Foreclosure Prevention and Homeownership Protection Act

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

Madam Chairman, I would like to first thank Chairman Frank and all of the members of the Financial Services Committee, and particularly those members who serve on the subcommittee that I chair, the Subcommittee on Housing and Community Opportunity. I'm thanking Members on both sides of the aisle for helping to bring this bill to the floor today.

H.R. 5818, the Neighborhood Stabilization Act, authorizes a $15 billion HUD administrative grant and loan program to State and local governments to purchase, rehabilitate and resell or rent foreclosed homes. To understand the urgent need to enact this legislation, one need only consider the sobering figures on foreclosures recently released by RealtyTrac, which show that foreclosure filings during the first quarter of 2008 are 112 percent higher than 1 year ago, and that actual bank repossessions of homes during March were a shocking 129 percent above March 2007.

The human reality behind these numbers is revealed if you visit, as I have the past year, cities and communities in cities like Cleveland, Ohio; Detroit, Michigan; or the San Bernardino and Stockton metropolitan areas in California, where block after block is dotted by foreclosed properties, many of them suffering from neglect or actual vandalism. These abandoned and foreclosed properties drag down the value of homes still occupied by working families, and contribute to a cascade effect whereby plummeting home prices erode the tax base of State and local governments and cause real estate related industries such as the construction trades to suffer.

States and most local governments must balance their budgets each year and, as a result, 20 States have already had to make or are proposing budget cuts due largely to revenue losses resulting from the subprime crisis, which further reduces demand in the economy and deepens the recession.

On April 10, the Financial Services Committee heard from Mayor Thomas Menino of Boston, Governor Martin O'Malley of Maryland, and others, that despite severe physical constraints, many States and cities are already dedicating their own shrinking tax revenues to purchase foreclosed properties and attempt to stabilize these neighborhoods. But they are overwhelmed by the scale of the problem in comparison to their shrinking tax revenues. For this reason, the National Governors Association has stated that a ``one-time Federal funding commitment to support the acquisition and rehabilitation for foreclosed properties is vital.''

The Governors are joined in their support for the stimulus contained in H.R. 5818 by the U.S. Conference of Mayors, National Association of Counties, National Association of Local Housing Finance Agencies, and the National Council of State Housing Finance Agencies. H.R. 5818 is also endorsed by nearly 40 civil rights, community development, labor and low income housing groups, including the AFL-CIO, Catholic Charities, Lutheran Services of America, the NAACP, the National Urban League, the National Low Income Housing Coalition, and the National Foreclosure Prevention and Neighborhood Stabilization Task Force.

This bill targets assistance where it is most needed. The $7.5 billion in grants and $7.5 billion in loans would be allocated to States based on two factors: The number of foreclosures, and the number of subprime loans 90 days delinquent. This is then subject to a limited adjustment for median home prices, a bipartisan compromise that was worked out in mark-up with the committee's members from Ohio, which, like many midwestern States, has faced skyrocketing foreclosures but did not experience an extraordinary run up in housing prices.

Second, the bill puts flexible resources in the hands of government with the capacity to address the crisis and put funds on the street quickly enough to stimulate the economy. Rather than expect HUD to process plans from 1,200 entitlement jurisdictions, the balance we struck at mark-up was to allocate funding to States and to the Nation's largest 100 cities, largest 50 counties, and cities over 50,000 with especially high foreclosure rates. The areas of States outside of those cities and counties would be addressed in the State's plans.

Under the bill's timelines, fund obligation must begin within 6 months of enactment, be completed within a year, and fully spent within 2 years of enactment. This is no ``big government,'' immortal program, as our colleagues across the aisle suggest. Rather, it is a timely, targeted and temporary shot in the economy's arm, exactly where one is needed.

Indeed, using well-accepted construction activity multipliers, the National Foreclosure Prevention and Neighborhood Stabilization Task Force calculates that the bill's proposed $15 billion investment will generate at least $38 billion in direct and ripple effect economic activity nationwide, employ about 120,000 people, and restore nearly $225 million per year in local real estate tax collections.

Some Republicans have tried to frame this bill as a bailout bill for investors. This simply is not so. Government and their nonprofit partners will drive a hard bargain with property owners because they are highly incentivized to make this money go as far as possible in their efforts to stabilize neighborhoods where many of them have been working for years, and because they must pay the government back any funds used to purchase homes.

In no event, moreover, can they pay more than 110 percent of the average

home sale price in the area. Creaming of properties and ``sweetheart'' deals are prevented by the requirement that properties sit for 60 days before they are eligible.

What H.R. 5815 does make possible is for States, cities and counties to stabilize a few neighborhoods, especially low income ones, that are in serious danger of an overcorrection and rapid deterioration past the tipping point, where it becomes very difficult to turn them around.

I urge Members to hear the pleas of the Nation's governors, mayors, community-based organizations and ordinary citizens to provide this critical relief to stabilize neighborhoods and stimulate the economy.

The administration and my friends on the opposite side of the aisle in this Chamber argue that we cannot afford to respond. I would like to just remind this body of what Mr. Frank said earlier today, we afforded $30 billion to bail out Bear Stearns, and certainly we can afford half of that amount, $15 billion for the entire country. We simply cannot afford not to.

I urge passage of the Neighborhood Stabilization Act.

I reserve the balance of my time.

Madam Chairman, I yield to the chairman of the Financial Services Committee 3 minutes.

I yield an additional minute to the gentleman.

Madam Chairman, I recognize for 1 minute the gentleman from Massachusetts to straighten out the gentleman on the opposite side of the aisle who does not know the history of CRA.

I yield the gentleman an additional minute.

Madam Chairman, I yield to the gentleman from Texas (Mr. Al Green), who serves on our committee, for 1 minute.

