Providing for consideration of the bill (H.R. 1427) to reform the regulation of certain housing-related Government-sponsored enterprises, and for other purposes.

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

Mr. Chairman, I want to begin by again asking the indulgence of the House for my less than usual sartorial splendor, but the cast on my left arm would misalign my jacket, and I wouldn't want to wear a suit unless I could do it full justice. So I am wearing a sweater that Mr. Rogers no longer needs.

The bill before us today is a version of a bill that came before this House in October of 2005 after a lot of work by the former chairman, the gentleman from Ohio (Mr. Oxley), and many of us now on the committee. That bill passed the House by a vote of 331-90. Many of those who voted in opposition, myself included, were motivated to it by a specific provision regarding the affordable housing fund that is no longer in the bill.

Mr. Chairman, the bill has two major components. First, it significantly increases the strength of the regulator of the two major Federal housing government-sponsored enterprises, Fannie Mae and Freddie Mac. It also deals with the Federal Home Loan System. That was seen as less in need of drastic change. There is, in fact, less change there. There will be an amendment regarding that offered by the gentleman from Pennsylvania (Mr. Kanjorski), which I strongly support, to increase public participation in that system. But this is a bill fundamentally about Fannie Mae and Freddie Mac.

There is general agreement among a wide range of parties that this bill, building on the bill that Mr. Oxley brought to the floor, does do what needs to be done in creating a strong regulator. There are some controversial elements here, but very few deal with the powers of the regulator that we have set up. And I am pleased that the Treasury Department, Under Secretary Paulson and Under Secretary Steel, has agreed. In fact, this is a bill which, with regard to regulation and the regulator, is a little bit stronger than the one we passed a few years ago. We had some negotiations. They were useful, and we have a fully empowered regulator here, independently funded and empowered to do whatever needs to be done to deal with any safety and soundness issues that arise from Fannie Mae and Freddie Mac.

The most controversial areas of the bill involve a provision that was also in the bill when it last passed, and that is an affordable housing fund. A number of people have argued over the years that Fannie Mae and Freddie Mac receive from the Federal Government advantages which help them borrow money cheaply in the market, and that is true. There is a connection between Fannie Mae and Freddie Mac and the Federal Government. Those who borrow that money thinking that the Federal Government guarantees it are wrong. There is no Federal guarantee implicit, explicit, or any other way. But it is the case that the market does see these entities in a very favorable light and lends them money at a somewhat lower rate than other entities can borrow. The reason for its having been set up that way was to try to help housing, especially home ownership because these entities buy the mortgages and help bring down the cost of mortgages, but they have also been given for years goals by the law where they are particularly to help lower income housing.

Now, a number of people have argued over the years that Fannie Mae and Freddie Mac's shareholders, and in the past some of their executives, received too large a share of those benefits. The argument was, with some accuracy, that Fannie Mae and Freddie Mac benefited very much and not enough of that reached the public.

There are two ways you could deal with that. You could reduce the benefits that Fannie Mae and Freddie Mac get. Some people have advocated that. Alternatively, you could do what this bill does: leave the existing situation which provides some benefits to them but increase the share of those benefits that go for public purposes. We do that in two ways in this bill: First of all, and this does not appear to be terribly controversial, Fannie Mae and Freddie Mac have statutorily imposed goals. Some people have said these are private corporations and you shouldn't tell them what to do. Well, we have been doing that for a very long time. They are told that they must, in purchasing mortgages in the secondary market, make certain purchases that

help certain goals, low income housing, et cetera. We increase those goals. Secretary Jackson at HUD had been critical of them for not doing enough. We increase both the mechanism by which they held to those goals and the goals themselves.

But the newly controversial element to this is the Affordable Housing Fund. I say newly controversial because an affordable housing fund virtually identical to this one, financed through a different formula, but essentially the same in the amount of money and in the function, was in the bill that passed the House in October of 2005. At that time, the Republicans in the House voted for it 209-15. Now Members having once had an opinion are not required to hold it forever. But I do note that in October of 2005, 209 Republicans voted for the bill that had an affordable housing fund. Now that the fund has been, in the minds of some, transmogrified into all kinds of things which it is not. In economic terms, it very likely reduces the return, not by a huge amount, to Fannie and Freddie shareholders. Some have argued that it is going to raise the cost of mortgages. But ironically, many of those who argued that this will raise the cost of mortgages have supported even greater restrictions on Fannie Mae and Freddie Mac, particularly by limiting their portfolios, which would have many, many times greater impact on Fannie Mae and Freddie Mac's profitability, and therefore, their ability to help mortgages, than the Affordable Housing Fund.

The affordable housing fund takes some of the profit that Fannie and Freddie make, arguably a part of what they get from their Federal benefits, and said that it will be used for the construction of affordable housing. We have a serious crisis in America and a lack of affordable housing. We have been dealing with this for years by vouchers. Vouchers add to the demand for housing, but an annual voucher cannot create new housing, it does not add to the supply. We have a mechanism here where, without impinging on the Federal budget, without adding a penny to the deficit, in an entirely self-paid way, we take some money from Fannie and Freddie which reflects some of the benefit they get from their Federal arrangements and we recycle it into affordable housing. In the first year, all of that money, maybe $500 million, will go to Louisiana and Mississippi under this bill to replace the severe destruction of housing that has not yet been replaced a year and a half after the terrible hurricanes there.

For the future, the bill says it should be used for affordable housing annually, but leads to a later decision by this House and the Senate, I say optimistically, hoping we can get a decision from the Senate, and then to be signed by the President as to how to further distribute it. It creates the concept of an affordable housing fund. But we had in our committee various arguments. Some people wanted it to go through HUD, some through the State housing agencies. I believe that is a decision that we should make collectively, first in our committee, and then on the floor.

But we are not here doing anything other than saying the money will be available for a subsequent decision by the House that it will be spent. We do say that it has to be spent for housing, for bricks and mortar.

And there are going to be amendments that are going to be offered, let me say we tried to put safeguards in here against abuse. There are several amendments being offered, the minority whip has one, the gentleman from Texas, Mr. McCaul, has one, and some others have amendments, that will further tighten the constraints on this fund. I intend to argue for the acceptance of several of those amendments, at least three, that further tighten up the use of the fund. And I believe we will have accomplished that.

The question then will be, given that Fannie and Freddie get great benefits from the Federal Government, given that we have a housing shortage and a budget crunch in this country, does it make sense to take several hundred million dollars of the profits of Fannie and Freddie, which are enhanced by their Federal regulations and rules, and make them available for affordable housing? I believe the answer should be yes.

Virtually every entity involved with housing in America, from low- income housing advocates to the nonprofit and religious groups that help build housing, to the home builders and the realtors and the mortgage bankers, all support the notion of beginning to get the Federal Government back in the business of trying to do some affordable housing.

I hope that we can go forward with the bill. I do note we had 36 amendments; a couple I believe will be ruled nongermane. Nine or 10 I hope will be accepted without any controversy, including about five from each party. I did note that many of the others, about 18 of the others, are various ways of accomplishing three essential goals, making sure that illegal immigrants don't get the housing, either abolishing the fund altogether or restricting it.

