Floor Statements

Mr. Chairman, I thank the gentlewoman for yielding time.

I wish to express concern about the operative effects of the gentleman's amendment. For many outside the storm impact area, you would not have an understanding of how processes work. But if you were eligible under the Road Home program, that was the federally funded program to assist people to return to their homes, the maximum allowable money that you could receive regardless of your circumstance was $150,000. But under current rule, if you are eligible for $150,000 and you, for example, had purchased Federal flood insurance in the amount of $150,000 and got paid $150,000 pursuant to the flood insurance premium, you would get nothing out of the Road Home program. Because of that inequitable application of benefits, this House has already voted to eliminate the duplication of benefits in the flood insurance area.

Now what is being suggested by the underlying bill is we should do the same thing with regard to an SBA loan. The argument here is even more persuasive. The person may have entered into the SBA obligation far in advance of the onslaught of Katrina. It

might be several hundred thousand dollars of loans that were made available to this individual through the SBA.

Under the current rule, any assistance that might be offered to that homeowner who happened to have the SBA loan would all go back to repaying the SBA obligation.

So get the picture. The Federal Government puts a stamp on the check, drops it in the mailbox and sends it to the house. But before it gets there, another Federal agent picks it up and hauls it over and deposits it at the SBA. Do you see where the hole is in this argument? No money at all gets to the affected individual.

So what the bill now provides is that without increasing the overall expenditure, the money made available to assist people via Katrina and Rita has been appropriated by the Congress. It is over, that is it. We are talking about available resources, not new dollars.

Secondly, once the money gets to the individual, the individual is still capped by the rules of the Road Home program, and that is, there shall be no enrichment above that $150,000 level. This is a reasonable proposal. It will enable people to recover appropriately from the disaster which is so overwhelming.

I suggest if any still have doubt whether this level of assistance is required and justifiable, walk the streets of New Orleans, as I did this past weekend. Sure, the business district and the French Quarter look terrific. The shops are empty, the restaurants aren't full and people are not coming back. But get out into the neighborhoods where the devastation still exists. We need this help, and we need it now.

Mr. Chairman, I thank the gentlelady for her courtesy.

I rise today to make observation that when a hurricane makes landfall, most people do not consider it a Republican or a Democratic event; that in the aftermath, when you have been devastated from life and property and someone comes to help, you don't ask, are you from local government, State government or Federal Government, and, by the way, are you a Republican or a Democrat?

The only thing I observed that hurricanes and government have in common at this point as a Louisianian is that either one you touch, you are going to come away confused, disoriented and possibly hopeless.

We can do better. I should be quick to add, however, lest these comments be misinterpreted, that it was President Bush's administration who came to this Congress and asked for the $100 billion of taxpayer money to begin the long, slow process of recovery. I also want to quickly add that it was Chairman Frank who discussed with me the administrative problems of the resolution and incorporated into the bill now before us important expediting processes which will make a measurable and financial difference to the people of Louisiana.

I want to express my appreciation to Chairwoman Waters and Ranking Member Biggert for their continued effort to understand and respond.

Not to dismiss that there are problems. In fact, a provision I was trying to include in the bill, which was made reference to during the debate on the rule, caused the CBO to express concern that we had a scoring problem. To make sure I say this the way I intend it, I learned that the CBO scoring process is mystical, algorithmic, nonsensical, opaque process intended to obstinately delegate common sense to irrelevance.

Short-circuiting all of that, let me say I appreciate Chairman Frank's

staff working diligently and the Rules Committee allowing that provision to be made in order and to be included in this legislation.

That problem is not the only one for taxpayers. Let me explain to you that when you send us a dollar, we don't get a dollar. At best, we get 80 cents, because FEMA has been keeping at least 20 percent of all the money intended to help people recover for their operational expenses. The American public needs to know that, that we are not wasting $100 billion. Certainly we can be more efficient in rolling out a response to a devastation that we have seen never before in this country, 90,000 square miles. I would say where we are today is not a hopeless mess, but indeed it is a mess.

My hope is that the small pilot program contained in this legislation, which will enable the collection of disparate tracts of property to be cleaned off and sold back into the private market, can be a way to kick-start a free-market recovery that to date has been impossible with government interference and obstinate regulation. There is a faster, better way, a more efficient way, to combat this scale of devastation and human suffering.

Maximizing taxpayer expenditures while minimizing benefits to those in need doesn't seem possible to the extent that we have seen in the current circumstance. If there is to be any long-term benefit to the resolution of this matter for all the affected taxpayers around this country, it is to construct a response mechanism that when the next devastating event occurs, we will be able to deploy resources, get people the help they need in an efficient manner, and get government the heck out of the way and let free markets function.

The bill before us today incorporates provisions that I believe will help get us closer to that goal. Are we there yet? Of course not.

Webster charges this House of Representatives with a very clear mission: Let us develop the resources of this land, call forth her powers, build up her institutions, promote all her great interests, and see whether we also in this, our day and generation, may perform something to be worthy of remembering.

Webster got it. We need to leave this place in a better condition than when we found it. We can do better than this. And before the next disaster strikes, we must.

Mr. Chairman, will the gentleman yield?

Mr. Chairman, I would just observe the gentleman is absolutely correct. There is FEMA-ese and HUD-ese and they don't apparently have a translator.

Madam Chair, at this time I would yield such time as he may consume to the ranking member of this Committee on Transportation, Mr. Mica.

Madam Chairman, at this time I claim 2 minutes.

Madam Chairman, I wish to express my appreciation to the gentlelady and to the Chair for their diligent work in this area. Certainly, it is an arena in which there is a clear and established, well identified need for which there are too few resources available. It is also a problem which will require many, many years of dedicated work to ensure the delivery of a safe water infrastructure in the years ahead.