Madam Chairman, I yield 1 minute to the gentleman from Georgia (Mr. Scott).

Madam Chairman, I yield myself 30 seconds.

The gentleman from Illinois evidently has not read the bill. As a matter of fact, they have to have a plan that is adopted or accepted, reviewed by HUD. And so in the plan, all of the disclosure, everything that needs to be known about that city's plans will be reviewed.

In addition to that, the amendment that the gentleman is referring to is an amendment that would bog down this ability to get money into the neighborhoods and on the street very quickly for the economic stimulus that we anticipate.

I yield to the gentleman from New York (Mr. Higgins) 1 minute.

I yield to myself 30 seconds.

I'm glad the gentleman found the plan in the bill that I had advised him about because there is a plan, and perhaps it does not have 101 things that he

would like, and I'm sure you could add a lot more to it, but there is a plan. And the situation that he just described could not happen. As a matter of fact, you have to pay back the money that you get through the loan.

Madam Chairman, I yield to the gentleman from Missouri (Mr. Clay) 2 minutes.

Madam Chairman, I yield 2 minutes to the gentleman from Minnesota, a member of our committee, both the subcommittee and Financial Services, Mr. Keith Ellison.

I yield 1 minute to the gentleman from Ohio, a member of the Financial Services Committee, Mr. Charlie Wilson.

I yield the gentleman 30 additional seconds.

Madam Chairman, I yield 1 minute to the gentlewoman from California, Ms. Barbara Lee.

I yield 1 minute to one of our newest Members, and a member of the Financial Services Committee, Mr. Andre Carson.

Madam Chairman, I would like to yield to the gentlewoman from Cleveland, Ohio (Mrs. Jones) 1\1/2\ minutes and remind her that it was 2 years ago when I was in her city that she asked me to come to a town hall meeting where this issue was being discussed at that time and most of us really didn't understand the depth of it.

Madam Chairman, I have no further requests for time, and I reserve the balance of my time.

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

Madam Chairman and Members, I would like to thank all of the Members who have come to the floor today in support of this legislation because they understand the devastation to neighborhoods all over this country.

I have listened very carefully to the arguments from the opposite side of the aisle, and none of them rise to the merit of being able to oppose this bill because they're substantive arguments.

First of all, I have heard Members on the opposite side of the aisle talk about taxes. They have talked about gasoline. They have talked about everything except what we are here to talk about: the fact that there has been a subprime meltdown in this country and many neighborhoods are devastated. We have homes that are being stripped of the copper. We have homes that have been boarded up with vandals inside those homes, oftentimes living inside those homes, with the weeds growing up in many of these properties, and the value of the homes in the neighborhood where people are attempting to maintain their homes is going down every day.

We had one Member on the opposite side of the aisle talk about how flush these cities are with money. Evidently, he has not looked at what is going on in the cities and States. Many of them are in deficit situations. They're in deficit situations because we're in this recession, this nonperforming economy under the leadership of the President of the United States where the price of food has risen, gasoline prices are up, and the subprime mess is fueling the problems of our economy. And with all of this that has taken place under this President and this administration, you would think that the Members on the opposite side of the aisle would want to come to the aid of their constituents.

We have talked about the $30 billion bailout under the Fed Chairman that was appointed by this President. And I am sure, since we did not get a call in the middle of the night to even discuss with us that the bailout was going to take place, I'm sure that the Fed Chairman called the President that appointed him. And I would give anything--I would place money on the line--to tell you that the President approved of that bailout. And so why not bail out the people who deserve to be helped? People, many of them who got into loans that were lured into these loans, lured into these mortgages by unscrupulous real estate brokers who

told them to just sign on the dotted line, by unscrupulous folks representing some of the financial institutions who said get into this ARM and when it resets, I will be there to help you refinance it, and, of course, they're not there. These people, many of them have lost these homes through no fault of their own.

But the neighborhoods are being devastated. We have information here that tells us how much crime will be fostered on the neighborhoods. As a matter of fact, what we have learned is that when there is one foreclosure, it leads to not only vandalism that affects the entire neighborhood, but it also increases the crime. This has all been documented.

I would think that the representatives who have been sent here by the people who have voted for them would want to be able to go home and say to their constituents, I understand what's going on in the neighborhoods; to say to their mayors and to say to their Governors and to say to their county commissioners, ``We are here to help.'' Yes, we are spending a lot of money on other things. As a matter of fact, many of the Members on the opposite side of the aisle, in a matter of hours, are going to vote for over $107 billion in supplemental funding to continue the war in Iraq.

Many of these Members have voted to give tax increases to the richest 1 percent in America. The least they could do is vote for the citizens and for their cities.

I yield back the balance of my time.

Madam Chairwoman, I have an amendment at the desk that has been made in order under the rule.

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

This manager's amendment is in the nature of a perfecting amendment that makes a few changes to the bill that I hope will be relatively uncontroversial.

First, as this bill has moved through the process, we have moved from a program that allocated all of the funds to States to administer to one that, as I described in my opening statement, distributes funds to States, certain metropolitan cities and large urban counties.

This amendment simply removes the State as the middle person in allocations to qualifying cities and counties which would instead receive direct allocations from HUD. This will expedite the distribution of funds which is critical in the context of economic stimulus.

Second, the amendment brings a definition of operating costs of housing purchased under the program, which is an eligible use under the grant component in line with similar uses in other HUD programs such as the McKinney-Vento Homeless Assistance Act. This just clarifies what is and is not an eligible expense when an entity is operating a purchase property as rental property or preparing it for resale.

Finally, to further address the concerns that this bill somehow provides a bailout to lenders, the amendment caps the purchase price of foreclosed properties at the appraised price or 110 percent of the average local single family home price, whichever is less. This guards against property owners gaming the system to obtain inflated prices under the program.