I would hope that we could work out among ourselves some kind of representational thing so that we don't have to vote on all 18 amendments, many of which are duplicative of the others. And if we are able to work that out, I believe we will be able to get the bill through.

There is an important decision to be made about affordable housing. I believe many of the other issues the House previously voted on, I don't think there's a lot of controversy. We do have an important, legitimate, philosophic discussion about affordable housing. I am hoping that between us, we can structure things so we will have a couple of strong votes on that and we can send the bill forward.

Mr. Chairman, I submit the following correspondence:

House of Representatives,

Committee on Ways and Means,

Washington, DC, April 25, 2007.

Hon. Barney Frank,

Chairman, Financial Services Committee, Rayburn House Office

Building, Washington, DC.

Dear Barney, I am writing regarding H.R. 1427, the Federal

Housing Reform Act of 2007, which was reported to the House

by the Committee on Financial Services on Wednesday, March

28, 2007.

As you know, a provision within section 144 of H.R. 1427

would provide an exemption for a limited-life enterprise from

Federal taxes, an authority which falls within the

jurisdiction of the Committee on Ways and Means. The Ways and

Means Committee has jurisdiction over all matters concerning

taxes and the Internal Revenue Code of 1986.

In order to expedite this legislation for floor

consideration, the Committee will forgo action on this bill,

and will not oppose the inclusion of tax provisions within

H.R. 1427. This is being done with the understanding that it

does not in any way prejudice the Committee or its

jurisdictional prerogatives on this or similar legislation in

the future.

I would appreciate your response to this letter, confirming

this understanding with respect to H.R. 1427, and would ask

that a copy of our exchange of letters on this matter be

included in the Record.

Sincerely,

Charles B. Rangel,

Chairman.

Mr. Chairman, I yield myself 1 minute.

Mr. Chairman, I am disappointed frankly at a number of inaccuracies in my colleague's statement. In the first place, with regard to Katrina, the bill that we passed had zero money for new construction, and if he will go back, he apparently forgot, he will see we constantly said during the Katrina bill that we intended to provide the new housing construction money through this bill.

His assertion that there is some duplication could not be more wrong. We were very clear then. The Katrina bill dealt with vouchers. It had one 4,500-unit section with regard to some project vouchers. But throughout the Katrina bill, it was clear that it was a two-step process. This was the second step. There is zero duplication. Nothing in that Katrina bill did any significant increase in housing construction.

Secondly, he notes that I and the gentleman from California and the others voted against the bill last time, as I said earlier today, for one specific reason. The Rules Committee, over the objection of the Committee on Financial Services at that time, injected into the housing fund amendments that would have kept the Catholic Church and the Methodists and all the other religious organizations that were interested in building housing from participating.

We had one very specific objection. At that time the fund was going to be administered directly by Fannie and Freddie. There was a fear that they would use it politically. So one specific amendment was put in by the Rules Committee, we weren't even allowed to vote on it on the floor, and it would have restricted religious groups from participating. For that reason only, we voted against the bill. Since this does not allow Fannie and Freddie to spend the funds, that is out there. That is why we are being perfectly consistent in now voting for it.

The gentleman from Alabama, everything he said about the housing fund was in the bill he and 208 other Republicans voted for in 2005. Every single thing.

The gentleman has told me that he is philosophically opposed to the Housing Trust Fund. Then why did they all vote for it, those who share that opposition, 2 years ago?

The final thing, the gentleman from Illinois is here. The gentleman from Alabama inaccurately said we were raising FHA fees. In fact, the FHA under the Bush administration asked us to raise fees. Last year, the House passed a bill that would have allowed them to raise fees. The gentleman from California and I objected to some of those increases. Our bill restricts the FHA's ability to raise fees above what they wanted. In fact, what we got was an amendment at that markup from the gentleman from Illinois substituting last year's bill that most of the Republicans voted for. That would have allowed the FHA to raise fees far more than us.

So I don't understand how the gentleman from Alabama, who voted with the gentleman from Illinois to allow the FHA to raise fees further now blames us when we passed a bill that would have restricted their ability to raise fees above what they wanted. Maybe people got to go back and look at what they voted for and look at what they offered. The staff will have time. We have time to do that.

Mr. Chairman, I yield 3 minutes to the gentlewoman from California.

Mr. Chairman, I yield 3 minutes to the chairman of the Subcommittee on Capital Markets, the gentleman from Pennsylvania (Mr. Kanjorski).

Mr. Speaker, I will yield an additional 2 minutes to the gentleman from California.

Well, it will be if you vote with him.

Mr. Chairman, I yield 2 minutes to the gentlewoman from New York (Mrs. Maloney), the chairwoman of the Financial Institutions Subcommittee.

Mr. Chairman, may I inquire how much time remains on my side?

Mr. Chairman, I yield 2 minutes to the gentleman from North Carolina (Mr. Watt), the Chair of the Oversight and Investigations Subcommittee.

Mr. Chairman, I yield 1\1/2\ minutes to the gentleman from New Jersey (Mr. Sires), a member of the committee.

Mr. Chairman, I yield 1\1/2\ minutes to the gentleman from New Hampshire (Mr. Hodes), another very able freshman member of the committee.

Mr. Chairman, I yield 2 minutes to the gentlewoman from California (Ms. Lee), an alumni of our committee who despite having left us still thinks of us from time to time, and she's one of the originators of the notion of an Affordable Housing Trust Fund.

Mr. Chairman, I yield 1\1/2\ minutes to the gentlewoman from Ohio (Ms. Kaptur), another dedicated advocate for housing in many capacities.

All the people of Ohio are welcome. How much time do I have remaining, Mr. Chairman?

Mr. Chairman, I would take it to say that we often focus on what we disagree on. Let's be clear.

We agree on the strongest regulator that you could possibly have and still be workable. The gentleman from Louisiana is here, he was one of those who started on it; the gentleman from Ohio who has left, Mr. Oxley. Many of us worked on this. We will be arguing about the housing fund.

But let's be clear that what this House will be doing overwhelmingly is create a strong regulator. As to the affordable housing fund, I would just say this, the notion that all of this comes out of the mortgages and not out of the shareholders is bad economics. Fannie and Freddie do not have monopoly power such that they can pass on every cost to the customer and absorb none of it themselves.

Mr. Chairman, I ask unanimous consent that the bill be printed in the Record and open to amendment at any point.

I thank the gentleman. First of all, let me say, given that our staffs have worked this out, it would be a good thing for neither one of us to mess it up. I have read it over. It does correctly reinforce the point this is not creating any new governmental involvement. We don't want anyone to misinterpret this.

This is not to increase regulation, not to increase any kind of entitlement or entanglement. I thank the gentleman for this initiative. I very much agree this ought to go on the Record as something that is universally agreed to in the Congress.

Mr. Chairman, I move to strike the requisite number of words.

I appreciate the gentleman for offering this. This is the central question we will be debating today, and I realize we are going to be debating it in a number of forums, I hope not all 17 that are offered, but several.