I, regretfully, have observed that the debate which will occur over the establishment of Davis-Bacon in this legislation is the one point around which great controversy has emerged.

In my own State, I can speak with authority as to our circumstance. Pursuant to the devastation of Katrina and Rita, we find our communities struggling to get back on their feet, and our infrastructure has been badly damaged. Water systems, pumping stations, sewage systems have been destroyed; and it will take, unfortunately, years for many communities to attain the status that they once had prior to the storms' impact.

It is clear to us that, although the American people and this Congress have been very generous to our State in making resources available, those resources are going to be stretched to their maximum extent possible; and yet we still have incredible needs that will yet be unmet. For this reason, we feel, at least in the view of our own State's interest, that the application of the Davis-Bacon requirement, artificially increasing the cost of construction of these important infrastructure projects, will only ensure that we are years longer in achieving the necessary recovery.

To state it quite simply, to spend more and accomplish less is not something we in Louisiana are comfortable in pursuing. For that reason, I join with my ranking Member, Mr. Mica, in expressing grave concerns over the inclusion of Davis-Bacon.

In the normal operative circumstance, when funds are made available from the State revolving account to a State for a particular project, Davis-Bacon has applied to that first-round funding. This bill will now make Davis-Bacon provisions extend to all subsequent utilizations of those funds, and that is the expansion to which we strongly object.

Madam Chairman, at this time I would like to extend to the gentleman from Florida, a valued member of the Committee on Transportation, the Honorable Congressman Connie Mack, 2 minutes.

Madam Chair, at this time, I would yield 2 minutes to the defender of the working man and hometown America, Congressman Tim Murphy.

Madam Chair, it is my pleasure to yield 2 minutes to a gentleman who is a defender of the taxpayer's best interest, Congressman Pence.

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

Madam Chair, at this time I would like to yield 2 minutes to Congressman King.

Madam Chairman, it is my pleasure to yield 2 minutes to the gentleman from California (Mr. McKeon).

Madam Chairman, I yield such time as he may consume to the ranking member, the gentleman from Florida (Mr. Mica).

I yield myself such time as I may consume.

I think it is important to understand the operative nature of the State Revolving Fund and the results of the legislation before us on that operation of the fund.

If a community in Florida, the ranking member's State, which has no prevailing Davis-Bacon requirement, borrows money from the revolving fund, there is a match associated with that which is State dollars. There is also interest that accrues on that loan. When the State repays the loan, the State repays the interest, that comes back into the revolving loan account.

Each year, as the Federal funds are made available, assume $500 million would be made available of Federal resources for the revolving fund account, only that $500 million under current rule would be subject to Davis-Bacon application. All of the repayment made by the State of Florida, including the interest, would be exempt from the applicability of a Davis-Bacon requirement.

``For the first time,'' and I read from the statement of administration policy, the White House statement on the matter, ``For the first time ever, projects financed by funds contributed solely by States and moneys repaid to the State Revolving Fund will be subject to Davis-Bacon requirements.''

So let there be no mistake about this, this is not merely voting to sustain Davis-Bacon as we currently know it. This is to expand the requirement for State-generated funds into States that have no Davis- Bacon requirement at the State level, and it will diminish those States' abilities to meet their identified water infrastructure needs. That is why this debate is occurring. It is not just about whether big business or big labor or the beneficiaries of some legislative initiative. This is about the real world in back home America, and are we going to provide the resources to help small communities get their water systems in decent and safe operating condition? We all agree that is a worthwhile goal.

The question is: How do we want to achieve it?

Do we want to constrain a free market system with arbitrary Washington rules that artificially drive up prices and give taxpayers less? Most of us think that is not advisable.

Madam Chairwoman, I yield such time as he may consume to the gentleman from Louisiana (Mr. Boustany).

I have a speaker on his way, and so I would like to I reserve the balance of my time.

Madam Chair, I yield 3 minutes to the gentleman from Michigan (Mr. Rogers).

Madam Chair, I only have one remaining speaker. May I inquire if the gentleman has multiple speakers remaining.

Correct, sir.

Madam Chairman, I yield myself the remainder of the time.

I wish to express sincere and deep appreciation to the gentlewoman who is the Chair of the Water Resources Subcommittee and, of course, to the distinguished chairman of the full committee, Mr. Oberstar. In thinking back over my tenure on the committee, it really is hard to remember a time when there has been significant partisan difference. It truly is one of the committees of the House that works in a unified way and produces a consistent, unified voice.

We share the vision that America's infrastructure is the key to our Nation's economic future and that where infrastructure is damaged or inadequate, economies lag behind, employment is high, and circumstances are not good. So we really are joined here together in an effort to do what we believe is right and best for communities we represent.

In this one instance, we find ourselves on the opposite side of a policy which has, over time, divided this Congress, the requirement by government to tell those engaged in a business endeavor what you should pay your employees in meeting essential public need.

It is clear to me that in my home State, the economic dislocations because of the tragic storms is immense and widespread and felt deeply and unfortunately will be likely felt for many years to come. We all know that there aren't sufficient resources to solve every problem in every community and certainly not even in our own State. Despite the generosity of the American people and this Congress, there will be billions of dollars of unmet need.

The question, as we go to Dr. Boustany's district in southwest Louisiana to a small, small rural parish in Cameron, where there isn't even a municipality, where after the storm's terrible surge went across the land, you could stand on the northern edge of the parish and look all the way to the gulf coast and not see a structure standing. We don't have enough money to build it all back. We can't even tell people even when we are likely to build it back, but we are going to send some money, now in the form of a State revolving fund intended for the restructuring and rebuilding of critical water infrastructure.