I urge my colleagues to vote for this amendment.

I reserve the balance of my time.

Madam Chairwoman, I was hopeful that the ranking member of the subcommittee would offer support for this amendment. I know that there are some differences that she has and others have on this bill.

However, the attempts that we have made to make sure that it is a bill that can operate efficiently, such as identifying those 100 cities, those 100 counties and those 50 cities of a certain size would be the kind of amendment that the ranking member and others would understand makes this a better bill and would formulate ways by which it could efficiently and effectively get that money into the communities that are needed.

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

Madam Chairman, I rise to claim time in opposition.

Although I rise to claim time in opposition, I am not opposed to the amendment.

I think the ranking member of the Housing and Community Opportunity Subcommittee has made a sound addition to the bill here. While, as I mentioned in my opening statement, we did not want HUD to get bogged down in processing 1,200 different plans from all the entitlement jurisdictions in the

HOME and CDBG programs, there is no question that the expertise at HUD to administer this bill's loan and rent program lies in the Community Planning and Development division of the agency. So I urge my colleagues to support Mrs. Capito's amendment to ensure that we don't create an unnecessary new bureaucracy if H.R. 5818 is passed into law.

I yield back the balance of my time.

Madam Chairman, I rise in support of Mr. Kucinich's amendment.

Madam Chairman, I rise in strong support of Representative Kucinich's amendment.

His subcommittee has done an enormous amount of valuable work examining this targeting issue, and I want to thank him for focusing attention on the issue of neighborhoods where there are large and growing concentrations of vacancies resulting from the foreclosure crisis. They're exactly the neighborhoods I mentioned in my opening statement, ones that face the prospect of reaching the tipping point of deterioration from which they may never recover. Stabilizing such neighborhoods is an especially daunting task for community leaders and organizations.

So I think it is entirely appropriate, as this amendment does, to require States, counties and cities in their plans to prioritize these foreclosures and vacancy hotspots.

Finally, I know that this is no academic exercise for Representative Kucinich in his role as subcommittee Chair. He's bringing hard experience to the table from the neighborhoods within his district in Cleveland.

I urge my colleagues to support this amendment.

I yield back the balance of my time.

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

A former President once unfairly characterized a leader of this House as someone who couldn't walk and chew gum at the same time. The gentlewoman from West Virginia extends, frankly, that insult to the whole House. She suggests we can't do two bills in one night. She says we should work to try to help avoid foreclosure. I agree. That's the next bill which we will get to after all of this useless temper tantrum is over, we will get to it at 3 o'clock in the morning, but we will get to it.

That bill will help avoid foreclosure. I know the gentlewoman agrees. She voted for that bill in committee although a majority of her colleagues were against it.

But I do not understand how anybody could argue that doing this bill now interferes with that bill later. They are totally not in conflict.

So the notion that this bill doesn't keep people out of foreclosure is true. It doesn't combat global warming. It doesn't get troops out of Iraq. It won't help me lose weight. There are a lot of things this bill won't do that I very much want to do. None of them are a reason to vote against a bill that doesn't do what it doesn't say it's going to do but does what it does.

What it does is to go to the aid of cities that have been victimized by the deregulation run rampant, perpetrated by this administration, which has led to the subprime crisis. We have vacant property everywhere in these areas.

Now the argument that this is going to award speculators and be an incentive to do foreclosures is also flatly wrong. This is $15 billion. People will tell you it's a lot of money, and it is. Do you know how much money this is? This is half of the money that this administration made available to buy up the debts of Bear Stearns. Now, I think they had to do that. I think they were forced to do it. But I think we have to do this as well.

I do think that the whole country, under this administration's calculation, ought to get at least half of what Bear Stearns got. That's all that this does.

Now, unfortunately, it's not nearly enough to buy up the property that's foreclosed. So anyone who says, I'm going to foreclose today because I want to get in on this, would be nuts because there is already property ahead of them. And even when this bill becomes law, if it does, there's a 60-day wait, and I hope it will be part of the stimulus.

Property that was once paying taxes because of this subprime crisis now eats taxes. It bites neighborhoods. And, yes, some of the people who foreclose may benefit here. But we are telling the cities and the States to be careful with this money. They have to buy it for affordable housing. That will put limits on what they will pay.

And you can say, well, why don't the cities do it on their own? Because the very cities that need help here have lost revenue because of this foreclosure. These properties are fire traps; they attract people who break the law; they attract sanitary nuisances. They lead to water hazards.

I always feel good when people make arguments against legislation that won't really deal with the legislation. The notion that the problem with this bill is that it doesn't help avoid foreclosure, when it was not the bill intended to avoid foreclosure, shows well, there's a dearth of arguments against it.

The argument that it's going to reward the speculators, this will go to

cities dealing with property that is causing them problems. Do we not trust the cities and States of this country to take this money and use it judiciously and wisely to prevent neighborhood decay?

I don't understand the animus that motivates so many of my Republican colleagues that say, Oh, no, let's not have government intervention here. Well, we heard that a while ago, and people on the other side successfully blocked government intervention in regulating subprime mortgage origination outside of the banks. It was this religion of never intervening that brought us here. A limited intervention to undo the negative consequences is what this bill calls for.

Of all of the unfair accusations, the one that blames the Community Reinvestment Act for this is the strongest.

The Community Reinvestment Act was passed in 1977. This subprime crisis, of course, did not appear until nearly 30 years later; but more important, the subprime loans that caused problems were overwhelmingly made by institutions not covered by the Community Reinvestment Act. It covers depository institutions: banks and thrifts and credit unions. Credit unions aren't covered. Banks and thrifts.

