie.

Mr. Chairman, H.R. 1461 compounds these problems by further insulating the GSEs from market discipline. By creating a ``world- class'' regulator, Congress would send a signal to investors that investors need not concern themselves with investigating the financial health and stability of Fannie and Freddie since a ``world-class'' regulator is performing that function.

However, one of the forgotten lessons of the financial scandals of a few years ago is that the market is superior at discovering and punishing fraud and other misbehavior than are government regulators. After all, the market discovered, and began to punish, the accounting irregularities of Enron before the government regulators did.

Concerns have been raised about the new regulator's independence from the Treasury Department. This is more than a bureaucratic ``turf battle'' as there are legitimate worries that isolating the regulator from Treasury oversight may lead to regulatory capture. Regulatory capture occurs when regulators serve the interests of the businesses they are supposed to be regulating instead of the public interest. While H.R. 1461 does have some provisions that claim to minimize the risk of regulatory capture, regulatory capture is always a threat where regulators have significant control over the operations of an industry. After all, the industry obviously has a greater incentive than any other stakeholder to influence the behavior of the regulator.

The flip side of regulatory capture is that mangers and owners of highly subsidized and regulated industries are more concerned with pleasing the regulators than with pleasing consumers or investors, since the industries know that investors will believe all is well if the regulator is happy. Thus, the regulator and the regulated industry may form a symbiosis where each looks out for the other's interests while ignoring the concerns of investors.

Furthermore, my colleagues should consider the constitutionality of an ``independent regulator.'' The Founders provided for three branches of government--an executive, a judiciary, and a legislature. Each branch was created as sovereign in its sphere, and there were to be clear lines of accountability for each branch. However, independent regulators do not fit comfortably within the three branches; nor are they totally accountable to any branch. Regulators at these independent agencies often make judicial-like decisions, but they are not part of the judiciary. They often make rules, similar to the ones regarding capital requirements, that have the force of law, but independent regulators are not legislative. And, of course, independent regulators enforce the laws in the same way, as do other parts of the executive branch; yet independent regulators lack the day-to-day accountability to the executive that provides a check on other regulators.

Thus, these independent regulators have a concentration of powers of all three branches and lack direct accountability to any of the democratically chosen branches of government. This flies in the face of the Founders' opposition to concentrations of power and government bureaucracies that lack accountability. These concerns are especially relevant considering the remarkable degree of power and autonomy this bill gives to the regulator. For example, in the scheme established by H.R. 1461 the regulator's budget is not subject to appropriations. This removes a powerful mechanism for holding the regulator accountable to Congress. While the regulator is accountable to a board of directors, this board may conduct all deliberations in private because it is not subject to the sunshine act.

Ironically, by transferring the risk of widespread mortgage defaults to the taxpayers through government subsidies and convincing investors that all is well because a ``world-class'' regulator is ensuring the GSEs' soundness, the government increases the likelihood of a painful crash in the housing market. This is because the special privileges of Fannie and Freddie have distorted the housing market by allowing Fannie and Freddie to attract capital they could not attract under pure market conditions. As a result, capital is diverted from its most productive uses into housing. This reduces the efficacy of the entire market and thus reduces the standard of living of all Americans.

Despite the long-term damage to the economy inflicted by the government's interference in the housing market, the government's policy

of diverting capital into housing creates a short-term boom in housing. Like all artificially created bubbles, the boom in housing prices cannot last forever. When housing prices fall, homeowners will experience difficulty as their equity is wiped out. Furthermore, the holders of the mortgage debt will also have a loss. These losses will be greater than they would have been had government policy not actively encouraged over-investment in housing.

H.R. 1461 further distorts the housing market by artificially inflating the demand for housing through the creation of a national housing trust fund. This fund further diverts capital to housing that, absent government intervention, would be put to a use more closely matching the demands of consumers. Thus, this new housing program will reduce efficacy and create yet another unconstitutional redistribution program.

Perhaps the Federal Reserve can stave off the day of reckoning by purchasing the GSEs' debt and pumping liquidity into the housing market, but this cannot hold off the inevitable drop in the housing market forever. In fact, postponing the necessary and painful market corrections will only deepen the inevitable fall. The more people are invested in the market, the greater the effects across the economy when the bubble bursts.

