Mortgage Forgiveness Debt Relief Act of 2007

With a heavy heart, I rise in opposition to this rule and the Wall Street rescue bill. Why? The key provision added over the weekend amounts to a huge elephant galloping over the American people with its blank check to Wall Street. In exchange, the American people get to cling to fool's gold--a few billion dollars to cities and States which are facing hundreds of billions of dollars of loss. Ohio alone needs the total amount of meager funds allocated to workouts. Sadly, less than one percent of the assistance in this bill is targeted to those local communities! We need a bill that strengthens each community's real estate values through Federal bond guarantees to them, not to the big investment banks and uninsured housing enterprises that caused this problem in the first place. I thank the gentleman very much for yielding.

Introduction

President Franklin Roosevelt aptly gave a name to the Wall Street financial manipulators who, time and again, put our nation in enormous financial peril. He called them ``malefactors of wealth''-- ``malefactors,'' from the Latin ``mal'' meaning ``bad,'' and ``factor,'' meaning ``makers'' . . . makers of bad. That is, people who do great harm with the use of wealth.

As a scion of old wealth himself, Roosevelt knew them well. He knew the lengths to which

they would go to satisfy their cravings for more, and more, and more-- as if reason and prudence didn't apply. And they did not care who they ran over in their quest. Their deeds have placed our nation at risk, time and again. Now, with the mortgage foreclosure crisis, they have done it again--this time, the damage is so huge it dwarfs the savings and loan fiasco of the 1980's when they ponzi-schemed up housing markets, saw them crash, and then ran to Congress to bail them out. Back then, the perpetrators centered their attention on California, Texas, Arizona, and the hot housing markets. Yet all Americans, from all states--like Ohio which was not one of the epicenters of their gluttony--were forced to pay the bills for their bad deeds.

Today, Congress will vote to burden the American people with another blank check, totaling hundreds of billions of dollars lasting three generations, to Wall Street brokerages and the shareholders of Freddie Mac and Fannie Mae. It is times like this that my heart feels very heavy for my fellow countrymen and women, as I cannot save us from this wrongful debt being imposed. This bailout of Wall Street giants never had a hearing in Committee.

Why should our people be made to pay for them? What will our communities get for this added, massive debt obligation?

The Legislation

The Foreclosure ``Rescue'' bill we're being asked to vote on today won't live up to its name. I challenge any Member to tell me how much help your district will receive from this trickle down to turn around local housing markets. This bill does not measure up to the challenge

The Congressional Budget Office under estimates that the bailout package will cost the American public $25 billion. This estimate isn't a good indication of the potential cost since $25 billion is just an estimate based on many faulty assumptions. The potential cost to the public actually is several hundred billion dollars. Fannie Mae and Freddie's current debts total $5.2 trillion, which equals our national debt of $5 trillion.

The fig leaf offered--and that our communities are clinging to is the promise of a mere $4 billion in community aid plus $10 billion for state housing authorities to counteract the nearly $356 billion loss in property values and property taxes in 2007 and 2008. $4 billion doesn't even meet the City of Cleveland's needs; Ohio alone is estimated to need $164.2 billion, just the gap for the state housing authority is $20 billion. With blocks of abandoned, vandalized, and stripped homes to contend with, along with an onslaught of displaced families, our communities are being asked to do more than ever, with fewer and fewer resources.

This bill asks taxpayers to issue a blank check with the words ``stand by authority''--to Wall Street--for the first time to federally uninsured investment houses and secondary market housing agencies. This critical provision never went through Committee, there were no hearings. This was a Boardroom deal.

The former head of Goldman Sachs is now the Secretary of Treasury under a Republican administration; under the former Democratic administration, the Secretary of Treasury was from Goldman Sachs. Just this week, Goldman Sachs' top banker, Ken Wilson, will take a leave from his job there to join his former boss at Treasury, Secretary Paulson. Who's running whose show here? Is Treasury serving the American people or simply Goldman Sachs, IndyMac Bank, and Bears Stearns?

Further, under this bill the Department of Treasury that failed to regulate, examine, and audit is now going to be given even more power to create another bureaucracy to regulate the Department that didn't regulate. This house of cards only gets more topsy.

Last year, Freddie Mac Chairman and Chief Executive Richard Syron received $19.8 million in compensation--even though the company's stock lost half its value. During the same period, Fannie Mae President and Chief Executive Daniel Mudd was paid $12.2 million, including a $2.2 million bonus. But curbing their excess doesn't even come close to offsetting the huge debt this bill anticipates for the American people.

Our cities are left holding the bag, yet the greedy corporations that blew through town are being made whole. Meanwhile, homeowners have lost decades of savings and equity. Once tight-knit communities are left shattered, shuttered, and dangerous. In order to make things even worse, big banks like Citigroup are now plundering our local communities even more by offering land contracts. How much lower can these banks sink? And yet Congress rewards them?

Savings and Loan Crisis Background

Even worse than the proposed no strings attached bailout is the fact that this is deja vu all over again. The Savings and Loan bailout of the 1980s cost the American taxpayers upwards of half a trillion dollars. The American people were asked to grin and bear it for the good of the Nation. States like Ohio were not among the worst abusers, yet our taxpayers were forced to bear this debt load too.

The savings and loan scandal destroyed an entire class of community banks, moved more power to Wall Street and money center banks, and exploded our public debt. Back then, they told Americans that if they were bailed out, such catastrophes would never happen again. They claimed a new money instrument was being developed by Wall Street called the mortgage backed security. Through its magic, the public would never have to worry again about greedy bankers in the housing market. Your mortgage would be safer, as it would be packaged with others and sold through securities Wall Street would invent, like an anonymous piece of paper.

Meanwhile, face to face community banking, and necessary underwriting and regulation first enacted for home lending in the Great Depression, were destroyed. Financing became more and more hot wired, more absentee, even over the phone and internet. A deluge of promotional materials from the banks arrived at our doorsteps, almost daily, urging mortgagees to borrow more and more against their shrinking home equity, to borrow for almost anything--a vacation, a car, to put on a roof. Few cautioned against it, and the debt pushers pushed on.

Home values inflated beyond their worth. But the regulators, like FNMA and Freddie, the OTS and FDIC stood frozen in place. The mortgage itself--which is a debt that must be repaid--was rolled up and packaged with thousands of other mortgages and, as America itself is in debt, sold into the international market for the first time to foreign buyers. Try to work out a loan when your financier is located in China.

Sadly, their entire modus operandi is an old trick--create a house of cards with money by pushing risk beyond what can be considered prudent, leverage the money pyramids where the underlying asset is purposely poorly appraised, and voila--the perpetrators make billions until the market they have created busts. Then blame the American people and run to Congress to close the gap by borrowing, borrowing, and borrowing from the very people they thought so little of. Oh yes, and then, blame the whole washout on ``them,'' the public.

Wall Street's money grabbers are back, this time stretching their long arms even deeper into your pockets to cover their latest craze-- draining out our home equity and home values. Americans have built their equity over decades in their mortgages. Yet Wall Street set its sights on families' home equity, and went after it with a vengeance. It was the only major savings pool America had left other than our public assets like roads, water systems, and public works. Millions of families succumbed to the snake oil.