If only those institutions, deposit-taking, regulated institutions covered by CRA had made these loans, we wouldn't have had the crisis. The loans were made by institutions not covered by CRA 30 years, 28 years after CRA was passed.

I yield to the gentleman from Florida.

The gentleman is wrong to say that we evaluated everybody under CRA. We have evaluated banks and thrifts under CRA. Mortgage brokers, mortgage bankers were not evaluated----

No. Not until I finish this factual statement.

I will yield to the gentleman.

I will take back my time.

First of all, I thought I heard the gentleman talk about the Community Reinvestment Act. It's been late. I keep hearing, ``I move to adjourn.'' Maybe my ears got a little curdled.

I thought the gentleman said, and we'll check the record later. If he didn't mention the Community Reinvestment Act, I will apologize.

But no. I for one have been saying that we should not be pushing people into homeownership when they can't handle it, and part of the problem here was killing affordable rental housing.

But let's have the record clear. There is no rational way to blame the Community Reinvestment Act passed in 1977 and not cover the nondepository institutions for this crisis caused by the nondepository institutions.

I will respond at great length later, but I would say this.

I said I did not oppose, myself, what they did. I was talking primarily about the Bush administration.

Now the ranking member said 17 Republicans out of almost 200 signed this letter. I don't think that's the majority of Republicans. They didn't oppose it. They raised questions about it.

But it was the two highest ranking economic officials appointed by the Bush administration, Chairman Bernanke and Secretary Paulson, who did this; and it's the Bush administration that seems to me to be totally inconsistent here. So yes, I did point to an inconsistency between the Bush administration doing the bailout and their opposing this. I'm setting a precedent. I hope the citizens will think we are setting the precedent of coming to their aid from time to time.

Madam Chairman, I rise in as close to opposition as this noncontroversial amendment is likely to engender.

I did note, and I welcome the gentleman from Michigan's affirmation, that this is not simply for banks, investment houses, pirates, lechers and other ill of sordid folk. He is seeking to give preference to veterans, members of the Armed Forces on active duty, members of the National Guard or Armed Forces Reserve, school teachers and emergency responders.

I agree with these priorities. It is, of course, an affirmation that this bill will benefit these people, unless we are to assume that they will be given a preference which is of no benefit to them. But if this bill is of no benefit to anybody but speculators, lenders and riffraff, then why give preference to these people? I agree with the amendment to that extent, and so I would just say that this underlines the point that there are very worthy beneficiaries.

But now I also want to return to the matter of the Bear Stearns issue. I will acknowledge, I did receive a letter from 17 Republicans, which is, by my math, not a huge percentage of 199 or 200 or whatever the declining number of Republican Members of the House is these days, but it is still not a very large number. And even in that letter, while it was not thrilled by the Chairman Bernanke-Secretary Paulson collaboration, it does not have one word in strict opposition to it. Nor does the letter that 24 Republicans--a slightly larger number, but still not even 15 percent--sent to Mr. Bernanke again raising questions.

So, yes, 24 Republicans have raised questions, Members of the House, about this bill. I will repeat that my accusation of inconsistency goes to the Bush administration primarily. They are the ones who engineered the $29 billion. They are the ones who are vehemently opposed to this.

Now some Republican Members did raise a question that said we should look into it and we're skeptical of it. I agreed with that. As I said in the letter, I think we should study it. I did think we should study it a little later for two reasons; first of all, I do believe

the subprime crisis is a crisis, some Members on the other side do not. There are, among the signers of this letter, some of those who, from their very conservative ideology, oppose any action by this Congress regarding the subprime. I mean that quite literally, they oppose any action to deal with this. That's their right. But I would put dealing with the subprime crisis ahead of a backward look, as important as that ultimately will be, at what happened with Bear Stearns.

Secondly, I want to look at what the Fed did there in the context of how can we make it less likely that it will happen again? I wasn't happy that it happened. I think there was a necessity in those circumstances. So what I said in the letter that I sent back to the authors was, yes, we should look at this in the context of the broader question: What powers do we need to give either the Federal Reserve or somebody else to make it less likely that this happens again?

So, yes, I should, we should, look into it, but I think we should look into it not simply from a kind of retroactive bawling them out, but how do we prevent it or diminish the likelihood of it happening? But the inconsistency remains. Twenty-four Republicans said they had questions. On the whole, I haven't heard any Republican opposition to it. I haven't seen any resolution opposing it.

It was the Bush administration, and this is my point: I thought it was unfortunately necessary. The Bush Administration, this is Secretary Paulson and Chairman Bernanke, they were the ones who did this. And I think they have been responsible in trying to deal with this crisis. But for the President who appointed those people to now denounce this because it's going to help, among others--and by the way, let's be clear, if this amendment passes, as I hope it will, we will be giving preference under this bill to veterans, members of the Armed Forces on active duty, members of the National Guard or Armed Forces Reserve, school teachers and emergency responders. So we have a Republican affirmation that these are among the beneficiaries.

And when you talk about bailing out investors and speculators, yes, that's what happened in the Bear Stearns situation. These were precisely the people who had done business with Bear Stearns. Now I believe that years of inadequate supervision of the economy, flawed legislation adopted when we repealed Glass-Stiegel and didn't put in regulations to deal with it at the time, that was supported by the Clinton administration and I voted against it. But when that happened, we invited the kind of problems that the leaders of the economic policy of the Bush administration had to implement. And it is that administration which is therefore being totally inconsistent in this regard.

Madam Chairman, I reserve the balance of my time.

May I inquire of the Chairman how much time I have remaining.

I have said repeatedly that I did not oppose the action. And I am pointing to the hypocrisy on the part of the Bush administration. The gentleman from New Jersey, like Sherlock Holmes, unearthed the fact that I wasn't opposed to it. I said that. I think they were forced into it. So, yes, I did not sign it.