Instead of addressing government polices encouraging the misallocation of resources to the housing market, H.R. 1461 further introduces distortion into the housing market by expanding the authority of Federal regulators to approve the introduction of new products by the GSEs. Such regulation inevitability delays the introduction of new innovations to the market, or even prevents some potentially valuable products from making it to the market. Of course, these new regulations are justified in part by the GSEs' government subsidies. We once again see how one bad intervention in the market (the GSEs' government subsidies) leads to another (the new regulations).

In conclusion, H.R. 1461 compounds the problems with the GSEs and may increases the damage that will be inflicted by a bursting of the housing bubble. This is because this bill creates a new unaccountable regulator and introduces further distortions into the housing market via increased regulatory power. H.R. 1461 also violates the Constitution by creating yet another unaccountable regulator with quasi-executive, judicial, and legislative powers. Instead of expanding unconstitutional and market distorting government bureaucracies, Congress should act to remove taxpayer support from the housing GSEs before the bubble bursts and taxpayers are once again forced to bailout investors who were misled by foolish government interference in the market.

Mr. Chairman, I offer an amendment.

Mr. Chairman, I yield myself 3 minutes.

(Mr. PAUL asked and was given permission to revise and extend his remarks.)

Mr. Chairman, my amendment is straightforward. It cuts off a line of credit to the Treasury. The GSEs have a line of credit of $2 billion. It is said that it is not important because they never use it. The answer really to that is if they never use it, why leave it on the books. But we do know they indirectly use it. It has been described as a subsidy, because the GSEs can go into the market and get a discount on their loan costs; therefore, they can out-compete the private sector. My amendment merely eliminates that line of credit, puts a greater burden on the marketplace to regulate the GSEs rather than depending on regulation.

I think Members can see there is a problem with our GSEs. The debt is horrendous. Today, the administration sent a letter around and said that the debt of the GSEs totals $2.5 trillion, and they also guarantee in addition $2.4 trillion. That adds up to more money than the Federal Government has borrowed. So it is a tremendous amount of money and credit that is in the system; and people have become frightened about this, including chairman of the Federal Reserve Board, Alan Greenspan.

But what we are doing here today is not addressing the real problem: Why is it out of control? Why is there a financial housing bubble that everybody is afraid is going to undergo a severe correction?

One of the major reasons is the fact that it has this special line of credit. So if we want to address the real cause of the problem, we have to eliminate the line of credit. So it rather amazes me that we do this much legislating without addressing the real cause of our problem.

Of course, there are other things that contribute to the housing bubble, something that we cannot deal with today, but the fact that there is easy credit and low interest rates, interest rates below the market level, that is then directed into the housing market. This also contributes to the size and the scope of the borrowing capacity of the GSEs.

Also in this bill, of course, we are adding into this a brand new housing program which is said to probably involve another billion dollars in the next 2 years. I guess it is not surprising when The Wall Street Journal editorializes against this. Unfortunately, they are not very kind. They say this bill is another ``Republican policy embarrassment''.

This housing bubble, a housing program that we are starting up, how do we finance it? Well, we tax the GSEs. Instead of arguing the case for the marketplace and letting people earn money legitimately without subsidies, what we do, we keep allowing the system to continue. They do make profits, and then we tax them. We are talking about an additional tax, and this might very well be the reason the administration has come out against this bill, because of this new tax.

Mr. Chairman, I yield myself such time as I may consume.

If we had a bill that was a little cleaner, we probably would be dealing with the problems we face with the GSEs and we would be dealing with a housing program, a new housing program, probably with a different bill.

I see one attempt is to deal with this problem that we face. Another attempt is we are deciding that we need more money directed into the housing industry, and of course your building friends like this, too. And those are Republican allies as well. The builders love this because we will pump more money into the market so they can make more profits. So it is another government housing project. From a market viewpoint, this is not good because we want the money in the market to be allocated purely by the market and not by government direction.

It is the government direction first from the inflation, the artificial interest rates, and then from the allocation of funds that cause distortion. That is what we are dealing with here, the distortion that people are literally frightened about because nobody can even measure the amount of derivatives that are involved with Fannie Mae and

Freddie Mac. People are holding their breath for an accident to happen.

