Floor Statements

Mr. President, we are nearing the end of a long debate in the Senate dealing with what some people call the housing bill, but as we know, it is more than housing. One of the big titles in it deals with the reform of the government-sponsored enterprises--GSEs commonly known as Fannie Mae and Freddie Mac, as well as the Federal Home Loan Bank Board.

We know that we are in a housing crisis in this country. We have a lot more houses than we probably need right now, and we have a lot of people who are going to be facing foreclosure. So, working together with Senator Dodd and our staffs, we have tried to come up with a plan to give thousands of people an opportunity for some relief. It is not a Government bailout. It is not taxpayers' money. It gives them an opportunity--assuming a lender is about to foreclose on someone--to get together with someone else who has borrowed money and say: Look, if you can get this refinanced through the FHA modernization plan, if we can do that and we can cut down on the value of the mortgage--take a haircut, so to speak--this is better than a foreclosure.

Lenders know the worst thing in the world for them is foreclosure. Borrowers know that too, because it is a dangerous game people play. Going back to the Fannie Mae and Freddie Mac situation, we know they play a huge role--a central role--in our housing, but we also know that together they owe a little over $5 trillion; $5 trillion in debt, and they are thinly capitalized because they are government-sponsored enterprises. They have the implicit guarantee of the taxpayer--the U.S. Government, basically. I have no reason to believe we would let them go under because there is a lot at stake. The way to keep them from getting in worse financial shape is to create a strong regulator that will monitor them closer than they have been in the past to make sure they have adequate capital.

With Senator Dodd's 28 years and my 22 years on the Banking Committee, we have 50 years. In our combined 50 years on the Banking Committee, we have seen financial debacles. We have seen good times and bad times. What we are trying to do is prevent as many headaches and hardships as we can, not only to homeowners but ultimately to the American people by reforming GSEs. I hope this is a big first step today.

I wish to take a minute to commend my colleague, Senator Dodd, chairman

of the Banking Committee. As I enjoyed my 4 years serving as chairman, I also enjoy working with Senator Dodd and his staff. I wish to commend his staff as well as my staff, our Republican staff on the Banking Committee, including Bill Duhnke, Mark Oesterle and others, for all the work they have done here, night and day, and it is not over yet.

I yield the floor.

Madam President, I rise to engage Senator Dodd in a colloquy discussing the amendment offered by Senator Dole concerning appraisal standards. I would like to acknowledge the distinguished Senator from North Carolina for her efforts in crafting this amendment.

In December of last year, Attorney General Cuomo of New York, along with Fannie Mae, Freddie Mac and OFHEO entered into an agreement to create a mortgage appraiser code of conduct. I applaud the work of the attorney general of New York for being proactive in trying to come up with a code of conduct in order to deal with some of the problems in the mortgage appraisal process.

While the ``code of conduct'' moves things in a positive direction, Fannie Mae and Freddie Mac are secondary market players, and the attorney general of New York has authority to deal with the conduct that touches upon the State of New York. In order to fully address the issue and create a unified standard affecting all mortgage originators, there must be a process involving all of the appropriate regulatory authorities including the Federal banking regulators who participate in the congressionally authorized Federal Financial Institutions Examination Counsel, FFIEC, subcommittee on appraisals. This would also provide regulated institutions with adequate opportunity to participate in the process.

The National Bank Act authorizes national banks to engage in mortgage lending, subject to OCC regulation. Since the early 1990s, each of the Federal banking regulators has had standards in place that deal with the conduct of mortgage appraisers. These standards were put in place to address many of the safety and soundness concerns that we are grappling with today. While I recognize the need to update and strengthen these standards, I believe that we need to be mindful of that structure, and rely upon it as part of the effort to reform the appraisal process.

The appraisal is a key component in ensuring sound underwriting both for banks and the consumer. I believe that the key concept of appraisal independence is laudable and although incorporated into Federal banking regulation, perhaps this construct needs to be strengthened.

Our goal should be to ensure that a standard exists that avoids inconsistencies, provides stronger consumer protection, and protects the safety and soundness of lending institutions. I believe that as a wake-up call to the regulators that their standards must be revamped and their enforcement stepped up.

I yield the Senator from Idaho 10 minutes.

Mr. President, I will suggest the absence of a quorum.

Mr. President, I ask unanimous consent the order for the quorum call be rescinded.

I ask unanimous consent that the time be equally divided, charged against each side equally.

Mr. President, I suggest the absence of a quorum.

Mr. President, I object.

Mr. President, I want to pick up on a few things that the Senator from Connecticut has been talking about. We got a vote a few minutes ago, I believe 83 to 9, on cloture on this bill.

Last week we had three or four well-debated amendments offered by various Senators, and they were overwhelmingly rejected, huge votes.

Where are we now? We have worked on this a long time. We have GSE reform in here, which I have worked on for 5 years on the Banking Committee, as Senator Dodd recalled, and the Presiding Officer, a member of the Banking Committee and very involved in the Banking Committee.

This is a very complicated piece of legislation in this title dealing with GSEs, which we have come a long way with. Everybody here knows, I believe on both sides of the aisle, that the GSEs provide a lot of the mortgage funds, most of them today. But they do need to be well regulated. They also need to be well capitalized, considering the risk and so forth, the implicit guarantee of the Federal Government.

I have been told recently that their debt, that Freddie Mac and Fannie Mae debt, exceeds the debt of the United Kingdom and France together. I do not know if that is exactly right. But if it is, that is over $5 trillion.

So we need to get this done. We need to make sure the GSEs survive. We want to make sure GSEs are properly regulated, and we can do it here. Another part of the title of this bill is dealing with housing, as the Presiding Officer knows. This is going to give a lot of people in America an opportunity to refinance some mortgages. It will not save everybody. It should not save everybody.

But there is no specific bailout for any specific mortgage company or banks, as somebody alluded to last week--none of that. The chairman of the committee, the Presiding Officer, as a member of the committee, and I, as a Senator, we would not have that. We would not vote our support for anything like this. But we will create conditions to let people refinance their mortgages, assuming they can work this out, assuming the lender would rather take a haircut--you know, less money than a foreclosure.