As to not having a hearing right away, that is a done deal. I'm trying to prevent foreclosures now, then we will get back to looking in the rearview mirror.

Will the gentleman yield?

I just want to repeat, Members seem to think they're scoring points by saying, oh, they discovered we weren't opposed to it. I've said a dozen times, I thought they did what was necessary. I am not critical of them.

I do want to go back and see how we can prevent this from happening again.

But there is no inconsistency on our part. We didn't say that was the wrong thing to do. The inconsistency is the administration that says yes to $30 billion to Bear Stearns and no to $15 billion here.

I thank the gentlelady for yielding, and I certainly rise in opposition to this bill. I have no doubt that it is certainly good-hearted but it is certainly wrongheaded.

There is a great challenge in our housing markets today, but I come here with some interest and amusement to see how many of my friends on the Democratic side of the aisle bemoaned the Bear Stearns bailout by the Federal Reserve, only to come here and offer a bill that, ultimately, using the States and localities as a conduit, is going to bail out Wall Street. It's going to bail out the investors, the people who own these properties in the first place, the people who made bad debts.

I wish somebody would introduce a bill to bail me out of my bad debts. Perhaps next time I invest in real estate or the stock market or the commodities, somebody will come here and say, if I failed, we will get the taxpayer to come in and bail me out.

Second of all, it misses the point of what the true challenge is. The true challenge in our housing markets is a shrinking paycheck, and I know as much as our friends on the other side of the aisle wish to come and blame all the economic woes of our Nation on us, the truth is elections have consequences. They've been in charge of the economic policy of this Nation for almost 18 months now. And what have they done in 18 months?

Number one, they passed a budget that has the largest single tax increase in American history, largest single tax increase in American history. After 3 years fully phased in, it's going to be a $3,000 average burden on the American family. That shrinking paycheck causes people not to be able to pay their mortgage bills.

We know what's happened to gasoline prices, almost $4 a gallon. Shrinking paycheck. Now supposedly they were going to bring the price of gas down when they were elected. The American people know differently, and it's not just gasoline that's $4 a gallon. Milk. I've got a 6-year-old and a 4-year-old back home in Dallas, Texas. They drink a lot of milk. Milk's expensive. The cereal they like, it's expensive, all happening under their watch. A shrinking paycheck.

How are people supposed to afford their mortgage when they're having to pay historic high gasoline prices, historic high food prices and pay an extra $3,000 in taxes? Madam Chairman, that's the real challenge that America's families are facing now.

And here's another problem with this particular piece of legislation that I find. It ignores the greater crisis in America, and that is the spending crisis, the one that is ignored on a daily basis here. Already we notice that when the new Member from Louisiana was sworn in today, we all saw that he had his baby in his arms, and, I don't know, it might have been a 1-year-old or 2-year-old child, but that child already has inherited a debt of almost $200,000 because Congress after Congress keeps on spending money and sends the burden to future generations.

So, you know, what is it? It's $7.5 billion for grants here and $7.5 billion for loans there. Well, Madam Chairman, sooner or later we're talking about real money.

We're on the verge of being the first generation in America's history to leave the next generation with a lower standard of living. And it's not just me that's saying it, it's the Congressional Budget Office, the Office of Management and Budget, the General Accountability Office. And yet again, the Democrat majority ignores that true crisis.

I also find it quite interesting that while the Federal Government continues to be awash in the sea of red ink in passing on unfunded obligations to future generations, that almost every State and municipality in the Nation is running a surplus.

So we're taking money away from a treasury that has none to supplement treasuries that do have some. We have a great challenge in our Nation.

And clearly predatory lending took place, I might add, so did predatory borrowing. And so we need to help people, but the way to help them when people are struggling to pay their mortgages is not to raise their taxes and force them to pay the mortgages of their neighbor, particularly a number of neighbors and Wall Street investors who speculated, who might have engaged in fraud.

But Madam Chairman, back to the States and localities. For example, the Commonwealth of Massachusetts spends $11 million a year on their Office of Tourism. If we're having a great housing crisis, maybe they could cut back a little on the tourism budget and help the people in need for housing.

Again, if this is such a great priority for the States and they're crying out for these loans and grants, why does the State of Massachusetts continue to spend $760,245 for pools and spray pools under the control of the Department of Conservation and Recreation?

Michigan, $9.4 million to enhance public boating access and dock facilities. I have no doubt, Madam Chairman, that this is important. But again, if we have a housing crisis, maybe the good people of Michigan could cut back a little on their boating access facilities.

State of Ohio. They apparently have a wonderful ``Discover Ohio'' tourism and marketing campaign, $8.2 million. Maybe they could use some of that money to assist the people in their State.

How about some of the municipalities? According to the Daily News, Los Angeles spends a half a million dollars, $550,000 to be exact, for calligraphers to decorate proclamations and honors. I'm sure that those proclamations are very handsome, but again, if we're having a housing crisis, maybe people in Los Angeles can cut back on the calligraphy to assist the people in need. And yet the Democrat majority--and the gentlelady from California who perhaps

is familiar with the calligraphy--has decided instead to take the money away from the Federal Treasury, help raise taxes on hardworking American families while they're trying to fill up their cars to take their children to school, to try to go to work, so that ultimately we're subsidizing Ohio tourism, L.A. calligraphy, water boating access in Michigan, and the list goes on and on. Surely we can find something that is more fiscally responsible and more creative than yet another grant and loan program to States and localities that ultimately bail out investors and Wall Street.

This is bad legislation. It should be defeated.

Madam Chairman, I have an amendment at the desk.

Thank you, Madam Chairman.

First, I would like to yield 30 seconds to the ranking member, the gentleman from Alabama.