I see this as an opportunity to talk about the marketplace, why we should move Fannie Mae and Freddie Mac into the market.

A lot of people complained about the problems we had with Enron, and we needed that as an excuse to pass a lot more regulation. The truth is the market dealt with Enron. Enron was dealt with rather cruelly by the marketplace before the regulators got there. What we need to do is not, and especially as Republicans and conservatives, talk about a world- class regulator and that it is going to solve all of these problems.

My argument is if we do not solve the problem of basic underlying inflation distortion of interest rates, allocation of funds through housing programs, as well as this line of credit, believe me, we are not going to solve this problem. Please vote to strike this line of credit to the Treasury.

As it was stated earlier on this floor, we may have some regulations built into this that may even precipitate the puncturing of the housing bubble. That nobody can predict. But without addressing the basic flaw in the system that has created this $5 trillion worth of debt, believe me, we will not have an answer. I urge a ``yes'' vote on this amendment.

Mr. Chairman, I demand a recorded vote.

Mr. Speaker, I want to thank the gentleman from Texas (Mr. Sessions) for yielding me the customary 30 minutes, and I yield myself 5\1/2\ minutes.

(Mr. McGOVERN asked and was given permission to revise and extend his remarks.)

Mr. Speaker, I rise today in opposition to this restrictive rule and to the manager's amendment made in order under the rule. H.R. 1461, the Federal Housing Finance Reform Act, as reported out of the Committee

on Financial Services, was a thoughtful, reasonable, bipartisan piece of legislation. As evidenced by the 65-5 committee vote in favor of the bill on May 25, H.R. 1461 clearly has the support from both Democrats and Republicans.

Chairman Oxley and Ranking Member Frank worked together to craft bipartisan legislation that provides real oversight and a stronger, more powerful regulator for Freddie Mac, Fannie Mae, and the Federal home loan banks. The Federal Housing Reform Act, as reported out of the committee in May, is the kind of legislation that the Framers intended Congress to pass. Not only is it legislation that will do good and will improve people's lives, it is legislation that was created out of bipartisan negotiations and compromise.

I commend Chairman Oxley and Ranking Member Frank for their actions on the Financial Services Committee and for producing an excellent bill.

But, Mr. Speaker, it is clear that the Republican leadership cannot handle bipartisan success. Despite overwhelming bipartisan support in committee, the Republican leadership held the bill hostage for 5 months, merely because a radical faction of their party opposes affordable housing and, specifically, opposes the Affordable Housing Fund included in the bill.

Unfortunately, after being strong-armed by the Republican Study Committee, the Republican leadership forced changes that not only weakened the Affordable Housing Fund provision, but will actually restrict the ability of low-income people from voting in future elections. Here is the deal: They have a manager's amendment that has some very good things in it, but tucked in that manager's amendment there is included some language that many of us find offensive. And the gentleman from Massachusetts, the ranking member of the Financial Services Committee, wanted to have an amendment made in order to strike that offensive language and was denied that opportunity last night in the Rules Committee.

The language that I am talking about specifically denies faith-based and nonprofit groups from funding simply if they express their first amendment rights. Under these restrictions, any nonprofit community group, or church would be ineligible to receive funding if either they or their ``affiliates'' have engaged in nonpartisan voter registration and get-out-the-vote activities. Furthermore, affiliation is defined so broadly that it includes having overlapping board members sharing physical space or other public communications.

It is worth noting that for-profit companies are exempt from these restrictions. Why would we protect companies from these restrictions, and impose them on low-income and faith-based communities, the very people who this legislation is supposed to empower? I would ask my colleagues, what do you have against faith-based organizations? We need to enhance access to affordable housing, not reduce it.

Mr. Speaker, these restrictions are undemocratic. They are part of a pattern by the extreme right in the Republican Party in an attack on poor people. They are written with the intent to deny poor people the access to vote. These provisions are a direct affront on the democratic principles upon which this country was founded.