Overall, home equity in our nation, our largest source of savings-- has now dipped below fifty percent for the first time in modern history. Millions of Americans have negative equity in their homes, they own more on their homes than their homes are worth.

So, to fill the gap, Wall Street wants the American taxpayer--the people they bilked--to bail them out, again. Bear Stearns succeeded to the tune of $30 billion. So now there is a longer line of bankers lined up to prop up their profligacy. This bill legitimizes their behavior and gets crumbs in return for the American people. The malefactors wealth manipulated and created panic in the market. They got the Bush Administration to propose an ``emergency'' bailout plan. And then they got Congress to ``limit'' executive pay as a fig leaf to cover over their real motherload in this bill. Not a bad bit of insider dealing.

But what about the American people? What about their interests?

Meeting the Needs and Strengthening of Our Communities

Let's get something real for the taxpayer. And let's get it now. As the Economist proposed this week, Fannie Mae and Freddie Mac could issue their own debt and exchange it for loans from the government-- this way, our taxpayers who are on the hook at least get something if markets recover. Otherwise, all this bill does is hand over the U.S. Mint to Wall Street.

I ask any Member: how much of this bill is going to your district relative to what it is going to cost to turn your local real estate market around?

If you don't know the details, you shouldn't vote for the bill.

And how do you know when the help will arrive? This bill is a trickle down from Wall Street; communities across this nation will be left holding an empty bag.

Our communities need expanded bonding power at the grass roots, not more rewards for Wall Street brokers who got us into this sorry situation in the first place.

We need trickle up, not trickle down.

Our communities need expanded bonding power at the grassroots level to raise the funds to combat this crisis, not more rewards to the very institutions and people who created this mess.

I have a better idea. Rather than Congress vowing to borrow more money--plus interest--from the American taxpayer for three generations to come, to make Wall Street whole, why not instead design a refinancing approach that benefits the taxpayer, and the communities they live in? Rescue local real estate markets. Give the bulk of assistance there. Let any refinancing medium reach deep into every affected community across this country. Stop the hemorrhage. Accelerate workouts now to save real estate values from plummeting even further-- including on families who own properties that had nothing to do with this ponzi scheme.

Strengthen each community's real estate values through federal bond guarantees to local countries and cities, not Wall Street. Empower local people. Empower local housing authorities' ability to respond. Democratize this bond offering. The largesse of the American people should not trickle down from the big bond houses on Wall Street who caused the problem, traffic in debt, and operate far from home. The bill being proposed in Congress is weighted WAY too heavily in their favor. For affected localities, less than 1 percent of this proposed aid is targeted to them; Wall Street gets the lion's share. Imagine a bill that strengthens local real estate markets NOW, and into the future through additional federal bond guarantee authority to those same communities. The ability of hundreds of affected jurisdictions to do refinancing and workouts will be direct, local and not just through Wall Street. Direct support to localities should be at a level commensurate with the scale of the foreclosure crisis--not just one percent of the largesse while Wall Street cleans up.

Conclusion

This approach makes sense as real estate markets are local. There is a greater likelihood that units will be turned around more responsibly and expeditiously at the local level. Wall Street is too far away. And they are already hawking their disgusting ``land contracts'' to move foreclosed units which are further blighting troubled neighborhoods.

Let's democratize this bond offering in community after community. Let's not give it away to the same Wall Street crowd that bleeds us time and again, but pays us no respect. Franklin Roosevelt understood the difference between money and wealth. He was about creating wealth in community after community, household after household, not letting Wall Street raid us dry. This Congress should remember how his policies built a middle class. We should champion that democratic vision of capitalism. It's long overdue. As this bill moves to the Senate, perhaps someone there will remember what representative democracy is all about and make this a much better bill. My vote is cast for the American people and against the malefactors of wealth.

Addendum

Fannie Mae and Freddie Mac

A Better Approach: Based upon Treasury Secretary Paulson's

emergency announcement and proposal on July 13, 2008, ``The

two companies could issue their own debt and exchange it for

loans from the government--at least the American people might

yield something rather than giving wall street the equivalent

of having access to the printing press.'' (Source: The

Economist, July 19th-25th, 2008)

Additional Facts: According to a Federal Reserve economist,

because the U.S. government has essentially guaranteed Fannie

Mae and Freddie Mac's debt, the ability of home buyers to

borrow has remained difficult, while the savings Fannie and

Freddie have realized--about $79 billion--instead went

straight to their shareholders. (Source: The Economist, July

19th-25th, 2008)

Current regulation, ``allowed Fannie and Freddie to operate

with tiny amounts of capital. Their capital reserves (as

defined by the regulator, Office of Federal Housing

Enterprise Oversight [OFHEO]) of $83.2 billion at the end of

2007 supported $5.2 trillion of debt and guarantees, a ratio

of 65 to one.'' Imagine if a household earned $83,000 a year

and was able to borrow $5.2 billion on that salary.

In 1998 Freddie Mac owned $25 billion of other securities,

according to OFHEO and by the end of 2007 it had $267

billion. Fannie Mae's outside portfolio grew from $18.5

billion in 1997 to $127.8 billion at the end of 2007. This

shift in investing in outside securities does not meet Fannie

and Freddie's core mission of increasing home ownership.

OFHEO as recently as July 10th said that both Fannie Mae

and Freddie Mac had enough capital.

Freddie Mac lost $3.5 billion in 2007; Fannie Mae reported

a $2.2 billion loss in the first quarter, having lost $2.05

billion in 2007. Each had credit-related write-downs of

between $5 billion and $5 billion last year.

Currently, Freddie Mac only has a market value of $5.3

billion.

On a fair-value basis, Freddie Mac had a negative net worth

of $5.2 billion at the end of the first quarter.

fannie mae and freddie mac's debt and foreign ownership

``Paulson said the Fannie and Freddie have issued $5

trillion in debt and mortgage backed securities. Of that

amount more than $3 trillion is held by U.S. financial

institutions and over $1.5 trillion is held by foreign

institutions.'' (AP; Crutsinger, July 22, 2008)

Fannie Mae and Freddie Mac's foreign debt has tripled from

$504 billion in 2001 to $1.5 trillion in 2007. Fannie Mae and

Freddie Mac's $1.5 trillion foreign debt is owned by China

$376 billion, Japan $228 billion, Russia $75 billion, South

Korea $63 billion, and Middle Eastern Oil-Exporters $29

billion. Now, both interest and principal is owed to foreign

bondholders.

The current proposal will allow Bank of America to purchase

Countrywide's portfolio. Then if Bank of America works out a

refinancing, FHA stands ready to insure it. If the owner

fails to make payments, FHA assumes the unit. This is a great

bonanza for Bank of America.

what the legislation needs

A better solution would be to let Fannie Mae and Freddie

Mac issue debt and then exchange that for a government loan.

At least our people would get something back on the upside--

just as America did when Chrysler Corporation was refinanced

through redeemable warrants.