The last thing a lender as a rule wants is a foreclosure because the house is vacant in the neighborhood. Senator Dodd was talking about that. We do not need four or five vacancies in the neighborhood and the house run down, weeds growing instead of the lawn trimmed.

Everybody knows what that does to the value of their neighbors' property.

Housing is important. What we are trying to do--and one can see the votes we have been getting--is fashion something that will give a lot of people a better opportunity to finance their home, as well as to regulate the GSEs in a meaningful way. Most of the Members of the Senate know that.

If somebody has an amendment, they ought to come down here. I know we can debate this for 30 hours under the rules--I believe that is right-- after cloture.

We are that close to passing a meaningful piece of legislation. We would like to pass it. We would like the House to pick it up quickly--either agree to it, amend it, or whatever, and get it to the President. The sooner, the better.

This is not a perfect piece of legislation, but overall it has a lot of good things in it. I certainly urge my colleagues to support it.

I yield the floor.

Mr. President, today I wish to recognize and pay tribute to LTC Craig M. Greene, deputy chief, Army Senate Liaison Division, Office of the Chief of Legislative Liaison, who will retire September 1, 2008. I wish to commend and congratulate Lieutenant Colonel Craig Greene upon his retirement.

Lieutenant Colonel Greene's distinguished career as an infantry officer embodies all of the Army's values of loyalty, duty, respect, honor, integrity, and personal courage and spans 20 years, during which he has distinguished himself as both a soldier and leader.

Upon graduating from the University of Massachusetts, Lieutenant Colonel Greene served as an infantry officer in command and staff positions in a number of infantry units. Prior to Lieutenant Colonel Greene's assignment to the Office of Chief of Legislative Liaison, he was assigned to the 25th Infantry Division, Light, Schofield Barracks, HI, from 2001 to 2003. His experience in the Army's Officer Personnel Management Command led to Lieutenant Colonel Greene being selected to serve as the brigade S-1 for the 2nd Brigade ``Warriors'' and the secretary to the General Staff for the Commanding General. The consummate professional, Lieutenant Colonel Greene revised internal systems to streamline information flow and the decisionmaking process to include instituting a ``Battle Rhythm'' for the division staff eliminating redundant meetings and events.

In his more recent position as a congressional liaison, I have come to know and respect Lieutenant Colonel Greene. A natural at building and maintaining relationships with Members of Congress and their staffs, Lieutenant Colonel Greene was invaluable as the Army faced many challenges associated with its budget and real-world combat operations in the global war on terror. Members knew they could count on Lieutenant Colonel Greene for his counsel, professional advice, and unwavering integrity.

While assigned to the Office of Congressional Legislative Liaison, Lieutenant Colonel Greene prepared members of the Army staff for over 20 hearings and orchestrated over 150 congressional engagements to ensure Congress understood the Army programs and budget requirements to grow and transform the Army. Lieutenant Colonel Greene escorted over 50 congressional delegations worldwide.

His expertise concerning congressional affairs, his strategic, operational, and tactical knowledge of the Army, combined with his keen intuition and ability to develop key relationships have been instrumental in enabling the chief of legislative liaison and the Army to meet the Army's legislative objectives. Lieutenant Colonel Greene has escorted 12 delegations to Iraq and Afghanistan, in support of Operation Iraqi Freedom and Operation Enduring Freedom. I was privileged to have Lieutenant Colonel Greene as an escort on several of my own trips.

A tireless worker, he coordinated with all of the relevant agencies and individuals to ensure my overseas travel was always successful. I am extremely grateful for the service he provided me and my staff during those trips.

During his distinguished Army career, Lieutenant Colonel Greene has been awarded numerous accolades, including the Defense Meritorious Medal, four Meritorious Service Medals, five Army Accommodation Medals, two Army Achievement Medals, the Expert Infantry Badge, the Ranger Tab, and Parachutist and Air Assault Badge.

Lieutenant Colonel Greene's faithful service, leadership, loyalty, and dedication to duty uphold the highest traditions of military service, and he has repeatedly stood for the defense of this Nation. His devotion to the defense of liberty epitomizes the words soldier, patriot and American.

I hope my colleagues will join me in thanking Lieutenant Colonel Craig M. Greene for his service to our Nation and the U.S. Army. I thank his wife, Michelle, and his sons, Jackson and Austin, for their support while he fulfilled this essential duty to our country. I personally wish the Greene family all the best as they celebrate Lieutenant Colonel Greene's richly deserved retirement.

Mr. President, this morning I am pleased to join my colleague, the chairman of the Senate Banking Committee, Senator Chris Dodd. The Banking Committee has devoted considerable time and effort to developing comprehensive and complex housing legislation. The proposed legislation's most significant provisions include a new regulatory structure for Fannie Mae, Freddie Mac, and the Federal Home Loan Bank system, a new program to help qualified homeowners stay in their homes, and reforming the FHA.

This legislation creates a new regulator who has the authority and the flexibility to regulate the GSEs appropriately. I am also pleased that the HOPE for Homeowners proposal is paid for; not by taxpayer's money either. I believe we should do what we can to help struggling homeowners, short of asking the taxpayers to foot the bill.

The legislation also provides immediate help to the marketplace by reforming the Federal Housing Administration, allowing it to provide greater liquidity and thereby enhancing the options available to America's homeowners.

It also provides additional funding for foreclosure prevention counseling, which will hopefully help homeowners stay current on their mortgages and able to remain in their homes.

In order to prevent this situation from repeating itself, the legislation increases the disclosures made to consumers obtaining mortgages. I believe that giving consumers more information and a greater ability to understand the choices they are making will help them avoid the pitfalls and bad decisions many underinformed consumers made in the recent past.

To better protect our soldiers, sailors, and airmen, this legislation extends additional consumer protections and provides those returning from combat a chance to get back on their feet before they face foreclosure of their homes.