Madam Chairman, I will yield myself as much time as I may consume.

Madam Chairman, I thank the ranking member for his comments and again bringing up what is a very important issue here. And that is fundamentally what we have before us is a Wall Street bailout bill. Now we all know there are some very significant challenges in our housing markets. But the answer is not to be bailing out lenders. They may be good lenders who made bad bets, and maybe they are the predatory lenders that we hear so much about. This bill doesn't make any particular distinction.

The people who can stay in their homes, if they just get a little help, we need disclosure. We need to enforce the law against fraud. There has been a lot of mortgage fraud on the borrowers' side, on the lenders' side.

Most importantly now, Madam Chairman, we need to prevent the single largest tax increase in American history passed by the Democrat majority in their budget which means that people who are struggling to pay their mortgages are going to have to pay more taxes.

The rising fuel cost, that's happened under the watch of the Democrat majority; the rising cost of food happened under the watch of the Democrat majority. They've been in charge of the economic policy of America for almost a year and a half now. It is the shrinking paycheck of the hardworking American homeowner and taxpayer that's at the crux of this problem.

And so what this underlying bill does is take $15 billion of money away from the school teacher in Mesquite, Texas, struggling to pay his mortgage; the guy who works at the Pepsi bottling plant in Mesquite; the rancher out in Athens, Texas; takes money away from

them to bail out all of these bad investors who made these bad bets.

So you can't say that you were concerned about Bear Stearns and then all of a sudden turn right around and have this humongous Wall Street bailout bill.

My amendment is simple. Presently, you have a $15 billion bill, half of which are loans and half of which are grants. The purpose of the amendment is to turn this into strictly a loan program. Now, I don't believe in the purpose of the underlying bill. But, if you're going to bail out Wall Street and use taxpayer money, let's at least, at least try to make it a loan so that there is at least some chance, some chance that the taxpayer who's facing a $3,000-a-year increase in their taxes for a family of four over the next 3 years under the majority budget, that maybe, maybe they have some small chance of recouping some of that money from all of these cities and localities. And by the way, again, the last I looked, almost every single State and municipality in America is running a surplus.

Yet the Federal Government isn't, and so what does the underlying bill do? Hands out more grant money, more grant money on top of the $57 trillion of unfunded obligations that every man, woman and child in America already owes. Well, let's add some more grant money.

Well, if it's that important to States and municipalities, maybe they would want to fund it or maybe they could take the loan money and eventually pay it back so maybe the Democrat majority wouldn't have to raise taxes on the Federal taxpayers quite as much.

So, Madam Chairman, it's a very commonsense amendment. If you're going to do it, at least do loans and don't do grants.

With that, I reserve the balance of my time.

I yield myself the balance of my time.

Well, first, I would say to my friend from Georgia and other friends on that side of the aisle, if loans are so bad, why are they in the bill in the first place?

Second of all, this bill does nothing to stop foreclosures, not a thing. Quite the opposite. Instead, it will increase foreclosures.

What you have is an incentive for these investors to no longer do a workout with the struggling family, but instead, I can get bailed out. I can get bailed out by the Federal taxpayer. This is a bill that will help banks, Wall Street and States and does nothing for foreclosed families. It certainly does nothing for the taxpayer, and if we have a liquidity problem, which we do, let's cut the capital gains tax rate and you will see capital come into this market. I urge adoption.

Madam Chairman, I demand a recorded vote.

Madam Chairman, today I want to thank, first of all, the chairwoman of the Subcommittee on Housing, of which I'm the ranking member, for her good hard work and dedicated service. We've had a lot of hearings and a lot of information, and I think we all want to try to achieve help for the homeowners or those who are on the edge.

But today I rise in opposition to H.R. 5818, the Neighborhood Stabilization Act of 2008. We all recognize that we are experiencing a sharp increase in foreclosure statistics and starts. Over the past year alone, approximately 550,000 homeowners with subprime loans began the foreclosure process.

However, we shouldn't rush to act. We must guard against adopting policies which create moral hazards and unintended consequences.

Unfortunately, we believe H.R. 5818, the Neighborhood Stabilization Act of 2008, is a bill which does both. H.R. 5818 is an unnecessary government intervention in the housing market which will bail out real estate speculators, servicers, and lenders while doing nothing to assist hardworking Americans struggling to make their mortgage payments. This bill will not keep one person in their mortgage or in their home.

The bill does this through a $15 billion authorization for grants and loans to be used to purchase already foreclosed homes from lenders, servicers, and speculators who have made bad loans or unwise investments. The Neighborhood Stablization Act will allow investors and servicers to unload their foreclosed properties to the government with the taxpayer footing the bill. Servicers and investors might even be encouraged to pursue foreclosure if this bill is enacted.

Instead of incentivizing foreclosure, Congress should be encouraging services to engage in voluntary loan work-outs and modifications. Furthermore, this bill calls on States and local governments to convert foreclosed properties into affordable rental and single-family housing. The increase in housing supply and decrease in prices creates housing affordability without government intervention.

I'm also concerned that the overly broad income targeting provisions in this bill, which will allow families making 100 percent and 140 percent of area median income respectively, to rent and purchase properties acquired with funds from this act. It is not appropriate for the government to provide housing assistance to individuals who can afford market-rate housing.

Congress should focus its efforts on keeping hardworking Americans in their homes. We should not unnecessarily intervene in the housing market in the process of adjustment after years of what has proved to be unsustainable growth. It is imperative that we recognize the primary beneficiaries of this bill will not be the thousands of Americans struggling to hold on to their home, but the lenders, servicers and speculators who bear much of the responsibility for the current housing slump.