It seems clear that these restrictions are unconstitutional. They would require any organization that wanted to receive funding from the Affordable Housing Fund to sacrifice their freedom of assembly, which protects their right to associate with one another in groups for economic, political, or religious purposes.

We can provide and expand the affordable housing market without trouncing on the Bill of Rights. Just as easily as these restrictions were added into the legislation, they can be removed without affecting the goals of the Affordable Housing Fund or the overall legislation.

A multitude of organizations across the country, ranging from the United States Conference of Catholic Bishops to the National Alliance to End Homelessness, have expressed their strong disapproval of these egregious provisions. For one reason, these groups realize how harmful these restrictions would be toward fighting homelessness.

Homelessness cannot be combatted unless our Nation's affordable housing stock is increased. Affordable housing cannot be expanded if we bar nonprofits and community organizations from tapping into the appropriate resources.

Mr. Speaker, affordable housing should not be a partisan issue, but, unfortunately, the Republican leadership has made it so. The battle against homelessness and the expansion of affordable housing needs to be addressed through a coordinated effort between the government and nonprofit and faith-based communities. This language in this manager's amendment severely restricts the ability of affordable housing professionals to fulfill their role.

After Hurricane Katrina, President Bush and the leadership in the House talked about the need to help poor Americans rise out of poverty. They talked about improving people's lives. Well, Mr. Speaker, their actions clearly do not match their rhetoric. When the Republican leadership had a chance to help the poorest of Americans to receive affordable housing, they acted to restrict access to a proposed affordable housing fund. When the Republican leadership had a chance to stand up for people who do not have a voice, for people who need help making ends meet, they made a conscious decision to turn their backs on them.

Mr. Speaker, at the heart of this debate is the ability to provide affordable housing and access to voting for low-income families. One of the icons of the civil rights movement, Rosa Parks, died on Sunday. We all mourn her passing. But it is hard not to see the irony that 2 days after her death, we are going to debate and vote on a bill that will restrict the ability of the poor to have access to affordable housing and to vote in democratic elections in this country.

This is a lousy way to run this Congress. I urge my colleagues to vote against this undemocratic and restrictive rule.

Mr. Speaker, I reserve the balance of my time.

Mr. Speaker, I include in the Record the following letter from Catholic Charities USA, which strongly opposes the language in the manager's amendment.

Catholic Charities USA,

Alexandria, VA, October 25, 2005.

Hon. James P. McGovern,

House of Representatives, Cannon House Office Building,

Washington, DC.

Dear Congressman McGovern: On behalf of Catholic Charities

USA, the national association of Catholic social services

agencies and institutions serving over seven million people

in need every year, I urge you to support H.R. 1461, the

Federal Housing Finance Reform Act of 2005, and to oppose

amendments that would prevent experienced faith-based and

community-based organizations from successfully competing for

the proposed affordable housing funds.

We strongly support the creation of the housing funds and

are convinced that this initiative would increase the

development of affordable housing, but we have learned that

the Rules Committee will be asked to put in order a managers'

amendment to bar organizations with proven experience in

mobilizing community support and resources.

We applaud efforts to develop additional non-governmental

funding resources to support affordable housing efforts that

will be cost neutral to the federal budget. At the same time,

we oppose limiting language that essentially bars non-profits

whose mission extends beyond the provision of affordable

housing. Not only our Catholic Charities agencies, but many

religious orders and some parishes, whose missions are

serving the poor and vulnerable in their communities, develop

and manage very effective affordable housing programs

alongside programs that provide food, clothing, counseling,

and other health and social services. These agencies should

not be barred from affordable housing funds simply because

their primary purpose goes beyond affordable housing.

In addition, we oppose amendments that restrain non-profits

from receiving these funds if they are engaged in any non-

partisan voter registration activities, even if these

activities are funded by their own resources. One of the

strengths of our democratic system has been the almost

universal involvement of community-based and religious

organizations in encouraging all citizens to register and

vote. National religious bodies, regional bodies, such as

Catholic dioceses, and local congregations throughout the

country organize voter registration efforts and provide

transportation to the polls for isolated seniors and people

with disabilities. Non-profits with expertise in housing

should not have to choose between two equally important

missions: supporting full participation in our democracy and

providing affordable housing.