Democratize the bond offerings by diverting some of the

securitized debt that is intended to prop up Wall Street,

Fannie Mae, and Freddie Mac. Direct it to Main Street--our

counties, our cities, our housing agencies and authorities.

Make the approach more equitable to the taxpayer. This

approach allows communities, not only corporations, mega-

banks, and investment houses, to actually own something.

Isn't that a value worth fighting for?

Mr. Speaker, the subject of my Special Order today is the birthday of one of America's greatest citizens, Dr. Martin Luther King, Jr.

Dr. King's birthday will be celebrated next week with the national holiday on Monday, one of the only men or women to have a holiday named for them in this country. At one time, of course, we celebrated the birthdays of George Washington and Abraham Lincoln, and now we celebrate Presidents Day. But we celebrate Dr. King's Day, a great American and an individual who changed this country for the better and whose life is a testament to fortitude and courage, faith, and a desire to make America better.

On April 4, 1968, 40 years ago this year, Dr. Martin Luther King, Jr. was assassinated in my hometown of Memphis, Tennessee. That was a defining moment in the history of America, indeed, in the history of the world. While Dr. King's death should not and will not ever be forgotten, I think that today on what would have been his 79th

birthday, we should remember his life because it was his life, his actions and his eloquent words, that truly challenged us as a Nation to consider where we were and where we could go.

Martin Luther King, Jr. was born in Atlanta, Georgia, on January 15, 1929, the son of the Reverend Martin Luther King, Sr. and Alberta King. As we all know, Dr. King followed in his father's footsteps and became a minister at the age of 24 in Montgomery, Alabama, where just 2 years later Rosa Parks refused to comply with the Jim Crow laws, which required her to give up her seat on the bus to a white man. The subsequent Montgomery Bus Boycott, led by Rev. King, changed America. The boycott lasted over a year but resulted in the Supreme Court decision outlawing racial discrimination on public transportation. Only in his mid-20s, Martin Luther King's passion and commitment were already affecting the laws of our Nation.

During his life, Dr. King's house was bombed and his government wiretapped his conversations. But Dr. King never wavered from his commitment to nonviolent change. Dr. King turned a mirror on America, and the reflection was not good. It was ugly. America was not the land of the free but it was a land built by the enslaved. The very Capitol Building in which I speak and in which we make our laws was built by slaves. Dr. King pulled back the quasi-fiction that has so often been touted as patriotism as if to say, ``but what about these Americans?'' And those are his words: ``But what about these Americans?'' Jim Crow laws, which had created two Americas, which had denied access and opportunity for so long were held up for examination, and they failed the examination, as they should have.

We are not there, ladies and gentlemen. I wish we were. I wish we had achieved the dream where the content of one's character is what each person is judged by, not by the color of one's skin. We are not there, but the good news, the positive message that Dr. King has etched into our national conscience is that one man can make a difference. One young man can step forward and live his life with purpose and dignity, can become the voice of all those whose voices have been stilled, whose hope has been lost. No assassin's bullet could stop what Martin Luther King had begun. Today, as we celebrate a birth which has changed us and which continues to challenge us, let us remember his dream.

Dr. King's words are what he's best remembered for. And in his hometown of Memphis, Tennessee, his words will be played constantly over the weekend and through Monday as we remember how he challenged us, how he inspired us in the 1950s and in the 1960s. Radio station WLOK will be, I know, having a tribute to him in Memphis, and other places all over the country will do the same. And in Memphis there will be a basketball game, a national basketball game, that will celebrate civil rights victories of this country. Particularly Bob Lanier will be there and Kareem Abdul-Jabbar and others. And we look at the steps which we have taken in this country to make the country better through sports and basketball, and I commend David Stern and the NBA for having that game in Memphis on Dr. King's birthday.

At this time I would like to read some quotes from Dr. Martin Luther King, Jr., as will be read and as will be heard throughout this country in the coming week and the coming weekend. Many of them resonate with the issues of today.

``A genuine leader is not a searcher for consensus but a molder of consensus.'' And we need more leaders like that today who mold consensus.

``A nation that continues year after year to spend more money on military defense than on programs of social uplift is approaching spiritual doom.'' Remember, Mr. Speaker, Dr. King was speaking during the time of the Vietnam War. We have another Vietnam, I think, today in Iraq, and we are spending more money not on military defense but on military offense and leaving programs of social importance behind. And I question the spirituality of where this country presently is, spending so much in Iraq and so little in America.

``A right delayed is a right denied.'' And there are so many rights which have not been granted to people and not just on the basis of race and religion and national origin but also of sexual orientation. ``A right delayed,'' Dr. King said, ``is a right denied.''

Dr. King said, ``Almost always the creative, dedicated minority has made the world better.'' And indeed they have. We are a country of minorities making for a great majority, and when we don't respect the rights of the minorities, we endanger ourselves.

Dr. King said, ``An individual has not started living until he can rise above the narrow confines of his individualistic concerns to the broader concerns of all humanity.'' And I would ask each of my colleagues to hold that thought in their minds when they vote and to realize it's not just the nature of their districts and their individual concerns which are important but the broader concerns of this country, as Dr. King said, ``the broader concerns of all humanity.''

Dr. King said, ``An individual who breaks a law that conscience tells him is unjust and who willingly accepts the penalty of imprisonment in order to arouse the conscience of the community over its injustice is in reality expressing the highest respect for the law.''

Dr. King and many civil rights workers violated the law, the law of the country, mostly in the South, Jim Crow laws, that said people were separate and inherently unequal. He did that with Rosa Parks when they challenged the laws that said African Americans were to ride on the back of the bus. And he challenged, along with President Johnson and this Nation in the 1960s, the law that said there could be separate establishments and would be by law for people based on race for entertainment, different public facilities, eating establishments, hotels and motels, colleges and schools. Those were wrong laws. They needed to be challenged, and they were challenged by Dr. King and many civil rights leaders, and the world changed in the 1960s.

Dr. King said, ``At the center of nonviolence stands the principle of love.'' He also said, ``Have we not come to such an impasse in the modern world that we must love our enemies or else? The chain reaction of evil, hate begetting hate, wars producing more wars, must be broken or else we shall be plunged into the dark abyss of annihilation.'' And, Mr. Speaker, I reflect on this when I think about what we are doing in the Middle East. Hate begets hate. Wars produce more wars. And we are in an abyss.

Dr. King said, ``He who passively accepts evil is as much involved in it as he who helps perpetrate it. He who accepts evil without protesting against it is really cooperating with it.'' One must actively oppose evil. And oftentimes in the debates in Congress, you have to remember Dante, and Dr. King has a quote similar to Dante, that the warmest spots in hell are reserved for people who in times of controversy stand on the sidelines. Certainly something Dr. King did not do.

In Dr. King's great speech just outside the Capitol on the mall, which I recall watching on television and which I am thrilled to be a Member of this House of Representatives so near to the mall where Dr. King gave his ``I have a dream'' speech, he said, ``I have a dream that my four little children will one day live in a Nation where they will not be judged by the color of their skin but by the content of their character.