Putting aside the issue of how massive this new program would be, the bill's ultimate beneficiaries, as I said, could be our lenders and investors and speculators; and indeed the FHA commissioner, Brian Montgomery, stated in testimony before our committee that ``this legislation may have the unintended consequences of making foreclosure a more attractive option for lenders thereby compounding the very problem of rising foreclosures that the bill purports to address.''

Madam Chairman, I oppose this bill, and I would like to reserve the balance of my time.

I would like to make a comment in reference to the chairman's comments.

I live in a small community, just barely over 50,000. And we have local government and State programs in effect right now that deal with foreclosed or blighted projects. They work together with the local nonprofits, with the local land owners and realtors, and we have problems that are moving forward.

So to say that we're not in favor of programs that would deal with foreclosure-blighted neighborhoods I think is factually incorrect.

I would like now to yield some time to the gentleman from Florida (Mr. Feeney), a member of the Financial Services Committee, 3 minutes.

Madam Chairman, I yield 3 minutes to a member of the Financial Services Committee, Mr. Roskam from Illinois.

Madam Chairman, I yield to the gentleman from Illinois (Mr. Roskam) 2 minutes.

Madam Chairman, I yield 4 minutes to the gentleman from Texas (Mr. Hensarling), a member of the Financial Services Committee.

I yield the gentleman 1 additional minute.

I yield the gentleman another 2 minutes.

Madam Chairman, I yield 4 minutes to the gentleman from Georgia (Mr. Price), who is also a member of the Financial Services Committee.

Madam Chairman, may I inquire as to how much time is remaining on each side.

I would like to reserve the balance of my time.

Madam Chairman, I would like to yield 3 minutes to the gentleman from New Jersey (Mr. Garrett), a member of the Financial Services Committee.

Madam Chairman, I yield to the gentleman from New Jersey (Mr. Garrett) 1 additional minute.

Madam Chairman, could I inquire of how much time we have remaining.

Madam Chairman, I am ready to close. I have no additional speakers as well.

I think we have heard a stark difference in opinion on this bill. I would like to make a distinction, as we have heard the discussion going back and forth, and I think the good-natured way that the debate has gone forward but also the intent of this bill is unquestionably a good intent.

But I would like to clarify to those who are listening that this bill is separate and apart from that person who can't sleep at night, that family who stays up at night trying to figure out how to meet the high cost of gas, how to meet the higher cost of food, and how to make their mortgage payment. We've been working with FHA to get people to refinance and to redo their loans so they can stay in their house, and I don't want there to be confusion concerning this bill and the next bill that we are going to be considering shortly after this.

This bill, separate and apart, is not going to help that family who can't figure out in the middle of the night how they are going to stay in their home, how they are going to pay their mortgage. These properties that we're also discussing are already foreclosed-upon properties. They're owned by investors, speculators, and financial institutions. And that's our objection. I don't believe we are in a position, and I don't think any of the speakers on our side believe we're in a position for a costly bailout for the lenders, servicers, and real estate speculators who have made risky bets on the housing market and who are now going to off-load their properties into a government program. I think that penalizes every single taxpayer, and it really penalizes that person at night who can't figure out how they're going to get up and pay their mortgage the next day, and that's the person we desperately need and we want to help and it's proper that we should help.

So I believe that H.R. 5818 is overly broad. It's a new government program that is going to end up creating a moral hazard, and it's going to end up benefiting not individuals, not people who are having trouble making their mortgage payments, not people who find themselves upside down in their house. It's going to end up benefiting, at the cost of the taxpayers, and I repeat again, lenders, servicers, and real estate speculators.

And with that, I urge a ``no'' vote on H.R. 5818.

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

Madam Chairman, I would like to claim time in opposition to the amendment.

Thank you.

While I appreciate the chairwoman's amendment, and I do believe that it does go in a direction that is much better for the bill, I still have, as I have voiced in the earlier debate, serious concerns about the bill in terms of the cost and in terms of taxpayers' dollars bailing out investors and lenders. This does not go to individual homeowners. It does not help somebody in foreclosure, an individual family in foreclosure.

And so with that, I would urge a ``no'' vote on the amendment.

I yield back the balance of my time.

Madam Chairman, I demand a recorded vote.

Madam Chairman, I offer an amendment.

Madam Chairman, my amendment is really quite simple. As we have heard myself talking and Members on my side of the aisle talking about the difficulties that we have with the bill, I realize that the odds are with it that it may pass out of this House. With that in mind, I would like to offer this amendment to what I think makes the bill better.

My amendment would very simply direct the funds to be administered through the Office of Community Planning and Development of the Department of Housing and Urban Development. This office already oversees the HOME and CDBG programs which we are very familiar with.

One of the concerns that we had with the bill was creating a whole new bureaucracy within HUD to administer this program if it were to go forward. And that is problematic any time you are creating a new bureaucracy, particularly when you are replicating some of the delivery systems that already exist within HUD. Those delivery systems exist in the Office of Community Planning and Development.

So with that, I would like to say that rather than the current language which just merely directs the Secretary to implement the program, I would prefer, and my amendment offers to direct those funds to be administered by the existing Office of Community Planning and Development within HUD which deals, as I said, with the CDBG program which we are all very familiar with working in a lot of our communities.

With that, I yield back the balance of my time.

Madam Chairman, I seek time in opposition, although I am not opposed to the gentleman's amendment.

I would just like to express my support for his amendment. I think we have had this debate on the floor many times. And I want to say that we want to assure the American public, I think it's always good to reassure the American public that taxpayer funds are not going to help people here who have entered our country illegally and remain here illegally.

I would like to see, as we move forward in this debate on this and other bills, that we tighten down the types of identification that are full proof, that can be used to certify the legality of whoever the resident is residing, whether it's in public housing or in other taxpayer-funded opportunities.

I yield back the balance of my time.

