Floor Statements

Mr. Speaker, I ask unanimous consent that all Members may have 5 legislative days within which to revise and extend their remarks and include extraneous material on H.R. 280, as amended.

Mr. Speaker, I move to suspend the rules and pass the Senate bill (S. 467) to extend the applicability of the Terrorism Risk Insurance Act of 2002, as amended.

Mr. Speaker, I ask unanimous consent that all Members may have 5 legislative days within which to

revise and extend their remarks and include extraneous material on S. 467.

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

Mr. Speaker, in the aftermath of the brutal terrorist attacks on our Nation on September 11, 2001, America's economic and financial security was put at risk. Thousands of innocent people were victimized and our insurance industry was brought to its knees.

Insurers could not predict when or where or how damaging the next attack would be. As a result, the insurance markets pulled back and businesses were unable to obtain terrorism insurance at any price. Business development plans stalled and our economy was put at risk.

President Bush immediately called on Congress to pass legislation that would prevent severe economic disruptions caused by a lack of available terrorism insurance. The Financial Services Committee worked closely with the administration and the Senate to draft the Terrorism Risk Insurance Act of 2002, or TRIA. TRIA provided a temporary Federal backstop to protect against future catastrophic terrorist attacks. This program, by any measure, has been a resounding success.

On June 30, 2005, the Treasury Department submitted a report to Congress on the effectiveness of the TRIA program, the availability and affordability of terrorism insurance for various policyholders, and the likely capacity of the property and causality insurance industry to offer insurance for terrorism risk after TRIA expires on December 31 of this year. According to the report, the removal of TRIA would result in ``less terrorism insurance written by insurers, higher prices, and lower policyholder take-up.''

The administration stated that it wanted to reform the TRIA program and foster the development of a private market for terrorism insurance.

The legislation before us today would temporarily extend the terrorism risk backstop for policyholders, but would also add a number of critical reforms. Perhaps most importantly, this bill is the only proposal providing significant taxpayer protections.

Unlike the current TRIA program which sets a limit on the amount of Federal assistance taxpayers may recoup, this legislation may have full 100 percent taxpayer payback. Every dollar the Federal Government pays out gets repaid over time. This bill also significantly increases industry co-shares, providing further taxpayer relief in the short run.

The bill raises the program trigger from $5 million to $50 million in the first year of the extension and then to $100 million for the second year. It also eliminates commercial automobile insurance from the terrorism insurance program, for a reduction of over $30 billion dollars in covered line premiums. The bill raises the deductibles on all lines of insurance from the current level of 15 percent to an average of over 20 percent, the biggest increase among all of the proposals.

The legislation encourages insurers to make coverage available for nuclear, biological, chemical and radioactive risk attacks, which are currently excluded from most insurance policies. Without these provisions, policyholders will continue to be unprotected for the most catastrophic of events.

Any Federal terrorism insurance program must be temporary. Because terrorism risk will not go away, one of our major goals must be to decrease the role of the Federal Government over time and provide real, lasting market reforms that will increase industry responsibility for terrorism insurance.

It is important that industry have more ``skin in the game'' to ease the transition to the private market for terrorism insurance. In addition to a raised trigger and deductibles, this bill is the only legislation that requires that development of a long-term solution shifting the backstop to the private sector and phasing out the Federal role.

A public-private entity is created and is required to issue specific proposals within a short period of time, and the bill sets up various risk-pooling mechanisms and dedicated terrorism capital accounts to immediately begin the transition. Without these provisions, we will be back here in 12 months arguing over another extension with no improved reforms.

This legislation is identical to the bill that passed our Financial Services Committee overwhelmingly by a vote of 64-3, with the exception of striking certain provisions that are within the jurisdiction of the Judiciary Committee by agreement, a slight change in the definition of exempt commercial purchasers, and other technical and conforming changes.

I applaud my friend and colleague, the gentleman from Louisiana (Mr. Baker), chairman of the Subcommittee on Capital Markets, Insurance, and Government Sponsored Enterprises, for introducing this legislation.

I would also like to thank the gentlewoman from New York (Mrs. Kelly), the gentleman from Texas (Mr. Sessions), the gentlewoman from Ohio (Ms. Price), the gentleman from Kentucky (Mr. Davis), the gentleman from New York (Mr. Fossella), the gentleman from Arizona (Mr. Renzi), the gentleman from New Jersey (Mr. Ferguson), the ranking member from Massachusetts (Mr. Frank), the gentleman from Pennsylvania (Mr. Kanjorski), and the gentleman from Massachusetts (Mr. Capuano) for their leadership and commitment to this important matter.