``I have a dream that one day every valley shall be exalted, every hill and mountain shall be made low, the rough places will be made straight, and the glory of the Lord shall be revealed, and all flesh shall see it together.

``I have a dream that one day on the red hills of Georgia, the sons of former slaves and the sons of former slave owners will be able to sit down together at the table of brotherhood.''

As I said earlier, Dr. King's dream has not totally been achieved, but we are getting closer to it. We are engaged in a Presidential debate where his words and actions are subject of much debate. But I have no doubt that Dr. King would be proud of all the candidates in the Democratic column who are running for this office and know that they are children of Dr. King's dream. To see an African American gentleman have a legitimate chance to be President of the United States and to see a woman have that same opportunity is what Dr. King talked about.

And they should be judged not by the color of their skin or by their gender but by the content of their character.

``Injustice anywhere is a threat to justice everywhere,'' Dr. King said. And that's something to be remembered when we see nooses hung in small towns or people being shot, tied behind cars because of aspects of their personage of which they had no choice.

``It may be true,'' Dr. King said, ``that the law cannot make a man love me, but it can keep him from lynching me, and I think that's pretty important.'' And that is important. We have a Senate and a House that passed a condemnation of the lynching that took place in this country in the 20th century. And this House, hopefully, will pass another proposition that says that we apologize for having been part of a Nation that allowed for slavery to occur and had laws that permitted it and for Jim Crow laws that saddled this country with unjustice for 100 years thereafter.

Dr. King said, ``Life's most persistent and urgent question is what are you doing for others?'' And that's a question that my friend Irbin Salky has often said to me, that the purpose of why we are here on Earth is to help others. And it's part of the Judeo-Christian religion and creed to care for others, and that's why we are here.

Again, Iraq and Vietnam, they are parallels, and Dr. King's words ring true today. He said, ``One of the greatest casualties of the war in Vietnam is the Great Society shot down on the battlefield of Vietnam.''

Indeed, many of the hopes of people in our inner cities, people that are left behind by what has been considered a great economic opportunity for many Americans, mostly the richest, have been left behind because of the moneys we have spent in Iraq rather than spending them on the people in this country.

There are many parallels, and I think I know where Dr. King would be on the issue of war and peace, on the issue of choosing Iraq rather than choosing America, the cities that have been neglected, the inner cities, Appalachia, Katrina victims, and others. Dr. King said: ``The moral arc of the universe bends at the elbow of justice.'' He always felt that the arc was bending in the right direction, although slowly. And justice and change do move slowly but they do move. We have change. Change is not revolutionary; it's evolutionary. It happens, but it happens in increments. But Dr. King and people like him made it move at a stronger pace, and it's necessary to have agents of change. Agents of change have moved the society forward.

One of the most prophetic quotes that I think I saw, and there are so many to review in thinking about Dr. King, he said: ``The Negro needs the white man to free him from his fears. The white man needs the Negro to free him from his guilt.'' I know from my sponsorship of an apology for slavery and Jim Crow and some of the comments I have read, there's a lot of guilt in this country and it's making it difficult for people to engage in a dialog and understand and honestly see what slavery did for many people's lives. Not only did it cause the African Americans and have them be enslaved, but it caused a lot of people to make a lot of money and have a lot of great economic fortune at the expense of the enslaved, and then of the Jim Crow citizen that served their needs for 100 years.

The quality, not the longevity, of one's life is what is important. I think about Martin Luther King, who died at the age of 39; I think of John Kennedy, who served in this House and lived to the age of 46; I think of his brother, Robert Kennedy, who died at age 42, but affected so many of us. All of these three men affected me in a great way. Their assassinations in 1963 and 1968 affected this world, but it affected me in a great way. It was the quality, not the longevity, of their lives that was important. And they didn't wait for tomorrow. They had the fierce urgency of now that Dr. King talked about to make a change, to make a change and a difference while they were on this Earth and to affect their fellow man and fellow woman.

``The ultimate measure of a man is not where he stands in moments of comfort and convenience, but where he stands at times of challenge and controversy.'' Once again, Dr. King implores us to have moral character and fiber and to stand up for what is important for America. And he said: ``We must learn to live together as brothers or perish together as fools.''

Dr. Martin Luther King was a special man. He took his talents and he used them for his fellow man. He inspired us all. This country and this world is much the greater for his life. It is indeed a testament to him that this Congress under the unyielding leadership of Representative John Conyers passed a bill to make his birthday a national holiday. It's a national holiday that should be held in high esteem by all men and women in this country, because Dr. King was special and unique and stood up for all people and stood for the height of American ideals.

I hope that everybody will take a moment over the weekend and on Monday on the celebration of his birthday to think about some of the things that Dr. King stood for: challenging the system to make it better; for peace; for people who have been left behind in our society; doing for the least of these and trying to make the world a better place.

My city bears great scars for his death having taken place there. There was nothing unique to my city. It was something wrong with this country that somebody out there put a reward up for Dr. King's death and that somebody wanted to claim that reward and didn't have a regard for the humanity of Dr. King. In Memphis now there's a National Civil Rights Museum dedicated to the civil rights movement and to Dr. King's life and ideals, and I invite and encourage everyone to come to Memphis to visit the civil rights museum, which is at the spot where Dr. King was killed at the Lorraine Motel, which has been preserved, and to celebrate his life and to celebrate his values, not only on his birthday but on every day, for Dr. King was a great American. I am just lucky, as we all are, that he came my way.

Mr. Speaker, I thank you for the time, and I know that you, like me, will reflect on Dr. King's works and will keep him in our hearts as we try to do what's right for America in this 110th Congress.

Madam Speaker, by direction of the Committee on Rules, I call up House Resolution 1363 and ask for its immediate consideration.

Madam Speaker, I rise today in strong support. For the purpose of debate only, I will yield the customary 30 minutes to the gentleman from Texas (Mr. Sessions). All time yielded during consideration of the rule is for debate only.

General Leave

I ask unanimous consent that all Members be given 5 legislative days in which to revise and extend their remarks on House Resolution 1363.

I yield myself such time as I might consume.

Madam Speaker, House Resolution 1363 provides for consideration of the Senate amendment to H.R. 3221, the American Housing Rescue and Foreclosure Prevention Act of 2008. The rule makes in order a motion by the chairman of the Committee on Financial Services to concur in the Senate amendment, with the text of the House amendment printed in the Rules Committee report.

The rule provides 2 hours of debate on the motion, with 80 minutes controlled by the Committee on Financial Services, and 40 minutes controlled by the Committee on Ways and Means.

Madam Speaker, I rise today in strong support of the American Housing Rescue and Foreclosure Prevention Act and this rule. Our landmark legislation today throws a lifeline to families who are struggling to maintain the American dream of home ownership during this housing crisis and the economic downturn.

Families across America are being forced to make heart-wrenching decisions in order to stay in their homes. What will they pay for in this day and age, with rising gas prices, property insurance rates escalating, the cost of health care rising? But nothing is more fundamental than having a safe and clean home for your family.