In an effort to provide communities with the ability to clean up the damage caused by foreclosures that have already occurred, we have also included funding to allow States and communities to buy up and repair foreclosed residences. Attached to this funding is a requirement--here I think this is important--that any profit from the sale of properties must be used to buy and repair additional properties. I believe

the reuse of this funding in this manner will maximize the impact of these dollars and minimize the possibility that funds will be wasted or profits inappropriately pocketed by someone.

The bill also contains a number of tax-related provisions prepared in a bipartisan fashion by the chairman and the ranking member and the staffs of the Finance Committee.

While there is a large and growing number of homes entering foreclosure in this country, we must remember that the vast majority of homeowners are living within their means and making their mortgage payment. Therefore, my primary consideration here during negotiations on this bill has been to protect the American taxpayer. In creating a strong regulator for the GSEs and using an independent funding stream to pay for the FHA program, I believe we have met that goal.

With crises such as this one we are facing now in this country, I believe the American people expect us to provide effective and timely solutions the best we can. Chairman Dodd and I have worked together to develop a package of targeted measures intended to stabilize and strengthen the housing financial markets.

I strongly urge my colleagues to support this carefully crafted compromise.

I remind my colleagues that this bill came out of the Banking Committee 19 to 2. That is a strong vote for a bipartisan measure.

I yield the floor.

Madam President, I commend the chairman of the Banking Committee, Senator Dodd, for his work on this package of legislation. It is a package. It is dealing with the reform of the government- sponsored enterprises, GSEs, which desperately need to have a strong regulator because they play such a huge role, probably the primary role by a long shot right now, in our housing industry. They need to be properly regulated because they are a government-sponsored enterprise, and that is part of the legislation I have pushed.

Senator Dodd and I have worked together. He is pushing the housing legislation, but I agree with him. If there were any inkling of a bailout for anybody here, we wouldn't be a part of it in any way, and no one would in the Senate. So that is a red herring. But this will give some hope and opportunity for some people to probably save their homes who otherwise wouldn't be able to.

We need to pass this legislation now. If we could get this legislation to the President's desk, and he would sign it, which I hope he would by the 4th of July, by the end of next week, this would be a significant feat on our part. I hope we can do it.

I also want to take a moment, as Senator Dodd did, and commend other Senators for their work. Senator Isakson knows a lot about housing. He grew up in housing. He has been very successful at it, and he brings that experience and knowledge to this body in the Senate. The housing tax credit, not to bail out anybody but to help people save their homes, was I believe originated by him. He is pushing this provision, and we commend him for helping us on this.

I commend my friend and colleague from New Hampshire, Senator Judd Gregg, the former chairman of the Budget Committee, now the ranking member. He knows a lot about all the problems in this country. He is very insightful. He sees this legislation, overall, as a good package and a good piece of legislation.

I hope we will be able today and tomorrow to pass this legislation, if the Senate is willing, and go to the next step, because there are a lot of people who will possibly be able to save their homes because of this.

Will this save everything in America? No. But it will be a good first step and it will be profound, meaningful legislation, and so I commend it to the Senate this afternoon.

Madam President, I yield the floor, and I suggest the absence of a quorum.

Madam President, I regret that I, too, must oppose the amendment offered by the Senator from Missouri, amendment No. 4986. Senator Bond's amendment would specifically undermine the goal of protecting the American taxpayer from the costs of the HOPE Program.

I have often said--and I will repeat once again--that we should do whatever we can to help people stay in their homes short of sticking taxpayers with the tab.

The Banking Committee has worked long and hard for months on this issue and has found a way to accommodate a wide range of goals and concerns with this legislation.

The affordable housing fund and the funding mechanism--which is important here--for the HOPE Program are two of the most critical elements that allowed us to reach a bipartisan agreement. Eliminating either one of these now would simply unwind the entire bill, would destroy the whole bill, and neither I nor Senator Dodd nor a lot of our colleagues on both sides of the aisle can support that.

Therefore, I urge my colleagues to join us in opposing the first Bond amendment.

Amendment No. 4985

Madam President, I would like to speak for a minute on the Bond amendment No. 4985, the second amendment.

While I am sympathetic to and share many of Senator Bond's concerns regarding FHA's longtime management problems and resource constraints, I cannot support this amendment.

The proposed HOPE for Homeowners Program establishes a new board to oversee the implementation of this program. Included on this board, in addition to HUD, are the FDIC, the Federal Reserve, and the Treasury Department. It is our intention that the expertise and experience of this board will compensate for FHA's longstanding management problems.

Additionally, the bill would provide--this is important--at no cost to the taxpayer, funding for additional resources, particularly in the form of increased staff, to manage and implement the proposed HOPE Program.

While I agree with Senator Bond that depending solely on existing FHA resources, the HOPE Program would be unworkable, I believe the increased resources and board oversight provided in this legislation sufficiently address those concerns.

I encourage my colleagues to oppose this second Bond amendment, too.

Mr. SANDERS addressed the Chair.

Madam President, what is the pending business?

I yield 1 minute, at this point, to the Senator from Georgia, Mr. Isakson.

Madam President, I will yield 2 minutes to the Senator from Tennessee.

Madam President, how much time do I have remaining?

I yield back the remainder of my time.

Amendment No. 4986, as Modified

Mr. President, within the hour, the Senate rejected two amendments offered by the Senator from Missouri. The first one, which would basically gut this program, the vote was 77 to 11. The second Bond amendment was also rejected, 69 to 21. That indicates that there is a lot of bipartisan support for this bill on which we have worked for years in the Banking Committee. The current Presiding Officer knows these issues well. He represents the State of Florida and knows about housing. He knows about mortgages and, as an attorney at one time, I am sure he dealt in that area.

In this bill there is no special treatment, I say to my good friends--and I have a lot of respect for Senators Bunning and DeMint-- no special treatment for any lender or homeowner. All lenders will have to take a significant loss, more than a little haircut, if they choose to participate. This is a voluntary program. All homeowners will have to share any equity gains. This is not a bailout, I assure my colleagues. The Presiding Officer knows I wouldn't support a bailout.