There was a legitimate question here. I have to say I do want to defend my friend, the gentleman from Alabama, from my friend, the gentleman from California, who said that anybody who would support such an idea is advocating socialism. I do not think the gentleman from Alabama was advocating socialism when he joined 208 other Republicans in voting for the Housing Trust Fund 2 years ago. I think that's a little bit excessive.

We have, I think, some economic disputes here. First of all, the notion that all of this money, $500 million, roughly 5 percent of the profits of the two institutions together, the notion that all of it will be passed along to the people who take out the mortgages, the banks and everybody else, incorrectly assumes that Fannie Mae and Freddie Mac have a degree of pricing power that virtually allows them to set prices however they wish.

In fact, there was a time when they had a very large share of the market, and might have had such monopoly power. They no longer do. There is economic competition. Fannie Mae and Freddie Mac are not the only games in town. The notion that this will all get passed along and none of it go to the shareholders is faulty economics.

In fact, this will come out of the profits of these institutions, and it will, I believe, reduce the return of the shareholders. Now, I think that's legitimate. These are institutions that receive significant benefits because of various Federal laws and the way those laws are interpreted by the market.

We say that they shouldn't keep all of the benefits. By the way, those who believe this ought not just to be opposing the Affordable Housing Fund. We have long had goals of, affordable housing goals, which dictate to Fannie Mae and Freddie Mac that they must buy certain kinds of loans rather than others. We have got that to the point where they have to give preference to people whose incomes are at 80 percent and medium and below. That also impinges upon the profitability of Fannie Mae.

In other words, the argument is that anything that impinges on the argument of Fannie and Freddie will automatically be passed along to the home buyers. I think that's faulty economics. But if you think that's true, then why are you supporting, I would ask the Members on the other side, the housing goals.

Why would Members be voting for the amendment offered by the gentleman from New Jersey, which would severely restrict the portfolio? Eighty-five percent of the profits of Fannie Mae are being made on the portfolio. Now many on the administration and many on the other side want to severely restrict the portfolio, reduce it or say they can only be used for the lowest income mortgages.

That amendment, which many on the other side apparently plan to vote for, would have a far more serious impact on the profitability of Fannie Mae and Freddie Mac than on this housing fund by 8, 10 times as much. It is simply inconsistent to argue that you cannot impinge on the profitability of Fannie Mae and Freddie Mac without hurting the average mortgage buyer, and then

be for this much more significant impact on the profitability, and the economics are the same.

The argument is no direct pass-through here. The argument is that if you impinge on that profitability, they will raise their prices. First of all, the answer is, of course, they wish. They wish they had that kind of pricing power. I don't think they do.

To the extent that there is some impact, it will be far more greatly achieved if the amendment were to be adopted by the gentleman from New Jersey and other efforts to restrict the portfolio.

The gentleman from Alabama also said we have all these other housing programs. No. We do not have enough programs currently being funded that build affordable housing for families. We have 202 for the elderly. We have 811 for the disabled, both of which the administration has tried to cut back.

We are not building public housing. We have the voucher program. The voucher program, on an annual basis, adds to the demand for housing in a way that does not increase supply. There is not now a generally funded affordable housing construction program for families, for working people.

So the notion, and I would challenge Members who say there is duplication, show me which program this duplicates. It doesn't restrict it to the elderly and the disabled. It is a general family affordable housing program. That's what we think we should get into. It does it without taking money from the general Treasury. It pays for itself.

Finally, people have said, well, how is it going to be spent? We made this point very clear.

In the first year, it will go to Mississippi and Louisiana State authorities. Subsequently, none of it will be spent until a second bill passes this House and the Senate, and we will collectively decide how to spend it. I know there are people who think the Federal Government should provide affordable housing. That's the only argument for this amendment.

Would the gentleman yield?

I said it would come from the shareholders. I didn't say it wouldn't come from Fannie Mae or Freddie Mac.

Yes.

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

Mr. Chairman, first let me thank the chairman of the Financial Services Committee, Mr. Frank, for his openness throughout this whole process. We have engaged in committee, in both hearings and in markup, in quite a long discussion. On most occasions, we came together; there was a consensus. And that's good. On other issues in this legislation we parted company, we had disagreements. That was the bad. There were one or two occasions where we had strong disagreements. Let's first talk about the things we agree as a body, both Republicans and Democrats.

I think we all agree that the government-sponsored entities, Fannie Mae, Freddie Mac, Federal home loan banks, that they play an important role in the American economy, and more importantly and more specifically, in homeownership.

Homeownership in America is at an all-time high. You go to any country in the world and homeownership rates come nowhere near what they are in America. I think it was the legislation that this Congress, many, many years ago, passed in setting up these GSEs that has resulted in more affordable housing, readily available opportunities to own a home and realize the American Dream.

Now, in recent years, the growth of our government-sponsored entities has been astounding. In fact, let me give you three figures. And if you hear nothing else that I say out here today in support of establishing a strong independent regulator over these entities, it is this fact: Fannie Mae and Freddie Mac, excluding the Federal home loan banks, but those two entities hold $3 trillion worth of debt. When you add mortgage base security obligations, it is $5.2 trillion. Now, you may say well, what is $5.2 trillion? I can't visualize that. And I don't know any of us that could get our arms around that. I'm not sure any of us appreciate how big that is. But let me compare it to the public debt held by the U.S. Treasury. The entire public debt of the U.S. treasure is $4.9 billion. In other words, the debt of Fannie Mae and Freddie Mac is greater than the debt of the U.S. Treasury. That is an astounding number.

We came together, both in 2005 and again this year, and we said we must establish a strong, independent regulator with power to make changes and oversight, and if necessary, forbid it to ever be the case that these entities became illiquid, to step in and prevent what would be, in either occasion, a devastating blow to the U.S. economy.

In 2005, we brought a bill to the floor and we passed a bill establishing a small regulator. Now, the chairman has pointed out that this is almost the same bill that we had in 2005, yet many Republicans who are going to vote no today voted yes then. That appears to be a contradiction. He has pointed that out. The lady from California has mentioned 2 years ago I was in support of the bill that came out of this floor. I voted to send it to the Senate. They pointed out earlier today, in debate on the rule, that the gentleman from Texas (Mr. Sessions), he voted for the bill, now he is voting against the bill. There are differences.

Now, the gentleman from Massachusetts says there are no differences. If you are voting against the bill today, why did you vote for it 2 years ago? He asked that question a few minutes ago. Why did we? Why did we vote for it 2 years ago and vote against it today? Different circumstances.

Two years ago, I will remind the chairman, the gentleman from Massachusetts, the gentlelady from California, the ranking member of the subcommittee, the gentleman sitting there from Texas, Mr. Green, Mrs. Maloney, who is here, the gentlelady from New York, they have all said why in the world are you changing your vote? Well, let me say to the entire body, there is a change in circumstances. And let me offer this as proof.

Two years ago, this was ``the same bill.'' The chairman, the gentleman from Massachusetts, voted against the bill 2 years ago. The gentlelady from California, who says why are you changing your position, she voted against the bill 2 years ago. The gentleman from Texas voted against the bill. The gentlewoman from New York voted against the bill. Let me tell you what some of those circumstances are.