I urge my colleagues to vote in favor of this bill.

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

Mr. Speaker, I am pleased to yield 2 minutes to the gentlewoman from New York (Mrs. Kelly), the chairman of the Oversight Subcommittee.

Mr. Speaker, I yield 2 minutes to the gentleman from Georgia (Mr. Price).

If the gentleman would yield, the gentleman has my assurances. I know we had some discussions in the committee, in the markup. Going forward, we have not been able to close that circle yet, but I see the

gentlewoman from Florida there nodding, and the gentleman has my assurances, as do all the other members of the committee, that we will address that issue. I think there were some drafting issues and the like that we will certainly take care of before the conference is concluded.

I thank the gentleman for his support.

Mr. Speaker, I am pleased to yield whatever time he may consume to the gentleman from Louisiana (Mr. Baker), the chairman of the subcommittee.

Mr. Speaker, I am pleased now to yield 2 minutes to the

gentleman from New York (Mr. Reynolds).

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

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

Mr. Speaker, I yield such time as she may consume to the gentlewoman from New York (Mrs. Kelly).

Mr. Speaker, I thank the gentlewoman for her inquiry, and clearly the committee on the point that she mentioned did not have hearings on the amendment offered, but I think it may be ripe for further exploration by the committee because the gentlewoman raises some interesting issues regarding foreign travel, particularly as it relates to life insurance policies.

I thank the gentlewoman for her interest and expertise.

Mr. Speaker, just in conclusion, I thank the gentleman from Pennsylvania for his kind words, and all the members on the committee who worked so hard on this, particularly Mr. Kanjorski and Mr. Frank on that side, and many, many others.

Mr. Speaker, when we had the hearing on this legislation with the Treasury Secretary after the Treasury report came out, I made the comment it would be irresponsible on the part of this Congress if we did not address the issue of terrorism risk insurance. It was far too important to ignore; it had too many implications for our economy going forward.

And Mr. Frank was right when he said this is not about the insurers. It is about the insured, the people out there creating jobs and making our economy work. And it is also a recognition that an act of terrorism is almost impossible to try to get actuarial information on to be able to set rates. It is virtually impossible. Anybody that knows anything about insurance knows that it is virtually impossible to work that in to any kind of an insurance scheme in which they would charge premiums. So that is why we needed this bottom-up, and that is why we need to continue this bottom-up.

And the idea is to transition during that period to a market-based solution, creating the incentive for insurance companies to create a pool, not unlike what the Brits have, the pool-rate concept, so you have this pool that could guard against losses. It is something that hopefully over the next year, as we finish this Congress, we can set the stage for that transition that will enable our economy to continue to grow and provide a robust insurance protection for those activities at the same time.

This is, in my estimate, as the gentleman from Pennsylvania pointed out, the legislative process at its best and I am very proud of the committee and the job that we have done. I ask for support of the legislation.

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

Mr. Speaker, I ask unanimous consent that the House insist on its amendment to the Senate bill (S. 467) to extend the applicability of the Terrorism Risk Insurance Act of 2002, and request a conference with the Senate thereon.

Mr. Speaker, I ask unanimous consent that it be in order to consider a motion to take from the Speaker's table the bill (H.R. 4133) to temporarily increase the borrowing authority of the Federal Emergency Management Agency for carrying out the national flood insurance program, with Senate amendments thereto, and concur therein, and that the motion be debatable for not to exceed 20 minutes, equally divided between myself and the gentleman from Massachusetts (Mr. Frank).

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

Mr. Speaker, I rise today in support of H.R. 4133, a bill that would temporarily increase the borrowing authority of the Federal Emergency Management Agency National Flood Insurance Program.

This bill was introduced by our friend and colleague from Pennsylvania (Mr. Fitzpatrick) in response to the terrible destruction that has resulted from Hurricane Katrina. The original version of this bill increased the borrowing authority of the National Flood Insurance Program from $3.5 billion to $8.5 billion. However, the extra $5 billion would have only allowed FEMA to make claims and payments through next week.

The Senate amended the bill to increase the borrowing authority to $18.5 billion and designate the funds as emergency spending. That amended version is now before us for consideration.