I voted against the stimulus bill that was here earlier in the year, as some of my colleagues did. But there are some good things in this bill, and I want to talk a few minutes about them. While the legislation would authorize FHA to provide up to $300 billion in loan guarantees under the new program over the 2009-2011 period, CBO, the Congressional Budget Office, estimates that FHA would use only $68 billion of that--that is a lot of money still--loan commitment authority through 2011 to implement the program. CBO estimates that enacting this legislation would increase direct spending by $729 million over the 2009-2018 period. That amount includes $684 million for the estimated subsidy cost of loan guarantees and $45 million in administrative costs.

Taxpayers will not bear these costs. Maybe that was the original proposal, but in the Banking Committee, we worked out a formula to let the GSEs, the affordable housing program, do this for 3 years because we didn't want the taxpayers doing this. Taxpayers will not bear these costs. During the 2009-2011 period, a portion of the GSEs' assessments would be used to pay the cost of this new program. These assessments would be used to reimburse the Treasury for the cost of the whole program up to an estimated $960 million total for those years.

Use of the new loan program is contingent upon the voluntary participation of both lenders and borrowers. As a result, demand for this program to refinance qualifying mortgages would depend on how many lenders and borrowers would perceive the new program as their best option in the marketplace.

It is important to note that mortgage lenders and borrowers will give up something in order to take advantage of this program. The current mortgage holder, whoever it is, must agree to a loan refinancing program that brings the loan-to-value ratio on the new FHA-insured loan to no greater than 90 percent of the property's current appraised value, not what it was at one time. In addition to forgiving a portion of the debt on the existing loan, the current mortgage holder will have to pay 3 percent of the original insured loan amount to FHA. The existing mortgage holder might also cover some portion of the origination fees for the new loan. In effect, the existing mortgage holder would take at least a 13-percent writedown--it might be 50 percent; we don't know--of the existing mortgage. That probably, in a lot of cases, would be better than foreclosure. What I am driving at is, we are not worried about the lenders. I am not. I am worried about the homeowners. I know the Presiding Officer is. The amount could be higher depending on the amount of the origination fee paid and the ability of the borrower to pay a mortgage. Thus, the current mortgage holder will receive no more than 87 percent of the property's current value, after the 3-percent premium is taken into account. I know this is complicated, but this is the way mortgages work.

Borrowers will have to agree to the equity-sharing provisions required under this program and determine whether forgoing some future profits on their homes is an acceptable arrangement. This is a voluntary program.

CBO, again, estimates that fewer than 40 percent of the 1.1 million-- at this time--eligible loans would be refinanced under the new program. But if they are, it is going to help a lot of people who are deserving. Following a reduction in the principal amount of those loans to make them affordable, CBO further estimates that approximately 400,000 loans would be guaranteed under this legislation, with an average loan amount of $170,000. This 40-percent participation reflects the number of expected foreclosures, the impact of second liens, administrative challenges, and anticipated participation by mortgage holders and borrowers.

Many borrowers who would otherwise be eligible for this program will not participate because servicers will not be able to contact some borrowers, as we know. Even with the assistance of this program, some borrowers will not be able to avoid foreclosure because they have experienced a significant event, such as job loss, illness, divorce, or death. In other words, they would not qualify.

The average subsidy rate for those guarantees would be 1 percent. This estimated subsidy rate assumes that the cumulative claims rate-- that is, the default--for the program would be about 35 percent and that recoveries on defaulted mortgages would be about 60 percent of the outstanding loan amount.

Mr. President, I want to say again, in this legislation there is no special treatment for any lender or homeowner. This is a voluntary program. All lenders--all lenders--will take a significant loss. There is no mention of any bank, mortgage broker, mortgage banker, or anybody else--Countrywide or anybody--in this bill. If there were, I would not support it.

I yield the floor.

Mr. President, I wish today to honor Kathryn Tucker Windham, who is celebrating her 90th birthday on June 5, 2008. In Alabama, one of our greatest treasures is our history, which is often best learned through the stories told by others. Alabama is lucky to have one of the world's best storytellers, Kathryn Tucker Windham, who shares her memories and observances of our State's social history in a way unlike any other. Kathryn can tell stories about graveyards and ghosts, cooking or recipes and the Gee's Bend quilters that provide her listener with a unique view into life in the rural South.

Born in Selma, AL, Mrs. Windham grew up in Thomasville, where she began her writing career at the age of 12 working for the Thomasville Times, a local weekly newspaper. After receiving her bachelor's degree from Huntingdon College in Montgomery, AL, Kathryn became one of the first women to cover the police beat for a major daily newspaper in the South at the Alabama Journal. She also worked as a reporter, photographer, and State editor for the Birmingham News and as a reporter, city editor, State editor, and associate editor for the Selma Times-Journal, where she won Associated Press awards for her writing and photography.

Kathryn is also the author of 24 books and is a playwright. She is widely recognized for storytelling abilities in classrooms, historical meetings, and storytelling events across Alabama. In addition to her writing career, Mrs. Windham worked as the community relations coordinator for the area agency on aging, which serves 12 rural counties in southwest Alabama and promoted statewide war bond drives during World War II.

Mrs. Windham's work in radio brought her a new level of notoriety, as she is now a favorite contributor to National Public Radio's program, ``All Things Considered.'' Her tales about life in the rural South tell listeners more about our region than is widely known and have included stories about rumors of people who could kill a rattlesnake by spitting, a hailstorm in Thomasville that was supposed to have knocked the eyes out of goldfish in a pond, or the frog houses Alabama children make with cold mud.

Quoted in a 1999 article for Current magazine, Windham said of her storytelling, ``It preserves a part of our Southern history maybe, our heritage. We need to know where we came from.'' I could not agree with her more. Kathryn Tucker Windham will leave an important legacy as a trailblazing female journalist and a chronicler of life in Alabama that I greatly admire.

I join Kathryn's three children, Kathryn Tabb Windham, Amasa Benjamin Windham, Jr., and Helen Ann Windham Hilley, and her two grandsons, David Wilson Windham and Benjamin Douglas Hilley in wishing Mrs. Windham a happy 90th birthday. Mrs. Windham is a special and unique lady, and I wish her the very best.