What are we going to do with that $10? Are we going to artificially increase the cost of that project just to make it more difficult for rural Cameron parish to recover? I don't think we really want or intend to do that, but that is the consequence of this provision in this bill. It makes recovery more difficult. It will take recovery longer. It will cost more to build less.

We all pride ourselves in America on our strong free enterprise beliefs. Let's turn free enterprise loose. Let's let Louisiana rebuild. Let's do it in the most efficient and expeditious way possible. Let's strike Davis-Bacon provisions from this bill.

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

Madam Chairman, I would yield time to the chairman of the full committee if he so chooses to claim time.

Certainly.

Madam Chair, I share the comments of our Chairman. I know of no opposition on our side, and I accordingly yield back the balance of our time.

Madam Chairman, I offer an amendment.

Madam Chairman, at this time I would yield 3 minutes to the cosponsor of the amendment, Mr. King.

May I inquire as to the time remaining.

I claim the remaining time.

I certainly respect the chairman's knowledge and views of these matters and appreciate that on 95 percent of the issues before the committee, we are generally in unanimity.

On this particular point, I would like to bring the issue to that of the individual who is trying to rebuild their home in the difficult area of south Louisiana. Materials are short, workmen are hard to find. Do we really want to tell an individual trying to rebuild their personal home, you are going to have to meet a government wage rate in order to build this house or else you cannot build it? This is about government injecting itself into a free market process, all for no apparent reason that is clear to me.

It will make the compliance of the rules for the rural and lower income communities much more difficult to achieve. Compliance with the Davis-Bacon provisions is a difficult and cumbersome task.

And where we have low-income communities, where resources are greatly limited, we are now going to require additional regulatory burden and a higher wage rate that is artificial to further inhibit the ability of that community rebuild. We wouldn't contemplate having that set of requirements on the individual trying to rebuild their own home, but yet we are going to force that set of standards on communities across this Nation, even where States have no Davis-Bacon provisions at the State level at all. And that I think is the most troublesome aspect of the implementation of the proposal as constructed. Eighteen States have chosen not to require a Davis-Bacon implementation, and yet we here in the Congress by virtue of the State revolving infrastructure fund are going to require those States now to comply with these new standards. I hope Members will carefully consider the consequences of this amendment and vote for the Baker-King amendment.

Madam Chairman, I demand a recorded vote.

Madam Chair, I rise to claim the time in opposition, although I am not in opposition.

Madam Chair, I reserve the balance of my time.

Having no objection to the amendment, I yield back all time.

Madam Chair, I rise to claim the time in opposition, although I am not in opposition and therefore ask for unanimous consent for that purpose.

Madam Chairman, I reserve the balance of my time.

I would be happy to yield the chairman 1 minute.

Madam Chair, I have no further speakers. And having no objection, I yield back the balance of my time.

Mr. Speaker, I move to suspend the rules and pass the bill (H.R. 6325) to provide a new effective date for the applicability of certain provisions of law to Public Law 105-331.

Mr. Speaker, I ask unanimous consent that all Members may have 5 legislative days within which to revise and extend their remarks on this legislation and to insert extraneous material thereon.

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

Mr. Speaker, I urge today that the House do pass H.R. 6325, introduced by the gentleman from New Jersey (Mr. Pallone). It is a relatively simple bill in purpose, to accommodate one single intention, and that is to correct an honest misinterpretation of the law governing the distribution of surcharges on the sales of a commemorative coin that honored America's great inventor, Thomas Edison.

Legislation to authorize the coin was approved in 1998, and the coin issued subsequently in 2004. But owing to slightly contradictory information guiding recipients of the surcharges, the recipients did not understand requirements to raise matching funds from private sources, which meant that such funds must be entirely from nongovernmental sources. That misunderstanding now has been resolved, and I would like to introduce into the Record at this time a letter to that effect, and all agree that a short 6-month extension would then be sufficient to cure any pending problem.

Mr. Speaker, it was a misunderstanding, clearly not at the fault of any one party, but I believe that this remedy being posed by Mr. Pallone in a bipartisan fashion will cure the defect that we currently face, and I would urge the House to consider the bill and immediately adopt the underlying text.

Edison Memorial Tower

Corporation,

Edison, NJ, November 14, 2006.

Chairman Michael Oxley,

Committee on Financial Services,

Washington, DC.

Dear Chairman Oxley, The non-profit Edison Memorial Tower

Corporation is requesting a 6-month extension to our deadline

to raise $379,000 in private funds in order to secure a

$379,000 matching grant from the United States Mint. These

funds, available thanks to the sale of a Thomas Alva Edison

Commemorative Coin, will greatly assist us with our efforts

to restore Thomas Edison's Menlo Park laboratory site where

many of his most important inventions were made.

Our Board has made good progress in our fundraising efforts

and we are confident that the additional 6 months will allow

us the necessary time to raise the full required amount. We

understand that if this 6-month extension is approved, this

will be the only extension allowed for this grant. We

therefore commit that we will not ask you to consider a

further extension of time.

Thank you for your consideration.

Sincerely,

Nancy L. Zerbe,

Chairperson.

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

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

Mr. Speaker, I thank the gentleman for yielding, and wish to express appreciation to my friends on the other side for their work in this arena.

It flows from the problems that erupted during the fall of 1998 when the then largest hedge fund in the world, LTCM, pursuant to a Russian currency crisis, found itself unable to meet its financial obligations. When the New York Fed arrived at the meeting location to determine how to best resolve this uncertainty, they were surprised to find the scope and complexity of the financial relationships that LTCM had with significant and large financial institutions, both U.S. and abroad. There was not in place at that time a mechanism where counter-party obligations could be unwound without wreaking havoc and some sort of domino effect, potentially bringing significant adverse financial consequences to large numbers of individuals who had no knowledge of their exposure to the LTCM instability.