While this Administration has worked diligently to remove

barriers to full participation in federal programs and

funding by faith-based organizations, these amendments would

bar these very same groups from being considered for this

funding while for-profit agencies remain free to engage in

these same voter activities. We are puzzled and troubled by

the double standard being applied to faith-based and non-

profit organizations.

Existing limits in H.R. 1461 on activities that qualify for

affordable housing funds prevent abuse of this funding. In

addition, Catholic Charities agencies routinely sign

certifications to receive federal, state, and local

government funds that prohibit diversion of program funds for

political and lobbying purposes. There are multiple vehicles

available to ensure that the new Affordable Housing Funds are

protected from inappropriate use by grantees.

The proposed Affordable Housing Fund to be created under

H.R. 1461 is sorely needed, especially in the devastated Gulf

Coast region where hundreds of thousands of families have not

been able to return to their homes. In such challenging

times, it would be unfortunate if experienced faith-based

organizations and non-profits that have performed laudably in

meeting the needs of these survivors would be barred from

participation in funding that would help meet critical

housing needs.

Sincerely,

Rev. Larry Snyder,

President.

Mr. Speaker, I yield 3\1/2\ minutes to the gentleman from Maryland (Mr. Hoyer).

Mr. Speaker, I include the following editorial that appeared in today's New York Times entitled, ``A Ban on Voter Registration,'' which is very much opposed to the offensive language in the manager's amendment.

[From the New York Times, Oct. 26, 2005]

A Ban on Voter Registration

Hurricane Katrina made it politically necessary for

Republican Congressional leaders to tone down their effort to

kill off federal programs for affordable housing. But it has

not stopped them from dragging their feet on an important

bill to create a valuable housing fund by tapping into a

small portion of the after-tax profits of the federally

backed mortgage giants Fannie Mae and Freddie Mac. The fund

would initially be aimed at the hurricane-ravaged gulf

states, but would eventually help to house poor, elderly and

disabled people nationally.

Not satisfied with just delaying the bill, House ideologues

are advocating an outrageous and potentially unconstitutional

provision that would bar the nonprofit groups that build most

affordable housing from participating in the fund if they

also participate in even nonpartisan voter registration. This

would force such nonprofits to choose between their

historically important roles: promoting civic engagement and

providing housing and other services for low-income people.

The provision would conflict with state laws that require

housing grant recipients to do things like register voters

and would put the federal government in the unacceptable

position of actively discouraging political participation.

The long-overdue housing fund contains numerous safeguards

that would prevent grant recipients from using federal

dollars for advocacy. A measure that would bar them from

nonpartisan activities has absolutely no place in a

democracy.

Mr. Speaker, I yield 3\1/2\ minutes to the gentlewoman from California (Ms. Matsui).

(Ms. MATSUI asked and was given permission to revise and extend her remarks.)

Mr. Speaker, I yield 4 minutes to the gentleman from Missouri (Mr. Cleaver).

(Mr. CLEAVER asked and was given permission to revise and extend his remarks.)

Mr. Speaker, the gentleman from Texas keeps on saying this is about policy, not politics; but what would be more political than the language in here that denies poor people the right to vote?

Mr. Speaker, I yield 2\1/2\ minutes to the gentleman from Pennsylvania (Mr. Kanjorski).

Mr. Speaker, I yield 2 minutes to the gentleman from Texas (Mr. Hinojosa).

Mr. Speaker, I yield 2 minutes to the gentlewoman from New York (Mrs. Maloney).

Mr. Speaker, I yield 2 minutes to the gentlewoman from California (Ms. Waters).

Mr. Speaker, I yield 5 minutes to the distinguished gentleman from Massachusetts (Mr. Frank), the ranking member on the committee.

Mr. Speaker, I yield myself the balance of my time.

Mr. Speaker, over the past 5 years, we have seen 100,000 Federal housing units lost. We are down 50 percent in real terms in elderly and disabled housing at a time when the leadership on the other side of the aisle has tried to eliminate the Community Development Block Grant Program. They have significantly cut back on the number of section 8 vouchers for low-income housing assistance, and they have tried to limit housing assistance overall, so it is important that this underlying bill pass and at the same time that this reprehensible provision, this attack on poor people, be struck from the bill.