Mr. President, I want to respond to the Senator from Oklahoma and commend him for his efforts in this area.

What Senator Dodd and I and other Members, including the Presiding Officer at the moment, who is involved in banking issues and insurance, and so forth, know is that this flood insurance program is bankrupt, as does the Senator from Oklahoma. It is not working. And what we are trying to do is move it toward an actuarially sound basis.

The Senator's suggestion is something I think we ought to consider as we move along down the road because we want to make sure nobody beats the system. In other words, the more people who are involved in the flood insurance program, proper mapping is going to mean lower premiums to everybody. And the problem, in the long run, as we have catastrophes, tornados, hurricanes, earthquakes--well, in this case floods and water--that the insurance would take care of it rather than thinking, as the Senator from Oklahoma says: Well, I do not have to insure you; the Government, the taxpayer, the people will take care of me in the end.

I think that is what we are trying to prevent. I think the Senator from Oklahoma has a very good point.

I yield the floor.

Mr. President, I commend the Senator from South Carolina for bringing up his amendment. I think it is something we should consider in conference. Senator Dodd had a colloquy about it on the side on the floor a few minutes ago.

At the end of the day, what we are interested in is a more actuarially sound flood insurance program, one that will make more sense after a lot of mapping goes on around the country that will broaden the program and not perpetuate subsidy over and over for four or five sales or four or five generations where property is sold.

The Senator from South Carolina is on the right track. I assure him I want to pursue this in conference.

Amendment No. 4710 Withdrawn

Mr. President, I rise to oppose the Vitter amendment and oppose it very strongly. The goal of flood insurance legislation is to move the program to more actuarially sound prices. This amendment would undermine that goal. The Vitter amendment would add significant new liabilities to the program without ensuring the necessary premium increases to cover such liabilities.

I want to remind my colleagues that we are forgiving in this bill nearly $20 billion of debt incurred as a result of failures of the flood insurance program to date. The changes we are making are an attempt to ensure that taxpayers never have to pay off such a debt ever again. This amendment runs contrary to that goal, making it much more likely that we will be back bailing out the program in the near future.

Furthermore, there are currently numerous private insurance carriers providing flood coverage for losses that exceed the maximum amounts provided by the Federal program. In other words, unlike basic coverage, where no private insurance exists, there is a private insurance market available for additional coverage. While I recognize this insurance is expensive, that is because it is actuarially priced. The premium is commensurate with the risk.

This program was designed to address the fact that the market stopped providing primary flood insurance coverage. It was not intended to socialize risks that were otherwise being handled by private markets. The only reason to increase the coverage limits of the program is to crowd out risk-priced private insurance to provide socialized subsidized insurance. I believe it is largely due to the existing subsidies that this program has such problems. We do not need to add more subsidies at this time.

For all these reasons, I oppose the Vitter amendment and urge my colleagues to do the same.

Mr. President, I would like to take a few moments. I rise in opposition to the Wicker amendment that the Senator from Mississippi offered earlier and has spoken to. I recognize that property casualty insurance availability and affordability is a serious concern in some parts of this country, perhaps all parts. The addition of wind coverage, however, to the financially insolvent flood insurance program is not the solution to this problem.

I think we should put this amendment into context. According to the Insurance Information Institute, this amendment would add an additional $10 trillion to $12 trillion in exposure to the bankrupt Federal flood program, as well as annual Federal program deficits that could reach $100 billion or more. Just think about it.

On this, in the Banking Committee, we have had no hearings. We have established no record. We have no understanding in any way, shape, or form as to what the true consequences of the Wicker amendment could be--nothing at all.

Perhaps we should consider this amendment in the context of flood insurance. The National Flood Insurance Program does not charge actuarial rates for anyone within the program. There are direct subsidies to many homeowners and indirect subsidies to all others because the underwriting criteria do not accurately depict the risk. The program is currently bankrupt and has no ability to pay back its $17 billion debt obligation at this point. With a model such as this, I am not convinced that another Government-managed insurance program will well serve the American taxpayer.

There are other considerable flaws to the approach contemplated by the Wicker amendment. Private insurers minimize exposure to catastrophic risk through diversification. The Wicker amendment would concentrate the risk. It provides no ability for reinsurance, retrocessional insurance, or any other means to diversify and lay off risk.

In addition, the Federal wind coverage would face operational challenges that have not been addressed through the Wicker amendment. The flood program currently takes advantage of efficiencies created by the use of public and private resources. No private insurance company would ever sell or solicit a policy that would directly compete with itself. Therefore, the wind portion of this insurance will be marketed, underwritten, and serviced directly by the Federal Government, if you will. This will add significant administrative costs and bureaucracy to the process of claims handling.

The capital markets have begun to show strong willingness to underwrite the risks associated with natural disasters. New innovations, such as catastrophe bonds and sidecar agreements, have been created recently. By allowing more Federal Government involvement, many of the innovative techniques for transferring risk will be crowded out in the marketplace.

While there are some parts of the country where insurance coverage problems have occurred, most of the property casualty insurance market is functioning well in this country. In order to fully understand the problems associated with coverage lapses, I believe we must work to understand the root causes of the problem so we can debate solutions and address the problem without hindering the rest of the market itself.

Our legislation creates a commission intended to provide us much of the necessary information we need to understand the problem of catastrophic risk. For instance, the commission would study ``the current condition of, as well as the outlook for, the availability and affordability of insurance in all regions of the country.'' It would also consider ``catastrophic insurance and reinsurance markets and the relevant practices in providing insurance protection to different sectors of the American population,'' as well as many other issues directly relating to the cost and availability of insurance for wind damage.

Given the potential exposure to the taxpayer, I believe we owe them a better process. At a minimum, Mr. President, I think we need to further study this problem prior to committing the resources of the American taxpayer.

Mr. President, I ask unanimous consent that the order for the quorum call be rescinded.

Mr. President, I rise in strong opposition to the amendment offered by Senator Landrieu, my friend from Louisiana, which would allow the mandatory purchase provision for areas behind levees and dams to be eliminated.

Currently, the flood insurance program suffers from a $17 billion deficit, mostly as a result of payments made to individuals living behind manmade structures such as levees and dams.