FEMA has run out of money to pay claims arising from Hurricanes Katrina and Rita and has directed the insurance companies to stop paying the estimated 225,000 Katrina and Rita policyholders who have already filed a claim. These homeowners who have a contract with the NFIP to cover flood events could initiate legal action against FEMA and the U.S. Government if we do not act now.

I remain committed to seeing the National Flood Insurance Program implement the reforms begun last year when we passed the Bunning- Bereuter-Blumenauer Act, and I look forward to working during the coming months to ensure greater accountability of the flood insurance program.

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

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

Mr. Speaker, I just want to thank my good friend and ranking member, the gentleman from Massachusetts (Mr. Frank), for his support on this. This is critically important for the folks down in the gulf region that they get compensated under their insurance program that they paid premiums into FEMA for. This is an obligation by the Federal Government to make sure that those people are paid. FEMA is out of money as I speak. We need to get this done. I would ask the House's cooperation in this effort.

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

Mr. Speaker, I yield 2 minutes to the gentleman from Pennsylvania (Mr. Fitzpatrick).

Mr. Speaker, I have no further speakers, and I yield back the balance of my time.

Mr. Speaker, I was absent from the House floor during today's rollcall votes on H.R. 2419, the Fiscal Year 2006 Energy and Water Development appropriations conference report; H.R. 2862, the Fiscal Year 2006 Science, State, Justice, and Commerce appropriations conference report; and S. 1894, the Fair Access Foster Care Act.

Had I been present, I would have voted in favor of each of those measures.

Mr. Speaker, I rise today in support of H.R. 1953, the ``San Francisco Old Mint Commemorative Coin Act,'' introduced by the gentlelady from California, and urge its immediate passage.

It is often said that coins tell the history of a country, and of the world. If this is so, Mr. Speaker, mint facilities tell the history of coins, from the most modern mass-production mints such as the United States Mint plants in Denver and Philadelphia, back to the earliest mint, thought to be in the Kingdom of Lydia, which is modern-day Turkey. Greeks living there began using a system of weights for trade in 2,500 B.C. But in 700 B.C. merchants started making punch marks on lumps of metal so they could trade without weighing the metal for each transaction.

Mr. Speaker, if you were to pick one mint to focus on to understand the history of coins in this country, it would probably be the San Francisco Old Mint.

The Old Mint at San Francisco, known as the Granite Lady, has seen 130 years of this country's history, from the day it opened in 1874 until its official closing as a production mint in 1937, and subsequently as offices for the United States Mint. More recently during a roughly 20-year span it was a Treasury-operated coinage museum--starting with a Nixon-era renovation and ending in the mid-'90s because of cost concerns mostly related to upgrades that would be needed to withstand earthquakes.

Mr. Speaker, this is the second U.S. Mint production facility built in San Francisco, the first having been built in 1852, right after the great California gold rush of '49, and the third being the one that operates there today. The Old Mint, known as the Granite Lady, was designed by the architect A.B. Mullett, who also designed the Treasury Department's headquarters and the Old Executive Office Building here in Washington. At one point, the building made half of the circulating coins produced in the U.S., and held a third of the Treasury's gold reserves.

But perhaps the most notable point in its history and one to which many of us can relate today, came after the Great San Francisco Earthquake of April 18, 1906, and the fires that followed. The Granite Lady was saved from the raging fire by Treasury Department employees and the U.S. Army with a single, one-inch hose, saving the equipment and $200 million worth of gold inside. With all of the city's banks destroyed, the Mint building became the city's financial center. The building became the holder and disburser of the relief fund formed for the city, was the only point of payment to and from the city, and made all of the payments into the city. With memories of the recent hurricanes on our mind, I'm sure we can all imagine how important the Granite Lady was to the rebuilding of San Francisco.

The commemorative coins that would be issued under this legislation would be available next year, in suitable recognition of the 100th anniversary of that event.

The history of the building since it ceased being a Mint facility is less glorious. While operating as a museum, it was damaged by at least one earthquake, in 1989, and was said to be too expensive an operation for Treasury to keep open. It finally closed in 1995, with its exhibits sent off to other museums or back to those who had lent them.