I thank the gentlewoman for the time.

Madam Chairman, I come to the floor optimistic inasmuch as I have heard, I think, where maybe five or six Members on the other side of the aisle raised the issue of exactly what transpired with regard to Bear Stearns and that circumstance some 2 months ago. I come optimistic but at the same time somewhat perplexed because, as I say, this did occur with regard to the Federal Reserve some 2 months ago, and immediately thereafter my office contacted the full body of our committee, both Republicans and Democrats, saying should not our committee be investigating what transpired there? And we extended a hand to the other side to say let's do two things: First, let's contact the Federal Reserve and Secretary Paulson to raise the issues that are now being raised at this belated date by the other side of the aisle. We came through at that time with a list of upwards of nine pertinent questions, questions such as, the SEC states that it monitored Bear Stearns' capital and liquidity positions on a regular basis and that levels of both capital and liquidity appeared adequate right up into the week of March 11, but given the subsequent rapid deterioration in Bear Stearns' financial condition, does the SEC have the capacity and authority it needs to assess these risks? Secondly, why wasn't the loan made in a traditional manner? If, as stated in President Geithner's testimony to the Senate Banking Committee that the Federal Reserve did not have the authority to acquire interest, what authority does it have now?

These were the questions that we were posing that should have been answered several months ago. We extended the opportunity to the other side at that time to join with us in this letter to make this investigation. Oddly enough, at that time no one on the other side of the aisle found a need to do so.

Also what is odd with regard to the investigation in this matter, the committee of jurisdiction looking into what the Federal Reserve did would be the Financial Services Committee. Once again, our side of the aisle suggested to the chairman that we should be delving into the issues that the other side is raising tonight, belatedly. We extended the opportunity to send a letter to Chairman Frank, with signatures of most Members on our side of the aisle to the chairman, saying should we not be looking at these issues, these nine issues that I just referenced before to the Federal Reserve and also Paulson? Should we not be looking into this in Financial Services? Two months ago no one from the other side of the aisle saw it as pertinent. Tonight, as we go into it here and from the rhetoric that comes to the floor, they all say that they are interested in examining what the Federal Reserve is doing.

That's why I say I come to the floor optimistic and a little bit happy because now I believe that when I leave the podium tonight, I can go to the other side of the aisle and I will be more than happy to do two things: To make an addendum to our questions to Secretary Paulson and the Federal Reserve and to make an addendum to Chairman Frank to say that in both cases we should be investigating it and that we would ask that Chairman Frank schedule hearings forthwith, immediately, so that we can go into the matters that you are raising and that I have raised as well to see what authority the Federal Reserve has to conduct these activities.

Madam Chairman, actually at this time I'd just like to put into the Record the letter that was signed by Members from our side of the aisle to Chairman Frank back on April 7, which would have been a month ago now, requesting an expedited hearing with regard to the Financial Services situation with regard to the Federal Reserve and the Financial Services hearing. Also, I will put in the Record a letter dated April 16 to Secretary Paulson from the Department of Treasury and Chairman Bernanke of the Federal Reserve as well, itemizing the nine particular questions with regard to their authority and activity; and also the letter in response dated April 14 from Chairman Barney Frank with regard to not setting forth a date for any hearing going forward.

House of Representatives,

Washington, DC, April 7, 2008.

Hon. Barney Frank,

Chairman, Committee on Financial Services,

Washington, DC.

Dear Chairman Frank: We are writing to respectfully request

you hold a hearing of the full Financial Services Committee

regarding the recent collapse of the investment bank Bear

Stearns and the subsequent actions taken by the Federal

Reserve to facilitate Bear Stearns' sale to J.P. Morgan

Chase. These steps have had an immediate impact on the

financial markets and are also expected to have a long-term

effect on our financial regulatory structure.

For the first time since the Great Depression, the Fed

voted to open its discount window to primary dealers. While

this authority has been available to the Fed since 1932, the

decision to use it at this time has raised questions about

whether and when the Fed should intervene to help a

particular industry or firm in the name of market stability.

With the Fed approving the financing arrangements of the

sale of Bear Stearns to J.P. Morgan Chase as well as

guaranteeing $29 billion in securities currently held by Bear

Stearns, the Fed has possibly exposed the American taxpayers

to unknown amounts of financial loss and established a

precedent that could lead to future instances of companies in

similar financial trouble expecting the same assistance.

These extraordinary actions have raised a number of complex

and multifaceted questions. As members of the committee of

jurisdiction over our nation's financial markets and the

regulatory bodies that oversee them, we feel it is imperative

to have a full and public vetting of this unique situation.

Therefore, we strongly urge you to convene a hearing on this

subject of the Financial Services Committee on the soonest

possible date.

Thank you for your consideration of this request.

I find it amazing and amusing that the chairman raises how many Republicans signed onto the two letters when, in fact, it evidences the fact that zero Democrats signed onto that letter and zero Democrats have done anything with regard to Bear Stearns for the last 2 months since this occurred. If there was even one Member from the other side of the aisle from the committee, when we invited the entire committee to sign onto it, I think the chairman would be in a stronger position, but he is not because none of them signed on then. And even earlier this evening, when I invited them to sign onto an addition to it, none of them have come across to sign onto it.

Secondly, I find it amusing when the chairman's response in the letter was that he has more confidence in Bernanke and the Fed than we do. So if your question is that we did not point out that there were problems with it, your response points out that--as I've said, I'm not quoting because I cannot get a copy of the letter back here--you had more confidence in the decisions and in the actions of the Fed and the administration. So if you had more confidence, maybe that explains why 2 months after the action we are still asking for the chairman to hold a hearing on the matter, and here it is, 2 months later, all we are getting is rhetoric from this side of the aisle.