Let me say this to the gentleman: This bill, in many respects, is better than the bill 2 years ago, and we need to pass this bill. And I predict, the gentleman from Massachusetts, the gentlelady, the subcommittee chair from California, this bill is going to go to the Senate. But we do have objections to this bill, and we are going to protest those objections by voting against the bill.

Two years ago, this is exactly, when you all were in the minority, the reason you voted against it. You voted against it. It's not the same bill.

Now, what is it that we find uncomfortable about this bill? It is not that we are establishing a strong regulator. It's that we are doing things that run contradictory, counter to what we are trying to do here today. And what are we trying to do? We are trying to assure the safety and the soundness of Fannie Mae and Freddie Mac. We are also trying to make them more independent and not beholding on the government. We are saying, quote, this implicit guarantee that the government will stand behind the GSEs, that we are going to establish an independent regulator and we are going to try to move in a direction where they are more independent and they function more like a private corporation, which was as originally conceived. But then, right in the midst of saying that, we established additional costs on Fannie and Freddie. And they are opposed to that, they are opposed to the additional costs.

We say we are going to make them sounder, more independent, more stable, and then we put on them an obligation of $3 billion, a cost. We say that we are going to take this occasion, the reason for this bill is because we are going to establish a strong regulator. We are going to do that to make them safer. And yet at the same time you say, we're going to increase their costs by $3 billion over the next 5 years.

We are going to make them pay a part of their profits into a fund.

Yes, let me say this: There is a problem in our country, a problem of the lowest income Americans, and I have said this, I have said this in committee, I will say it on the floor of the House; probably the group of Americans most in need of shelter are the lowest income Americans. And they, and the chairman and I are in agreement on this, are the ones who need affordable rental properties. We need to do something about that. We need to address that. We have presently 50 or 60 housing programs, and part of their responsibility is to address that need.

Now, what we ought to do before we establish yet another Affordable Housing Fund, we ought to see why the 50 or 60 that we have that are spending hundreds of billions of dollars, why they are not meeting this need, why money is being wasted, why there is still an unacceptable amount of fraud. Why don't we clean up and make more effective and efficient those housing programs that address those needs, instead of turning around and creating yet another housing program?

Not only do we address a goal that we have 50 or 60 other Federal programs which are supposed to address this, but how do we address it? First, we talk about how important the financial stability of the GSEs are, but yet we say that over the next 5 years we are going to make you pay $3 billion, $500 million a year, into yet another Federal housing program.

Then we do something else, because there is a chain reaction. Where does this money come from? Well, it comes from middle and low income American homeowners that Fannie Mae and Freddie Mac are holding their mortgages or mortgage-backed securities. So where do Fannie and Freddie get that money? Because they don't print money. Well, they will have to get it from only one place, and that is their customers, their clients. That is every low and middle income American that takes out a mortgage. They will pay into this fund.

Now, who won't pay into this fund? Upper class Americans, and many upper-middle class Americans, they won't. There will be no obligation on their part on this $3 billion. In fact, what is the mission of Fannie and Freddie? It is to promote affordable housing for low and middle income Americans. And yet those are the very Americans that you are going to make it not quite as affordable for, because you create a $3 billion obligation.

Mr. Blunt, the gentleman from Missouri, calls it a tax on middle class Americans. Now, I would say it is not a tax on all middle class Americans, it is a tax on middle class American homeowners, and he has said that. But we probably should, in fairness, include the low income Americans who will pay into this fund. We probably ought to include them.

Because we are establishing a $3 billion obligation, on behalf of American homeowners, low and middle income, we are going to offer an amendment to take out what is really an extraneous provision in this bill, and that is a bill to create yet another Federal Affordable Housing Fund.

We are going to do a second thing. We are going to offer amendments that say if there are benefits to this Affordable Housing Fund, and if it does pass, it ought to inure to the benefit of American citizens, those who live in America and who are citizens of America. There will be four or five amendments to do that.

We are going to oppose this fund. We are going to lose later tonight when the vote is taken. It will move over to the Senate, and, if it passes the Senate, there will be another $3 billion Federal housing program.

We are particularly concerned about, because when the FHA bill came up 3 weeks after this bill came up and we created in committee a $3 billion new Federal housing program, we raised FHA fees and we created another placeholder in that bill that will move out here, we created another Federal housing program to add to the tens of programs we have, or maybe it is over 100 programs. I am not sure. I have quit counting.

But in every bill that we bring out of the Financial Services Committee, are we going to establish a new multi-billion dollar plan to help low income Americans with affordable housing? And if we do, if we do, are we going to raise the cost to low and middle income Americans to purchase a home, the cost of that mortgage? Or are we going to increase their FHA fees when they do use and utilize FHA, have an FHA- backed mortgage?

What we said in committee during this whole subprime situation, and I will say the chairman and I tried to address that last year, and I really wish we had, we both have seen this coming for a long time. He and I are both happy that the regulators have started moving, and we will just see if that is enough.

But with all these problems in subprime lending and a reduction in liquidity in the mortgage market, we have said many times people are going to need to avail themselves of the FHA. But yet, just like we did in this bill, we increase the cost to those homeowners. It simply does not make sense.

Now, the chairman from Massachusetts says, oh, no, we are not increasing the cost to those who avail themselves of an FHA mortgage. We are not increasing the cost for the tens of millions of Americans who depend on Fannie and Freddie to reduce the cost of their mortgage. We are not getting it from them. We are getting it from Fannie. We are getting it from Freddie. We are getting it from the FHA.

Where do they get their money? They get it all from the homeowners. They don't get it from the Treasury. They get it from the homeowners, and these are the people we are going to tax when we pass this bill today.

So we are opposed to this bill. We are protesting the inclusion in this bill of yet another Federal housing assistance program, and we are taxing low and middle income Americans.

Now, in fairness to the chairman, a lot of this money will go to Louisiana and Mississippi over the first 2 or 3 years. In fact, because of that, there were Republicans, particularly 2 years ago, that rushed into helping on this bill because a lot of it was going to Katrina. But just 3 months ago we passed a massive bill in this House in Katrina relief. We agreed on the number it would take and we passed it.

Yet, here we go again with more money for Katrina, if we need more money for Katrina relief, and that relief is going to go into 2009 now, we are going to pay for years in the future for people who are displaced by that to continue to have shelter. We keep saying, well, 6 more months. Then we extend it another 6 months and another 6 months. And here we go again. Three months ago we passed what we said would probably be an amount we pretty much all agreed on, I thought, for Katrina relief. But yet here we go again.

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

Mr. Chairman, I yield 5 minutes to the gentlewoman from Illinois (Mrs. Biggert).

Mr. Chairman, I thank the gentleman from Pennsylvania for his sincerity, and I yield 2 minutes to the gentleman from California (Mr. Gary G. Miller).

I appreciate that. That really is evidence again of the bipartisan approach we have had on this committee.

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

Let me close by acknowledging the many positive aspects of this bill and just reiterate that had it not been for the creation of our new Affordable Housing Fund, a new government program, we would have had consensus here. But that should not distract from the fact that we do need a strong independent regulator, as the gentleman from Pennsylvania said.

Mr. Chairman, with that I yield the balance of my time to the gentleman from Texas (Mr. Hensarling).