Now, a new project to earthquake-proof the building, renovate it and open museums--on San Francisco and on the Gold Rush, as well as a numismatic museum--has gained momentum, and the surcharges on the sales of gold and silver commemorative coins authorized in this legislation will add millions to that important project. I will note that while Greeks were the first producers of coins, Romans were the first to collect them. Romans initially prized Greek coins, especially the older issues, but they later collected their own coins. Now, many Americans, while collecting foreign coins, are proud to collect U.S. coinage, from the early days down through the 50-State quarters and, I hope soon, the Presidential dollars. A coinage museum in this grand old building would be a boon to collectors, teachers, and students.

Mr. Speaker, this proposal is an excellent idea for a commemorative coin. It has received the required two-thirds co-sponsorship of House members, and if enacted will proceed at no cost to the taxpayer. I urge its immediate passage.

House of Representatives,

Committee on Financial Services,

Washington, DC, October 25, 2005.

Hon. William M. Thomas,

Chairman, Committee on Ways and Means, U.S. House of

Representatives, Longworth House Office Building,

Washington, DC.

Dear Chairman Thomas: I am writing concerning H.R. 1953,

the ``San Francisco Old Mint Commemorative Coin Act,'' which

was introduced in the House and referred to the Committee on

Financial Services on April 28, 2005. It is my expectation

that this bill will be scheduled for floor consideration in

the near future.

As you know, Section 7 of the bill establishes a surcharge

for the sale of commemorative coins that are minted under the

bill. I acknowledge your committee's jurisdictional interest

in such surcharges as revenue matters. However, I request

that your committee forego action on H.R. 1953 in order to

allow the bill to come to the floor expeditiously. I

appreciate your cooperation in so doing, and agree that your

decision to forego further action on this bill will not

prejudice the Committee on Ways and Means with respect to its

jurisdictional prerogatives on this or similar legislation. I

would support your request for conferees on those provisions

within your jurisdiction should this bill be the subject of a

House-Senate conference.

I will include a copy of this letter and your response in

the Congressional Record when this bill is considered by the

House. Thank you again for your assistance.

Yours truly,

Michael G. Oxley,

Chairman.

Mr. Speaker, I was attending events in my congressional district during today's rollcall votes on H.R. 3548, the Heinz Ahlmeyer, Jr., Post Office Building Designation Act, and H.R. 3989, the Albert Harold Quie Post Office Designation Act.

Had I been present, I would have voted in favor of both bills.

Mr. Chairman, I stand in support of House Joint Resolution 65, disapproving the recommendations of the Base Realignment and Closure Commission.

This will be my first vote against a BRAC list, and it is not a vote I take lightly. I support the BRAC process as a whole as a reasonable and apolitical method for evaluating our Nation's defense infrastructure needs, and recognize the necessity of this first BRAC round in a decade. But while I salute the hard work of the BRAC Commission members in their deliberations and recognize the difficulty of their task, this BRAC round took place in the context of flawed methodology as regarded Air National Guard bases.

It was my expectation that the Department of Defense would solicit input from all relevant sources in evaluating our Air National Guard requirements--most importantly, the adjutant general of each State. But at no time in the Pentagon's development of its Air Force BRAC recommendations did it ask the Adjutant General of Ohio or any of the other 53 adjutants general for input. I find this shocking, considering that the Army consulted the adjutants general when crafting its recommendations--and considering that 37 of the 42 Air Force BRAC proposals involved Air National Guard units.

For the past 24 years, I have had the privilege of representing the guardsmen of one of those units: the 179th Airlift Wing of the Ohio Air National Guard, located at Mansfield Lahm Airport. The 179th has been a vital part of Mansfield and Richland County since 1948, with an annual economic impact of roughly $70 million. Members of the airlift wing have served more than 195,000 days just since 9/11 in support of homeland defense and the global war on terror.

More recently, the guardsmen of the 179th have flown sorties to the gulf coast region, delivering much-needed supplies and transporting hundreds of troops to assist those affected by Hurricane Katrina. Relief missions such as this are nothing new for the men and women of the 179th, who have answered the call during past hurricane relief missions in Florida and other States, and have assisted with vital defense operations in Iraq, Saudi Arabia, Afghanistan, Kosovo, and elsewhere.

I was disappointed, therefore, at the inclusion of the 179th on the Pentagon's proposed closure list in May. As I said in a letter to President Bush last month in support of the 179th, the unit has always stood ready to accept any flying assignment, and represents a wealth of expertise and professionalism that Ohio and the Nation can ill afford to lose.