The good news is that many of us in the Congress understand, and we are going to stand up for families and ensure that if you work hard and you play by the rules, the tools and resources will be made available to you to help you stay in your home.

The American people have a number of champions here in Congress that understand the importance of a safe, clean and affordable home. Chairman Barney Frank has spent countless hours in providing the tools necessary for families across this country to have a safe, affordable place to live.

Chairwoman Maxine Waters of California has spent a great part of her career dedicated to affordable housing for American families.

Speaker Pelosi and the Chairwoman of the Rules Committee, Louise Slaughter, are champions of American families and affordable housing as well.

Madam Speaker, today three million to four million families are expected to lose their homes to foreclosure. And when a home in your neighborhood ends up in foreclosure it affects everyone. It is usually sold at a reduced rate, and the values of homes throughout the neighborhood are affected. We have all seen these eyesores with overgrown grass, broken windows and in disrepair.

Well, that is why we are all in this together. It is vital that we fight to maintain the property values of our communities.

Madam Speaker, just a few weeks ago I had my first foreclosure workshop to get families together with lenders to try to get to a point where they could work out their loans. We were very surprised. We had over 600 individuals show up who were either in foreclosure, had fallen a month or two behind, or could see on the horizon, because of an adjustable rate loan or some family circumstance like the loss of a job or the kids going off to college, that they needed a little bit of help.

Well, we have been very active in this Congress because while this is a problem that, yes, critically affects a State like Florida, in the Tampa Bay area that I have the privilege to represent, and it affects California desperately, Ohio, Nevada, no part of the country has been immune from the sub prime lending crisis.

Fortunately, this American Housing Rescue and Foreclosure Prevention Act comes at an important time. But, you know, this Congress has been working on this for over a year and a half. So many of the initiatives contained in this package have been passed by the House of Representatives. This ``New Direction Congress'' has worked, in a bipartisan way, to pass most of the initiatives that are contained in the act today.

Families should know that H.R. 3648, the Mortgage Forgiveness Debt Relief Act, was passed and did become law at the end of last year; passed by a margin of 386-27 here in the House. It provides that over the next 3 years, families who have had to sell their homes in foreclosure will be spared from getting hit by a larger tax bill, in addition to the pain of losing their homes.

There are a number of other critical components in the Housing Rescue Package that were previously passed by the House. And I would like everyone to note, because we will probably hear a great deal of debate here today on the housing package. Everyone should note that almost all the initiatives contained in the bill today were passed over the last year and a half by wide, bipartisan margins.

First, the Neighborhood Stabilization Act. That was approved in May by a vote of 239-188. It provides grants to the States and local governments to purchase and rehabilitate foreclosed properties and turn them into safe, affordable places for folks to live.

And I would like to recognize and thank the White House for removing its veto threat. It had threatened to veto this entire package that had been negotiated with the White House over this small section that provides important tools to our State and local governments to tackle those properties that are up for foreclosure, the ones that are overgrown, that have the broken windows, allows them to go in and purchase those properties and turn them into affordable housing for families who are in need.

The package also includes the important provisions of the Federal Housing Finance Reform Act that we passed in May of 2007 by a vote of 313-104. This is vital legislation today because it establishes new and extensive oversight and regulatory authority over the Federal National Mortgage Association, Fannie Mae, and the Federal Home Loan Mortgage Corporation, Freddie Mac.

To protect the taxpayers, we are instituting new requirements for the safety and soundness of the portfolio operations of these regulated entities. We need to make sure that we have oversight on the effects of the financial and housing finance markets of all these alternatives and provide an alternative to the current secondary market system for housing finance.

Madam Speaker, last September we also passed an important part of this package, the Expanding Home Ownership Act of 2007, by a margin of 348-72 here in the House. This is a critical piece because it expands access to the middle class to the low interest, low fee loans provided by the Federal Housing Administration. These FHA loans are a much better option to the sub prime loans. We are going to take a proactive step here to allow families facing foreclosure to qualify for the

low interest, no fee loans offered by the FHA.

The housing package today also includes the National Affordable Housing Trust Fund Act of 2007. That was passed here in the House last October by a vote of 264-148. This creates a new, innovative fund that will be used to build more affordable housing for hard working families and families who have lost their homes due to foreclosure. The new trust fund will focus on construction, rehabilitation and preservation of affordable housing in our hometowns. It will pool monies to target housing for families with the greatest economic need.

And our efforts come at a critical time if we can get this trust fund up and running. See, the Federal money for affordable housing has largely disappeared under the current administration over the past 7 years.

In many communities like mine, housing agencies have thousands on the waiting list. In my hometown of Tampa, Florida, during a 1-week open enrollment session, more than 10,000 seniors, veterans and families indicated a need for housing. But instead of receiving housing, they are placed on a waiting list, and the waiting list takes up to 4 years, and it is so long that the Tampa Housing Authority is unable to help others that need it.

Madam Speaker, another important part of this housing package is the Mortgage Reform and Anti-Predatory Lending Act of 2007. Yes, we passed this here in the House last November by a vote of 291-127. It requires States to license all mortgage professionals and mandate criminal background checks, requires exams and a ban on felons participating in the mortgage loan industry.

We all know that the predatory lending was rampant during the sub prime loan run up. And I would like to draw your attention to anyone that would like to examine in depth the details of predatory lenders and how they worked. Go to the MiamiHerald.com Web site and review their series on predatory lending that they have run over the past couple of days. It is outstanding.

They reviewed thousands of pages of court documents, State industry reports, internal e-mails, and police reports from 2000 to 2007 and they discovered that over 5,000 people with criminal histories during that time became loan originators, a rate of nearly two a day. Worse, those include over 2,000 who had committed financial crimes such as fraud, money laundering, and grand theft. Too many of our neighbors were outright lied to and steered into unaffordable, exploding adjustable-rate mortgages without being given an option for a fixed rate and are now facing foreclosure which harms their families and all of us in their community.

To accompany this extensive package, what has been added that really has not been voted on by the House today is a request by the Treasury Secretary for new standby authority to buy stock or debt in the GSEs if it is determined that an emergency exists. This is something of an insurance policy against broader losses in the housing market that could bubble up.

Mr. Speaker, our efforts here today are absolutely necessary. Families across this country are depending on us. It's unfortunate that while the House and the new-direction Congress has been focused on affordable housing over the past year and a half and has passed terrific, substantive legislation, that it's taken a few months to get it enacted and passed in the end.

Thanks again to Chairman Barney Frank for headlining our negotiations with the other body and with the White House. And I feel secure that a large bipartisan vote here today will prove that we can stand up and address this housing crisis across this country.

I reserve the balance of my time.

Mr. Speaker, I am privileged to yield 5 minutes to the distinguished chairwoman of the Rules Committee, Ms. Slaughter of New York.

I yield the gentlewoman an additional 1 minute.

Mr. Speaker, I'm very pleased to yield 2 minutes to the gentlewoman from California (Ms. Waters), a champion for affordable housing and America's families.