Mr. Chairman, I offer an amendment.

Mr. Chairman, I yield to the gentleman from California (Mr. Royce).

I thank the gentleman from California.

Mr. Chairman, I said earlier in the debate, we do not need another housing program. If we determine that the 90 some-odd housing programs are not being effective in addressing the needs of low-income and middle-income Americans, then we need to first reform those programs.

But, in passing legislation to strengthen the financial stability of our GSEs, we do not need at the same time to impose a $3 billion cost on them. Those are opposing actions.

If we are to do it, we certainly don't need to do what we are doing in this bill, and that's impose it on those who depend on Freddie and Fannie. Those are low- and middle-income American homeowners. In fact, regrettably, that's what we do in this fund. While we do a lot of great things, we do that.

I thank the gentleman from Georgia and I thank the chairman.

I would like to briefly respond to two things that the chairman said. But before I do, I would like to acknowledge and thank the chairman. He said, in voting against this bill 2 years ago, I was not promoting and voting for it, I was not promoting socialism. Let me also acknowledge that 2 years ago, when the chairman voted for this bill, he was not opposing socialism. So, I think we both acknowledge that I was not promoting socialism, and you certainly weren't opposing socialism, nor are you today.

Now, the chairman has said that this isn't going to cost anything. It's out of the profits. It's not going to come from homeowners, it's not going to come from Fannie Mae, it's not going to come from Freddie Mac.

Yes.

Oh, it would come from shareholders.

Let me say this, the shareholders, that's the profits of the company, and the profits have to be generated somewhere. This idea that it doesn't cost anybody anything, and there is not a cost to the customers of the corporations, who are homeowners, it would be, indeed, a historic moment in this body if we passed legislation that cost billions of dollars, but it didn't cost anybody anything.

It would probably be the first time in the history of this universe. And if it does happen, we should pause, because we will have figured out basically how to defy the principles of mathematics and economics.

Third, the chairman mentioned Katrina, and I mentioned Katrina earlier in this debate, and let me point out, and I think this is probably conclusive evidence of why we do not need to pass a $3 billion additional housing fund.

The chairman correctly said that we passed this bill before, and I voted for it and it had money in there for Katrina. Well, this bill creates $3 billion, much of which will go to Katrina. Well, it was only 2 months ago that we appropriated $3 billion for Katrina. That is the 3 billion that we voted for; and there is no reason to pass legislation, which actually passed this body, went to the President and passed appropriating $3 billion, and here we come appropriating another $3 billion.

So I will continue to say we determined we needed $3 billion when I voted for this bill before, and I stand by that. We didn't need $6 billion, we needed $3 billion. That is why we voted for $3 billion. That is why 2 months ago we said this is what it will cost.

Mr. Speaker, by direction of the Committee on Rules, I call up House Resolution 404 and ask for its immediate consideration.

Mr. Speaker, for the purpose of debate only, I yield the customary 30 minutes to the gentleman from Texas (Mr. Sessions). All time yielded during consideration of this rule is for debate only.

I yield myself such time as I may consume.

(Mr. WELCH of Vermont asked and was given permission to revise and extend his remarks.)

General Leave

Mr. Speaker, I also ask unanimous consent that all Members be given 5 legislative days in which to revise and extend their remarks on House Resolution 404.

Mr. Speaker, as the Clerk just described, H. Res. 404 provides for consideration of H.R. 1427, the Federal Housing Finance Reform Act of 2007, under an open rule with a preprinting requirement. As of the date required for filing, 36 proposed amendments have been printed and met the preprinting requirement.

Mr. Speaker, affordable housing is absolutely critical as an issue to many Americans and certainly to folks in my State of Vermont, as well as yours. Along with food, health care and energy costs, affordable housing can make all the difference in economic survival, and we must begin to take seriously the challenge of affordable housing for renters and perspective homeowners.

In Vermont, just to give an example, affordable rental units, we have a shortage of about 20,891 rental units, short of what we need for working families in Vermont. They need in Vermont an annual income of $29,000 to afford a statewide average two-bedroom apartment.

The challenge of home ownership, in addition to renting, is daunting. While many low- and moderate-income households aspire to own their own home, limited supply, rising costs and other significant barriers can make that dream out of reach. Beginning in 2005, the new construction of 12,300 owner-occupied homes in Vermont was needed to meet the demand expected in 2010, not something that most Vermonters think will be possible.

The average purchase price for an average single-family home in Vermont in 2000 was $144,000, a lot less than it might be in the City of Washington, but beyond the reach of many Vermonters. But 5 years later, in 2005, the average price had increased a staggering 60 percent to $232,000, and very few families have seen their paychecks rise 60 percent in the past 5 years.

More than 1 million low-income households across New England, including the elderly, disabled and families, live in federally assisted housing. Most of these households have annual incomes of less than $8,000, well below the poverty line. They are at serious risk of homelessness. Even larger numbers of households are struggling to survive in the private housing market and are paying more than 50 percent of their income for rent.

In 1995, the housing community started facing dramatic changes in Federal housing policy, including funding cutbacks, program reforms and the devolution of responsibilities to State agencies who lack the funds to meet the need. Budget cuts aimed primarily at low income people presented an enormous challenge for communities across the country. Vermont and the whole of New England region, due to its high housing cost and large stock of subsidized housing, was one of the most heavily impacted regions in the country, but by no means unique. In the past few years, we have witnessed even more dramatic cuts to the important Federal housing programs, such as section 8, again imposing enormous burdens on our local communities.

The crisis of affordability is not just a well-crafted political phrase. It is a fundamental fact in Vermont and around the country, and it is a problem we must begin to address, as this bill, H.R. 1427, does.

What H.R. 1427 does is ensure that Fannie Mae and Freddie Mac operate in a safe and sound financial manner and they fulfill the responsibilities assigned under their charters given to them by Congress. These government-sponsored enterprises, or GSEs as they are called, support the mortgage market, and this bill establishes strong independent regulation and enhances GSE responsibilities under their mission.

The bill also creates the first new funding source for affordable housing since the HOME program was created in the early 1990s, and it does it without asking the taxpayers to pick up the tab. The $500 million affordable housing fund, which housing advocates in Vermont and around the country are very excited about, will be used for the badly needed construction and preservation of affordable housing.

Freddie Mac and Fannie Mae and several of the Federal Home Loan Banks have experienced considerable accounting, financial reporting and managerial problems in recent years. Unacceptable. Significant operational safety and soundness issues have arisen since 2001 that highlight the need to fortify the supervisory structure for all the regulated GSEs. This bill will do that.

The Federal National Mortgage Association, or Fannie Mae, and the Federal Home Loan Corporation, Freddie Mac, were chartered, as you know, by Congress in 1934 and 1970, respectively, in order to create a secondary market for mortgages and increase liquidity.

Through their charters, GSEs are granted special privileges not available to other private sector firms. For example, the Secretary of the Treasury is authorized to purchase up to $2.25 billion of the enterprises' obligations. Additionally, GSEs are exempt from State regulation, State income tax and SEC registration, substantial benefits conferred to meet a public need of providing affordable housing.