Contrary to national trends, the 179th has consistently excelled in recruiting and retention, currently standing at 105 percent of assigned strength. Mansfield draws from a rich recruiting base, boasting the best personnel strength figures of any Air National Guard C-130 unit. The men and women of the 179th are highly experienced, with an average of more than 12 years of service; Mansfield's aircrews have an average of 16 years of military aviation experience. In just the last few years, all Mansfield aircrew members have flown combat sorties in the Middle East and Asia, and have received 116 air medals for their bravery, courage, and skill.

In its final deliberations, the BRAC Commission found that closing Mansfield was ``not supportable'' and recommended instead that a ``contiguous enclave'' be established at Mansfield Lahm. The commission further acknowledged that the Air Force did not adequately consult with governors and State adjutants general with respect to its Air Guard recommendations. Had there been consultation, better decisions could have been made about Air Guard infrastructure in view of our national defense and homeland security needs.

In short, the Air Force would have done well to follow the Army's BRAC model, which stood as an example of good consultation among parties. When the Joint Systems Manufacturing Center--located in Lima in my congressional district--was placed on the BRAC list with a recommendation to reduce manufacturing space by 27 percent, top Army officials working on the BRAC staff made themselves available to meet with representatives of JSMC and the community. The JSMC delegation explained that such a reduction would impede operations at the plant, resulting in a higher cost to the government for the weapons systems the plant produces. As a result of these discussions, the BRAC staff recommended that the commission remove the JSMC proposal from its final list, which it did. The Army's deliberations on JSMC were an ideal example of how the BRAC process works well: when information is shared and all relevant parties are consulted.

Even with the commission's decision to reverse the JSMC proposal--and even with the partial reversal of the Mansfield decision and the encouraging possibilities for obtaining a new mission for the more than 1,000 guardsmen of the 179th--I will vote for this resolution of disapproval. By statute, the purpose of BRAC is to reduce excess infrastructure. The current BRAC round, though, is being used to implement operational policies and transfer Mansfield's C-130s from the Guard to the Active and Reserve Forces. Such complex issues should not be handled within the BRAC procedure.

Although I strongly oppose the transfer of Mansfield's planes, I welcome the opportunity to work with the Department of Defense and State officials to obtain a new mission for Mansfield, should the BRAC recommendations be upheld. In just the last 8 years, more than $20 million has been invested in the 179th's facilities at Mansfield Lahm. Thanks to the efforts of Mansfield Mayor Lydia Reid and other local officials, the city has made 163 acres adjacent to the airport available for Guard expansion or joint service activities. This significant investment and possibility for expansion should make Mansfield an even more attractive site for locating a new air-based mission.

Nonetheless, given Mansfield's solid track record as a C-130 unit and its many contributions to our Nation and world, I oppose the transfer of its planes. At a time when our troops are already stressed by operational tempos, and when our national recruiting and retention rates are reaching record lows, I fear any disruption to our well- equipped and well-manned Guard units. Our planes are only as good as the people who maintain and fly them, and our country cannot afford to lose their skills.

Mr. Speaker, let me thank the gentleman from Texas (Mr. Sessions) for conducting a worthwhile debate on this issue and the rule.

While we will have plenty of time to debate the merits of the legislation, and there are a great deal of those out there, and I think both sides would agree, I want to thank the gentleman from Louisiana (Mr. Baker) for his excellent work, as well as the gentleman from Massachusetts (Mr. Frank), the ranking member.

The approach that we took, beginning with the need, the glaring need for a world-class regulator for the GSEs, became quite evident with the revelations of some of the accounting scandals that took place in both of those institutions and to a lesser extent with the Home Loan banks.

Looking back in the past when Chairman Baker was a lone voice in trying to get changes in the regulatory structure to where we are now is quite extraordinary. It is quite extraordinary that we are actually debating a rule that would bring up a major piece of legislation totally changing the way we look at GSEs and their role in the housing market and the secondary market, particularly as it relates to their regulation and how they are regulated. I do not think anybody can argue that the structure we set up is less than superlative and provides a world-class regulator.

Some of the issues we debated that were so contentious, I think of receivership, and all of the debates that we had about the necessity for including receivership language in it so in case one or both of the GSEs, that the regulator could actually put them in receivership, essentially became a nonissue just a few months ago. I think that points out the kind of progress we made in the committee. The 65-5 vote that we had on final passage was quite extraordinary.