The fact that people behind manmade flood protections do not have to purchase flood insurance clearly sends the wrong message. As we all know now, flood protections sometimes fail. Telling people they need not protect themselves from the risks associated with those failures provides a false sense of security.

Keep in mind that all of these individuals will be required to pay a rate that reflects the risk associated with living behind flood mitigation devices. Currently the rates behind many of these structures would suggest an individual homeowner would pay approximately $316 for coverage up to $350,000. That is less than $1 per day for full flood protection; $1 dollar a day. This bill eliminates the entire debt associated with this program that is owed to the Federal Government, but it also demands that in the future people begin to pay a fair price for the risk associated with living in high-risk areas.

This amendment would require that we undertake a study as to the effect of requiring insurance behind manmade structures. I believe we have learned all we need to know about the risk associated with living behind manmade flood protection devices.

The insurance premium takes into account the real risk properties face. Levees fail. They fail all the time. They do not eliminate all risk. Flood insurance protects people against unforeseen risk.

These amendments do not recognize that fact. A prudent course is risk-based premiums for everyone at risk. I strongly oppose this amendment. I urge my colleagues to do the same.

Mr. President, I ask for the yeas and nays.

Mr. President, I oppose the Vitter amendment. The purpose of the Dodd-Shelby bill is to increase the actuarial soundness of the flood insurance program. This amendment by Senator Vitter would undermine greatly that effort. The amendment would extend flood insurance subsidies, crowd out private markets, and lead to larger program losses down the road.

I urge my colleagues to join Senator Dodd and me in opposing the Vitter amendment.

Mr. President, I ask for the yeas and nays.

Mr. President, I oppose the Vitter amendment No. 4273. Most homes mapped into the mandatory coverage areas will only see limited increases in their premium rates.

Homes or properties mapped into the higher risk areas should pay higher rates to match the reality of higher risk. Out-of-date maps that have vastly underclassified risk need to be updated, and delay in requiring property owners to pay their full freight is an extension of the inadvertent subsidies provided by inaccurate maps.

I urge my colleagues to join Senator Dodd and me in opposing the Vitter amendment.

I ask for the yeas and nays.

I move to lay that motion on the table.

The motion to lay on the table was agreed to.

Mr. President, I rise in support of the managers' amendment. It is a bill that combines the Flood Insurance Reform Act of 2008 with the Catastrophic Commission Act of 2008 that Senator Dodd has just outlined. Senator Dodd and I worked very closely to develop this important legislation in the Banking Committee, which the Senate Banking Committee, by the way, unanimously passed last year.

The legislation places the national flood insurance program on a stronger financial footing because it requires those living and working in areas vulnerable to flooding to assume more of the financial risk, as it should be. The bill also addresses many other structural and fiscal weaknesses in the program itself.

In addition, the managers' amendment creates a commission to study the current market for catastrophic insurance. The results of this commission should provide Congress with a factual basis for future legislative action, if we deem it necessary.

To fully appreciate the need for significant reform of the national flood insurance program, we must first consider the program's history. The flood insurance program was established in the Congress in 1968 to provide policyholders with some insurance for flood-related damage. The intent of the program was to generate enough revenue through premium dollars to prevent taxpayers from paying for flood-related losses during an average flood loss year. At the inception of this program, Congress included explicit subsidies for business properties and homes known as preflood insurance rate map or pre-FIRM structures. It was determined that it was not fair for the owners of such structures immediately to pay actuarial prices because they received no notice regarding the new mandatory purchase rules.

That said, it was also believed that many, if not all, of the pre- FIRM structures would quickly become ineligible for the subsidies. For this reason, Congress never included a subsidy elimination mechanism. This oversight has had significant financial consequences for the current flood insurance program.

More than 40 years later, a large number of these properties still receive explicit subsidies. Many of these properties have made the greatest claims on the program after suffering repetitive losses. In fact, the Congressional Budget Office has valued the explicit subsidy for grandfathered homes at $1.3 billion per year. There are other key factors beyond the poorly designed financial structure of the program that need to be addressed. For example, the size of the program has expanded exponentially since its inception. In 1978, 10 years after the program started, the program had 1.4 million policyholders and $50 billion in risk exposure. Today there are more than 5 million policyholders and over $1 trillion in risk exposure.

Finally, the maps used to determine the rates for the program are largely out of date just about everywhere. Antiquated maps do not represent accurately the risk that covered structures face.

Without up-to-date maps and, hence, an accurate risk assessment, price is

simply reduced to guesswork. Often these guesses have been too low, and the taxpayers have been forced to make up the difference, oftentimes to very wealthy people. This program currently generates $3 billion in premiums, spends roughly $1 billion on administration, and has a liability exposure of more than $1 trillion. Let me repeat that. The program has a liability exposure of more than $1 trillion. In fact, the financial deficiencies of the program are so great that the Government Accountability Office placed it on a list of high-risk programs because it does not generate enough money to cover its liabilities.

Furthermore, Robert Hunter, who is recognized as one of the key individuals in getting the program started, has stated:

The integrity of the program [must be] restored . . . [or]

consideration must be given to ending this . . . hopelessly

administered program.

Mr. Hunter was with the Consumer Federation of America for many years. Mr. Hunter's prescription for restoring the program's integrity is requiring greater mitigation efforts and moving toward actuarial soundness. This is what we have attempted to do today.

I recognize that reforming the flood insurance program presents the Congress with difficult choices. We could end the program, we could dramatically increase fees on program beneficiaries, or we could do nothing. Each of those choices would be unacceptable. That is why Senator Dodd and I have crafted a bill that addresses what we believe are the most significant financial weaknesses of the program without dismantling its core features. We struck a realistic balance between the needs of the program's beneficiaries and the taxpayers on the hook for the program's shortfalls.

The legislation before us strengthens the program by immediately eliminating subsidies on vacation homes, businesses, and severe repetitive-loss properties. It then paves the way for eliminating all subsidies in the future. It proceeds in such a way, however, that recognizes immediate elimination of all subsidies is not prudent because flood maps will not be updated for some time.