In January 2003, Freddie Mac announced that it needed to revise its financial statements, resulting in a special review by the Office of Federal Housing Enterprise Oversight, known as OFHEO.

In November of the same year, following the discovery of accounting irregularities and a reorganization of its management, Freddie Mac announced that it had overstated its earnings by $1 billion in 2001. An investigation into that is ongoing. The company said that the error, restating its earnings by that $1 billion, stemmed from failure to properly account for derivatives activity.

In December 2003, OFHEO reported that Freddie Mac disregarded accounting rules, internal controls and disclosure standards, again all completely unacceptable. Furthermore, the report found that the company had misstated its earnings overall by $5 billion between 2001 and 2003, and that the Board of Directors had failed to exercise its oversight responsibility. This has got to be corrected.

This bipartisan bill takes an important first step to provide effective oversight of GSEs in response to the lack of affordable housing that plagues so many of our communities.

Specifically, H.R. 1427 does the following:

Federal Housing Finance Agency: It establishes this as an independent regulator that oversees the safe and sound operation and mission function of the housing GSEs, Fannie Mae, Freddie Mac and the 12 Federal Home Loan Banks.

Director and Deputy Director: The FHFA will be led by a Director appointed by the President and confirmed by the Senate for a 5-year term.

A Federal Housing Enterprise Board is established.

Affordable housing goals: GSEs will be required to meet goals established by the FHFA for single and multi-family home purchasers in low income or very low income areas. The goals would be based on data using 3-year averages to determine the market and they would be set annually, but could be set for a multi-year period, allowing flexibility. It requires GSEs to serve underserved markets such as manufactured housing and affordable housing preservation in rural areas.

It also establishes an Affordable Housing Fund. The bill creates this with funds sent directly to the States to be administered as the States see fit. So we have a local control element here, enhancing the prospects that the money will be used for its intended purpose. The fund is intended to be a down payment toward the eventual creation of a much larger National Housing Trust. In fact, the bill provides that funds allocated for the Affordable Housing Fund may be transferred at a later date to the National Affordable Housing Trust Fund that hopefully we will enact that into law.

The bill also makes sure we take care of the victims of Hurricanes Katrina and Rita. The individuals living in the devastated gulf coast need the money immediately. Seventy-five percent of the Affordable Housing Fund available in the first year will go to Louisiana and 25 percent will go to Mississippi for affordable housing needs arising out of the hurricanes.

Also the bill is deficit neutral and directs that all of the spending is fully offset. Seventy-five percent of the contributions made by the GSEs would be used for the Affordable Housing fund. Twenty-five percent would be allocated to the Federal Government to keep the bill deficit neutral.

All of us applaud the work of Chairman Frank for recommending an open rule to this bill and for the content of this bill, and providing the first new infusion of funds into an ever rising crisis about affordable housing.

Chairman Frank came before the Rules Committee and testified we should allow consideration of all amendments, and we have done that, with the limitation of a preprinting requirement so as to allow us to manage and the Members to know what it is they will be debating on the floor. The rule was agreed to with the chairman, and I am pleased to bring forth such an open rule.

This is a bipartisan measure. It is supported by a diverse group of financial institutions, lenders, housing industry participants, housing groups and other financial service providers. The administration also supports the bill.

I urge all Members to support this open rule that allows the House to consider H.R. 1427.

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

Before yielding to my friend from Massachusetts, I just want to emphasize that every single Member of this House did have an opportunity to preprint an amendment, as was done by my friend from Texas.

In a recent rule, we had a specific deadline by which that had to be filed. There were complaints from our friends on the other side of the aisle about a specific deadline. In this case, we extended it so that depending on what the floor schedule was, there would be the maximum time available for folks to put their amendments in printed form, and now there are complaints about that process as well.

Mr. Speaker, I yield 7 minutes to the gentleman from Massachusetts (Mr. Frank).

Mr. Speaker, I yield 1 minute to the gentleman from Massachusetts (Mr. Frank).

Mr. Speaker, I yield 5 minutes to the gentlewoman from California (Ms. Waters).

Mr. Speaker, I yield 30 seconds to the gentleman from Massachusetts (Mr. Frank).

Mr. Speaker, I'd inquire of the gentleman from Texas if he has any remaining speakers at this point?

Mr. Speaker, I'm the last speaker on this side. So I will reserve my time until the gentleman has closed for his side and has yielded back his time.

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

H.R. 1427, the Federal Housing Finance Reform Act of 2007 ensures that Fannie Mae and Freddie Mac, the GSEs that support the mortgage markets, operate in a safe and sound manner and fulfill the missions assigned to them under their charters.

The bill does this through the establishment of a strong, independent regulator and through the enhancements to the GSEs mission responsibilities. The bill also creates the first new funding source for affordable housing. Since the HOME program was created in the early 1990s, it's been almost 20 years since we have put any infusion of money from a new source into a growing crisis in housing. The $500 million Affordable Housing Fund, which housing advocates in Vermont, in your State and States all across this country are very excited about, will be used by them for badly needed construction and the preservation of affordable housing.

Very similar legislation, as has been discussed between my colleagues from Texas and from Massachusetts, passed this House on a strong 331-90 vote last Congress, and this bill, H.R. 1427, was approved in the Financial Services Committee by a bipartisan vote of 45-19.

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

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

The previous question was ordered.

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

Mr. Speaker, I want to thank the gentleman from Vermont, my friend, for not only his friendship, but also for our opportunity to engage today on this important bill.

Mr. Speaker, I rise in opposition to this unorthodox rule and to a number of provisions in the underlying legislation in its current form. While I do appreciate and support the committee's effort to provide for the safety and soundness of our Nation's housing finance system and broader financial system, this legislation has a number of fatal shortcomings that I hope will be corrected during the modified open amendment process provided for by this rule.

Unfortunately, I cannot support this rule, which breaks with the longstanding, bipartisan precedent of providing Members with the certainty of a specific date by which their amendments must be printed in the Congressional Record so that they may be included in the debate under this rule. By changing this longstanding, established practice and only providing Members with the requirement that their amendments must be printed at an undetermined, unannounced time before the consideration that this bill begins, Members from both sides of the aisle are left vulnerable to the scheduling whims of the majority, which is neither an open nor a transparent way to run the House of Representatives.

I also find it odd that a majority of the Rules Committee members would vote to provide for such an open deadline. Just this week, they demanded such precision in timing from Members and an overworked Legislative Counsel Office with a filing deadline for the Defense authorization bill. That is an unprecedented move. Amendments filed less than 12 hours after this deadline were simply turned away at the door.

Members were informed that their noncompliance with the arbitrary deadline meant that their voices would not even have the opportunity to be heard in the House.

I wish I could say that I was surprised by this decision made by the Democrat members of the Rules Committee. Unfortunately, the majority's selective enforcement of amendment deadlines and disregard for other long-standing House precedents has become the status quo in the Democrat Rules Committee. So much for all of those campaign promises to run the most honest, ethical and transparent House in history.

While this bill does provide for a stronger regulator with increased powers to ensure the safe and sound operations of the housing government sponsored enterprises, I must rise in strong opposition to this bill's worst flaw: A new housing fund mandate that would create a de facto tax on the middle-class homeowners to finance an expensive and ill-defined big government housing program.