We also needed to look at the whole issue of affordable housing. The gentleman from Ohio (Mr. Ney) and his subcommittee really deserve a lot of credit for putting together, I think, a very solid plan borrowed from the Home Loan bank system from which they set aside 10 percent of their profits towards affordable housing. Let me point out that program has been incredibly successful over the years, borrowing a page from the Home Loan

banks, in this case, to set aside 5 percent from Fannie Mae and Freddie Mac that would potentially provide hundreds of millions of dollars towards affordable housing. Again, I think Members agreed with that, and the concern was always, I think, in the back of everybody's mind to make certain that this money was accountable and it was used for bricks and mortar, actually building the homes instead of political advocacy and the like. Indeed, I think we came to a reasonable conclusion on that.

We have differences as to the application of that. It was always our goal to make those funds available only to groups that had housing as a function and that they had a track record. I am thinking of Habitat for Humanity as a good example, but also State housing agencies and for- profit companies that would compete for those funds and would have to be approved by the board we set up in the legislation, again, providing accountability where that money goes because it is technically, certainly, not government funds, taxpayer funds, but private sector funds. We want to make certain that every dollar that was made available went into building affordable housing.

And then, of course, along came Hurricane Katrina, Hurricane Rita, and now Wilma; and those events provided another glaring need for affordable housing in those heavily struck areas. That is why we wanted to include those and provide them with the opportunity to essentially be first in line for those funds because of the enormous complications that have developed down there in terms of housing and exacerbated an already difficult situation. That is where we are now.

I am proud of the committee and the work we have been able to do. I think we are in a position where we can debate the manager's amendment under the rule. There are several Democrat amendments made in order, Republican amendments made in order, four on each side. I think the Rules Committee has done a superb job in doing that. I know the gentleman from Massachusetts will probably offer a motion to recommit based on the issue of fund availability. That is precisely within his rights, and I would expect that.

But this vote on the rule that I support is moving us forward to get to legislation passing to help the hurricane victims and to better regulate the GSEs. I think there is a broad bipartisan consensus for that. Let us vote up the rule and get on with the debate.

Mr. Speaker, I ask unanimous consent that all Members may have 5 legislative days within which to revise and extend their remarks and include extraneous material on H.R. 1461, the Federal Housing Finance Reform Act of 2005.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Mr. Chairman, will the gentlewoman yield?

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

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

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

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

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

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

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

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

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

House of Representatives,

Committee on Financial Services,

Washington, DC, September 14, 2005.

Hon. F. James Sensenbrenner, Jr.,

Chairman, Committee on the Judiciary, Rayburn House Office

Building, Washington, DC.

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

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

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

sequentially referred to the Committee on the Judiciary until

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

understanding with respect to the further consideration of

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

Mr. Chairman, I offer an amendment.

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

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

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

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

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

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

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

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

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

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

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

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

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

I urge adoption of the manager's amendment.

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

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

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

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

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

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

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

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

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

Mr. Speaker, I offer a resolution (H. Res. 513) and I ask unanimous consent for its immediate consideration.

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

Madam Chairman, let me just say to my friend from Pennsylvania there are some sections of that amendment that I support in terms of independence. But I do have a problem with the Presidential appointees to the board. They are basically symbols of the tie between Fannie Mae, and Freddie Mac and the Federal Government, and really do speak to the implied guarantee out there for the GSEs.

The gentleman indicated that he had bipartisan support. In fact, it failed on a tie vote in the committee. I will concede there was bipartisan support. There was also bipartisan opposition.

But at the same time I think that President Bush, who has decided not to fill those vacancies on the board, is on the right track, and I think this amendment would simply add to the perception of the Federal guarantee. To that extent, I would oppose the amendment.

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

Mr. Speaker, I rise in opposition to the motion to recommit.

Mr. Speaker, I never thought a debate on GSE reform would be so emotional, and it has been a long day and a very productive day and a good debate.

Let me, first of all, say to my friend from Massachusetts, who worked very well with us in committee on this important legislation, let us not lose sight of the fact that this is the first major GSE reform bill to ever come before any Congress. It was well written and well received, and it does a lot to create a world-class regulator for the GSEs.

Secondly, it creates for the first time a housing fund that will funnel millions and millions of dollars into affordable housing through the GSEs, and I think we do not want to lose sight of that.