Further, at the time of LTCM's demise at the end of 1998, they had approximately $1.5 trillion in notional amounts of derivative positions held worldwide. And their leverage ratio exceeded 28 to 1. In other words, this was not a good thing. They were significantly larger in scope than any of the

largest commercial banks. And although others enjoyed higher leverage ratios, few had the sophisticated relationships with counter parties that were engaged by LTCM.

The provisions of the bill now suggested by the gentleman from North Carolina is the ability to close out what are called netting relationships to prevent the failure of one entity from causing a domino effect of more serious disruption, known as systemic risk. Absent the adoption of these provisions with the growth in size of hedge funds and in number of hedge funds, there is considerable market uncertainty as to how a bankruptcy proceeding would affect market liquidity. The unwinding of these obligations, and let me quickly add that it is in scope much larger than impact just in hedge funds; it does go to the broader financial marketplace, all of which have in common that these transactions are put in place through intermediaries such as stock brokers, smaller financial institutions, securities clearing agencies that often hedge their risk on transactions through securities collateral received pursuant to these obligations.

As a result, this will provide a safe and secure mechanism to unwind complex financial relationships, minimizing market instability, providing market liquidity and ensuring that our economic system is not adversely impacted by the demise of a hedge fund. In essence, that is a good thing, and I commend the gentleman for his work product.

Mr. Speaker, I certainly want to start by acknowledging the focused work of our chairman who has worked diligently on many aspects of reform, and the bill now pending is one small piece of a larger puzzle which has been constructed by the committee in an effort to facilitate provision of insurance of all sorts, but particularly focusing on the needs of homeowners. And a word of special appreciation from those of us in Louisiana as a result of the debacles of Katrina and Rita. We are experiencing a similar circumstance to that of our colleagues in the State of Florida.

The remedy posed under the pending bill is an important one. In one small area, it enables someone to have direct access to surplus lines policies which currently is not facilitated. Current rules require you to apply to at least three separate companies and be denied coverage before you can approach a surplus lines company to acquire the needed insurance. The proposed reform would enable certain qualifying purchasers of product, whether it be business owners or individuals, to have direct access. And in the case of the Katrina-Rita impact areas, this is of extreme importance in facilitating access to insurance which otherwise would not be made available.

I also want to speak to those members of the committee who worked diligently on this subject matter. As the ranking member indicated, this has been a bipartisan effort, and certainly Mr. Moore and Ms. Wasserman Schultz on their side are to be commended for their contributions. Ms. Brown-Waite and Mr. Fitzpatrick and others on our side have worked diligently as well.

I think the product we now have pending before the House is a very important step, but should be viewed only as that, a first step. There is much work yet to be done to facilitate regulatory commonsense oversight of the insurance industry, and hopefully provide for enhanced product development and competitiveness in markets where

we find in many States people are better served where markets are open, products are available, and prices are competitive.

I believe this surplus lines reform proposal will demonstrate that as an effective remedy to the problems we now face in a very expensive insurance market, and, in some cases, a market where a product is not available at all.

Mr. Speaker, I congratulate the chairman on his good work on what is truly an important piece of reform legislation in the world of finance. This has immeasurable impact on any number of businesses and individuals' financial interests.

I certainly want to continue to compliment Mr. Fitzpatrick on his good work with H.R. 2990, a previously passed House bill, which in essence is incorporated into the version sent back to us from the Senate with the good additions provided by Senator Sarbanes. So this has been a bipartisan and bicameral effort which I think presents itself before the House today and also provides for exemplary reforms.

Credit rating agencies are unique entities. Currently, there is no mechanism by which a corporation may become a credit rating agency. There is

little oversight once one is designated; and if they fail to meet their fiduciary duties, there is not clear methodology by which one would be decommissioned.

The underlying bill makes strategic and important changes with regard to these provisions establishing a registration process through the SEC. The additions which Mr. Sarbanes suggested be included in the legislation are important, providing additional accounting and financial screens through which a corporation must pass in order to achieve this designation.

There is also another important reform not yet mentioned in the debate, and that goes to the previous practice of rating agencies engaging in unsolicited ratings. It is not a bad business model: You simply pick out the company you wish to charge, you rate them, and send them the bill for services later. It presents a corporation with a very difficult dilemma in that, under our securities law, if a corporation chooses to enter the public markets and issue debt, you must have two favorable ratings from credit rating agencies.

For these reasons, this bill eliminates those unsolicited ratings, provides stability in the overall rating process, and I believe will serve our capital markets well in good fashion going forward.

I again compliment Chairman Oxley and Mr. Fitzpatrick for their leadership and good work.

Mr. Chairman, the road to justice is a difficult journey. It is not a mere step, but rather a lengthy endeavor. The result of the endeavor is to seek out those who have committed wrongdoing and deliver punishment in accord with the offense. All that any may hope, is that through the travail, there will be reflection on the truth. The truth is determined by careful, objective analysis of the facts, as best they can be determined. Facts are what result from examination of the evidence. When evidence show that the accused was not in the state at the time when the offense occurred, there is sufficient reason to find the accused was not a participant in the offense. It is even more explicit that the accused did not participate in the offense when the person was not yet born. Yet, that does not insulate the unfortunate from accusation. Accusation is the understandable action from those affected by wrongdoing. Someone is at fault, and failing clear evidence to establish the responsible party, accusations flow until the evidence and the facts lead all to justice. All of us should find affront in unsubstantiated accusation.

Here is where I discover reason for concern in the matter before us. The bill now pending, when enacted, will seek to serve justice. Notwithstanding the evidence, or the facts, for the next twenty five years, all those who follow in the scourged seven states will be branded with the racist label. This follows 25 years application of the previous penalty, which was assessed based on the facts and the evidence of the 1960's.