In its budget score of the legislation, the Congressional Budget Office acknowledges that the new government-mandated assessments on the GSEs could very easily be passed on to their customers in the form of higher fees, meaning that this fund would unfairly target the most modest home prices to finance this unprecedented government-mandated redistribution of wealth from the middle class.

I believe it is bad public policy to tie the fate of families that need housing support to the success or failure of Fannie Mae or Freddie Mac's portfolios. Even worse because the affordable housing funds would come from loans that are less than $417,000, which in 12 metropolitan areas in the country is dangerously close to or below the median home price, this bill levies a new stealth tax on the most modest home buyers without even disclosing to them the costs associated with this new Federal mandate. Mr. Speaker, it is the same as a tax increase to these middle income home buyers.

To deal with this problem, I will be offering an amendment that provides useful information to home buyers about the real costs of this stealth tax. This amendment would require that the director of the Federal Housing Finance Agency determine what the cost per $1,000 finance would be to home buyers whose mortgages are purchased by the housing GSEs. This information would need to be disclosed to the home buyer at or before closing for these mortgages, who qualify for future GSE purchase, and any additional cost for mortgage originators created by this new disclosure regulation would be paid for by the housing fund so that the new disclosure requirement does not create a new, costly private sector mandate.

Mr. Speaker, if we are going to pass along a brand new, stealth $2.5 billion tax increase on the middle class to pay for their affordable housing, I think that Congress should at the very least be up front about the true cost of this fund with those who are being asked to foot the bill. My amendment simply provides for transparency for mortgage consumers about the true cost of this new government $2.5 billion mandate, and I would encourage all of my colleagues on both sides of the aisle to support it.

Mr. Speaker, I encourage all my colleagues to oppose this restrictive rule and the underlying legislation in its

current form, particularly this stealth tax contained in the affordable housing fund provision.

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

Mr. Speaker, I want to notify my colleague from the Rules Committee that I have no additional speakers at this time. We had spoken about that before. But, in fact, as a result of the scheduling that has taken place this morning, none of my colleagues on my side are available to come down this morning.

Mr. Speaker, as is generally always understood in this House, the gentleman is generally correct, that the Rules Committee, in fact, did provide a good number of wonderful amendments that would be made in order.

The fact of the matter is that as part of this House majority and minority being able to understand what the Rules Committee is going to do, we were looking for some transparency and some consistency. I believe it is important for Members to be able to know when they can submit those amendments that they might want to have.

It is also true that the majority is the one that determines what this schedule would be. Members generally have no clue exactly when amendments are going to be due if you do not give them a deadline and if you simply say well, before the bill is called up.

The bottom line is we are simply asking that the Rules Committee would state very clearly when amendments would need to be placed for consideration, and that is what our point is.

The gentleman also makes other points about the GSEs and about this House voting on this money that would become available for affordable housing.

I recall that earlier this year this House provided for Katrina housing relief. We've done that, and yet that's now what this bill that is left over for, that was passed last year was for. And so now what we're doing is taking a bill that was passed last year through a huge number of votes in this House, did not pass the other body, was not signed into law, and yet earlier this year we provided for a housing fund for Katrina earlier.

Now we're asking for $2.5 billion increase on middle class homeowners. We're simply saying that we believe that there should be transparency. We believe that the processes by which this takes place should be more apparent to Members where they would have these opportunities to come down.

If the gentleman wants to support a $2.5 billion increase for middle class consumers, as he did last year by bringing the bill forward, as he's doing this year, then we will let the Members decide by voting on that. But I think there should be transparency to the people who will be footing or paying the bill as to why there's additional costs that may keep people out of the marketplace because of additional costs related to them by buying their new home.

Mr. Speaker, evidently at this time I have created an opportunity to continue dialogue, so I reserve the balance of my time.

I appreciate the gentleman asking. At this time I have no additional speakers.

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

The gentleman from Massachusetts makes important points. I think that the gentleman should also hear that we believe there should be transparency to make sure that these middle class homeowners who would be buying and paying for this $2.5 billion increase, that they would understand why that additional cost is being placed on them, and these are the transparency things that we think that good government can be about.

The process also has developed itself to where we began talking about the Rules Committee once again, and Mr. Speaker, two nights ago I was provided with a summary by the majority party of a breakdown of the rules, what we have done when I was in the majority in the Rules Committee versus the Democrats now being the majority party.

And the fact of the matter is through May 15, which is what this is talking about, the Democrats have had 13 closed rules. The Republicans had six closed rules over the same period of time. Six closed rules for Republicans; 13 closed rules for Democrats. Eight open rules for the Democrats, which they call open rules but that had a preprinting requirement, so they really should be modified open rules, but the bottom line is a number of those have been over suspensions that Republicans did not even place a rule on. We just brought them to the floor of the House of Representatives and let them see what that outcome would be.

Mr. Speaker, I would insert this into the Record at this point.

110th rule breakdown through May 15, 2007

43 Total rules:

8 open rules (7 with a preprinting requirement).

20 structured rules.

Thirteen closed rules.

1 conference report rule.

1 procedural rule.

60--Republican/minority amendments in order.

109th rule breakdown through May 15, 2005

29 Total rules:

2 open rules (1 appropriations bill).

15 structured rules.

Six closed rules.

2 conference report rules.

4 procedural rules.

51--Democratic/minority amendments in order.

Mr. Speaker, the Republican Party, my party, is very aware of the dramatic needs of housing in this country, the needs that people have, families who have children, elderly people, disabled people, who do need more affordable and better housing, and that's why you have seen in our past, as was undisputed on the floor today, about the number of people who have voted for providing these funds that would be available.

We do believe that there should be transparency. We believe that the people, the consumers, who will be paying this additional $2.5 billion should be told why, what it's for, just as anyone who closes on a house should understand if there's going to be a FedEx package that would be delivered or a title fee or some fee that would be associated even with a notary public, that that should be included as part of the closing cost of a house to make sure that the consumer knows why and what they are paying for.

So I would be offering an amendment that was made in order by the Rules Committee as part of our discussion about how to improve this opportunity to make transparency available to all the consumers.

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

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

Mr. Chairman, I rise today in support of H.R. 1585, the National Defense Authorization Act for Fiscal Year 2008. The provisions of this bill are critical to our national security and to improving the readiness for our fighting men and women who serve our country so ably. I commend Chairman Ike Skelton, Ranking Member Duncan Hunter, and my colleagues on the Committee on Armed Services for their leadership and work on writing this important legislation. The work of the committee ensures that this Congress will make a meaningful and positive impact on our Armed Forces.

Many members of the United States armed services, including scores of servicemembers from Guam, are at duty stations in the United States, at sea, or are deployed to combat zones and elsewhere around the world today. I have had the unique opportunity, since I was elected to Congress in 2002 and sworn into office in 2003, to travel to many of the combat zones and visit with our servicemembers there. I remain impressed by the professionalism of the members of the United States armed services. I am inspired by their continued, steadfast commitment to their achieving their missions. And I am heartened by their daily, unquestioned acts of bravery performed in defense of the American way of life, despite the hostile intentions and aggressive actions of persistent and deadly enemies.