Mr. Speaker, I'd like to correct the record here because this House of Representatives has been working in a bipartisan way for almost 2 years now on housing legislation. In fact, in my opening statement, I chronicled the number of bills starting last year that have been passed in this House by substantial bipartisan margins and sent over to the Senate where they waited. To say that there's been no opportunity for amendment or debate, that's wholly inaccurate.

Out of this package, it contains at least five or six bills that had committee hearings, extensive hearings, the opportunity for amendment in committee, the opportunity for debate, previous debate, debate on the floor, amendments here on the floor, debate in the Rules Committee.

So I think it's important that the record reflect that reality.

And at this time, I'd like to yield 5 minutes to the chairman of the Financial Services Committee, the gentleman from Massachusetts (Mr. Frank).

I yield the gentleman 30 additional seconds.

Mr. Speaker, we reserve the balance of our time.

Mr. Speaker, at this time I yield 1 minute to the gentlewoman from California (Ms. Lee).

I will have to object to that. I will note that the rule does provide for an extended amount of debate on the legislation, itself.

Mr. Speaker, I yield 1 minute to the gentlewoman from Texas (Ms. Jackson-Lee).

Mr. Speaker, I have the right to close, so I will reserve the balance of my time until the gentleman from Texas has made his closing statement.

Mr. Speaker, I urge adoption of the American Housing Rescue and Foreclosure Prevention Act and this rule, as families across America are in the grips of a housing crisis and it demands expeditious action.

The President of the United States says it's necessary. The Governors in this great Nation say it's necessary, and I will submit their statements into the Record.

Foreclosures are way up, and the options for safe, clean, and affordable housing are down. In my home town of Tampa, Florida, one in 280 homes is in foreclosure. Now, as Rules Committee Chairwoman Slaughter said, we're going to clean up this mess because America's hardworking families are depending on us, but we will also need to follow up and hold those accountable who have created this mess.

Now, the House of Representatives over the past 1\1/2\ years have passed bills to help homeowners avoid foreclosure, provide resources to local communities to build new, safe and affordable housing, and crack down on predatory lenders. It has all come to fruition here today.

Our efforts will keep the American dream of homeownership available to more American families, thanks to the efforts of Speaker Nancy Pelosi, Chairman Barney Frank and Chairwoman Maxine Waters, and the other champions for America's families who are going to continue to side with them, and our commitment to affordable housing and safe and healthy communities.

Mr. Speaker, I urge a ``yes'' vote on the previous question and the rule.

Executive Office of the President, Office of Management

and Budget,

Washington, DC., July 23, 2008.

Statement of Administration Policy

H.R. 3221--Housing and Economic Recovery Act of 2008, (Rep. Frank (D)

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

Thank you, Mr. Speaker. I would like to thank my friend, the gentleman from California, for the time and I yield myself such time as I may consume.

In August, over 165,000 properties in Florida alone entered foreclosure, 50 percent more than the previous month. The situation is most acute in the part of Florida that I am honored to represent. Miami-Dade County ranks in the top five counties in the Nation among major metropolitan areas where homes are entering some stage of foreclosure. Broward County ranks third in the Nation. This great cause for concern in the housing market has prompted anxiety over the tax consequences associated with discharges of indebtedness, debt forgiveness, in connection with restructuring acquisition indebtedness and home foreclosures.

As the gentleman from California pointed out, under current law, when a lender forgives some or all of the mortgage debt, Mr. Speaker, the borrower is required to treat the forgiven debt as taxable income, taxed at ordinary rates. In today's marketplace, declining property values have left some sellers in the position of having to sell their homes for less than the outstanding balance on the mortgage. Even if the loss of value occurs through no fault of their own, if the lender forgives the shortfall, that amount is taxable income for sellers. This phantom income tax places a heavy burden on a family that has incurred a significant economic loss. This legislation will help protect those homeowners from an unexpected and unfair tax bill.

The bill also extends the deduction for private mortgage insurance for 7 years. Current law limits the deduction for private mortgage insurance to payments made prior to the end of 2007. This provision will be helpful, especially to young families purchasing their first home.

There is some concern that the bill may go beyond what is needed during this time. The administration and some in the minority here in Congress have stated that the relief should be temporary to assist homeowners during the current mortgage market transition period, avoiding as much as possible distorting consumer and lender decisions on new mortgage loans. But, Mr. Speaker, there can be no doubt that the underlying legislation being brought forth today for consideration by this House is an example of what can happen, the good that can happen, the progress that can be made when the congressional majority decides to work with the administration, with the President and the minority in Congress on an important issue such as this. Much of the legislation that we will be considering today was proposed, the substance of that legislation was proposed by President Bush. And so this is an example of what progress can be made on important issues when the congressional majority decides to work with the minority and the administration.

Now, on process, Mr. Speaker, in a document called The New Direction for America, the new congressional majority laid out its campaign promises to

the American people last year. Included in that document was a promise, and I quote, that bills should generally come to the floor under a procedure that allows open, full and fair debate consisting of a full amendment process that grants the minority the right to offer its alternatives, including a substitute.

But with this rule today that, as you know, Mr. Speaker, the rule is what brings to the floor the underlying substantive legislation that will be considered subsequently by the House; with this rule today, the majority has broken its own promise in two ways. First, they denied the minority the ability to offer a substitute amendment. My colleague, the distinguished ranking member, Mr. Dreier, offered two amendments Tuesday in Rules to allow Ways and Means Ranking Member McCrery the ability to offer a substitute amendment on this legislation. But on a party-line vote, the majority rejected the minority's ability to offer a substitute.

The majority claims that they are running the House in a more open manner than we did in the 109th Congress, but this rule today once again demonstrates that they are not moving toward a more open process, but instead moving backwards. This rule closes out all amendments. So every Member of the House is precluded from in any way offering their ideas to improve this bill.

So far this year, the majority has offered 34 closed rules on bills, closing out all amendments, far surpassing the number from the 109th Congress at this point, as a matter of fact, more than double the amount of closed rules. At this point in the 109th Congress there had been 16 closed rules. And remember the promise: the promise was to move in the other direction, and instead, more than double the amount of closed rules; clearly, moving backwards.

What this rule today really represents, Mr. Speaker, is a missed opportunity. If the majority had offered an open rule, the majority could have doubled their number of open rules on nonappropriations bills to a whopping two; instead, they've permitted only one open rule on nonappropriations bills, thus continuously violating their claim to be a more open and bipartisan Congress.

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

Mr. Speaker, in response to my good friend Mr. Cardoza's point about the tradition with tax bills, yes, there has been a tradition to bring tax bills to the floor under a restricted rule. That has not precluded in the past, as we did often, the ability of the minority to offer a substitute amendment.

So what I was talking about with regard to process is that there was a clear promise to move in a more open direction, to move toward more openness and more transparency and more rights for the minority. And what has happened is exactly the opposite, a doubling by the majority of closed rules that absolutely close out, in other words, prohibit, all Members from proposing amendments on this floor. So that great contrast between the promise and the performance is what I was alluding to, that unfortunate contrast.