In the case now pending, the decision to condemn will be built upon the evidence now 42 years buried in history. It is not evidence or facts discovered today. The actions of the grandfather will now determine the fate of the grandson.

What is it that I ask? I have always found merit in the principle that where action is justified for one, it should be justified for all. Public policy should be applicable to all within jurisdiction of the government. Do we believe that discrimination ends at a county line? Is it really your view that justice is served in 43 other states, while bigotry only survives in a constrained geographic corridor? Where is the evidence? What are your facts? Why is it this legislation will mandate supervision of seven states, and not the whole of our Nation?

Many have been incensed even by the thought of this discussion, because they mistakenly view this legislation as all that stands between them and their right to vote. The 15th

Amendment to the Constitution apparently is of no consolation, although it ensures the right to vote to every American across the entire Nation. The bill now pending leaves 43 States on a different legislative landscape.

There is much in history to regret. We should not forget, or fail to learn from the troubled past. But we must also think about the present. Careful, analytical thought must precede action. Action to condemn or punish should be taken only when the evidence establishes the facts. All should be presumed innocent until proved guilty beyond a reasonable doubt. This principle establishes our freedom from the actions of an otherwise tyrannical government.

How do we come to this moment? Am I to believe that my grandchildren, not yet born, are condemned to a life of racial intolerance? How can this be? All reason is to be cast aside?

And if, my colleagues, you believe this policy to be well advised and necessary, why is it then ill advised to make it applicable to your constituents? And failing that, would you not examine the evidence, determine the facts, before condemning my constituents?

The pending amendment by the gentleman from Georgia, Mr. Norwood, would remedy most of my concern. Failure to adopt that amendment will leave those in Louisiana without an opportunity for fair deliberate consideration. Without the adoption of this provision, I cannot support the underlying bill.

For those who demand justice, it is now time to demand justice for all.

I thank the gentlewoman for yielding time.

Mr. Speaker, I rise today to express concern about where we are and where we have been with our current credit rating agency methodologies.

Many have come to the well today to express concern that we will be sacrificing quality for the sake of quantity. Let us simply go back a few short months, a few short years, and think about the irate comments made on the floor of this House with the disclosures of WorldCom and Enron and Global Crossing; and you make your own list. Guess what, the keepers of the gate were on duty when all that happened.

We can go back a little further to the tragic loss of taxpayer resources in the S&L crisis. Guess who was on duty.

It is the structure that some stand before the House today to defend and decry that we are going to sacrifice quality. Well, gentlemen, if that is your definition of quality, we have had enough. It is time to make a change.

What do we suggest? Just lightly opening the doors and let someone run down the hall and say, now I am an NSRSO, I am qualified? No, you have to be in business for 3 years. That is a pretty long internship to spend money and resources to establish you have the ability to issue credit ratings on which the market invests its confidence.

Let us think one more step, Fannie Mae and Freddie Mac. Some may be surprised to know that after a multiyear, multibillion dollar restatement, Fannie Mae cannot issue financials that meet their auditing requirements for the public benefit. Today, they can't.

Others may be surprised to learn that 43 percent of America's financial institutions have 100 percent of their tier one capital requirement invested in Fannies and Freddies. Now, some people rush to say, oh, no, it is not all Fannies and Freddies. Oh, great, it is Farm Credit System; that is even better.

The point is, we have the financial security of our Nation and our financial system invested for the money in the sock drawer when things go bad, the tier one capital requirement, so if they hit a bump in the road, they can reach in the drawer and pull out a few bucks and pay off the loan. That money is tied up in Fannie and Freddie securities that this enterprise, S&P and Moody's, have said are great, they are fine, notwithstanding the fact that for 5 years corporate executives paid themselves $250 million in bonuses on financials where they cooked the books. Boy, we have got a great system; I am going to fight to the death over preserving this.

Look at what it has done for America's taxpayers and American investors. Man, if there ever was a clear-cut case to make a change, why aren't we making the change? If you don't believe me, go to McGraw- Hill's Web page. Go to McGraw-Hill's Web page and look at the income from S&P, which is a subsidiary of McGraw-Hill. In 2005, their operating revenue was 2.4 billion; their operating profit was 1 billion. Now, friends, a 42.5 percent rate of return on your operating expense is a pretty hefty rate of return; it represents 68 percent of McGraw-Hill's entire operating profit. McGraw-Hill is only one of 34 companies to have increased its dividend payments for 33 consecutive years.

Put it in perspective. In looking at the first quarter performance in 2005 versus the similar quarter in 2004, McGraw-Hill actually lost money in its educational activities. It had in its information and media arena, down 65 percent; but financial services, which is S&P, it was up $222,512,000.

I think I figured out 222 million reasons why this bill is controversial. It is a fight about money. Let's get it right this time.

Mr. Chairman, I thank the gentleman for yielding and wish to compliment him for his leadership in this matter, as well as that of Mr. Fitzpatrick who has put many hours into this subject matter and, I think, has helped to produce legislation worthy of this House's consideration.

I wish to enter into the Record the statement of administration policy issued July 12 of this year regarding the passage of H.R. 2990, the relevant portion being: ``This legislation would enable more credit rating agencies to qualify nationally under Securities and Exchange Commission regulation. The bill requires credit rating agencies to disclose their performance records, methodologies and any conflicts of interest. The administration looks forward to working with Congress as we move towards these goals.''

It is clear the administration and the members of the Committee on Financial Services have found H.R. 2990 not only to be good legislation but necessary to be adopted; and why is that so?

If one were to ask how could you become a credit rating agency and get a part of this lucrative business today, the process is unclear. It is much like the old adage relative to identifying art, ``I know it when I see it.''