Mr. Speaker, to prohibit organizations from receiving funding for housing, many of these organizations, faith-based organizations, that participate in nonpartisan activities, as the New York Times said today, has no place in our democracy. We can do so much better. The fact of the matter is that many of these faith-based organizations that do an incredible job in housing will be barred from participating because of this provision. Vote down the rule. Let us fix this provision.

Mr. Speaker, I yield back the balance of my time.

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

Mr. Chairman, I yield myself such time as I may consume.

Mr. Chairman, today the House will consider H.R. 1461, the Federal Housing Finance Reform Act of 2005. This legislation creates a world- class regulator for the housing Government-Sponsored Enterprises, or GSEs, Fannie Mae, Freddie Mac, and the Federal home loan banks.

Last May, the Committee on Financial Services overwhelmingly approved H.R. 1461 by a vote of 65 to 5.

We have worked a long time on GSE regulatory reform. Since the 106th Congress, we have had over 20 hearings and received testimony from more than 100 witnesses on GSE-related matters. Capital Markets Subcommittee Chairman Baker has worked hard on these issues for many, many years. He should be commended for his many efforts.

I also want to thank Housing Subcommittee Chairman Ney for taking a leadership role in developing the housing goals and Affordable Housing Fund sections of the bill, as well as our ranking member, Mr. Frank, for his constructive input on many of the bill's key provisions.

The GSEs are among the largest financial institutions, with $2.5 trillion in assets. Fannie Mae and Freddie Mac own or guarantee nearly half of the residential mortgage market. Eight thousand banks, thrifts, and credit unions have $550 billion in loans from the 12 Federal home loan banks. For decades the GSEs have served the housing finance system well.

We have heard from some that Congress should be cautious in creating a GSE regulator and mindful not to harm the housing market. However, we are here today largely because we have learned over the past 2 years about multiple accounting violations and widespread corporate mismanagement by the GSEs, resulting in billion-dollar earnings restatements.

This has brought to light the fact that current GSE regulators lack many of the supervisory and enforcement powers bank regulators currently have. H.R. 1461 will remedy this troublesome situation by consolidating GSE regulation and providing all of the tools needed to oversee these huge, complex institutions.

It is time for a new GSE regulator who can prevent problems from developing and take swift action if the problems arise, thus ensuring that the housing market and financial system remains strong. Some believe that the GSEs should be more tightly controlled. Federal Reserve Chairman Greenspan has called for a mandatory reduction in their $1.5 trillion in mortgage portfolio holdings.

He is concerned about the systemic risk posed by the GSEs, based on investor perception that GSE debtholders are backed by the Federal Government. I do not take this concern lightly, nor the potential for any taxpayer financial liability.

Today OFHEO can reduce a GSE's portfolio only if the company is already seriously undercapitalized. H.R. 1461 gives a new regulator broad discretionary authority to require portfolio adjustments depending on the circumstances at the time, even if the GSE meets minimum capital standards.

Such action must be consistent with the GSE's safe and sound operations or mission, relying on the regulator's expertise. H.R. 1461 strikes the right balance by fully empowering the GSE regulator, while at the same time allowing the GSEs to pursue their mission in the housing market.

Specifically, the bill merges OFHEO, FHFB, and part of HUD into a new independent regulatory agency, the Federal Housing Finance Agency, to oversee the GSEs. It is funded by annual assessments on the GSEs, not subject to the congressional appropriations process. The agency is headed by a director appointed by the President and confirmed by the Senate for a 5-year term.

There are three deputy directors for divisions of enterprise regulation, Federal Home Loan bank regulation, and housing. A housing finance oversight board advises the agency on overall strategies and policies, but has no executive authority. The board is comprised of the Secretaries of the Treasury and HUD, two appointed members and the director as chairman.

The agency's director is authorized to determine minimum and risk- based capital standards, review and adjust portfolio holdings, approve new programs and business activities, establish credential management and operation standards, take prompt corrective and enforcement actions, put a critically undercapitalized GSE into receivership, require corporate governance improvements, and hire examination and accounting experts.