To address the mapping deficiencies, the bill creates stringent standards that the program must use to complete the map modernization process. Once we have the most accurate and up-to-date flood mapping possible, homeowners will better understand and mitigate their risks.

The program will also transition to more accurate pricing. In addition to eliminating subsidies, the bill requires State-chartered lending institutions to maintain flood insurance coverage for all mortgages located within the 100-year flood plain. It increases enforcement tools available to bank regulators at both the Federal and State levels by requiring escrow of flood insurance premiums throughout the life of the mortgage. The civil monetary penalties that regulators may levy against lenders for failure to comply are also increased. The bill creates a mandatory reserve fund to cover the cost of unusual events. This provision is intended to limit future reliance on the American taxpayer. The bill requires a rulemaking to ensure that the ``write your own'' carriers are being reimbursed solely for their expenses.

Finally, the legislation creates a commission that Senator Dodd outlined earlier to study the effects of natural disasters on our insurance system. The commission must report its findings within 9 months.

Some have suggested that we should add wind insurance coverage to the already bankrupt Federal flood insurance program. I remind my colleagues of certain facts: The Insurance Information Institute estimates that by adding wind as a covered peril, the program will take on an additional $14 to $19 trillion worth of risk exposure. In addition, a Towers-Perrin report indicates that adding wind coverage to the flood program could lead to an additional annual program deficit as high as $1 billion.

Both of these studies point out exactly why we should have a complete understanding of all of the facts before we even contemplate expanding the Federal Government's role as an insurance provider.

Before I conclude, I will take a moment to recognize Senator Bunning for all of his efforts to reform this program for the past several years. As Senator Dodd did, I also recognize Senator Jack Reed of Rhode Island and his staff for their efforts to create accurate and up-to- date flood maps which are essential for this program in the future. Lastly, I thank my colleague, Senator Dodd, chairman of the committee, and his staff for their efforts in crafting this bipartisan legislation.

I repeat something I said earlier: Reform of the program involves tough choices. We must make these tough choices, however, if this program is going to survive. For the good of the program beneficiaries and the taxpayer, I urge my colleagues to support this legislation.

I yield the floor and suggest the absence of a quorum.

Mr. President, I thank Senator Dodd for all of his cooperation and his leadership on the Banking Committee and on the Senate floor, and I want to associate myself with his remarks, thanking the staff of the Senate and also the staff of the Banking Committee, including my staff and his. It is good to work together where we can in the Senate. And when we do, we get a lot of work done.

Mr. President, when crises such as the one we are now facing come about, the American people expect us in the Senate to act in an expeditious and an appropriate manner. I think this is what we have been doing the last couple of weeks. Senator Dodd and I, at the direction of our respective leaders,

Senator Reid, the majority leader, and Senator McConnell, the Republican leader, have invested a considerable amount of time in drafting a bipartisan and balanced piece of legislation that is focused on addressing the growing number of foreclosures nationwide, which Senator Dodd just mentioned.

In an effort to maintain that balance and to preserve our bipartisan agreement, we were not able to agree to a number of amendments, some of which I believe have a great deal of merit, and I want to touch on some. It is my hope that Senator Dodd and I can continue to work closely on a number of those, such as the need for meaningful GSE reform, as well as a mortgage broker and banker licensing bill.

Senator Hagel introduced an amendment on GSE reform that I believe may represent the foundation for a very promising approach to addressing a very complex but critical set of issues. I stand ready to work with Senator Dodd at any time to reach an agreement on meaningful GSE reform.

Senators Feinstein and Martinez introduced an amendment on mortgage broker and banker licensing that I hope also lays the foundation for further action by the Banking Committee, headed by Senator Dodd.

There are other provisions that are not in this bill and that I could not support. These included the bankruptcy provision, or so-called cram-down, as well as an unprecedented expansion of the FHA guarantee to hundreds of thousands of homeowners who find themselves underwater on their mortgages and stretched beyond their means.

Mr. President, when we began consideration of this bill, I said the following:

While we are in agreement on the measures contained in this

bill, there is a line that we should not cross. That line is

represented by a taxpayer-funded bailout of investors or

homeowners that freely and willingly entered into mortgages

that they knew or should have known they could not afford.

With that in mind, I intend to examine closely any proposals to further expose the American taxpayer to the risks freely incurred by individuals or investors. I understand that Chairman Dodd intends to hold additional hearings on just such a proposal. I intend to work closely with him to ensure that all facets of this approach are examined thoroughly before we expose those who made prudent financial choices to the risks created by those who didn't.

First and foremost, I believe our primary responsibility is to the American taxpayer. In our zeal to help those who find themselves in financial difficulty, we must make sure that we do not do more harm than good. This bill does include a number of provisions that deserved my colleagues' support, and that they supported. The bill makes the necessary changes in the FHA program so that it can meet the needs of today's mortgage marketplace. The FHA language provides protections for the American taxpayer, who ultimately bears the financial risk of the program. The FHA title provides immediate help to the marketplace by reforming the Federal Housing Administration, allowing it to provide greater liquidity and thereby enhancing the options available to America's homeowners.

The bill also provides additional funding for foreclosure prevention counseling--Senator Dodd has spoken on this--which will help homeowners stay current on their mortgages and be able to remain in their homes. That is our goal. This is an area in which I hope to work closely with Senator Dodd over the coming year. I believe we must conduct thorough oversight to ensure that this money is being spent properly and effectively. Should additional funds be necessary, I believe they can be provided during the normal appropriations process.

In order to prevent a repeat of the current housing crisis, the bill also increases the disclosures made to consumers obtaining mortgages, which I think is very important. I believe giving consumers more information so they understand what they are doing and the ability to understand the choices they are making will help them avoid making the pitfalls and bad decisions many uninformed consumers made in the past.

To protect our soldiers, sailors, and airmen, the bill extends additional consumer protections and provides those returning from combat a chance to get back on their feet before they face any type of foreclosure proceeding.