Now, on substance, again, I think that today is an example of something very positive. The congressional majority has decided to work with the minority and the President on an issue that is of importance to this legislation. And so we see legislation, much of

which was proposed by the President of the United States, coming to the floor today to solve a major problem facing the American people.

So while I reiterate the great disappointment that we in the minority feel with regard to the lack of performance by the majority with regard to its promise to open this House to more fairness on substance, I think it's commendable that for once there is an issue of importance to the American people that the congressional majority has decided to work with the President on and with the minority in Congress.

I will be asking for a ``no'' vote on the previous question, Mr. Speaker, so that we can amend this rule and allow the House to consider a change to the rules of the House to restore accountability and enforceability to the earmark rule.

Under the current rule, so long as the chairman of a committee of jurisdiction includes either a list of earmarks contained in the bill or report, or a statement that there are no earmarks, no point of order lies against the bill. This is the same as the rule in the last Congress. However, under the rule as it functioned under the Republican majority in the 109th Congress, even if the point of order was not available on the bill, it was always available on the rule as a question of consideration. But because the Democratic Rules Committee specifically exempts earmarks from the waiver of all points of order, they deprive Members of the ability to raise the question of earmarks on the rule or on the bill.

I would like to direct our distinguished colleagues, Mr. Speaker, to a letter that the House Parliamentarian, the distinguished John Sullivan, recently sent to the distinguished chairman of the Rules Committee, Ms. Slaughter, which confirms what we have been saying since January, that the Democratic earmark rule contains loopholes. In his letter to Chairwoman Slaughter, the Parliamentarian stated that the Democratic earmark rule ``does not comprehensively apply to all legislative propositions at all stages of the legislative process.''

House of Representatives,

Office of the Parliamentarian,

Washington, DC, October 2, 2007.

Hon. Louise McIntosh Slaughter,

Committee on Rules, House of Representatives,

Washington, DC.

Dear Chairwoman Slaughter: Thank you for your letter of

October 2, 2007, asking for an elucidation of our advice on

how best to word a special rule. As you also know, we have

advised the committee that language waiving all points of

order ``except those arising under clause 9 of rule XXI''

should not be adopted as boilerplate for all special rules,

notwithstanding that the committee may be resolved not to

recommend that the House waive the earmark-disclosure

requirements of clause 9.

In rule XXI, clause 9(a) establishes a point of order

against undisclosed earmarks in certain measures and clause

9(b) establishes a point of order against a special rule that

waives the application of clause 9(a). As illuminated in the

rulings of September 25 and 27, 2007, clause 9(a) of rule XXI

does not comprehensively apply to all legislative

propositions at all stages of the legislative process.

Clause 9(a) addresses the disclosure of earmarks in a bill

or joint resolution, in a conference report on a bill or

joint resolution, or in a so-called ``manager's amendment''

to a bill or joint resolution. Other forms of amendment--

whether they be floor amendments during initial House

consideration or later amendments between the Houses--are not

covered. (One might surmise that those who developed the rule

felt that proposals to amend are naturally subject to

immediate peer review, though they harbored reservations

about the so-called ``manager's amendment,'' i.e., one

offered at the outset of consideration for amendment by a

member of a committee of initial referral under the terms of

a special rule.)

The question of order on September 25 involved a special

rule providing for a motion to dispose of an amendment

between the Houses. As such, clause 9(a) was inapposite. It

had no application to the motion in the first instance.

Accordingly, Speaker pro tempore Holden held that the special

rule had no tendency to waive any application of clause 9(a).

The question of order on September 27 involved a special rule

providing (in pertinent part) that an amendment be considered

as adopted. Speaker pro tempore Blumenauer employed the same

rationale to hold that, because clause 9(a) had no

application to the amendment in the first instance, the

special rule had no tendency to waive any application of

clause 9(a).

The same would be true in the more common case of a

committee amendment in the nature of a substitute made in

order as original text for the purpose of further amendment.

Clause 9(a) of rule XXI is inapposite to such an amendment.

In none of these scenarios would a ruling by a presiding

officer hold that earmarks are or are not included in a

particular measure or proposition. Under clause 9(b) of rule

XXI, the threshold question for the Chair--the cognizability

of a point of order--turns on whether the earmark-disclosure

requirements of clause 9(a) of rule XXI apply to the object

of the special rule in the first place. Embedded in the

question whether a special rule waives the application of

clause 9(a) is the question whether clause 9(a) has any

application.

In these cases to which clause 9 of rule XXI has no

application in the first instance, stating a waiver of all

points of order except those arising under that rule--when

none can so arise--would be, at best, gratuitous. Its

negative implication would be that such a point of order

might lie. That would be as confusing as a waiver of all

points of order against provisions of an authorization bill

except those that can only arise in the case of a general

appropriation bill (e.g., clause 2 of role XXI). Both in this

area and as a general principle, we try hard not to use

language that yields a misleading implication.

I appreciate your consideration and trust that this

response is to be shared among all members of the committee.

Our office will share it with all inquiring parties.

Sincerely,

John V. Sullivan,

Parliamentarian.

This amendment, Mr. Speaker, will restore the accountability and enforceability of the earmark rule to where it was at the end of the 109th Congress, to provide Members with an opportunity to bring the question of earmarks before the House for a vote. I urge my colleagues to close this loophole by opposing the previous question.

Mr. Speaker, I ask unanimous consent to insert the text of the amendment and extraneous materials immediately prior to the vote on the previous question.

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

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

Mr. Speaker, I recognize myself for 2\1/2\ minutes.

It is not often I find myself disagreeing with my esteemed friend, the ranking member of the Ways and Means Committee, but I would like to briefly address his concerns.

As our esteemed chairman, Mr. Rangel, pointed out, this is a serious program that all agree needs a serious solution to avoid having people who lose their homes end up having their loss become a taxable event. Our legislation solves this.

Where I take modest exception to the ranking member and, in fact, had a rather spirited debate before the Rules Committee with Ranking Member Dreier that this is somehow a temporary problem and just requires a temporary solution, we are in a situation now where the majority would argue that there is never a good time to have people who lose their homes have that loss be a taxable event. Second, unlike the Bush administration thinks this is going to be solved in the next year or two, the fact is, in 2006, 20 percent of the first-lien mortgages were in the subprime market.

We are going to see exploding adjustable rate mortgages for years. Those people shouldn't have uncertainty if there are people who assume control who think that their loss should be a taxable event.

As it speaks to the pay-for, the Democrats have made a commitment that we are going to pay for our actions. We are not going to add to the deficit. This is an entirely appropriate pay-for. There was never an intent with the $500,000 per couple exclusion from capital gains on the sale of their homes to string these together.

I came to Congress committed to enacting that relief to protect them. But under the provisions that, as it has worked out, some extraordinarily wealthy people can string these together and have a $500,000 tax-free gain three times in 6 years.

Our amendment, our pay-for, gives everybody the protection for their principal home and allows them to get the capital gains exclusion to the extent that a second home is their principal home. It's reasonable, it's balanced, it's paid for. I urge its adoption.