H.R. 1461 also greatly expands the affordable housing role of Fannie and Freddie. By charter, they must assist in providing mortgages for low- and moderate-income families. The bill includes new single-family and multi-family housing goals, duty to serve lower income markets and a new affordable housing fund with contributions from the enterprises.

The bill establishes a fund to finance construction of houses for underserved people. It is modeled after the successful Affordable Housing Program of the Federal Home Loan Bank system. Fannie Mae and Freddie Mac will manage programs funded by a percentage of their after- tax earnings, initially 3.5 percent, then 5 percent, or $450 to $650 million annually combined.

In comparison, CBO estimated that in 2003, GSE status provided Fannie Mae and Freddie Mac a $20 billion Federal subsidy, one-third of which was retained by stockholders and management, not passed through to borrowers.

Twenty-five percent of the GSEs' contributions will go to the Treasury Department to help pay off REFCorp, that is the old S&L bonds, with the remainder going to the fund. Funds will be awarded through a competitive, transparent application process to for-profit builders, State, and local housing agencies and nonprofit organizations.

This should result in Fannie and Freddie leading the market rather than lagging behind private sector lenders as HUD has found in promoting affordable housing for underserved communities. Moreover, a greater amount of the GSE subsidy will go where Congress intended.

I intend to offer a manager's amendment that includes a number of important changes to the fund, which I will specify at that time.

Mr. Chairman, H.R. 1461 is of great importance to the safety and soundness of the housing mission of the GSEs, as well as to the stability of this Nation's housing and financial system. I urge Members to support its passage.

Mr. Chairman, I reserve the balance of my time.

Mr. Chairman, I yield 3\1/2\ minutes to the gentleman from Texas (Mr. Hensarling).

Mr. Chairman, I yield 2 minutes to the gentlewoman from Ohio (Ms. Pryce).

Mr. Chairman, will the gentlewoman yield?

I look forward to working with the gentlewoman on that issue.

I look forward to clarifying this language with the help of the gentlewoman from Ohio.

Mr. Chairman, I yield 2 minutes to the gentleman from Ohio (Mr. Ney), the chairman of the housing subcommittee.

Mr. Chairman, I yield 1 minute to the gentleman from California (Mr. Gary G. Miller).

Mr. Chairman, I yield 2 minutes to the gentleman from Connecticut (Mr. Shays).

Mr. Chairman, I yield myself such time as I may consume.

This has been an excellent debate, and we appreciate the efforts on both sides of the aisle for this legislation.

Mr. Chairman, this is historic legislation, the first time that any Congress has reached a stage where we are debating a major reform effort for the GSEs. It is a long time coming. The gentleman from Louisiana (Mr. Baker) has toiled in the vineyards for all of these years, and we have finally reached a situation where we can finally pass legislation that will improve the regulatory structure of the GSEs, ultimately make them stronger and more accountable, provide affordable housing funds through the GSEs throughout the country and particularly related to the hurricane-affected areas.

This is well balanced. It makes a lot of sense, something that we have been working on for a long time. And I know a lot of the debate has been about one particular part of the manager's amendment that I will be offering next, but at the end of the day, when this bill comes up for final passage, most Members will support it because it makes good sense from a regulatory standpoint, it makes good sense from an affordable housing standpoint.

House of Representatives,

Committee on Financial Services,

Washington, DC, September 14, 2005.

Hon. F. James Sensenbrenner, Jr.,

Chairman, Committee on the Judiciary, Rayburn House Office

Building, Washington, DC.

Dear Mr. Chairman: On July 14, 2005, the Committee on

Financial Services filed its report on H.R. 1461, ``Federal

Housing Finance Reform Act of 2005.'' The bill was then

sequentially referred to the Committee on the Judiciary until

September 16, 2005. I am writing to confirm our mutual

understanding with respect to the further consideration of

Mr. Chairman, I yield back the balance of my time.

Mr. Chairman, I offer an amendment.

Mr. Chairman, I yield myself such time as I may consume.

The manager's amendment that I offer makes a number of substantive and technical changes to H.R. 1461, the Federal Housing Finance Reform Act of 2005.