It has been some 30 years since the SEC adopted its current methodology for establishing this recognition, and yet we do not know today how one can successfully become an NRSRO, much less once you are one, who is it that looks over your shoulder, and should they find inappropriate behavior, how is one unregistered or decommissioned. That process is also unclear.

What we do know from the record is that very lucrative companies have engaged in a government-granted business operation, have garnered significant profits, and have not on all counts met their professional fiduciary duties.

The bill at hand provides for resources to register, oversee and, yes,

even unregister, decommission, provide for someone losing their license should they be found not meeting appropriate financial and fiduciary standards. For that reason alone the bill should be adopted.

But let me give one more example of past practice which I found troublesome. In the past, a rating agency could select a corporation on which it could engage in its credit analysis and issue an unsolicited credit rating. Unsolicited means the company didn't ask for it, but in some cases the rating agency would forward a bill to the corporation. Now why would the corporation pay that bill? Well, if a corporation, a public operating company, is going to issue public debt, they have to have the rating of at least two independent credit rating agencies.

Since two of the credit rating agencies perform about 99 percent of the ratings, it would become pretty evident that you would pay the bill because some time in the future your corporation would need to enter the public debt markets.

This bill will provide the authority for the SEC to prohibit such activity in the future, I think a highly appropriate reform. Certainly, there could be other matters brought to the attention of the House on the subject of value, but the underlying essential reforms contained in this bill should be adopted and adopted today.

Statement of Administration Policy, July 12, 2006

h.r. 2990--Credit Rating Agency Duopoly Relief Act of 2006

The Administration supports House passage of H.R. 2990, the

Credit Rating Agency Duopoly Relief Act of 2006. This

legislation would enable more credit rating agencies to

qualify nationally under Securities and Exchange Commission

(SEC) regulations. In addition, the bill requires credit

rating agencies to disclose their performance records,

methodologies, and any conflicts of interest. This bill would

improve competition and transparency in the credit rating

industry, which ultimately would benefit individual

investors. The Administration looks forward to working with

Congress to accomplish these goals.

Mr. Chairman, I rise to claim the time in opposition to the amendment.

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

I want to make clear that there is a difference of opinion as to the appropriate method to move forward and establish that the committee's work product is not frivolously or expeditiously constructed. The committee has worked many long hours and heard from many experts in the field as to the most sound recommendations that could be adopted to effect the changes both sides agree need to be made. In studying the gentleman's substitute, I think it is important to recognize, however, the consequences if the House were to adopt this specific recommendation.

The Kanjorski amendment would establish by sense of Congress that the SEC should continue to negotiate with the NRSROs to form some sort of unidentified self-regulatory model. What has been suggested in the proposal is that offered by the International Organization of Securities Commissions, the acronym IOSCO. The IOSCO code provides for a rating agency disclosure regime, but those who have studied it who do not share its goals point out there is the lack of a meaningful enforcement provision that is so essential, we believe, that is contained in H.R. 2990. It is important that if we do identify conduct that is inappropriate financial behavior, violating one's fiduciary obligation, that the regulatory structure have a mechanism to take away the right to practice. H.R. 2990 would provide that certainty.

And, further, Mr. Kanjorski's amendment requires the SEC to testify annually for a period of 5 years on the SEC's efforts to improve the transparency of the credit rating agency. Therein, I think, generally not giving much attention on the question of reporting by an agency represents the real thrust of the amendment. It is to continue the dialogue for another 5 years.

Well, we have identified the sufficient problems to bring to the Congress's concern. There is time for action. The time is now. And adoption of the Fitzpatrick recommendation, H.R. 2990, is essential and justified and, I think, essential and justified for us to act today.

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

Mr. Chairman, I yield 3 minutes at this time to the primary sponsor of the legislation, Mr. Fitzpatrick.

Mr. Chairman, how much time is remaining?

Mr. Chairman, we will have two.

Mr. Chairman, I yield 3 minutes to the gentleman from North Carolina (Mr. McHenry), a valuable member of the Financial Services Committee.

Mr. Chairman, I yield myself the remaining time.

Mr. Chairman, it is appropriate, I think, to perhaps review the subject matter at hand from a little higher altitude than the debate has taken us.

We have an obligation in this House to ensure that hardworking American families who invest their money in the markets can do so in the most safe and sound manner possible. What we now know about the function of the credit rating agencies over the past decade is their performance has been less than what we should expect. In fact, days before corporate failures, they continued to report the highest investment grade analysis on many troubled companies. We know that we must act to ensure that pension fund investors, managers of perhaps rather large public schoolteacher or public employee investment funds have the best tools available to ensure that innocent third parties are not harmed by abhorrent actors in the capital markets.

I can assure my colleagues that this proposal moves us in an improved direction. Certainly, any legislation can be improved upon, but the bill we have before us is fully warranted, fully justified, and it is now timely for this House to act.

I commend Chairman Oxley for his continued leadership in trying to bring out fiscal accountability in the capital markets. I commend Mr. Fitzpatrick for his hard work on this measure. But I ask this House to turn down the Kanjorski substitute and adopt H.R. 2990 as recommended by the Financial Services Committee.

Mr. Chairman, I yield back my time.

I thank the chairman for yielding time and for his continuing diligence and hard work on this important matter to all the people of this country, but particularly those of us in Louisiana.

I certainly want to express my appreciation to Mr. Frank and to colleagues on his side who have also worked hand in hand with us to try to come to accommodation on this difficult issue.

The flood insurance program is one that has been roundly criticized, and appropriately so in some instances. The repetitive loss problem that was addressed several years ago by this Congress was one of embarrassment for those who are responsible and felt that the program had been abused. But those chapters are now closed.