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

Mr. Speaker, I yield 2 minutes to the distinguished Chair of the Trade Subcommittee, and a senior member of the Ways and Means Committee, Mr. Levin.

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

Mr. Speaker, I yield 2 minutes to the distinguished Chair of the Select Revenue Measures Committee and a champion of tax fairness, Mr. Neal from Massachusetts.

(Mr. NEAL of Massachusetts asked and was given permission to revise and extend his remarks.)

Mr. Speaker, I yield myself 15 seconds to clarify that there's no luxury tax on second or third homes. It preserves the tax exemption for the $500,000 capital gain on a residence, and it permits people to claim an additional benefit to the extent to which it is their primary residence in the future.

I would at this point, Mr. Speaker, recognize a distinguished member of the Ways and Means Committee, Mrs. Tubbs Jones from Ohio, whose experience helped shape this legislation, for 2 minutes.

(Mrs. JONES of Ohio asked and was given permission to revise and extend her remarks.)

Mr. Speaker, I yield 2 minutes to the distinguished Ways and Means Committee member, Mr. Pascrell from New Jersey, a former mayor who has firsthand experience about the significance of this legislation.

Mr. Speaker, I yield 2\1/4\ minutes to the distinguished Ways and Means member from Nevada (Ms. Berkley), who has represented an area that is facing this problem and has been so generous in sharing with us the consequences.

Mr. Speaker, it is my honor to yield 2 minutes to the distinguished gentleman from New Jersey (Mr. Andrews), who has been acknowledged as one of the prime drivers in shaping this legislation.

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

Mr. Speaker, I yield 1 minute to the distinguished gentleman from Rhode Island (Mr. Langevin).

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

Mr. Speaker, I yield 1 minute to the gentleman from Ohio (Mr. Space).

Mr. Speaker, I yield 1 minute to the distinguished gentleman from Indiana (Mr. Donnelly).

Mr. Speaker, I yield 1 minute to the gentlewoman from Arizona (Ms. Giffords).

Mr. Speaker, I would recognize the gentleman from California (Mr. McNerney) for 1 minute.

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

I would like to commend my colleague for the work that he has done on this measure, Mr. McCrery, and our leadership because at core there is bipartisan understanding and support for the elimination of what has been referred to as a phantom and unfair tax on the poor souls who lose their homes and who receive no net increase to them.

Where we have modest disagreement is in two specific areas: one, the bill that is before us recognizes that there is never a good time to tax American homeowners on this phantom benefit of having their loan forgiven on a foreclosed property. There no circumstances under which we could conceive that we wanted to penalize them for something that they didn't receive, so we made it permanent. Unlike the minority, unlike the Bush administration, we don't think there is ever a good reason to tax them on something that they don't receive.

Second, we're paying for the cost that is associated with it because, sadly, even a tax provision that makes no sense carries value, and under our rules, we need to pay for it. And what we did was not to implement any additional tax, but to clarify the benefit that is given to owners of principal residences that they have a $500,000 tax-free gain if they occupy that as their principal residence for 2 out of 5 years. That's something that we broadly agree upon.

Now, we've always agreed that that ought to occur to the homeowner. Now we're hearing that somehow our friends on the other side of the aisle think that an additional tax benefit, so that people could string this together over the course of 6 years and get $500,000 three times as a tax benefit, is somehow, some way a tax increase. It is not. The purpose of that tax provision was never to reward people who could game the system and string together tax increases two or three times over a relatively short period of time.

So we have clarified it: as long as it is their principal home, their principal residence, they can claim the exclusion. And to the extent that a second home, after they've gotten $500,000 tax free, the extent to which they occupy a second home for an additional period of time, they can claim the proportion that it is actually their principal residence. I would dare say that was the intent for the majority people of why that provision was implemented in the first place. It's reasonable, it's sound, and I would strongly suggest that that's why people in this industry, Realtors, mortgage bankers, homebuilders, support the bill that we brought forward.

I suggest that this bill is something that all of us ought to support. I strongly urge its passage.

Mr. Speaker, it is estimated that, before this housing slump is over, 2 million homeowners will lose their homes due to skyrocketing interest rates on their mortgages.

Increased foreclosures have adverse effects on the values of neighboring properties. For example, research indicates that, for each foreclosed home in a given neighborhood, the prices of nearby homes could fall by 1 percent to 1.5 percent.

Nationally, housing prices have stopped rising. In fact, some measures of home prices have already declined, by more than 3 percent since the beginning of 2007. Some economists predict that real housing prices are likely to decline by more than 15 percent over the next 2 years.

We want to prevent thousands of Americans from getting hit by the double whammy of (1) losing their homes to foreclosure, and (2) getting slapped with a tax bill when the debt on their home is discharged by the lender.

Even taxpayers that restructure their mortgages to avert foreclosure face this risk of triggering large tax bills.

It doesn't seem right for individuals in this circumstance to face a tax bill when they really have no increase in their net worth.

As I see it, their house went down in value, and the individuals couldn't meet their mortgage requirements, resulting in foreclosure. The amount of the income that they would recognize without regard to this bill would be equal to or less than the decline in value of their home. So, absent this legislation, homeowners in this situation would be slapped with a tax liability for no net increase in wealth.

H.R. 3648 would correct that result so that if a person's principal residence lost value, that loss won't give rise to a tax liability.

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

Mr. Speaker, I rise to oppose the motion to recommit.

First of all, as the gentleman mentions, using the term ``promptly'' means that it is kicked back to the committee to an uncertain future.

This has been before the committee for some time. There is broad bipartisan support that we need to solve this problem. And I have listened to my friends, they haven't come forward with any reasonable suggestion about an alternative pay-for. They had an opportunity in the Rules Committee; they had an opportunity before the committee. If we follow their course, we're going to be in limbo, I don't know how long, but unnecessarily.

The minority has been interested in the past in making it temporary. That was the Bush administration's position; that's what Republicans argued before the Rules Committee. We don't want to put it back to an uncertain future.

The one proposal that has come forward today for a pay-for was itself a long-term revenue loser. Using a Roth-style approach to government employee accounts, I think they're 457s, is a long-term revenue drain which uses an accounting gimmick in the short term to have people pay a little tax so they save a whole lot of tax in the future. That will add to the deficit over time.

Now, contrary to what my distinguished friend from Virginia says, it does not disadvantage people. The exclusion for residential property for a prime residence was just that, it was to give people a $500,000 exclusion from capital gain on the sale of the property. It doesn't foreclose other people from stringing it forward to get more than $500,000. It just means the extent to which it's not your primary residence, you don't get a percentage increase above that. If it's your primary residence for one-third of that time, you get one-third of the benefit, in addition to $500,000 that you get with your first bite of the apple. It means you don't get two it means you don't get three in 6 years; you get one full bite, and then you get a percentage on top of that. It's reasonable; it's fiscally responsible.

I strongly urge the rejection of this proposal that puts this legislation in limbo. There is broad bipartisan support for the concept. The permanent support of a permanent nature of it is sound, the pay-for is reasonable. I urge rejection of the motion to recommit.

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