Mr. President, in an effort to provide communities with the ability to clean up the damage caused by the foreclosures that have already occurred, we have included funding to allow States and communities to buy up and repair foreclosed residences through the Community Development Block Grant Program.

Attached to this funding is a requirement that any profits from the sale of properties must be used to buy and repair additional properties. I believe that reuse of this funding in this manner will maximize the impact of these dollars and minimize the possibility that funds will be wasted or profits inappropriately pocketed.

The bill also contains a number of tax-related provisions prepared in a bipartisan fashion by the chairman and ranking member on the Finance Committee.

Mr. President, this bill also includes a managers' package that contains a broad range of provisions offered by 13 separate Senators. Chairman Dodd and I worked closely to come to agreement on including this group of provisions that, I believe, strengthens the core bill.

The first group of provisions touch upon a number of veterans and military service personnel housing programs. These measures provide greater resources, flexibility, and options for veterans and military personnel to help meet the particular challenges they face in regards to their housing needs.

The managers' package puts to greater use assets in the Home Loan Bank system to help bring additional resources to the effort to deal with current conditions in the housing market.

The package includes additional consumer protections for senior citizens who participate in the FHA-insured reverse mortgage program. The package requires enhanced scrutiny of loan originators participating in the FHA program, which should better protect the solvency of the taxpayer backed mortgage insurance fund.

The package also ensures that funds are not used to provide inappropriate benefits to private entities by prohibiting the use of funds in cases where eminent domain is used to benefit private parties.

Finally, the managers' amendment protects taxpayers by requiring that any profits made from the sale of rehabilitated homes that are not reinvested in the program are recaptured and returned to the Treasury.

Mr. President, I believe this is a focused and targeted piece of legislation that will address in an appropriate manner a number of the difficulties we are now facing in the housing market.

While there are a large and growing number of homes entering foreclosure, we must remember that the vast majority of homeowners are living within their means and making their mortgage payments.

While some would argue that we have a responsibility to aid those who find themselves under water on their mortgages or unable to afford their increasing payments, I would argue that we also have equal responsibility to those who have made prudent financial decisions. We must not forget them as we seek to help others.

Mr. President, the eve of an election year can be a very difficult time to reach consensus on just about anything.

When we are able to come together, it is incumbent upon us to seize that opportunity and move forward.

Mr. President, I think this is a good bill overall, and I was pleased to see the vote of the Senate just a few minutes ago.

I yield the floor.

Mr. President, this afternoon in the Senate, I wish to take a minute to commend the Senator from Louisiana for her work on these amendments and her concern for her people. Senator Dodd and I have talked to the Senator from Louisiana and others about our package. The Presiding Officer is a member of the Banking, Housing, and Urban Affairs Committee who knows we have done the best we can to craft a bill which is focused on bringing relief to those areas affected most by the growing rate of foreclosures. We realize this will not be a panacea, but it is a good first start. Because we were stalled, as the Presiding Officer knows, on the floor, and what we are trying to do is make a breakthrough. The success of this effort we have been working on for a second week now, I believe, will depend a great deal on whether the funds made available in this bill make it to their intended designation. We can help to ensure a degree of success by keeping it focused on the foreclosure market.

The Presiding Officer talked about that, as did the Senator from Louisiana. Chairman Dodd and I worked closely with Senator Reid and Senator McConnell, our respected leaders, to draft a targeted bill designed to address the problems caused by the recent turmoil in the national housing markets. Our goal was to provide resources to deal with the recent foreclosures and try to prevent additional foreclosures. In other words, this bill was put together in the context of the current conditions of the national housing market.

I recognize, as I said a minute ago, Senator Landrieu's concern and others' concern regarding the housing issues, particularly hers in Louisiana. I believe we need to address those, some of them, outside this particular legislation. I know the Presiding Officer right now is very involved in the Banking and Housing Committee, and we are going to continue to address this problem. I think we have to.

I object.

Mr. President, I rise today to pay tribute to Congressman William Dickinson, who passed away on Monday, March 31, 2008. Bill was a skilled legislator and a personal friend, and along with the entire State of Alabama, I mourn his passing.

William Dickinson was born on June 5, 1925, in Opelika, AL. He served in the United States Navy during World War II and as a Major in the United States Air Force Reserves. In 1950, he obtained a law degree from the University of Alabama. He then practiced law for 2 years. In 1952, Bill began his career as an elected official, serving as a judge in city, juvenile, and circuit courts in Lee County. After his successful career as a judge, Bill was an executive for the Southern Railway. Bill also served on the Opelika Board of Education.

When Bill was elected to Congress in 1964, most of his constituents had never before been represented by a Republican. Nevertheless, Bill was elected to 14 consecutive terms in office and was a pivotal force in Alabama's change into a two-party State. While in office, Congressman Dickinson accomplished a great deal for his district, the State of Alabama, and our Nation.

He worked tirelessly for the 13 counties in his congressional district, particularly on military matters. As ranking member of the House Armed Services Committee, Bill was able to protect and strengthen the military bases in Alabama. He was a steamroller in military funding issues for the Air War College at Air University, Maxwell Air Force Base, and Gunter Annex in Montgomery, AL, and also further south in Alabama at Fort Rucker, where Army helicopter pilots go through their training. His exemplary work in this area improved both the economy of our State and the security of our Nation.

Bill's work for the military also extended to the national level. He was very influential in the rearming of America during the Cold War, working to stop the spread of communism and providing the military with the programs and equipment they needed during the Vietnam war. Bill is credited both with the creation of the Aviation Department in the Department of the Army and for the Apache Attack Helicopter program. In fact, Bill was nicknamed the ``Father of Army Aviation'' due to his advocacy on behalf of those issues.

His work garnered the attention of the American Conservative Union, which presented him with the Statesman Award; the Army Aviation Association of America, which awarded him with its Congressional Appreciation Award; and the Association of the United States Army, which presented William with the Distinguished Service to Soldiers award, among others.

Bill is loved and will be missed by his wife Barbara, his four children and his five grandchildren. He was an inspiration to many and will be remembered for his service to our Nation. I ask the entire Senate to join me in recognizing and honoring the life of our colleague, Congressman William Dickinson.