The problem that faces us today is one of a different nature, and that is people entered into contractual obligations to protect their property, and storms beyond anyone's comprehension have now caused individuals to make claim on those policies, leaving the program today at a $20 billion borrowing level, a record high, and as previously noted, a requirement to go to $25 billion if the agency is to meet all of its contractual obligations.

But I believe one point needs to be made clear in the hearing record on this matter, and the flood insurance program is unique. It is a program that collects premiums and from premiums collected makes payments to claimants. It is the only disaster response program in the United States which has a stream of income from which people who suffer loss may be reimbursed.

Through 2004, the fund balance on hand after paying out $15 billion in claims within the flood insurance program was a positive balance of $1.8 billion. This is the only mechanism I know of when FEMA writes a check as the result of a declaration of a Presidential disaster where the taxpayers see their money come back. So I find it problematic when this program is criticized, because in all other cases where there is a disaster response, taxpayer

money is spent without any recourse of recovery.

In this case, we need to address the problems before us. The bill increases the borrowing authority to $25 billion, and also, from a financially soundness perspective, increases the amount of money to flow back into the program with increases in premium.

The most important sector where these increases occur is in the nonprimary residence structures, meaning businesses and vacation homes. Premiums will increase, or may increase, up to a maximum of 30 percent per year. This is estimated to get the program in sound financial condition over the next 3 to 4 years, of course barring what we hope will not happen, and that is another cataclysmic Katrina-Rita combination.

I do believe this program serves an essential service in the function of our economy. Pointing to the area still decimated by Katrina, we need to get people back into their homes. They need to have the knowledge they have flood insurance coverage, because there are important economic activities that must occur in that region of the State in order to provide the United States with a free flow of energy and to have access to our ports through which agricultural products are exported.

I certainly hope the House will adopt a great bipartisan product.

Mr. Speaker, I thank the chairman for yielding.

I rise today in strong support of this measure which represents the work product of the Committee on Financial Services not for a matter of hours but, frankly, a matter of years.

The committee first authorized a terrorism reinsurance program some years ago, initially after the events of 9/11. That program has now exceeded its lifespan and is due to expire at the end of this year.

The consequences of letting the program expire are consequential. The inability to underwrite an indeterminate risk is of great consequence to particularly our real estate and development community, but to all business enterprises which are vulnerable to and concerned with the potential of a terrorism event.

The collective impact of this program will not be felt by taxpayers until and unless there is a terrorist attack. It is something that some appear to not understand. We are not creating a job bureaucracy. We are not spending tens of millions of taxpayer dollars. We are only saying that in the event another unexpected terrible calamity that struck New York some years ago should ever reoccur, that there be in place a governmental mechanism to help us through the crisis.

Some are concerned that this represents a way in which to funnel hundreds of millions of dollars to private interests of taxpayer money without recourse.

The principal reason why the House approach is the only approach that we should adopt is the requirement for the industry, once solvent, once stable, once economic conditions have returned to normality, that there would be repayment of the credit extended by the United States taxpayer. This is not a giveaway. This is a bridge loan in the time of national crisis.

I cannot conceive of how this Congress could go home and walk away from this responsibility to act for a preventive measure. It only gives our economic system the assurance that there will be continuity; that there will be the ability for our economic systems to function should we be called upon to respond to an event of enormous proportions that all of us hope will never occur.

We also are sensitive to the scale of the insurance industry. There are very large companies who can withstand enormous losses and pay them off quite well. There are regional and smaller providers who provide an essential service in our economy that would be disastrously impacted if the provisions contained in the House measure are not adopted.

I cannot speak highly enough about the long-suffering work of our chairman, Chairman Oxley, and the kind assistance offered by the ranking member, Mr. Frank, in really making this a bipartisan recommendation to meet what is an identified and obvious need in the most responsible manner possible.

Let me say it again, because it is so important. If, and only if, the provisions of this act are necessary will it be brought into life. At such time any assistance offered to any private entity who is a for- profit entity and taxpayer resources are expended, there will be a requirement to repay the taxpayers of this country when the solvency of that enterprise is clear and established. Emergency purposes for emergency needs in a time of crisis.

I commend both Members for their leadership and hard work on this measure.

Mr. Speaker, I thank the gentleman for yielding time and wish to express my appreciation to him and members of the Rules Committee who have delivered a rule enabling consideration by the House today of significant legislation relative to the reform in the regulatory structure of government-sponsored enterprises.

For many years, that has been the subject of discussion by the Committee on Financial Services and, prior to that, the Committee on Banking. I cannot express enough appreciation to Chairman Oxley for his long-standing tolerance on this matter, the many hours of agony I am sure I have caused all Members on this subject matter; and I am very appreciative for his courtesies extended in bringing to the floor a bill which has been over many months hammered into the shape we currently find it.

As to the current issue before the House in the consideration of the rule now pending, I wish to make clear that the manner in which the manager's amendment was constructed is no different from the construction of hundreds of manager's amendments over the years in this body. From the time at which a matter leaves committee until it arrives on the House floor can be a matter of days, weeks, or months. Circumstances change.

In this case, one element of that manager's amendment is the establishment of assistance for victims of the significant hurricanes the country has experienced, a highly appropriate utilization of a new fund. I think it important to understand this is the first time such fund has been constructed. The entity which will manage and distribute the funds does not now exist; and so, for some Members, constraining the utilization of the fund in its beginning stages was a logical precaution.

It is about restoration of housing in the case of hurricane victims, many of whom do not live in my district, but

certainly reside in my State. At the moment, they are without a home. They are living in a FEMA trailer or a tent or with family and friends or in any number of circumstances around the country. They are desperate for the opportunity to come home, to live in that structure that they call their own.