The responsibilities and obligations of members of the United States armed services are significant and honorable, but not without great risk. The tenth soldier from Guam to be killed in action during operations support of the war on terror will soon be laid to rest by his family, friends, and a grateful country. I, like all of my colleagues, am deeply saddened when we learn that the life of one of our country's finest young men and women has been ended as a result of their service to our country. Such a loss is grave to the United States and to the United States armed services. But there is no doubt their passing is a more grievous loss to their family, friends, and communities who knew and loved them as individuals. All of us should try to find comfort in the thought that our service men and women serve so that others might someday know the joys of liberty and justice. And for that, we should all be proud and thankful.

We have the opportunity today to act and renew our commitment to our servicemembers. Supporting this legislation will help provide for our military heroes and their families. There are few who deserve our support and gratitude more than these individuals and their spouses and children. At home and abroad, they serve and represent our country and government in a manner that is both honorable and admirable.

This legislation in particular addresses many critical issues that face Guam, our community and the existing and planned military facilities for our island. Included in this bill are authorizations for a total of over $300 million of military construction projects on Guam for fiscal year 2008. This amount represents a significant increase above the amount of military construction funding that was authorized and appropriated for Guam for fiscal year 2007. I welcome this significant increase in investment in Guam. These increases improve the facilities and capabilities of the military bases on Guam. But they also help Guam's business community to begin to build the capacity that it will need in order to successfully compete for, and complete the scopes of work of, the tremendous amount of military construction planned to support the rebasing of United States Marines from Okinawa, Japan, to Guam.

The bill before us today includes approvals for full funding of several key infrastructure projects at Naval Base Guam. Among them is an authorization for $59.4 million to improve the base's electrical system security; for $57.2 million for Naval family housing; for $51.8 million to expand wharf capacity at Kilo Wharf in Apra Harbor; for $42.5 million for a new fitness center on base; for $40.8 million to repair and upgrade the base's wastewater treatment plant; and for $31.4 million to build Phase I of a potable water distribution system on base. This legislation would also provide authorizations to fund needed projects at Andersen Air Force Base on Guam. The authorizations are for $15.8 million for two projects at Northwest Field to support the 607th Training Flight ``Commando Warrior'' unit that will soon relocate from Osan Air Base, Korea, to Guam.

In addition to military construction projects, H.R. 1585 addresses quality of life issues for military retirees and military dependents on Guam. The Department of Defense has been unresponsive to the needs of retirees on Guam who are reliant on the TRICARE system. Military retirees who live on Guam who are referred off island for specialty care are forced to travel to those locations at their own expense. These trips to access referred specialty care in Hawaii or California cost in the

thousands of dollars. The Department of Defense used to cover this significant expense. But in 2005 it suddenly changed its policy and practice and discontinued reimbursements to retirees for the travel expenses they incur as a result of such referrals. I raised this matter repeatedly during committee hearings since 2005. I have written to Department officials regarding this issue, and discussed it with them during meetings. The committee included report language on this matter in the report that accompanied H.R. 1815, the National Defense Authorization Act for fiscal year 2005. Unfortunately, the Department has taken no action to provide relief to Guam's retirees.

I understand that this is a challenging issue. But Guam's retirees deserve to be treated better and deserve resolution brought to this matter. This is why I requested that H.R. 1585 include a provision that would authorize retirees requiring specialty care at off-island medical facilities to receive space-available category 4 level seating priority. Additionally, I have requested that the Department of Defense be required to submit to the committee a report that would identify the administrative actions needed to be executed in order to provide relief to the affected TRICARE beneficiaries residing in the territories of the United States. I most sincerely hope that the Department takes a very close look at its current policies and provides the committee with a thoughtful, innovative, and actionable plan to resolve this matter. I remain committed to working with the Department toward this end.

The report accompanying H.R. 1585 includes language that directs the Department of Defense to conduct a study on the treatment of general and flag officers, and other servicemembers who are called out of retirement to serve their country. It has come to my attention that there are numerous instances where officers left active duty or reserve status only to return and were not allowed to retire at the highest grade attained. In an era where our Reserve components are operational forces, we can ill afford losing any servicemembers who have the institutional knowledge and expertise that is critical to maintaining a ready and operational force. Moreover, we must ensure that our Reserve component members are treated equitably and fairly. I am committed to ensuring that the affected servicemembers receive a fair and equitable solution to this issue and that they be able to retire with the benefits they have earned. I commit that I will work closely with the Department to ensure that we come to a fair solution to this matter.

Finally, I was honored to co-sponsor the National Guard Empowerment Act under the leadership of Mr. Taylor of Mississippi, Mr. Davis of Virginia, and Mr. Hayes of North Carolina. I am pleased that a substantial portion this legislation has been incorporated into H.R. 1595. After comprehensive studies undertaken by various research institutions and by the Commission on the National Guard and Reserve we finally have legislation that addresses the concerns brought forward in these studies. We will finally give the National Guard a seat at the table. As Lieutenant Governor, I know firsthand, how brave, valiant, and essential the National Guard is to the safety and security of our country. Elevating the Chief of the National Guard Bureau to a four- star general allows the Bureau to overcome certain cultural dynamics within the Department of Defense. The provisions making the National Guard Bureau a joint activity and the requirement to have the Chief of the National Guard Bureau help identify Department of Defense civil support requirements are even more essential. If we are to give the National Guard a seat at the table, then we must ensure that the root problems are rectified. Nothing can be more important than ensuring that we have a ready force to respond to natural disasters and terrorist attacks. Where other departments and agencies have failed in previous years, I am confident that the National Guard will develop a solid lay down of requirements so that we, as a country, are truly ready to respond to emergencies. I also believe, consistent with my other initiatives, that the Department should give very serious consideration to allowing State Adjutants Generals joint credit for their service to the State. The National Guard is truly a joint force and the work of their general officers should be recognized as such.

I support this bill Mr. Chairman. There are quality provisions in it that will benefit the bases on Guam. The quality of life experienced by military personnel who are stationed there and their families who accompany them will be improved as a result of passage of this bill. The provisions of this bill moreover will help us better serve retirees who have served us so nobly in their careers. Indeed, this bill will make notable contributions to the security of the United States and to defending our country's interests around the world. But I want to take this opportunity to note my concern regarding a couple of matters contained in or related to the provisions of this bill.

The Committee has authorized the funding for the Kilo Wharf project at Naval Base Guam, but has directed a phased approach to executing this project. The administration opposes this approach. I share these concerns. I am particularly concerned that the funding for this project will receive further cuts as this bill proceeds through the legislative process. I encourage the Department of the Navy to redouble its efforts to ensure that this project can proceed according to plan and to engage with me in dialogue regarding potential barriers to success for it. The Kilo Wharf project is critical to increasing wharf capacity at Naval Base Guam. Guam offers the United States Armed Forces a strategic location to counter threats posed by the People's Republic of China, North Korea, and al Qaeda affiliated terrorist forces in Southeast Asia. Further funding reductions for the Kilo Wharf project will negatively impact the ability of our commander to re-fit and re-supply vessels operating in, and to respond to contingencies, in the region.