H.R. 1461, as reported by the Committee on Financial Services, greatly expands the affordable housing role of Fannie and Freddie. There are major sections on new single-family and multifamily housing goals, duty to serve lower-income markets, and a new Affordable Housing Fund with contributions from the enterprises.

The bill establishes a fund to finance construction of houses for underserved

people. It is modeled after the successful Affordable Housing Program of the Federal Home Loan Bank System. Fannie Mae and Freddie Mac will manage programs funded by a percentage of their earnings.

The manager's amendment moves the effective date of the entire bill up from 1 year to 6 months following enactment, including the affordable housing funds. For the first 2 years, Fannie and Freddie will contribute 3.5 percent of after-tax earnings and, subsequent to that, 5 percent of such earnings. Twenty-five percent of the GSEs' contributions will go annually to the Treasury Department to help pay off REFCorp, that is, S and L bonds, with the remainder going to the fund.

The fund will sunset in 5 years, when its extension will be considered. During the first 2 years, priority consideration will be given to areas impacted by Hurricanes Katrina and Rita. Thereafter priority in funding will be based on greatest impact, geographic diversity, timely action, as well as other disaster area needs.

Eligible recipients, for-profit builders, State housing agencies, and nonprofit organizations must have a demonstrated capacity for affordable housing activities and make assurances that they will comply with limits on the use of those funds. Funds may not be used for political activities, advocacy, lobbying, counseling services, travel expenses, and tax return advice.

Nonprofit recipients must have affordable housing as their primary purpose, and beginning 1 year before applying, nonprofits and their affiliates cannot have engaged in Federal election activity, electioneering communication, or lobbying.

Recipient use of funds will be closely tracked. Those misusing funds will be permanently barred from participation and must make reimbursement.

In addition, the manager's amendment includes a request from the Committee on the Judiciary to require consultation with the Attorney General by the GSE regulator when exercising new litigation authority, and from the Committee on Government Reform to remove a Freedom of Information Act exemption for the proceedings of the new agency's oversight board.

The Federal Housing Finance Agency will establish an ombudsman to hear complaints and appeals from the GSEs and those having business relationships with the GSEs.

H.R. 1461 consolidates current GSE regulation by two agencies in HUD into one agency. The manager's amendment clarifies that existing rules and regulations will remain in force during the 6-month transition period and until changed by the new Federal Housing Finance Agency.

I urge adoption of the manager's amendment.

Mr. Chairman, I reserve the balance of my time.

Mr. Chairman, I am pleased to yield 4 minutes to the gentleman from Louisiana (Mr. Baker), chairman of the GSE subcommittee.

Mr. Chairman, I would simply say in summary to ask the Members to support the manager's amendment. We need to support the folks down in the gulf region that were affected by the hurricane. The purpose of the manager's amendment was twofold, to insure that money was available as quickly as possible to those victims who are 100,000 homeless, just in Louisiana alone, to make certain that they can get access to that as quickly as possible; secondly, to make certain that the groups that are building those homes are not political front groups for a right or left agenda, but ones who are sincerely interested in building with bricks and mortar to provide that opportunity to those folks.

If you want to help those folks in the gulf region, and you want to make certain that money is used effectively and not in a political way, support the Oxley manager's amendment.

Mr. Chairman, I yield back the balance of my time.

Mr. Chairman, I rise to claim the time in opposition to the amendment but am not opposed and would indicate that we are pleased to accept the amendment offered by the gentlewoman from Indiana and applaud her for her foresight and leadership in the area of manufactured housing.

Mr. Chairman, I rise to claim the time in opposition, but I also want to say I do not oppose this amendment. As a matter of fact, I want to congratulate the gentleman from Alabama for an excellent amendment and well thought-out. He is a valuable member of the committee. This side has no objections to the amendment.

Madam Chairman, I claim the time in opposition, although I am not opposed to the amendment. As a matter of fact, I am very much in favor of the amendment, and I congratulate the gentlewoman from California for her amendment. I know the gentleman from Delaware (Mr. Castle) and the gentleman from Michigan (Mr. Ehlers) and others on our side of the aisle have been very interested in this entire issue. I think it is a worthy amendment, and we have no objection on this side.

Madam Chairman, I move that the Committee do now rise.