The bill now provides resources to construct homes. It was never intended that the bill would become the basis for political activism. The choice is clear: If we have limited resources to meet overwhelming need, should we not ensure that those resources are used as intended for the construction, for affording opportunity for low-income individuals and those who are requiring homeownership opportunities for the first time to have every cent go for that utilization? Of course it does.

It is regrettable, of course, that there would be those to say the amendment is flawed and that you should oppose it because we will not allow a voter registration campaign or political activism. I think in light of the concerns expressed, the overwhelming need for housing inventory, the fact that this is a 5-year program which will end at the end of 5 years, that we do not have yet an entity to manage, supervise or distribute the funds, it is highly appropriate that the constraints adopted in the manager's amendment be favorably considered by this House and adopted.

More broadly, I think the rule has made in order a number of amendments that were not discussed in committee, which the House will consider and vote on accordingly; and I think at the end of the day, no matter the construct of the final bill, it is important to understand that a government-sponsored enterprise reform is absolutely essential.

I will speak more to that matter during general debate; but I think those who only listen to the debate on the rule should understand, a government-sponsored enterprise is created by an act of Congress. It is given a privileged position in the marketplace. They utilize taxpayer- guaranteed debt in order to make a profit for their shareholders. They are unique in their construct in that they are authorized by the Congress, but are shareholder-driven institutions. They take on great risk and, accordingly, deserve the highest standard of regulatory oversight possible. This bill achieves that.

Mr. Speaker, I move to suspend the rules and pass the bill (H.R. 3945) to facilitate recovery from the effects of Hurricane Katrina by providing greater flexibility for, and temporary waivers of certain requirements and fees imposed on, depository institutions and Federal regulatory agencies, and for other purposes, as amended.

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

Mr. Speaker, I rise today in support of H.R. 3945 and express appreciation to the chairman and the ranking member and the members of the Committee on Financial Services for their continuing assistance for those who are victims of Hurricane Katrina.

In this instance, it is relative to financial institutions who now find themselves under some financial duress as collateral for loan obligations has been impaired, or in the case of loan repayments, the revenue streams available to the borrower are no longer available for repayment of loan obligations.

Under current regulatory law, the regulator must act when a financial institution's financial characteristics take on certain problems. In the instance of this legislation, we are providing unprecedented flexibility for the regulator with regard to capital and net worth standards for lending institutions. Stated another way, we know these institutions are only impaired as a result of the consequences of Hurricane Katrina as they were all adequately-to-well-capitalized the day before the storm made landfall.

In addition to that capital and net worth forbearance, we also extend terms relative to deposit of insurance proceeds. Normally, when there is a large influx of assets into the bank, deposits or really liabilities, the bank is then required to take certain financial actions to ensure its financial solvency. This provides the regulator with the ability to allow that aberrant behavior brought on by Hurricane Katrina insurance payments not trigger normal regulatory responses.

To say it a different way, the bill provides relief to financial institutions which today could be found to be troubled which are fully capable of restoration of their responsibilities over time if the regulator is given the ability to exercise the powers in this legislation.

I think it is well crafted. I think it is responsive to the problems identified, and I would hope the House would act favorably on its consideration.

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

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

Mr. Speaker, I certainly appreciate the comments of the gentleman from Massachusetts and his courtesy extended during the course of consideration of this and a number of other measures relating to the response to the Katrina effort. I feel it entirely appropriate, in light of the many people who are still adversely affected by the storm, to not appear that we are only expressing interest in the financial institutions.

There are many individuals today where their employment is no longer

possible because the structure where they worked is no longer there. There are folks who cannot go back to work because other employees are unable to be located. There are many people still without homes living in a variety of circumstances across the country. The state of emergency continues.

In reaching out to those individuals, we are at work on a number of measures, one of which I hope the House will soon consider, H.R. 4100, relative to the Louisiana Recovery Corporation. I will be speaking to that issue at length in hearings over time, but I certainly wanted to take advantage of the opportunity presented to let individuals adversely affected by the current storm circumstance understand that this is only one small part of a very large effort by all of the members of the House delegation from Louisiana, as well as the members of the Committee on Financial Services, to be responsive to the entire array of identified difficulties.

In fact, the corporation, once created and authorized by the Congress, would enable to assist financial institutions and homeowners with the acquisition of mortgages and assuming the debt obligations for those borrowers, as well as some restoration of the equity homeowners may have in their property prior to the storm.

It is intended to help communities rebuild, not simply build homes. The overall effort from extending assistance and forbearance through the regulatory process to financial institutions, as well as extending assistance to homeowners who are now displaced from their property, is a massive long-term effort, which will require the work of this Congress, I suspect, for years to come.

To those who are concerned about Louisianans rebuilding in circumstances which are less than desirable, we share the view. Only when levee restoration is complete, only when environmental remediation is complete will the rebuilding begin, and then to the highest hurricane standards available and applicable for our circumstance.

But make no mistake. Because of the vital nature of the energy industry, the aquaculture industry, the shipping and exporting business, which is conducted through one of the world's largest ports, the Baton Rouge/New Orleans, there is an evident and obvious necessity for people to return to the great city of New Orleans and the surrounding area because of the jobs that are necessary to provide the rest of the Nation with energy independence and the abundance of natural resources which our State produces.

Accordingly, the bill now before us is an important measure to help provide that economic stability going forward. It is a small part of a much larger package, but there is a plan, coming through in various pieces through each of the appropriate committees, to respond to the needs of the people of Louisiana in an appropriate and professional manner.

I simply ask the indulgence of those people in Louisiana who are still dealing with FEMA, living in a trailer, not certain about tomorrow, to understand the Congress is responsive to their concerns, and over the course of the next several weeks, actions will be taken we hope all will find appropriate and responsive.

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

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

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. 3945.