Thirdly, this legislation does not ban faith-based groups from providing housing. All it says is that we want groups that have had a record of building houses, a record of building houses in the various States, to be able to do that. We want to make certain that that money is used for housing, not for political activity, not for lobbying or everything else.

Fourthly, let me add, the gentleman from Massachusetts (Mr. Frank) in his motion talks about a nonpartisan basis.

There is no definition in the campaign laws that I can find that defines what is essentially nonpartisan, and I think we need to keep that in mind.

Understand this effort is to try to get as much money into the areas, in particularly the first 2 years in the hurricane-related areas, so we can provide affordable housing. Those folks along the gulf coast that were affected, Florida, Alabama, Mississippi, Texas, need to understand that this is the best way to provide affordable housing as quickly as possible with the maximum amount of oversight in this area.

Mr. Speaker, I yield to the gentleman from Louisiana (Mr. Baker), the sponsor of the legislation.

I yield to the gentleman from Massachusetts.

Mr. Speaker, I was absent from the floor during yesterday's rollcall votes on House Resolution 457, recognizing National Chemistry Week, and House Resolution 491, supporting National Cyber Security Awareness Month.

Had I been present, I would have voted in favor of both resolutions.

Madam Speaker, I rise in support of this legislation and commend the sponsor of the legislation, the gentleman from Louisiana (Mr. Baker), for his tireless work and dedication for providing housing relief for the victims of Hurricane Katrina and Hurricane Rita.

Residents of the rural gulf region have been especially affected by the devastating impact of Hurricanes Katrina and Rita. While media attention in the aftermath of these catastrophes has been focused on the urban disaster, particularly New Orleans, rural communities in the region, and individuals and families who are assisted by rural housing service programs, face a challenging road.

Rural areas are often plagued by poverty, high numbers of substandard homes, affordable housing shortages, costly development, and inadequate access to mortgage loans. RHS, through its programs, provides direct loans, guaranteed loans and grants to help families obtain and maintain affordable housing in those rural areas. Because so many rural families in the gulf region have left their communities, either because their housing is now in ruins or because they have settled in another community, it is extremely important that RHS has the flexibility to provide assistance to these families who have been displaced from rural gulf communities.

The legislation we are considering today will enable RHS to continue to meet the needs of rural families who have been displaced by the hurricanes. This legislation will temporarily give RHS the necessary funding options it needs to keep families in the program in the wake of this disaster. In short, this important revision will give RHS the ability to convert to vouchers funds tied to a rural housing project that is no longer habitable due to the effects of Hurricane Katrina and Hurricane Rita. RHS will have the authority to reprogram funds in either HUD section 8 vouchers or RHS vouchers authorized under title V of the Housing Act of 1949.

This legislation is designed to provide temporary housing relief for families affected by the hurricanes and upon enactment will be effective for 6 months.

Next, H.R. 3895 will expand the flexibility of RHS by temporarily eliminating the current limitations regarding the number of vouchers that can be issued and where they can be used. Again, this is a temporary suspension, to be in effect for 6 months upon enactment, which reflects the need for timeliness and efficiency in securing housing for rural families under RHS programs.

Finally, this legislation amends the single family housing guaranteed loan program by expanding refinancing to include loans for housing repair and rehabilitation. Currently, repair and rehabilitation costs cannot be financed from refinanced guaranteed loans. This legislation will also allow refinancing of loans from borrowers who are not currently in the USDA single family housing program.

While these authority changes to the single-family housing program are not limited to disaster situations, they will be very helpful in assisting families affected by Hurricanes Katrina and Rita.

H.R. 3895 will help ensure that housing assistance continues to be available to those of the neediest individuals and families in the rural gulf region, who have already suffered greatly in the aftermath of the hurricanes.

I urge my colleagues to support this legislation, and, Madam Speaker, point out that the committee, once again, has worked effectively through these issues, these three suspension calendar votes, in anticipation, as the gentleman from Louisiana pointed out, and my friend from Massachusetts mentioned, with a goal of looking at a long- term solution to this problem that is one that will not go away and will be over a period of years, as the gentleman from Louisiana pointed out.

I want to say to the members of the committee and to the House that this committee stands ready to do what is necessary to bring relief to those regions in a fiscally responsible manner. I have every reason to think we will do exactly that.